Globalisation's Impact - Research Paper Example

Globalization has impacted the world economy since the 1980s and ever since it has been an issue with contrasting views. Globalization has changed the way people communicate, the way they live and the way they work. It has changed the way businesses function and crossed national borders. Cultures have mingled but with positive and negative outcomes. Globalization has changed the way people live, think and act. The livelihood and the modes of existence have changed while also impacting the degree of control that can be exercised politically. It has made the rich richer but has adversely affected the poor. The gap between the rich and the poor has widened. It is definitely a novel way of thinking about the world but it has shown both positive and negative impact. There has been resistance to the global capitalism because the process has ignored the transition that the world is going through. While it has immense benefits, the risks are equally evident but globalization is an irreversible process. It is hence essential to understand how exactly globalization has impacted the globe. No commonly accepted definition has yet emerged of ‘globalization’ although it generally implies the process of consolidation of the world as one society. The process is supposed to give rise to a global consciousness and refers to the expansion of global linkages. Since it involves the organization of social life on a global scale it is complex as opinions differ on the issue. Hence various interpretations and definitions have emerged of globalization. According to the well known economist, Friedman, globalization is the integration of markets, nation-states and technologies which has enabled the individuals, the organizations and the nations to reach round the world faster, cheaper and deeper than before.1 Globalization has caused the spread of free-market capitalism to virtually every country of the world. According to Robertson however, globalization has led to interdependence and compression of the world. Globalization has led to overcoming of the geographical barriers and cross cultural interactions have been positive. People all over the globe have been accepting the values and technologies of other nations and incorporating in their daily lives. People have become easily influenced by other people and their food habits. All these changes have re-shaped the human activities. Globalization is a continuous process but has given rise to numerous debates on various issues including the interpretation of the term ‘globalization’. While some consider it to be an irreversible process that has integrated the world markets and virtually shrunk the world, others do not consider it to be an irreversible process but an ideological project of economic liberalization that has created intense market forces in which the nations now have to compete.2 Debates ensue even on the process of globalization. While some think it has ushered in a new era with new processes and introduced the ‘global age’ where people are influenced by the changing values and technology, others contend there is nothing new about globalization. It is the age-old capitalism which is actually fragmenting the world into civilization blocs. Whether globalization has been good or bad for the people, the nations and the world at large is another point that has given rise to immense debate. Some consider it as a new birth of freedom which has broken down barriers to trade providing the countries with more and better opportunities. It has changed the way people live and they are willing to accept new products and ideas. They consider this to be a new world order through political cooperation which has empowered more and more people. On the other hand are people who challenge the consequences of globalization as the sovereignty and identity of countries is at risk. It is considered dangerous as disparities among people have increased and the environment has deteriorated. Further debates explain globalization as either hard or soft. While some consider it to be the material interest of the multinationals who exploit technologies and set the trend to suit their convenience, while others think it is rooted in the expanding consciousness of living together on one planet. It has led to global interaction thereby enabling to overcome the constraints of powerful players. Again, some argue that globalization constraints states as in order to protect domestic companies they lay down rules. It makes the welfare states less competitive in the global market as global norms and institutions have become more powerful. Others differ as they believe that globalization has given more power in the hands of the states as they can now create conditions of growth and compensate for the effects of economic cooperation. Even as far as culture is concerned some feel it has led to cultural homogeneity others contend that such interaction and integration is likely to provoke a defense of tradition. The American symbols are spreading all over the world and the world passively accepts whatever it has to sell. The rich are getting richer…this issue has been studied and it has been found that there are three different issues – cross country inequality, within-country inequality and global inequality.3 While cross-country inequality has increased but this does not mean that inequality within a country has increased. While average income in the advanced countries have risen the average income in the sub-Saharan Africa has fallen but inequality within the country has been stable in many countries. Global inequality compares income between persons and not between countries and it has been found that average global citizen has become richer. World income distribution has become equal which has largely been due to the growth of countries like India, China and Vietnam. The three different forms of income distribution are used for different purposes. A measure of global inequality denotes that human welfare has increased but to assess policies to reduce poverty within a country, the nation has to take into account the living standards and the income within that country. The cross country inequality indicates whether governments in poorer countries are adopting policies that would lead to enhanced income at par with the other nations. Income is just one measure of well-being as the United Nations suggests other factors like the per capita income, longevity and literacy to determine the well-being of a state. The poorer countries have gained in longevity than the richer countries and hence extra income is added because of the extra years added to the life of an individual. Hence concentration should be on poverty and not inequality of incomes. Economic progress improves the lives of everyone. Inequality in income may not always be bad for the society although opinions differ as income disparity has been considered to be the major failings of capitalism and the markets. Concentration of income lies with the ten percent of the world’s population and they are interested in preserving their own wealth and power. What should matter the most is the income inequality within a country and that is governed by a complex set of forces – historical factors, cultural norms, and other forces like trade and technology. Local policies are also important as many western countries use redistributive policies to achieve equal distribution of income. Even though many people believe that globalization has widened the gap between the rich and the poor and hence increased poverty, proving this is a complex task for several reasons. Globalization has led to increased borrowing between nations, competition among workers and foreign investment, both inward and outward. Each of these variables can have an impact on the economy and hence affect the poverty level. This implies that directly globalization cannot be said to cause poverty. Poverty can be measured in different ways by different countries and hence there are no laid down rules or structure to measure poverty. While come consider it to be a measure of well-being others relate it to the country’s consumption capacity. Globalization has been proceeding since the 1980s and according to a recent Global Poverty Report the proportion of the world population living in poverty has declined from 29% in 1988 to 26% in 1998.4 Many countries have also registered improvement over the decades. Countries that have become integrated into world economy have made progress which is contradictory if it is to be believed that globalization increases poverty. Sub-Saharan Africa remained isolated and has not made any progress. These may nit be indicators of poverty caused due to globalization but it also shows that various forces are at play which affect the overall well-being of a state. Many countries have had to borrow funds from the World Bank and the IMF and to obtain these loans they had to agree to certain conditions laid down by these institutions. These may cause hardship to the country’s people and these may be classified as globalization leading to poverty. It is al a matter of how one interprets and relates poverty but the fact is that the rich have not become richer because the poor have become poorer. Globalization has affected the lives of the poor but has also opened up opportunities that countries can take advantage of depending upon their domestic political and economic institutions. The reduction in poverty in India and China and the stable poverty condition in Africa are both unrelated and possibly not an impact of globalization.5 It could be due to the changes in the micro-economic factors within the country and hence the general statements are those of correlation. In the case of self-employed and the poor artisans, they face many constraints but again these largely depend on the domestic policies. Many countries have a protectionist attitude which adversely affects the small producers involved in exports. Small farmers from the developing countries have been shut out from exports as the developed nations have imposed safety and sanitary regulations. But this provides an opportunity for rich-country transnational companies in marketing the products of poor countries as they are better equipped to handle the regulatory machinery. Globalization has given rise to multinational marketing chains which the small traders and farmers from poor countries can take advantage of. This requires coordinated attempts on the part of the developing countries. The competition among multinationals in international markets has increased and a protectionist attitude closes a nation from growth opportunities. Trade liberalization can increase the mean incomes of the poor but also heighten their vulnerability. Even though the workers from the poor country have comparative advantage when the products are labor intensive but this too has been combated when other poorer countries import from such developing countries. This further pushes down the wages in the first set of poor countries. Hence trade liberalization has actually adversely impacted the small workers in the poor countries but these can be tackled with the right policies. The rich countries have special programs in providing safety and security to the displaced workers which is not found in the developing countries. Globalization has given rise to hostility and anxiety as the workers in poor countries suffer from insecurity. To benefit in the long run from globalization, domestic policies have to be amended as opportunities are enormous even for the small farmers and the traders. This requires political leadership and participation. Instead of agitating against institutions like the WTO the nations should concentrate on opening their economies and not allow domestic vested interests to rule. Poverty can be measured in terms of the percentage of the total population or as an absolute number of the poor. The share of population of poverty has declined in all the developing regions except the Sub-Saharan Africa, Central Asia and Eastern Europe.6 Infant mortality rates have gone down and the standard of living has improved. Those nations that have maintained a protectionist attitude and have been stringent on inward foreign investment have suffered or experienced stagnancy but poverty is affected by many factors other than growth. It is generally accepted that trade liberalization and investment has resulted in poverty reduction and growth of the economy which translates into overall reduction in global inequality. Those nations that have not registered growth are due to their inability to integrate with the world market and economy although economists argue that there is no systematic relationship between globalization and inequality. Globalization is opposed by many people because it is believed to be another form of capitalism that polarizes the world and leads to greater inequality and unjust development.7 They feel it has led to deterioration in the environment and is not subject to domestic control. Another reason why globalization is opposed is that it is supposed to undermine cultural diversity. Western ideas are falsely established as universal and is said to have gives rise to consumerist culture like McDonaldization or Americanization. What is being overlooked by the opponents is that globalization promotes diversity as people interact across the border and there is mixing of cultures. Culture may originate in a different sphere and flow in a different direction but is accepted by all. Ideas and images are shared and have given rise to mixed reaction and responses. Globalization has also enabled accepting certain forms universally but with local adaptation, also known as glocalization. Another issue that is often debated upon is whether globalization can be controlled. Opponents of neo-liberalism who want global justice believe that this process is irreversible and out of control because technological innovation is unpredictable. Most importantly, globalization is the result of interplay of several factors and none of them exert dominant influence. They also contend that there is no single set of rules to regulate transnational behavior. Besides, the old regulatory bodies are not competent to control the new set of actions and processes. Thus some institutions are being formed to manage and regulate globalization and its processes, actions and problems. Global governance is being framed but even this is being opposed by many. Those who believe in the traditional democratic values and state interests are not inclined towards global governance. Works Cited Bardhan, P. (2004). The Impact of Globalization on the Poor. Available from: http://ipl.econ.duke.edu/bread/papers/policy/p003.pdf [accessed 07 July 2008] Lechner, F. (2001). What is Globalization? Available from: http://www.sociology.emory.edu/globalization/issues01.html [accessed 07 July 2008] Lechner, F. (2001a). Globalization Debates. Available from: http://www.sociology.emory.edu/globalization/debates.html [accessed 07 July 2008] Loungani, P. (2003). Inequality. Back to Basics. Available from: http://www.imf.org/external/pubs/ft/fandd/2003/09/pdf/basics.pdf [accessed 07 July 2008] Lechner, F. (2001b). Does Globalization cause poverty? Available from: http://www.sociology.emory.edu/globalization/issues03.html [accessed 07 July 2008] Lechner, F. (2001c). Globalization Issues. Available from: http://www.sociology.emory.edu/globalization/issues.html [accessed 07 July 2008] World Bank (2000). Poverty in the Age of Globalization. Available from: http://www1.worldbank.org/economicpolicy/globalization/documents/povertyglobalization.pdf [accessed 07 July 2008] Read More