Globalisation - a Force Exacerbating Inequalities or a Bringing Economic Opportunities - Essay Example

Is Globalisation Better Conceived as a Force That Exacerbates Inequalities or a Force That Closes the Income gap by Bringing Economic Opportunities? (Name) (University) Introduction Globalization is no longer a new item in the economic environment worldwide. It is a rather broad concept that integrates countries, trade, the economy, economic interdependence and many others (Sakir, 2013). Although the integration of the world economy through globalization is also not new, the global implications continue to grow gradually. As such, it is not surprising that changes in the economic inequalities are coinciding with the entry of developing countries into the world market. Exposure to globalization is synonymous with the changes in the trends of inequality (Woods, 2012). The world economy has experienced increased “connectedness” and integration since the ‘80s. The resultant decreasing costs of transportation, increased information flow and spread of communication technologies for instance have led to the rapid elimination concept of “distance”. Also experiencing a rapid increase are the issues of international trade, capitals flows, foreign direct investments, transfer of technology and many others. The spill over effects of all these things is a parallel increasing concern on the effects of globalization on poverty increase, economic opportunities and distribution of income (Tebin, 2014). This paper takes the position that globalization has and continues to reduce poverty through economic empowerment, creation of economic opportunities in the world economy. The paper will build consensus through a discussion on the implications and effects of globalization and will conclude with a summary. Conceptualizing Globalization According to Sachs (2014) globalization reflects the interactions between nations which promote the establishment of trans-national structures as well as a global interaction and integration of culture, economy, ecology, politics, technology, social aspects and many more. This definition represents a multi-dimensional approach to understanding globalization through various facets and levels. It is therefore seen as a process of modernisation and westernisation through which the world is transitioning globally from traditional to a fairly modern society. As such, it can be seen as a global harmonization of ideas, cultures, values and lifestyles as the case may be. It turns the world into one big “village” despite geographical challenges. Through globalization, there is expansion of trade well beyond the normal alliances that were often limited to spheres of influence both geographically, politically and economically (Ruigrok, 2015). The result is openness and liberalization in almost all spheres of life characterised with mobility of capital and human resources. This paper views globalization in two perspectives. In the first perspective, globalisation is regarded as an accidental or inevitable result of economic growth (Krugman, 2013). This economic growth is in terms of technology, communication, industry, trade and many others. Here, the rationale is that as an economy grows, it then naturally follows that global trade and economy expand and become more established. This expansion and establishment is aided by free trade together with free movement of capital. From this perspective therefore, globalization is not merely an expansion but incorporates an increasingly integrated global economy. In order for this integration to take place also, integration and economic freedom need to be synonymous. The second perspective views globalisation as more of a deliberate process as opposed to an inevitable one (Krugman, 2013). Although there may still be an aspect of “inevitability”, the process is largely seen as deliberate owing to the agreements and treaties made between countries, multinational corporations (MNCs), international trade partners and associations just a few to mention. It is arguable that business wants globalization and has gone through lengths to ensure it happens. A good example is the Silk Road business idea by China. The Silk Road was a visionary business plan to connect Asia to the continental Europe and Africa (Alhaji, 2013). Technological advancement and political goodwill certainly goes a long way towards fostering globalization as was the case with this Chinese project. The deliberate effort to realise globalization especially for business is the creation of a competitive advantage. Such a competitive advantage would ordinarily come with diversified resources, interests, markets and acquisitions. Theories of Globalization Before attempting to make a case for globalization as an agent of economic growth, it is important to understand its underpinnings. The two theories below try to provide an understanding of what drives globalization and how it eventually affects and impacts on the world. The theory of Interdependence Interdependence is perhaps one of the tenents that foster globalization. Here globalization is regarded as a web of interdependence; where interdependence is associated with peace and peace with democracy (Nina, 2014). The economy influences nations to make policies and decisions. However, as the level of interdependence between nations progressively increases, the same policies and decisions are now made collectively and not as individual states or nations. This leads to the promotion of coherence in the economic, educational, cultural and social spheres of life. Through interdependence, there also is the harmonization of all these spheres within the global economic market (Nina, 2014). Economic interdependence is manifested through increasing international trade and co-operation as well as in investment (mostly direct foreign investment). Production, trade and consumption are activities that link countries globally (Barbara, 2015). As countries increasingly integrate, the economic growth of a given country also becomes dependent on the economic growth of its economic partners. So intense is the interdependence to an extent that even the choice of one’s clothes becomes dependent on the lives of the workers who live in the country that manufactures these clothes. Social interdependence is manifested through the ever increasing global expansion of employment opportunities and the resultant employment diversity (Barbara, 2015). Also, the level of interdependence can sometimes be so high such that events happening locally are largely influenced by events occurring far away in distant countries. As such, countries depend on each other for goods and services, labour, capital and technology. Environmental interdependence is manifested in international co-operation in the establishment and protection of ecosystems, the environment, wildlife and endangered species of both flora and fauna (Barbara, 2015). The famous wildebeest migration from Kenya to Tanzania and vice versa for instance is an example of a situation where the survival and protection of wildlife is literally depended on more than one state. Globalization as Capitalism. This theory sees globalization as capitalism; that globalization is basically the spread of capitalism globally. In the ages before the advent of globalization, power was measured and acquired through wars, physical strength and military prowess (Derne, 2014). Globalization has since changed this. The theory regards globalization as a process whereby institutions are used to modernize the world economy. This process is seen through the domination of world trade arena by transnational companies and financial institutions that operate beyond countries, boundaries and even local economic considerations. Globalization as an agent of poverty reduction Having understood globalization, its definitions and theories, it is then important to make a case for its role in global poverty reduction and economic improvement. One of the most common impacts of globalization is that it has eased international trade by “eliminating” the traditional barriers that once existed (Eddy, 2015). Geographical distance is now no longer a problem. Nations can now, more than ever before, trade with each other through treaties and trade concessions. Through financial globalization for instance, the economic growth rate of countries continually increases. When there is improved economic progress in a country, the expectation is that this improvement should be replicated in the standard of life, education, medicine and health care services as well as food and sanitation. According to Derne (2014), the average per capita income of nations with more financially open economies usually would grow more favourably as compared to those of a less open economy. Poverty reduction and globalization are almost becoming synonymous. The integration of nations into global trade has led a reduced level of poverty, more especially extreme poverty. This is because globalization opened up the world economy to all countries. The biggest beneficiaries of this opening up are perhaps the developing countries. Around 1981, 52% of people who were living in developed countries were actually living in extreme poverty (Sakir, 2013). As the impacts of globalization took shape in these countries, the percentage decreased to 17% (Sakir, 2013). A good example is China and the Silk Road project. Before then, the country was faced with a huge population and poverty. But through globalization through projects such as the Silk Road and the “Opening up” policy, the country experienced improved economic growth and reduced poverty levels. In fact, China has risen through poverty to take up its position as a superpower and powerful economic nation. China is now a member of the United Nations, and a permanent member of the Secretariat. Poverty is gradually degreasing as a result of globalization. Initially, most developing countries recorded the highest levels of poverty. Through interdependence and integration, there is widespread inflow of international investments such as Foreign Direct Investments (FDIs) and exchange of technological expertise and skills (Woods, 2012). Developing countries continually surfaced as potential investments grounds hence much of the FDIs were directed towards such countries. What has followed is a massive mushrooming of factories, international businesses and institutions as well as companies and corporations. All these establishments have created employment opportunities for masses that were initially living in abject poverty. As a result, globalization is partly responsible for the increasing number of people classified as the middle class. Globalisation has increased international trade and has aided in improving the Gross Domestic Product (GDP) of countries (Tebin, 2014). Over the years and with increased impacts of globalization, hundreds of people have joined the middle class category of earners. This category has over the years formed a formidable force in the consumption of goods and services. In most countries, the middle class comprise substantial factors and drivers of national, regional and international economies. This is a situation that is evident in countries such as Brazil, China, Kenya, Indonesia and India where most of the working class population falls under this classification (Sachs, 2014). Increased trade between countries has helped reduce poverty and improve standards of life. Establishments in the developed countries have benefitted from ready markets in the developing countries (Ruigrok, 2015). The spill-over effect is that the resultant goods and services have catered for the needs of the middle class in the developing countries thus helping alleviate their standards of living. The interdependence established here is that most of the developing countries would provide raw material and low production costs for developing countries. Developing countries would in turn provide capital and opportunities for employment (Krugman, 2013). The finished products then find a ready market both in the developing and developed countries. The end result is that increased demand for these products has created pressure for more production leading to increased opportunities for employment. Increased employment translates to decreasing levels of poverty as more people are able to earn income to satisfy their needs and those of their families and dependants. The interdependence established here is close to none other. The beneficial aspects of globalisation are numerous and so are the not so beneficial implications. This however does not mean that globalization has ceased to help in poverty reduction. For instance, the increased industrialization in developing countries has led to increasing environmental pollution as well as unplanned urbanization. It has also led to the exploitation of low-wage earners (Alhaji, 2013). As the demand for more low-cost production rises, so is the exploitation of human resources through long working hours, low earnings and often poor working conditions; a total violation of international human rights and socio-economic rights (Alhaji, 2013). Also, opportunities for international trade have catalysed the movement of manufacturing industry from developed countries to developed countries in search of low-cost production and cheap labour. This shift has led to loss of manufacturing base for developed countries. Ultimately, it beneficial aspects outweigh the not so beneficial aspects hence a general reduced percentage of poverty globally. Conclusion This paper has argued the case for globalization as an agent for the reduction of poverty. The paper has explained globalisation as well as the theories that underpin its existence and influence. From the foregoing, globalization has increasingly led to a reduction in poverty levels through the opening up of the world economy to all counties through interdependence and integration. It has also emerged that both developing and developed countries have a share in the benefits and negative impacts of globalization. Through globalisation, numerous employment opportunities have been created, while nations have been empowered economically to provide for its people. Globalisation therefore has played, and continues to play a vital role in poverty eradication globally. References Alhaji, A.I. (2013). The impact of globalization in Africa. International Journal of Humanities and Social Sciences 3(15), 85-93. Arjun, A. (2012). The impact of Globalization on national education systems. Waxmann: Berlin Barbara, T.S. (2015). The effects of globalization phenomena on educational concepts. Us- China Educational Review 7(8), 50-61. Derne, S. (2014). Globalization and the transformation of culture, gender and class in India. SAGE: New Delhi. Eddy, L. (2015). The social impact of globalization in the developing countries. MPIE: Warwick Krugman, P. (2013). Globalization and the inequalities of nations. Quarterly Journal of Economics 10, 857-880. Nina, P. (2014). How has globalization benefitted the poor? Dartmouth College. Ruigrok, K. (2015). The logic of International restructuring. Rutledge: London. Sachs, K. (2014). Economic reform and the process of globalization. IMF: Washington DC. Sakir, S. (2013). Globalisation is only a good thing if it benefits all of society. The Economist 22, 34-55. Tebin, H. (2014). The globalization of telecommunications. Journal of Economic Issues 29(20, 40-62. Woods, N. (2012). The causes of continued under-development. Oxford Development Studies 26, 8-23. Read More

This paper views globalization in two perspectives. In the first perspective, globalisation is regarded as an accidental or inevitable result of economic growth (Krugman, 2013). This economic growth is in terms of technology, communication, industry, trade and many others. Here, the rationale is that as an economy grows, it then naturally follows that global trade and economy expand and become more established. This expansion and establishment is aided by free trade together with free movement of capital.

From this perspective therefore, globalization is not merely an expansion but incorporates an increasingly integrated global economy. In order for this integration to take place also, integration and economic freedom need to be synonymous. The second perspective views globalisation as more of a deliberate process as opposed to an inevitable one (Krugman, 2013). Although there may still be an aspect of “inevitability”, the process is largely seen as deliberate owing to the agreements and treaties made between countries, multinational corporations (MNCs), international trade partners and associations just a few to mention.

It is arguable that business wants globalization and has gone through lengths to ensure it happens. A good example is the Silk Road business idea by China. The Silk Road was a visionary business plan to connect Asia to the continental Europe and Africa (Alhaji, 2013). Technological advancement and political goodwill certainly goes a long way towards fostering globalization as was the case with this Chinese project. The deliberate effort to realise globalization especially for business is the creation of a competitive advantage.

Such a competitive advantage would ordinarily come with diversified resources, interests, markets and acquisitions. Theories of Globalization Before attempting to make a case for globalization as an agent of economic growth, it is important to understand its underpinnings. The two theories below try to provide an understanding of what drives globalization and how it eventually affects and impacts on the world. The theory of Interdependence Interdependence is perhaps one of the tenents that foster globalization.

Here globalization is regarded as a web of interdependence; where interdependence is associated with peace and peace with democracy (Nina, 2014). The economy influences nations to make policies and decisions. However, as the level of interdependence between nations progressively increases, the same policies and decisions are now made collectively and not as individual states or nations. This leads to the promotion of coherence in the economic, educational, cultural and social spheres of life.

Through interdependence, there also is the harmonization of all these spheres within the global economic market (Nina, 2014). Economic interdependence is manifested through increasing international trade and co-operation as well as in investment (mostly direct foreign investment). Production, trade and consumption are activities that link countries globally (Barbara, 2015). As countries increasingly integrate, the economic growth of a given country also becomes dependent on the economic growth of its economic partners.

So intense is the interdependence to an extent that even the choice of one’s clothes becomes dependent on the lives of the workers who live in the country that manufactures these clothes. Social interdependence is manifested through the ever increasing global expansion of employment opportunities and the resultant employment diversity (Barbara, 2015). Also, the level of interdependence can sometimes be so high such that events happening locally are largely influenced by events occurring far away in distant countries.

As such, countries depend on each other for goods and services, labour, capital and technology. Environmental interdependence is manifested in international co-operation in the establishment and protection of ecosystems, the environment, wildlife and endangered species of both flora and fauna (Barbara, 2015).

Read More