Globalization and the Global North-South Gap - Research Paper Example

Globalization has/has not Worsened the Global North-South Gap + Introduction This research aims to look at both sides of globalization so as to develop a clear understanding of whether or not it had had any effect on the global north-south gap. If it has had any effect, has it been positive or negative. This paper includes an examination of this gap with particular focus on what has caused it. This comprises looking at certain the theories, as well as research pertaining to the cause and reasons behind the widening gap between the global north and the global south. It also looks at globalization from various perspectives with particular focus on factors related to economic development and trade.1 It further goes on to determine whether or not its influence can be linked to the gap between the north and the south. Other units of analysis include how the various aspects of the countries have been affected by globalization as well as a look at the institutions contributing to globalization. Significance of the research Most researchers have focused on the effects of globalization on poverty and inequalities within countries. There is minimal research done on the effects of globalization on the poverty gap between countries, specifically the global north and the global south. This paper intends to provide information on how globalization not worsened the gap between the global north and the south. Thesis statement: This study shall aim at determining the effects of globalization on the global north and south gap, through a study of several variables such as economic growth, trade prospects and financial management in the two regions. This shall be enhanced through the understanding of whether financial globalization has an effect on the economic growth of the countries. Research hypothesis Null hypothesis: Globalization has not worsened the Global North South Gap. Alternative hypothesis: There is no relationship between globalization and the global North-South gap. The null hypothesis will be justified by the lack of change in the GDP of most countries in the global North. Also, depending on the justification provided regarding the decreasing levels of development, there may prove to be other reasons for the decline for the global north-south gap other than globalization. The relationship between globalization and the north-south gap will be established by the specific globalization effects that have resulted in a change in the economic growth of the two regions. Operationalization of the global north-south gap The North-South Gap in this paper is being identified by the economic growth rates and the standards of living adopted by those staying in these regions. The Human Development Index (HDI) examines how an individual is able to access services such as education, health, nutrition, information communication technology and opportunities for creating wealth. The more rapid the HDI is to 1.0, the more a country is developed. According to the United Nations Development Report, 2005, the countries in the global North have an HDI of beyond 0.8, and they are only 57 in number so far. The Gross National Product of the two regions is also assessed with regards to how it has transformed over the economic periods due to the effects of globalization. Inequality resulting from trade can be analyzed through the changes in cost of living, which includes the costs of goods in these countries and how much people earn. According to a report by the United Nations Development Program, global trade and finance has been the cause of the increasing gap between the rich and the poor countries. GNP being the total of salaries, payment of interest, profit, rent or the collection of these earned by those living in a particular state (Giovanni Arrighi 2003). Unit of analysis: Understanding the relative impacts of globalization on the various aspects of the countries with regard to the developing countries shall be the unit of analysis. This includes the impact of the globalization process on the share the nations have of the world’s income. A detailed analysis shall be done based on the identification of the GDP and the Human development Index of these nations in the past two decades in relation to globalization. As such, this study shall take states/countries as the units of analysis in determining the respective objectives of the study. Other factors to be considered include economic growth and development in trade. Research design The research design that shall be adopted in this study is shall be quantitative design in which descriptive statistics shall be adopted given that it shall lay more emphasis on the already available secondary data that shall be used in describing the effects that the various economic, social and political influences that could have an impact on the globalization rate of the gap. The dependent variable that shall guide the study is a political situation of the north-south gap, while the independent variables include globalization, economic growth, trade, and financial conditions over time. Definition of concepts Globalization is the way by which individuals, states, as well as organizations, come together and interact. When considering the effects of globalization on the global North- South gap, the major factors to be considered are those that have had a direct influence on economic development in the two regions. Some of these aspects of globalization that will be looked at include the state of international trade, information communication technology and investment.2 International relations, in the context of this study, relates to the mutual relations that exist between different countries; hence, enabling the attainment of sufficient economic benefits among nations. The effect of these variables on this gap will be addressed in consideration to advancement in the economic sector as well as poverty eradication. The term development in this context refers to the advancement in terms of the economy as well as individual development in areas including employment, life expectancy, poverty, and literacy levels. The global North -South gap will be looked at in terms of the social, economic as well as political differences between the North and the South which set them apart. In this situation, the global North refers to the most developed sections of Eastern Asia, North America and The Western region of Europe. The south comprises of Middle East, the African continent, Latin America and the more advanced part of Asia. Modernization has been used to refer to adoption of the ways of life of the developed North by the underdeveloped South. (Kruger 2003). The reasons for the global north south gap The North has been considered to be more developed than the south. This is in terms of among other factors, having better technology than the south and a much more stable government. The situational differences between the two regions have been present for over thousands of years with different researchers putting forward the reasons for this divide. The shifting of people from the nations in the South to those in the North since the eighteenth century has been a large underwriting aspect to the deficiency of improvement in the south (Williamson, 2002) The migration from the south to the North promoted the area as it led to more innovations in technology, advancement in trade which became huge contributors to their economic growth in the North. Theories seeking to elucidate the reason behind the global divide between the North and the South in relations to growth include the modernization and the dependency theory. The modernization theory explains the gap between the two nations being as a result of the South’s failure to abandon their outdated way of life and ideals. These customs have limited their ability to be as innovative, industrialized, modernized and as successful as the North. Instead, the South continues to struggle with poor governmental systems, overpopulation, poor resource distribution and use as well as ancient and unproductive traditions. According to this theory, for the South to develop and bridge the gap between it and the North in terms of development, it needs to become more like the North. This means being becoming modernized and abandoning its traditional ways (Kruger, 2003).3 The dependency theory whose origin is Latin America looks at the underdevelopment in the south as a result of the exploitative relationship between the North and the South. This is in terms of trade, finance and utilization of resources. This concept was established in the 1960s and it reveals that in terms of foreign investment and trade, the South is largely dependent on its sale of basic raw products to the South whose prices are what’s more unstable. This has been linked to the colonization period as it involved the exploitation of resources. The role of the South became much more of the providers or raw products while the North controlled the markets including the prices for the products. (Kruger, 2003) The South has very minimal power when it comes to regulating international trade making them largely vulnerable to such situations as price fluctuations. This limits their ability to earn more which further widens the gap. This is subsequently supported by the graph below that shows the openness of the two sides in relation to trade and financial services. Source: IMF, World Economic Outlook Database, 2007 Analyzing these graphs indicates that the developed and developing countries indicative of the north and south have varied reactions to trade caused by globalization. Globalization and international trade Right even before the First World War, international investments were still present between the global north and the south. With globalization, the trade across boarders has been raised to a higher level. This is as a result of the advancement in technology and the policy changes made to various international trade regulations. Globalization has been fueled by the policies that have been set up to eradicate economic boarders worldwide. Trade agreements made to foster investments and unrestricted trade between nations around the world. Policy change, as well as technology innovations, have also influenced the migration of more people from the South into the North. The rate of globalization has been described by Thomas Friedman as having gone further, increased its pace, affordable and more profound. Improved technology means better techniques and tools for recognizing opportunities in the economy and effectively exploiting them.4 The nature of the relationship between globalization and trade is as indicated by the graph below for the period up to 2005. Globalizations effect on the global north-south gap The following literature reviews seek to defend the benefits of globalization to the development in both developing and developed states of the world; thus, contributing to the lessening of the gap amid the global north and the global south. Despite the benefits resulting from globalization, it has also had its disadvantages, more so to widening the North-South gap. The unrestricted market created as a result of globalization has been of more benefit to the already developed nations at the expense of the less developed ones. According to (Al-Katatsheh, 2011) globalization bridges the gap between the two states by improving the relationships between them. In a study conducted by Mahmoud in 2006 aimed at determining whether globalization has any effect on the efforts of third world countries to lessen poverty levels. With a sample of 17 nations whose social and economic structures are largely alike, the study concluded that the globalization had no impact on the rate of poverty. This supports the hypothesis; globalization has not made the poverty gap between the rich countries in the north and those in the south any worse. According to (Harrison 2007), it is revealed that investments into countries in the south as well as the increase the number of exports have led to the reduction of poverty levels in all these countries. Globalization stands to benefit the poor, but this can only be possible if the right policies, as well as institutions, have been set up. The author continues to point out that there is no direct connection between globalization and poverty. This is despite there being a continuous reduction in poverty levels in the developing nations with the increase in its incorporation with the rest of the world through trade for the past two decades. Proof of the direct connection between international trade and poverty, however, is not readily available (Harrison 2007). From the perspective of increased incomes between the two regions, a number of researchers argue against this being the effect of globalization (Lindert 2003). This is grounded on the perceptive that the inequalities have been mostly due to the historical poor economic growth rates. This paper emphasizes that the globalization does not necessarily favor the rich nations. On the other hand, it benefits both the poor and rich countries more so those undergoing industrialization `with those failing to embrace liberalization lagging behind in development (Lindert 2003). The author notes the opinion that the more international integration there is, the more inequality there is which contributes to the widening wage gap among nations. The resource, however, concludes that the underdevelopment in the poor countries is not as a result of globalization. Instead, it is due to such factors as poor democracy, policies and political systems. The gap between the nations in relation to economic growth has been on the upsurge. The last two centuries, this gap has done so at an extraordinary rate. However, not considerably great information has been provided on how this gap has been influenced by the great depression, the first and Second World War among other factors. There has been over focusing instead on the effects of globalization (Williamson 2002). The poor countries are more vulnerable to the financial crisis with Africa having a lot of international debts. Certain nations in the global south such as India, Brazil, Mexico and China upon liberalization of trade have witnessed significant economic growth. This has reduced the poverty gap between them and the well-off countries. Mamsr conducted a study in 2004 to determine whether globalization had an impact on the social characteristics of the les developed nations. The research concluded that the globalization, especially the economic reforms, had negative effects on the social structure as it resulted to an increase in social inequality.5 Globalization with regard to individuals and organizations Globalization according to researches has been seen as being controlled by the North particularly the United States of America. (Al-Katatsheh, 2011). This has led to the view of globalization by some to mean the same as Americanization. Most of the institutions that have been used as tools for globalization especially in international trade, industry and investments are from the north. This includes the World Trade organization and the International Monetary Fund. Enquiries have been elevated on the catastrophe of such organizations to improve the underdeveloped levels in the developing nations as it has with the already developed countries. The financial institutions have been accused of operating in the south with only the intention to enable repayment of debts and ensure that the profits made by foreign investors are transferred back outside. Other researchers have faulted them with the intention to exploit the resources in these countries and having (Al-Katatsheh, 2011) no intention to establish long term development in these countries’ economy.6 Market liberalization has also been argued not to be towards the benefit of the developing countries. It results to the rise of external deficits and its considerations are mostly about the state of affairs of the nations in the North rather than those in the south. Globalization is predicted to continue worsen the problems being faced by the countries in the south. It is also expected to widen the poverty gap between the two regions (Williamson, 2002). The South are highly sensitive and thus the effects of globalization will be more prominent. The financial sectors are more fragile than those in the north. The inability of the countries in the southern region to effectively follow through with the established policies has been one of the reasons why they have not been able to fully benefit from globalization. These include policies in industrialization, agricultural development among other sectors. (Nayyar, 2009) Globalization has been seen by some researchers to be resulting from depreciation of the environment. They view globalization as a way in which the north exploits the resources of the developing world causing devastating effects on the environment.7 Technology in sectors such as transport and communication has brought the world closer. The Boeing 747 was a huge advancement in air travel across the globe. The augmented airlifts in and out of the countries had led to the reduction of international travels (Lindret, 2003). Even though this might be reasoned to be a creation of opportunities for the developing countries, it has led to more migration to the wealthier countries. Globalization has also been seen to be the causing factor of interdependence between nations as a result of the separation of labor. The emerging countries concentrate on production work because the labor and the location are cheap and basically the cost of production is very low.8 Conclusion Those supporting globalization as a means to reduce the scarcity gap amongst the north, and the south maintain that the liberalization is beneficial as it improves trade and business. They also argue that because of the advancement in trade, residents in these countries are able to earn more thus afford decent living. This has however been countered with the argument that these advancements only lead to widening social and economic gap both within and between the richer and poorer countries.9 Based from the units of analysis used, it is evident that although globalization has had its benefits, the south continues to lag behind the north in terms of development. Research also shows that the economic, social and political status of the south has continued to decline as a result of some of the aspects of globalization. However, some countries especially those in Asia have continued to experience substantial growth in their economies.10 BIBLIOGRAPHY Al-Katatsheh, Dr. Mohammad Hamad. "The Future of North-South Dialogue in the Context of Globalization." Journal of Politics and Law, 2011: 108-117. Flint, Colin, and Peter J. Taylor. Political geography: world-economy, nation-state, and locality. Pearson Education, 2007. Harrison, Ann E. 2007. Globalization and poverty. Chicago: University of Chicago Press. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=212641. Kanbur, S M. R, and Michael Spence. Equity and Growth in a Globalizing World. Washington, DC: World Bank, 2010. Print. Kruger. L. "North-North, South-South, And South-North Relations." Global Transformations and World Futures, 2003. Lindret, Peter H, and Jeffrey G Williamson. "Does globalization make the world more unequal?" In Globalization in historical perspective, Univeristy of Chicago Press. 2003: 227-276. Nayyar, Deepak. "Developing countries in the world economy: the future in the past?." (2009).35-38 Williamson, Jeffrey G. "Land, labour and globalization in the third world." The Journal of economic history, 2002: 55-85. Read More