The Transformation of Local Phenomena Into a Global One - Research Paper Example

Globalisation Our world since its origination has been a ‘hotbed’ of activity. That is, the mental and physical activities of humans have transformedour globe from an archaic one to an advanced one. Many movements in the course of world history have initiated or boosted this advancement. It was only after industrialization that advancement or growth spread to majority of the world population, which in a way changed lives of many people. And as time flowed, new movements or changes started to have effect on the lives of people and international relations, aiding as well as affecting it. Among the many movements, globalisation had and is also having a major impact on the people worldwide. Globalisation literally means the transformation of local phenomena into a global one. Globalisation is a practice of interacting and mixing or assimilation among people, companies and governments of different countries whose significant feature is international industrial and financial business structure. Globalisation may be thought of as the widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritually. More formally, globalisation can be categorized as a process that embodies a transformation in the spatial organization of social relations and transactions (Wiley, Nandi & Shahidullah 1998, p. 21). Hyperglobalism conceive globalisation as a new age of economic integration that is characterized by open trade, global financial flows as well as multinational corporations. Hyperglobalism is driven by capitalism, communications and transportation technology, integration into one world market and it is increasingly eroding state power and legitimacy. However another perspective is, in the past few years, more and more people have been complaining that the new liberty in the form of globalisation have gone too far, giving rise to a hypercapitalism (Roberts and Hite 2007, p.263). Probably the largest body of opinion - and one that spans the entire politico-ideological spectrum - consists of what might be called the hyper-globalists, who argue that we live in a borderless world in which the national is no longer relevant (Dickens 2008, p. 6). The so said social relations and transactions are assessed in terms of their extensitivity, intensitivity, velocity and impact and the rate at which they generate transcontinental or interregional flow and networks of activity, interaction and exercise of power. The purpose of this study is to analyze idea of ‘globalisation’ and some of the key controversies and debates that surround it in the economic sphere and how globalisation is having both positive as well as negative impact, and at the same a very influential impact. Forces causing globalisation The policies and technological advancement have opened up many domestic and international economies unlike during the Second World War. The adoption of free market economic systems by many governments has amplified their industrious potential within years and created numerous of opportunities for both international trade and investment. There negotiated reduction of barriers to trade by governments and the establishment of international agreements that promotes trade in goods, services and investment have also initiated the globalisation process. Corporations have benefited from overseas markets by constructing new foreign factories and through establishment of marketing and marketing arrangements with foreign associates. Among the many economic based movements, globalization is the one which had and is still having major impact on the economic development of many countries and its people worldwide. “The word globalization marks a set of transitions in the global political economy since the 1970s, in which multinational forms of capitalist organization began to be replaced by transnational” (Appadurai, cited in Meyer and Geschiere 1999, p307). Economic part of globalization is the key because with the whole world becoming a kind of global village, barriers between the countries are broken with integration happening mainly in the economic aspects. In this scenario, foreign organizations, using the globalization plank, have entered and will also enter various sectors of the businesses leading to the establishment of many industries and thereby having an impact on social change. But, the fact is, the entry of countries into various territories and thus making impact on the culture was an age old phenomenon, which took place place under the guise of imperialism. That is, after Vasco da Gama found the sea route to India, circumventing the Cape of Good Hope, major European countries from the initial years of 1500’s moved in large numbers to develop trade relations. (Gopinath 2008, p16). This trade turned into imperialist leanings due to the weakness of the Asian as well as African countries and in course of time lead to the formation of social change in a basic and minimal scale. This negative act of imperialism continued throughout the 20th century and only after the advent of globalization, this entry into foreign territories acquired positive meanings. Communication technology and the worldwide marketing of western cultural have also triggered globalisation. Developments as well as advances in information technology have been another most important driver of globalisation by spectacularly transforming the economic life. Information technology gives individual economic actors like the consumers, producers, investors and businesses an important tool for identifying and pursuing the underlying economic opportunities. This has been possible through the use of faster and more up to date analyses of global economic trends, easy transfer of assets and partnership with distant partners Globalization is one of the most controversial issues in these modern times. Among the political scientists in general it has both strong proponents and radical opponents that attempt to find arguments in favor of their perspectives. It is beyond any doubts that globalization affects national cultures and economies but the scholars still disagree whether such influence is overwhelmingly positive or negative. Some of the experts, whose articles will be evaluated in this paper (Ansell and Burgeon, 2001), believe that it leads to greater economic freedom and liberalization thus contributing to democratization of the country in general while others (Elkins et al, 2004) argue that it has opposite results, expanding the role of the government and leading to regional differences. Similar perspective on globalization in general and its effects on the welfare states is expressed in Brian Burgeon’s article, titled “Globalization and Welfare Compensation: Disentangling the Ties That Bind”. However, he approaches the issue differently. The author argues that globalization directly affects the level of public spending as it puts many groups of citizens in risk and they increase their demands for the government. He analyzes various types of welfare programs in order to identify how they are influenced by the globalization (Burgeon, 2001). As a result, the economic decisions within a global market are often estimated through ‘cultural’ and, more importantly, ‘religious’ lenses. The acceptance of certain economic policy model can to a great extend depend on its success in the country with similar socio-economic features that competes for the same slice of global capital. It proves that the governments are sensitive to external signals and tend to liberalize or restrict their policies, following the lead of other countries with common cultural heritage or dominant religion. From this perspective, the arguments presented in the article “Why Do More Open Economies Have Bigger Governments?” by Dani Rodrik receive additional proof of their validity. The author believes that there is a positive correlation between an economy’s exposure to international trade and the size of its government (Rodrik, 1998). As the nations feel both positive and negative effects of the globalization, the public tends to demand greater government to protect them from larger external risks. In the article “The Globalization of Liberalization: Policy Diffusion in the International Political Economy”, Beth A. Simmons and Zachary Elkins also present an interesting perspective on globalization. They assume that the countries with similar socio-cultural characteristics tend to be influenced by the policy transitions of one another. They are more open to any changes if they see that the nations with many common features have succeeded from such decisions (Simmons & Elkins, 2004). Culturally comparable nations tend to form unofficial or official ‘groups’ and follow the lead of one of them which is the most successful. If the consequences of a particular policy shift are known not just for any country in general but for a country with a great degree of similarity, the nations tend to use such political agenda as an example (Simmons & Elkins, 2004). In the article “Traders, Teachers, and Tyrants: Democracy, Globalization, and Public Investment in Education,” Ben Ansell argues that globalization leads to increase of government spending on education. Due to opening of the markets, the economies face stricter competition. As a result, the authorities must create the environment that will promote economic growth which, in its turn, depends on the level of education of the citizens to a great extend (Ansell, 2006). The salaries and ability to find a job are directly affected by the educational level of the job-seekers and the professionalism of the labor force can influence the ability of the nation as a whole to compete at the global market. Globalization and its correlation to Free Trade Nations have been engaged in doing business with each other in order to get profits and cultivate their economies and also for the reason that they are not equipped with sufficient resources like territory, workforce, and resources to fulfill all the requirements of citizens of a country. Trading begins when a state has a product which is needed by some other state. Trade provides a chance to states to acquire those items that they are unable to get without difficulty or affordably manufacture themselves. International trade amongst countries increases standard of living inside the countries since resources are used more competently and a larger selection of items exist. Although this form of trade is going for centuries, certain countries in certain period of time have imposed restrictions on this international trade. That is, these nations due to one reason or other will actualize a protectionist regime, thereby blocking foreign companies to enter and do business in their territory. However, with the advent of globalization and the liberalization of the WTO regimes including, this protectionist regime gave away to the regime of free trade. WTO agreement broadened the coverage of the GATT to include areas such as trade in services. The GATT establishes rules to liberalize trade in services, which in 2002 was estimated to be almost $1.6 trillion (Wild and Wild 2006). Many countries have opened up their economies as part of Free Trade with globalization acting as the catalyst. In literal meaning Globalization is defined as a collective alteration, an elevated association between various societies and their fundamentals because of the transculturation, the explosive advancement of communication and transportation technologies to assist an exchange of global economy and culture. The arrangement of a global community in such a way there is an immense contact linking various parts of the globe, with elevating potential of individual switch over, communal understanding and companionship among "world citizens", thereby leading to economic cooperation. When one looks at the economic or financial part of globalization, it is clear that globalization has given liberty to the business to initiate an entry into various prospective markets, based on the Free Trade regimes of the entering countries. The main strength of Free Trade is that, it puts forward the notion that minimalistic state role or intervention resulted in better economy and importantly better society. That is, with greater role for private sector and importantly entrepreneurial role for individuals, there will be better productivity. Free trade proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and importantly free trade (Harvey 2005, p.2). Globalisation, Free Trade approach and neoliberalism The blurry perception of globalization has been clearly explained in financial vocabulary. Corporate globalization may be viewed as the movement of items, services and money assets or savings across global boundaries. In this manner, globalization has turned out to be a predominately ‘financial umbrella’ of the world, with national organisations developing into international corporations, and countries are no longer seen as self-governing and closed monarch states, but as a fraction of single large financial system with their Free Trade regimes. Globalization has also impacted international trade in a significant manner and its importance has increased manifold as is apparent from the statistics that reveal while in the late 1960s, the value of international trade represented only 10 percent of total global economic output, by the late 1990s that proportion had grown to 25 percent. (Held et. al 1999). From earlier times, during international trade certain countries will have natural comparative advantage or will try to maintain a comparative advantage for itself. The theory of absolute comparative advantage states that a country contains an unconditional advantage in the production of a product when it can produce more of that product with the same amount of resources than another country. Absolute advantage can also result in higher incomes for a country as one hour of labor output should increase and the country should become more efficient as a result of trade between countries. Realistically, one country should have an absolute advantage over another country in the production of some goods. As an example, Saudi Arabia would have an absolute advantage in the production of oil compared to a country such as Japan. However, the act of nations to maintain unfair competitive or comparative advantage has become a thing of the past, with globalization and WTO regulations, preventing nations from doing so. Because of globalisation, Free trade regimes are being actualized in many countries and Free Trade has been promoted by decreasing or abolition of tariffs, creating free trade zones with minimal imposition of tariffs, reduction in transport costs through containerization for ocean shipping, reducing or abolition of capital control measures as well as balancing subsidies for local businesses. Free trade is also encouraged by harmonizing the laws that regulate intellectual property across most nations and by supranational acknowledgment of intellectual property and patent rights. The basic principle of Neoliberalism is the actualization of free markets and free trade. So, it involves market deregulation, minimum intervention from the state and its government, and also increased privatization. With the actualization of this kind of political economy perspective, there will be break down of barriers to international trade as well as foreign investment. Thus, there will be adequate transfer in the control of a nation’s economy, from the state actors or government to the private sector players. However, globalization has also generated significant international opposition over concerns that it has increased inequality. That is, certain countries or even organizations develop at the expense of other countries, by ‘tapping’ their weak policies. “The rise of neo-liberal economic thinking in the West led to the view that the underdeveloped states had approached development in the wrong way. Instead of establishing inefficient state run import substitution industries, it was argued; they should have concentrated on areas in which they possessed comparative advantage (Best and Hanhimaki 2008, p.329). In the book, “The Travels of a T-Shirt in the Global Economy” presents, Rivoli comes up with important conclusions regarding the inferior status of poor countries with supporting evidence. Rivoli concludes that poor countries’ economy and importantly its people stay poorer, without improvement mainly because of the direct and indirect suppression of their products. That is, farmers and manufacturers of developed countries succeed and indirectly suppress farmers and manufactures of poor or Third World Countries because of various tax exemptions and the scenario of unprotected global trade provided by corrupt governments. According to Rivoli, even the used up dresses with cheaper price tag did not reach the Africans, because they are worn by Americans and Japanese as part of vintage clothing. Even though, Rivoli pessimistically talks about the poor countries, he concludes positively by seeing some hope for them. Role of businesses in aiding globalisation focusing on the economic aspects Now, in the post industrialization era, organizations or firms cannot remain “static”. They has to keep on moving breaking ‘boundaries’ both geographically as well as economically, to actualize the opportunities and emerge successful. That is, with every firms wanting to expand their geographical reach and make an imprint in various markets, there will be enough opportunities for it, to initiate an entry into a foreign market. This economic aspect of globalization clearly creates and impacts social change. Creates in the sense, the entry of foreign firms leads to workers from many countries or background working together and this also creates basic social change. Organizations operating internationally or MNC will be composed of workers from three national or country categories. The employees from the parent country where the firm is usually headquartered or based (or came from) are called Parent Country nationals (PCNs). The employees from the host country where a subsidiary or MNC may be located are called host country nationals (HCNs). Finally, there will be third or other countries which may be the source of labor, finance, research and development, and the employees from these countries are called third country nationals (TCNs) (Scullion 2007). These entry of foreign firms, employees and thereby its products and services will make a major impact of social change. Globalisation and the resultant positive economic changes From earlier times, many Third World countries including Asian and African countries only indulged in agriculture for their livelihood. However, with the onset of globalization and the opening up their markets as Free Trade regimes, these countries and their governments started to focus on industrial development, by improving their own industries and importantly by facilitating entry of foreign companies. Thus, globalization and the resultant Free Trade turned out to be a great boon to these countries. These countries as part of their Free Trade regimes opened up their markets and enticed the foreign companies with a slew of beneficial financial and social schemes. Foreign firms for their part optimally invested tapping the existing cheap labour and other resources, thereby garnering for themselves good profits. Today a company in the US which is in the west approaches a company in India in the east to fulfil its software requirements. Hence an integral part of the business process done by the US firm lies on the other side of the world. This way both the parties get major benefits - good service and lesser costs for US, Indian software professionals get higher salaries. Also, many developing countries are on the path to the top echelons because of globalisation as they were able to manufacture many products and market to the whole world. In China, 30 years after the counter-revolution, a new big bourgeoisie has emerged along with increasing stratification and oppression. In 2004, the Chinese proletariat manufactured 75% of the world’s toys, 58% of the world’s clothes, and 29% of the world’s mobile telephones (Levy 2007). Because of these benefits, Free Trade regimes were appreciated and welcomed by majority of the people in those countries, with only a minority against it. The minority’s arguments against Free Trade are not valid at all and it only exposes their inabilities. Foreign firms entice maximum local customers by offering quality products or services and also by means of effective marketing strategies. However, the indigenous businesses does not upgrade to the levels of the foreign companies in terms of quality as well as other factors, thereby being ignored by the local customers. “Producers of goods for home consumption do not gain, but there is nothing like competition from abroad to keep them on their toes, alert to ways in which they can improve efficiency and better satisfy their customers.” (Delong 2002). With these foreign firms providing good employment and the resultant good development, people of those countries have became financially stable and are going in search of material comforts, causing impacts on social change. The other reasons why there needs to be further economic development is because there still a major portion of population living in abject poverty. To raise these people and also to sustain the current growth, countries and companies in those countries need to further accelerate economic development. “Despite formidable strides in poverty reduction, especially Chinas landmark achievement of lifting of hundreds of millions of people out of poverty, China and India still host the largest number of poor in the world. According to World Bank calculations, out of a total 2.3 billion people in China and India, roughly 1.5 billion earn less than US$2 a day. Only rapid economic growth can hit them out of abject poverty” (Aslam). So, it is clear that the current economic growth will be sustained and even accelerated by these countries. This economic development caused by globalisation is having a positive impact on the lives of the people and will continue in future, incorporating social change. Importantly, a sizeable portion of good profits reached the local employees, thereby improving their economic standing and also optimizing country’s economy. With booming economy, there is rapid growth as well as poverty reduction in many Third World countries including China, India, and other African countries that were poor 20 years ago, all because Free Trade regime actualization.. Thus, loss of customers and market share, happens mainly due to the inability of the local businesses, however they wrongly fear that large multinationals would drive them into extinction and cripple domestic entrepreneurship. (Bhagwati 181). So, this globalization and the resultant industrial and financial optimization are welcomed by majority of the people, with the government of these countries also taking maximum initiatives. Debates regarding Globalisation’s negative impact The proponents of globalisation agree that globalisation allows poor countries and their citizens to grow economically and as a result improve their lives, whilst the opponents of globalisation argue that the establishment of unregulated free markets has instead benefited the multinational companies in the western world at the expense of the local companies, local culture and the ordinary people. There has been increased resistance towards globalisation and this has taken form at both popular and governmental level while at the same time people try to control the flow of capital, labour, goods and ideas that make up the present sign of globalisation. Globalisation presents opportunities for economic growth and thus employment and increasing incomes but it raises the concerns about the negative aspect of the labour market risks in the form of unemployment, downward wage pressures and a race to the bottom in the working conditions. Firm hiring and firing rules tend to affect women and young workers. Most of the world’s biggest employers are now global and most companies are signing global agreements which are often called framework agreements and they cover issues ranging from trade union rights and collective bargaining rights to information and consultation, equal opportunities, safety and health, minimum wage standards and the banning of child labour and forced labour. At the global level, there is a crucial difference between a unilateral company code of conduct and a union management agreement. Companies have been relocating or outsourcing to other countries where there are lower wages and often much lower standards. Service jobs are not necessarily sweat jobs and high staff turnover and poor career advancement are found anywhere in the world. The service jobs are relatively high skilled. When managers want to take their operation global, they should consider effective support for workers and their communities, they should observe fundamental workers’ rights and hold prior consultations and negotiations with workers representatives before they introduce change in their operations. Globalisation has helped extend the market and the responsibility for goods produced under extreme forms of exploitation such as child labour or forced labour. However the one of the weaknesses of Free Trade is the uneven distribution of income. That is, with the emergence and success of private sectors and international players as part of Free Trade, the resultant wealth or income gets stagnated in few hands, with uneven wage distribution. It leads to poverty, industrial problems, etc. Another weakness is the uneven geo-economic development due to Free Trade regimes. With the advent of globalisation, business organizations have entered the domain of many countries helping them as well as destroying them. “Rapid growth and poverty reduction in China, India, and other countries that were poor 20 years ago, has been a positive aspect of globalisation. But globalisation has also generated significant international opposition over concerns that it has increased inequality and environmental degradation” (worldbank.org). That is, with the foreign firms enticing the maximum customers through effective and at the same time unethical marketing strategies, it is depriving the home grown business of their livelihood. “The fear that large multinationals would drive small local firms into extinction and cripple domestic entrepreneurship” (Bhagwati, 2004, p181). The government for their part as part of corrupt practices support MNCs instead of its citizens depriving them. “Quite clearly, it is the property of the powerful corporations that is being protected by the state in every part of the world under the new Free-trade regimes, while the property of the ordinary citizen has no protection.” (Lechner and Boli 2007, p.424). Because of this deprivation, people dependent on local or home grown businesses and part of the social change suffer a lot, with economic inequality being the prime results. This inequality and the resultant differences in the lifestyle of the two groups of people create a lot of tension and even clashes. There occurs demonstration against globalization by the local populace, with many critics branding globalization as a destroyer of home grown business and local people’s livelihood. So, globalization mainly focuses on the economic sphere with the entry of foreign firms holding the prominent position, and this clearly impacts social change both from the social angle as well as from the business angle. Although this economic development could uplift the life of many people, the fact is, this same economic development and the actions that are taken for it, will damage many lives by destroying the environment in which the lives exist. Among the many steps that countries take for economic development as part of globalisation, most of them lead to Greenhouse gases emissions (GHG) or particularly carbon emissions, one of the major causes of environment destruction. That is, starting from constructing new infrastructure to electrifying the infrastructure, all the activities emit carbon emissions.. Electrical power is one of the main needs to sustain or accelerate the economic development. For that crucial electrical power, these countries particularly China and India are focusing on the main Carbon emitter, Coal as the primary source of electric generation. For instance, China roughly generates 70 per cent of its energy needs from coal, and India for its part needs coal to meet more than 50 per cent of its energy needs. The more disturbing fact but a possible eventuality is that this electrical generation through coal is expected to increase even more, making these countries major emitters of environment destroying GHG gases particularly Carbon. “The Asian coal rush is expected to generate 30,000 megawatts coal-fired power over the next 10 years in the region. The IEA has projected that the worlds C02 emissions will reach 40 gigatons by 2030. The emerging economies led by China and India will contribute to more than 70 per cent of these emission” (Islam). As the current and further economic development will only lead to further emission of environment damaging carbon, environment and the people in those countries as well as in the other countries will face dangerous repercussions because of globalization. Conclusion To conclude, globalisation is having an impact on the economic, social and political forces of society and the world. Social and economic structures and concepts that were considered sacrosanct have suddenly been exposed to a series of queries and posers. These have made serious thinkers all over the world to sit up and actually ponder about the impact of such a large scale fusion of not only capital from diverse sources but, more importantly, cultural streams emanating from societies and nations that were safely insulated from each other, through the apparently insurmountable barriers of distance, language and customs. The palpable result is, like all such mammoth churnings of social and cultural things, is a curious amalgam of seamless fusion in certain areas with certain other segments demonstrating manifestations of discord. Globalisation is an omnipresent and continuous phenomenon impacting the lives of many people. As it impacts people in various countries, it has an impact or effect on the social change or multiculturalistic society. With globalization making both positive and negative impacts on social change, people are benefiting, losing out and even getting influenced by it. The impact of globalization will continue in the future as well, and it is up to the countries and people to make sure there are mainly benefits. Reference: Ansell, B 2006, Traders, Teachers, and Tyrants: Democracy, Globalization, and Public Investment in Education. Weather head Center for International Affairs, viewed on March 31, 2010 http://www.wcfia.harvard.edu/sites/default/files/1060__BA_TradesTeachers.pdf Aslam, SM, 2007, “The environmental cost of growth in China and India: Asias powerhouses face serious dilemma on how to balance surging economic growth and environmental protection.” The Business Times, on March 31, 2010 http://www.isasnus.org/articles/article-46.pdf Bhagwati, JN, 2004, In Defense of globalization, Oxford University Press US, New York. Best, A and Hanhimaki, JM 2008, International History of the Twentieth Century and Beyond, Routledge, New York. Burgeon, B 2001, Globalization and Welfare Compensation: Disentangling the Ties That Bind, Springer. Cavusgil, S. T., et al 2008, International Business: Strategy, Management, and the New Realities, Prentice Hall, London. DeLong, B. 2002, Globalization and Neoliberalism, Chronicle of Higher Education. Dicken, P., 2007, Global Shift: Mapping the Changing Contours of the World Economy, 6th Edition, Sage, London Gopinath, C, 2008, Globalisation: A Multidimensional System, Sage Publications, London Gitlin, T. 2001, Media unlimited: How the torrent of images and sounds overwhelms our lives. Metropolitan, New York. Harvey, D 2005, A Brief History of Neoliberalism, Oxford University Press. New York Held, D, McGrew, A, Goldblatt, D and Perraton, J 1999, Global Transformations, Polity Press. Held, D and McGrew, A 2007, Globalization/Anti-Globalization, Polity Press. Islam, SM. “The environmental cost of growth in China and India: Asias powerhouses face serious dilemma on how to balance surging economic growth and environmental protection.” The Business Times. 13 June 2007. Lechner, F J and Boli, J 2007, The Globalization Reader, Blackwell Publishing Levy, B 2007, The interface between globalization, trade and development: Theoretical issues for international business studies, International Business Review, vol.16: 594–612 Meyer, B and Geschiere, P, 1999, Globalisation and Identity: Dead certainty: Ethnic Violence in the Era of Globalisation by Arjun Appadurai, 305-324, Wiley- Blackwell, New York. Roberts, J T and Belone Hite, A 2007, The Globalization and Development Reader :Perspectives on Development and Global Change Blackwell Publishing. Rodrik, D 1998, Why Do More Open Economies Have Bigger Governments? Harvard University Press. Rothenberg, LE 2002. Globalization 101: The Three Tensions of Globalization, American Forum for Global Education, viewed on April 1, 2010 http://www.globaled.org/issues/176.pdf. Scullion, H & Collings, D. G., 2006, Global Staffing, Routledge, New York Simmons, BA. and Elkins, Z 2004, The Globalization of Liberalization: Policy Diffusion in the International Political Economy, Association of American Political Science Wild, JJ and Wild, K 2007, International Business :the challenges of globalization, Prentice Hall. Wiley, J, Nandi, P.K and Shahidullah, S.M. 1998, Globalisation and the Evolving World Society, Brill, Boston. worldbank.org, Globalisation, viewed on April 1, 2010 http://www1.worldbank.org/economicpolicy/globalization/ Read More