Impact of Globalization on Sustainable Development - Literature review Example

Globalization and Sustainable Development Name: Darshil Khimasiya Student ID: 15770343 Course: Formal Exchange Student Module: EIB200 Lecturer: Endah Lecture Time: Tuesday 6.00PM Question Approached: NO 1. Globalization and Sustainable Development Introduction Globalization refers to the emergence of a global society in which political, cultural and economic events are loosely interlinked. This means that events happening in one part of the world rapidly become relevant to the people in other parts of the world. (Shadlen, 2005; 750-775). Globalization is a result of rapid advances in communication, transportation and information technologies as well as cultural integration between individuals, countries and businesses across the globe. The concept of globalization is also used to describe the expansion and growth of multinational corporations, as well as, transnational organizations. Although people across the world still live as citizens of their own countries, they are in constant communication and engaged with people from other countries, technologically, culturally and psychologically. This is because of the advances in transport and communication technologies which have made it possible for people in far way countries to communicate with each other in real time. Rapid technological advances have made it possible for events taking place in other countries to bring immediate impact on the local people and have hence blurred the traditional boundaries of interaction and communication (Shadlen, 2005; 750-775). For instance, globalization has enabled the volume of world exports to rise steadily since 1970s. In 2001, the value of international trade accounted for 25% of the value of goods and services produced in the world. One of the most important aspects of globalization is the dramatic increase in the volume capital movement between countries and this occurs in the form of currencies, stocks and bonds. Foreign direct investment is an important business phenomenon that has been enhanced by globalizations. Despite the increasing level of disparities between nations, it must be recognized hat the overall wealth of nations has increased enormously as a result of globalization and because of the more open trade that it has brought about. Impact of Globalization on Sustainable Development According to Renard, 2003; 87-91) globalization is characterised by four major trends: increased flow of persons and commodities between countries; diversification and expansion of economic activities; development of knowledge, relationships, communications and networks and increasing cultural and economic disparities between countries. These trends need to be counter-balanced by sustainable development, which focuses on improving the welfare of human beings. According to Byrne and Yun (1999; 493-500) sustainable development is the capacity of human societies to meet their fundamental needs including accommodation, food, water, satisfactory healthy conditions, social cohesion, participation in decision making and social and spiritual expression. In a nutshell, sustainable development is all about improving the quality of life. From this definition, sustainable development entails adaptation of lifestyles and technologies to the social, economic and environmental potentials of different parts of the world and establishing systems that are compatible with the biosphere. To a great extent, globalization has made sustainable development a multifaceted phenomenon. Sustainable development seeks to attain balance between economic, ecological and social spheres while taking into account the consideration for political participation and ethical responsibility. In addition, sustainable development calls for consistent re-evaluation of people’s basic lifestyles and principles and for the ways in which communities function particularly with regard to production and consumption. Grais, Ellis and Glass (2003; 1065-1073) have claimed that three important institutions have played a critical role in the development of globalization. These institutions are: the International Monetary Fund (IMF); the World Bank (WB); and the World Trade Organization (WTO). The institutions were formed after the Second World War to set up new policies to govern the global economy. The IMF was established with the primary purpose of stabilising currency markets while the WB was formed to provide funds for reconstructing economies that had been destroyed during the war. On the other hand, the world trade organization was formed to oversee policies in international trade practices. Almost all countries in the world are members of the three institutions above. The institutions have in various capacities helped address economic and technological gaps between countries by enhancing resource and knowledge transfer, a process which is an important aspect of sustainable development. The rapid rise of globalization is attributed to improvements in communication and information technologies. Innovations in information and communications technologies have made it possible for currencies, stocks and bonds to be transacted across the world at any time. In 1930, a one-minute call from Britain to Canada cost an equivalent of today’s US$100. This made instant communication very expensive for most people and limited transnational communications to government agencies and business organization. In contrast, rapid developments in information and communication technology have reduced the costs of communications such that it costs almost nothing to communicate. This is because of the use of more innovative forms of communications such as cell phones and the internet (Shadlen, 2005; 750-775). Improvements in the field of transportation are also a major force behind the rise of globalization. In fact, 1the world has been reduced into a global village due to quick delivery by jet planes. Improved infrastructure has made it possible for large business organizations to expand their businesses to other countries and take advantage of market efficiencies and cheap production costs. Advances in technology have considerably lowered the cost of processing business transactions by more than 90%. Using networked computers in banking business costs little very little compared to the traditional methods (Byrne & Yun, 1999; 493-500). Moreover, improvements in communication have made it possible for people to remain in constant communication regardless of the physical distance between them Grais, Ellis and Glass (2003; 1065-1073) have explained that globalization has the ability to instantly unite communities around the world. For instance, use of communication satellites can enhance worldwide broadcast of events happening in far away places. These events include national disasters, wars and sports In another example, Cisco, subcontracts most of its work to other companies, some of which are distributed across the world. The company relies on the internet to facilitate bidding of subcontracts. Moreover, the company conducts its transactions with suppliers and customers via the internet. Internet use has remarkably reduced Cisco’s cost of doing business and has resulted in increased revenue for the company. Significant reductions in the cost of business transactions have paved way for big companies to invest in foreign markets. For instance 60 per cent of vehicles sold by Toyota Corporation in North America are manufactured in the United States. This has greatly reduced Toyota’s distribution costs. In addition to physical goods, the globalization process has made it possible for knowledge to be disseminated over distances. Improvements in transportation have made it easy for people to migrate to other countries to look for jobs and good living standards. As such migration has become an important aspect of globalization. Migration has contributed to economic growth f some countries. For instance, remittances sent by citizens of El Salvador residing in the US account for 13% of El Salvador’s national income. This contribution is greater than what grants and foreign investments contribute to the country’s foreign income (Ghemawat, 2001; 137-147). Challenges and Costs of Globalization: Negative Effects on Sustainable Development There are numerous social and economic costs associated with the process of globalization. In a number of ways, globalization has made it easier for economically and politically powerful countries to accumulate a lot of wealth and resources at the expense of other countries. This has forced poor countries to compete desperately with the developed countries (Renard, 2003; 87-91). An important effect of globalization on sustainable development is that the process has considerably increased the rate at which non-renewable resources are depleted besides contributing to increased levels of environmental pollution and global warming. Because of globalization, countries have to contend with the threat of reductions in industrial production. This is because globalization has made it possible for firms to outsource production and labour from other countries to the extent of threatening environmental standards (Sachs & Warner, 2001; 106-118). Under-developed countries will increasingly have to reckon with the challenge of brain drain. Brain drain, which is a major problem in less developed countries, arises from massive relocation of skilled workers to other countries in search of greener pastures. Because of increased advances in transport and communication, it is difficult for countries to prevent their skilled workers from relocating to other countries where wages are high. Although governments and individuals do not oppose the process of globalization, it is strongly felt that certain aspects of it are undesired and require immediate redress. For instance, there are debates on how countries should implement policies and rules to govern the global economy. There are debates whether barriers to free trade such as tariffs should be lifted. Supporters of this debate argue that lifting barriers to trade will be beneficial in that it will allow capital and other resources to be distributed more efficiently between industries and countries and therefore give people increased freedom of choice (Ghemawat, 2001; 137-147). On the other hand, proponents view neoliberal trade policies as contributing to increased levels of poverty, social conflicts, environmental damage and inequality between countries. It has for instance been argued that developed countries succeeded because of tariffs and protectionist measures and not because of free trade. Therefore, lifting barriers to trade will be crippling to the economic prospects of less developed countries (Grais, Ellis & Glass, 2003; 1065-1073). Concerns have been raised that integration of global financial systems, which is a product of globalization allows for uncontrolled flow of money between investments and countries, which can lead into economic bubbles. In many cases, economic bubbles are characterised by booming financial markets and increasing property values. But if a country’s economic system cannot sustain such a high expectation, the bubbles burst. Naturally, investors will respond to the bursting of the bubble by pulling their money out of the economy. Occasional bursting of economic bubbles has devastated financial markets like the 2008 global financial crisis whose effects can still be felt. Concerning the issue of inequality, there are serious gaps between the economic achievements in countries. There are disparities in living standards and in the abilities of countries to participate in implementing policies for global economic and environmental issues. These issues are an important political problem in the wake of globalization. (Gibson, Ostrom & Ahn (2000; 217-239) have noted that because of economic and technological gaps between nations, some countries lack the capacity to function competently in the globalised economic and political systems. It is for this reason that the only viable economic activities some countries are related to criminal behaviours like smuggling, extortion and drug trafficking. Globalization has not been able to address the issue of democratic governance or to align governance with economic systems. States that have failed to establish democratic institutions have ended up being safe havens for terrorists and foreign criminals who use them to perpetrate activities that are harmful to human life. Global warming is an important issue that is related to globalizations. Globalization is caused by burning of fossil fuels, which is a serious problem among the developed countries. The other cause of global warming is the destruction of rain forests and this is prevalent in the developing world. The gradual melting of the world’s glaciers and ice sheets which is a direct result of global warming may cause weather patterns to change (Sachs & Warner, 2001; 106- 118). Environmental experts have predicted that if the problem of global warming is not reversed, it may have deleterious impacts on ecology and hence people’s lives. As such, globalization may have adverse impacts on sustainable development. Benefits of Globalization Globalization has led to significant improvement in the economic and social statuses of many countries and individuals across the globe. Frequent business transactions between rich and poor countries have resulted in positive outcomes for many countries (Gibson, Ostrom & Ahn, 2000; 217-239). By enhancing democratization of financial and trade practices, globalization has indeed become a liberating force for many of the world’s poor countries. In his article, Craig and Porter (2002; 53- 69) have underscored the relevance of globalization in today’s world by asserting that the process helps break the regressive taboos that have traditionally discriminated against people on the basis of their ethnic, racial, gender and education backgrounds. Craig and Porter (2002; 53- 69) have further explained that globalization has proved to be the most effective solution for fundamental political, religious and philosophical ideologies which have for a long-time oppressed millions of people across countries. As an example, globalization has helped address the plight of women in communities that were conservative in the past. Education of women has come about as an empowerment tool which has enabled them seek careers in positions that were traditionally reserved for men and to fight for the rights of other women and marginalized people. Moreover, the process of globalization has made it easy for companies to outsource skilled personnel from other countries. The process has also created opportunities for large corporations to establish production facilities in other countries where production costs favorable. According to Sachs and Warner (2001; 106-118) the ability of countries and organizations to utilize capital is a result of the development of new market opportunities, which is the most vital effect of globalization. On the social perspective, globalization has helped reduce incidents of child labor. This is because of the improvements in incomes for countries and households. In addition, issues related to ethnic tension and diversity have become easy to resolve because of improved communication. Craig and Porter (2002; 53-69) have asserted that that international corporations and developed countries will continue to be the greatest beneficiaries of globalization. This is because the two have more resources and the influence necessary to take advantage of new investment opportunities in other countries. Similarly, multinational organizations have the capacity to outsource employees, assets and experienced workers through their global franchises. A good example is the American soft drink giant Coca Cola. The multinational company has successfully taken advantage of opportunities created by improved transport and communication to penetrate markets in all parts of the world including the scorching deserts of Africa and the remote villages South East Asia (Gibson, Ostrom & Ahn, 2000; 217-239). Some countries like India and China, which were a few decades isolated and poor have reaped immense benefits by making themselves part of the global community. Conclusion In conclusion, globalization has helped bring about the quintessential improvement in global economic, political and cultural systems. Globalization has accelerated the development of communication between people in different countries, organizations and companies. It has facilitated rapid movement of information and commodities. In today’s world of politics and economic systems, globalization has become a shorthand way of describing the connectedness and spread of production and technologies across the globe (Gibson, Ostrom & Ahn, 2000; 217- 239). The spread has involved the overlapping of cultural and economic activities. References Byrne, J. & Yun, S.-J. 1999. Efficient Global Warming: Contradictions in Liberal Democratic Responses to Global Environmental Problems. Bulletin of Science, Technology and Society. 19(6): 493-500. Craig, D and Porter D. 2002. Poverty Reduction Strategy Papers: A New Convergence. World Development. 31(1):53-69. Ghemawat, P. 2001. “Distance Still Matters: The Hard Reality of Global Expansion”. Harvard Business Review, September, 137–47. Gibson, C.C., Ostrom, E. & Ahn, T.K. 2000. The concept of scale and the human dimensions of global change: a survey. Ecological Economics, 32(2): 217-239. Grais RF, Ellis JH, Glass G. 2003. Assessing the impact of airline travel on the geographic spread of pandemic influenza. European Journal of Epidemiology, 18:1065-72. Renard, Marie-Christine. 2003. Fair trade: quality, market and conventions. Journal of Rural Studies, 19(1): 87-96. Sachs, Jeffrey, and Andrew Warner. 2001. “Economic Reform and the Process of Global Integration,” Brookings Papers on Economic Activity, 1: 106-118. Shadlen, K. 2005. Exchanging development for market access? Deep integration and industrial policy under multilateral and regional-bilateral trade agreements. Review of International Political Economy. 12(5):750-75. Read More