Is Globalization an Evil or Benefit - Term Paper Example

Globalisation and its effects Introduction The process of international integration that arises from the interchange of products or services, different aspects of culture, world views and ideas is known as globalisation. Although globalisation is a term associated with the modern age of trade, detailed researches show that it is rooted in the European age of discovery when voyages were undertaken to various countries in order to establish trade relations (Saggi, 2002). Four aspects of globalisation identified by the International Monetary Fund (IMF) are migration, capital and investment movements, trade and transactions and dissemination of knowledge. The developing nations have increased their participation in world trade from 19 percent in 1971 to 29 percent in 1999 (Saggi, 2002). However, variations were noted in terms of economic development among the different countries. For example, the African countries performed poorly in comparison with the newly industrialized economies (NIEs) of Asia that greatly prospered. The developed countries and NIEs dominated the export of manufactured goods, thereby reflecting positively on the Balance of Payments (BOP). Then again, export share of the developing countries in commodities such as, food and raw materials, declined over the period. Another major aspect of globalisation is capital and investment movements. "Aid" or "development assistance" forwarded to the developing countries, before 1980s, were replaced by private capital during 1990s. Foreign Direct Investment (FDI) became a major form of investments made in the developing countries. The migration of people between the developing and less developed nations doubled in the period 1965–90 (Saggi, 2002). Globalisation for the Elites A very small portion of the masses, implying the industrialists, can compete on an international level, besides the national level. For example, Lakshmi Mittal, who is a powerful presence in the global steel market, do not need to restrict his business expansion to any one nation after globalisation, unlike previous business tycoons. This fact also holds true for the banking classes because globalisation has facilitated the free flow of finance among various countries. Sportsmen and entertainers of international acclaim has also benefitted due to globalisation. For instance, the famous tennis player, Maria Sharaprova, does not only earn from the games played, but also from the international endorsements made for various multinational corporations. Even film-makers are presently able to draw greater income as the domestic earnings of films have been outstripped by the international earnings. Films that fail to perform well domestically are often critically acclaimed overseas (Butler and Lees, 2006). Various exotic locales across the world are used as shooting locations nowadays. The budgets allocated in the making of a film are gradually rising. Then again, there is a level of discontent prevailing in the west against the elites. Many believe that the liberal-left elites are instrumental in destruction of the ethnic, religious and national identities of the US individuals, given that there was a sudden influx of immigrants during the period of globalisation. This particular section of people also believe that the United Nations has robbed the country of its sovereignty and has also created welfare states so as to provide aid to third world nations by using the tax-payers money (Buruma, 2013). Globalisation for the Poor The United States of America, where the process of globalisation was initiated, also had to deal with its negative effects. The social health index of women in the USA had greatly deteriorated. In 1979-89, poverty levels related to the African-Americans rose from 25 per cent to 33 per cent; that related to the Whites increased from 15 per cent to 19 per cent; and that of the Hispanics reflected a surge from 27 per cent to 38 per cent (Aerthayil, 2011). The condition of farmers worsened in the rural areas. With the federal government refusing to provide assistance, the debt burden increased and many farms were sold to agribusiness corporations. Owing to a steep rise in the housing costs, homelessness of the poor individuals increased to a great extent. Globalisation in a way facilitated unequal distribution of wealth. Hence, the developed countries witnessed homeless people flooding the streets, which clashed against the backdrop of skyscrapers and luxury apartments, thereby exposing contradictions of the development made owing to globalisation (Hopkins, 2011). Even though the official rates indicated that the unemployment rates had dropped, yet detailed analysis showed that there were millions of people who could manage only part-time jobs and thus, contributed to skewed nature of the employment index. As a result, privatisation and liberalisation should be complemented with well set government programmes that can create jobs and promote community welfare and education in the society (Dreher, 2006). Opening up the entire economy to market mechanism does not yield favourable results and often causes despair for the poor. Globalisation in developing countries Since 1980, globalisation has induced a sharp fall in human poverty that had never been witnessed in the global history. However, the rise in incomes has been uneven, leading to unequal accumulation of wealth. Largely speaking, the countries that have actively participated in the process of globalisation are Indonesia, China, India and few others. The poor in these countries have benefitted due to globalisation. The less developed countries such as, Somalia, have not been able to reap the benefits of globalisation, thereby restricting economic development. In 1978, China’s GDP per capita (adjusted for inflation) was $600 a year. Presently, the numbers have increased to around $6,000 a year (Forbes, 2012). In nearly thirty-five years, there has been a rise in the average material standard of living by a factor of around 10. Similar growth rate was demonstrated over a longer period of time in the UK, pre-globalisation. Foreign Direct Investment The agricultural sector in several countries has also developed owing to a sharp hike in FDI. There are a number of multinational corporations (MNCs) that invest heavily in agricultural sectors of the developed and less developed nations. The formerly destitute peasants in such countries are currently able to avail the advantage of basic life amenities. Increasing FDIs have also led to infrastructural development of roads, power and water supply, establishment of ancillary industries and increase in a country’s GDP, thereby generating greater employment opportunities (Ekholm, Forslid and Markusen, 2007). There is greater competition in the market and the local manufacturers, farmers and suppliers can easily access the international markets. Inefficiencies related to the supply chain in these countries have been reduced and the issue of intermediaries is dealt with. Local enterprises have benefited as they have been provided with managerial, technical and administrative expertise. The quality of produce demanded by the international customers is often not provided by the local manufacturers and foreign investment helps in ensuring export quality produce (Haskel, Pereira and Slaughter, 2007). Globalisation in Retail Due to liberalisation, there is free entry of low cost retailers in the market that benefits the consumers by way of lowering the market price. Joint ventures between the firms have eased capital constraints of the existing organized retailers, thereby controlling inflation, as the retailers are able to improve their networks with producers and offer products at competitive prices. Nonetheless, globalisation in the wealthy countries has also adversely affected a class of people such as, the small retailers. In most cases, they were unable to consolidate their position and put up a strong fight in the face of big companies like, Wal-Mart (Wrigley, Coe and Currah, 2005). The large scale retailers benefited considerably from globalisation as for the first time in 100 years, the power play had reversed. The retailers were initially dependant on the manufacturers; but in the present changed scenario, armed with huge investments from the bigger firms, they had a better bargaining power with manufacturers and dictated the terms of agreement. So, the retailers desired to source their products globally, implying that they wanted to move the production offshore. Consequently, the local manufacturers and small scale producers suffered. The cottage industries were almost wiped out and a majority of intermediaries were shut down. Globalisation was brought about by worldwide industrialisation that finds its roots in the UK. Hence, there was a need for talented and skilled manpower and the semi-skilled and unskilled labour force was rendered jobless. The global retailers often resorted to predatory pricing, which in turn jeopardised the consumer’s value for money. Even so, retailers operating in the wealthy nations often siphon off the profits earned by their divisions in developing companies. Thus, globalization affects the internationally based retailers in a positive manner. The bargaining power of such retailers increases, which results in instances of exploitation, as they tend to dictate the procurement prices. Cheap imports of the staples from less developed countries entail unfair economic competition (Mukherjee and Patel, 2005). Globalisation for women Globalization has affected various groups of women in different ways. It has helped women labour force to mobilize and has assisted the development of new standards for better treatment of women. Historically, women have been repressed by the male counterpart unfairly and discriminated under a patriarchal society. The division of labour was also inappropriate and was skewed. Globalisation has had liberating consequences on the condition of women all over the world. While in many countries women remain at a significant disadvantage, the precise role of globalization in causing or perpetuating the same is in dispute. Women provide cheap labour and accept wages that the male workforce would refuse, which is why several organisations prefer to hire women labour. Nevertheless, compared to the number of males in managerial positions, the female workforce dominates the positions of operators, labourers and production workers. Multinational corporations (MNCs) are nowadays aiming to equalise the disproportionate male-female ratio in boardrooms. Hiring more female employees has proved more profitable for an organisation. Almost three quarters of the residents in Europe accept the need for laws in order to ensure gender balanced boardrooms. The European justice commissioner, Viviane Redding, has proposed mandatory quotas to the effect (Watson, 2012). Although globalisation has rendered women adequately competent to compete at equal levels with the male counterparts, male female equity is yet to be ensured. Hence, in order to reduce the growing chasm between the two, greater diffusion of knowledge is imperative along with strict laws to ensure the same. In the wealthy nations, women status is more developed than that in the developing or less developed ones. Women have greater freedom in choosing their life partner and deciding upon their reproductive rights. Women in the developed nations have greater rights to decide whether or not to stay with an abusive or unsupportive life partner. Globalisation in Culture There has been a diffusion of different cultures owing to globalisation. Greater dissemination of knowledge has occurred, leading to up-gradation in mindset of the general population of a nation. Such developments have brought about a sharp reduction in the count of female foeticide. Female births are no more despised and considered a burden. People in the wealthy nations have started to accept other cultures and traditions and have incorporated numerous changes in the cultural practices. For example, inter-cultural marriages are presently more common than before. The cultural transmission and transfusion has been a two-way process. The films made in Hollywood are seen to be appreciated in most Asian countries as is ethnic cuisine in the west. There is diffusion in case of literature, music, clothing, electronics, technologies, accessories and many others. Globalisation fosters cultural development owing to mixing of the diverse world cultures. The differentiation and condensation of cultures has highlighted on uniqueness of the various cultures and the interaction between boundaries results in pluralisation. In his article, Huntington (2007) discussed that the fundamental conflict would arise due to cultural differences and not any political or ideological ones. Regardless of such conflicts, the nation states would still remain among the most powerful participants of world politics. The cultural differences between nations, if not handled in a matured manner, can lead to serious issues. With the advent of globalisation, the world has witnessed an Americanised culture. Converging tastes and preferences of the consumers worldwide with the American model as the blueprint is a major effect of globalisation. Conclusion Globalisation is considered a necessary evil and is an ongoing syndrome. It does not only connect the interplays between regional, local and national scales, but also considers the flow of wealth, interconnectedness between nations and uneven development among the various countries. The key players that have accelerated globalization were technical innovations, transnational corporations and the governments of various countries. Globalization has raised the standards of living in different nations and has also been instrumental in the transfer of knowledge and diffusion of culture. Additionally, globalisation has monumental effects on the socio-political-economic and cultural realms of life. It has challenged the unique characteristics of every nation by attacking the social structures, diminishing the role of state and fostering diversity in the global society. Even so, it is very difficult to gauge the risks and opportunities present in the globalisation process and hence, each nation should have a structured approach towards the same. Reference List Aerthayil, M., 2011. Impact of Globalisation on the Poor in USA. Mainstream Weekly, 49(24). Buruma, I., 2013. Globalisation is turning the west against its elites. [online] Available at: [Accessed 7 August 2014]. Butler, T. and Lees, L., 2006. Super‐gentrification in Barnsbury, London: globalization and gentrifying global elites at the neighbourhood level. 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