Consequences of Globalisation - Essay Example

Consequences of Globalisation In the past, it might have been possible to create and manage a company which had all inputs as well as outputs placed in one region but it is certainly not the case today (Edwards & Kuruvilla, 2005). As we have a world where competition becomes fierce, a company may have its main offices in London, the production facility in South Korea, the research department in France and the support centre in India (Friedman, 2006). This is simply one impact of the forces of globalisation which have created different perspectives on how people view globalisation with regard to its political, social and economic impact. In the simplest terms individuals who work with the forces of globalisation are seeking justice and fair play for all parties. However, the individual’s idea of justice may be different as there may be differences in the notion of fair play (Baldwin, 2007). The business objective of globalisation and the use of modern techniques like outsourcing of production, using cheaper locations for development work and the use of low cost labour are intrinsically linked with the need for getting the maximum value from human assets that are located across the world. They may be working in the same company but their salaries, benefits and even employment relationship may be based on the location where they conduct their employment (Ozbilgin, 2005). This can easily be termed as a new means of exploiting the workforce and the clash between those who seek justice for such workers and those who are used to exploiting cheaper labour resources in the name of globalisation is quite obvious (Faulkner, D. 2002). The needs of the corporate world and the humanistic ideals suggested by those who uphold the idea of international human development appear to be diametrically opposed. The primary basis for this clash comes from the difference in the standards of living that people around the world may be used to (Block, 1999). In many developed western democracies, even manual labour in general may have a much a higher standard of living than office workers in developing countries. For instance, individuals in Britain may place great value on their leisure time and they have historically had a relatively high standard of life after the Second World War. On the other hand, the majority of workers in China have had to live in situations which would be described as living in poverty in the UK (Clark, 1996). This difference is important since globalisation has not improved the lives of many individuals by supporting and aiding sustained national development (Kidger, 1991). However, such situations may not remain the same for a long time since even in China, the idea of living with less and working for the country may be going out of fashion. As people move from the rural areas to urban centres to find jobs in factories, population development is taking shape and the Chinese are getting used to having more than what their parents could afford in the past. Bardhan (2006) describes a 20 year study which shows that from 1981 and 2001 the percentage of Chinese individuals who were living on less than one American dollar per day has decreased from nearly eighty percent of the population to less than thirty percent of the people. Globalisation certainly played a part in this and the development which has been experienced by China as the manufacturing centre of the world certainly helped the Chinese gain a better standard of life. Even though the development took time to happen, it is certainly happening now and is likely to continue onwards. Undoubtedly, China placed some very strict controls on how development was supposed to take place and the sacrifices of the Chinese people have paid off for them. From a control economy, China has moved towards a capitalist structure not only in terms of economics and business, but also on the grounds of philosophy and political ideology. However, as the example of China shows us, controlling globalisation is more beneficial than simply opening a country for foreign investment and foreign companies to do as they please (Lachapelle, 2005). In fact, it can easily be said that it is the approach to globalisation which makes it useful or harmful for human development. Globalisation and the rapid development which comes along with the move towards globalisation are directly connected with the needs of the country which seeks sustainable development of their human resources and their economies. There are good examples of some countries that have experiences financial booms by taking a liberal approach to the financial markets such as India and China but others have experienced rapid inflation, erosion of wealth and have had to resort to international assistance and financial grants (Craig, 2000). Globalisation may also mean that developing countries may become stagnant at a certain level of technology and production output from which they may not be able to move forward. As developing nations, they may lack infrastructure, the technical knowhow, the production tools and even the highly skilled technical labour which may be needed and required to produce goods of a certain nature (Bardhan, 2006). Industrialised nations like America or the majority of the nations comprising the EU have gotten used to a certain level of quality production that developing nations may not be able to create for certain specialised products that are wanted by the rest of the world (Wannacott, 1996). By definition, a developing country would have a comparatively low standard of living, an underdeveloped base for its industries and lower scores on the scale of human development. In comparison, developed nations would have modern industrial setups that support their infrastructures and they would be less dependent on the basic economic activities such as agriculture or resource exploitation through mining. The economy of a developed nation is therefore based on continuous, self generated wealth which comes from the services or the manufacturing sectors (Sell, 2000). Many developing nations in Asia, Africa and Latin America started out with no debts but soon became some of the most indebted countries in the world since the development they planned could not be sustained. Before a country moves towards being a part of the global economy, it should carefully examine what capital controls are necessary for the healthy development of its systems. A mixed economic approach to capitalism and globalisation may be important when a nation seeks sustained human development (Feldman, 2005). In fact, Chong (2006) strongly recommends using political tools to keep a mixed approach towards globalisation such as the one used by Singapore which accepts and encourages foreign investment in terms of business but maintains monetary controls and even a communist outlook for human development. Globalisation has helped many countries in Asia but there were always other factors involved in the equation which helped the process. Robinson (2005) notes that these factors include private equity and venture capital funding which only come about when capital controls are relaxed enough to encourage investment in ventures that might be considered risky. Socially, globalisation brings about its own culture as suggested by Friedman (2006) who describes how call centres in India have made English the norm of business language in India rather than the exception. In the future, social changes could become more important than economic changes as a global culture could develop with time. However, such a state may still be quite far off in since societal norms and even personal cultural baggage has a greater influence in many regions of the world (Laurent, 1986). A simple comparison between China and Britain shows us that even on the organisational level; China has only recently developed a culture of giving increased importance to the human resource functions of a company (Friedman, 2006). On the other hand, countries in the west have focused on the value of human resources for many years as the most important asset of a company. With the development of a global culture, social orders might change to make businesses into institutes and business individuals into celebrities. In fact, who can say that Sir Richard Branson is not a celebrity in every meaning or the term? However, globalisation can only help development if there a complete set of policies which are used along with the guides to globalisation. The policies are not limited to the neo-liberal agenda of creating a free market of goods and service since other policies such as international fair trade, redirection of government spending towards human development plans, poverty alleviation, developing healthcare services, improving general education, broadening the tax base, privatization of nationally held companies as well as assisting donor agencies become important to gain the full benefits of globalisation (Williamson, 2000). A focus on the environment and the development of a green economy is also something the supporters of globalisation have to focus on since that too is an important consideration for developing countries (Feldman, 2005). Therefore, simply jumping into globalisation and hoping to gain developmental benefits cannot be the best choice for any country since it would be an unjustifiable move. As discussed by De Angelis (1998) it may even be seen as economic suicide if other problems within the economy are not fixed before a country starts looking for foreign investors. If used judiciously the approach described above would take care of the many objections to globalisation that have been raised by De Angelis (1996). No country in the world can claim to have escaped the rising levels of globalisation and even a country which is supposed to be as powerful and rich as America is facing an ever widening divide between the very rich and the very poor (Baldwin, 2006). Globalisation and the process of globalisation will create winners and losers but those who can understand the process, accept the changes which are coming and then effectively deal with the coming changes are far more likely to succeed than those who do not. Word Count: 2,018 Works Cited Baldwin, T. 2007, Numbers add up for Democrats who want to sink global trade deals, The Times, March 7. Bardhan, P. 2006, ‘Does Globalization Help OR Hurt the Worlds Poor?’, Scientific American, vol. 294, no. 4, pp. 84-91. Block, F. 1999, ‘New Thinking About Capitalism’, Dollars & Sense, vol. 12, no. 226, pp 19-25. Chong, T. 2006, ‘Embodying Societys Best’, Journal of Contemporary Asia, vol. 36, no. 3, p. 283-304. Clark, T. 1996, European Human Resource Management, Blackwell Publishing. Craig, B. 2000, ‘Aid, Policies and Growth’, American Economic Review, vol. 90, no.9, p. 847-68. De Angelis, M. 1996, ‘The Autonomy of the Economy and Globalization’. [Online] Available at: http://libcom.org/library/autonomy-economy-globalisation-massimo-de-angelo De Angelis, M. 1998, ‘Towards a theory of Globalization as Strategy’, [Online] Available at: http://homepages.uel.ac.uk/M.DeAngelis/EAEPE98.htm Edwards, T. and Kuruvilla, S. 2005, ‘International HRM: national business systems, organizational politics and the international division of labour in MNCs’, International Journal of Human Resource Management, vol. 16, no. 1, pp1-21. Faulkner, D, 2002. ‘International Mergers and acquisitions in the UK 1985–1994: A Comparison of National HRM Practices’, International Journal of Human Resource Management, vol. 13, no.1, pp106–22. Feldman, P. 2005, ‘Yes, Jonathon Porritt – capitalism is the problem’, [Online] Available at: http://www.aworldtowin.net/reviews/Porritt.html Friedman, T. 2006, The World is Flat, Farrar, Straus and Giroux. Kidger, P. 1991, ‘The emergence of international human resource management’, International Journal of Human Resource Management, vol. 2, no. 2, pp149-163. Lachapelle, E. 2005, ‘Morality, Ethics, and Globalization’, Perspectives on Global Development & Technology, vol. 4, no. 4, p. 603-644. Laurent, A. 1986, ‘The Cross-Cultural Puzzle of International Human Resource Management’, Human Resource Management, vol. 25, no. 1, pp 91-102. Robinson, W. 2005, ‘Global Capitalism: The New Transnationalism and the Folly of Conventional Thinking.’ Science & Society, vol. 69 no. 3, p. 316-328. Sell, S. 2000, ‘Big business and the new trade agreements’, in Political Economy and the Changing Global Order, Stubbs and Underhill (eds.), Oxford University Press. Wannacott, R. 1996, ‘Free-trade agreements: for better or worse?’ American Economic Review, vol. 86, no. 2, pp. 62-66. Williamson, J. 2000, ‘What Should the World Bank Think About the Washington Consensus?’, World Bank Research Observer, vol. 15, no. 2, pp. 251-264. Read More