Essay on Globalization And Its Pros And Cons

Globalization And Its Pros And Cons

Essay on Globalization And Its Pros And Cons


  • What is globalization?
  • Globalization’s beginning
  • Who are the players?
  • Concerns of environmentalists
  • Concerns of Third World countries
  • Concerns of Left critics of capitalism
  • Concerns of business organizations
  • Concerns of unions in rich countries
  • Internet and telecommunications industry
  • Global inequality and it’s getting worse
  • The costs and the benefits of free trade
  • The role of the internet and communications technology in globalization
  • Shifting power from nation-states to undemocratic organizations
  • Effects of globalization on culture
  • The environmental impacts of globalization
  • impact of globalization on the industries of developed world
  • Any alternative to globalization
  • Conclusion


There are divergent Definition of “Globalization”, Many see it as a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows. However, one can also point to a rapid increase in cross-border social, cultural and technological exchange as part of the phenomenon of globalization. The sociologist, Anthony Giddiness, defines globalization as a decoupling of space and time, emphasizing that with instantaneous communications, knowledge and culture can be shared around the world simultaneously. Ruud Lubbers, defines it as a process in which geographic distance becomes a factor of diminishing importance in the establishment and

maintenance of cross border economic, political and socio-cultural relations

Critics of globalization define the word quite differently, presenting it as worldwide drive .,toward a globalised economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments. Globalization is an undeniably capitalist process. It has taken off as a concept in the wake of the collapse of the Soviet Union and of socialism as a viable alternate form of economic organization.

Globalization is the rapid increase in cross-border economic, social, technological exchange under conditions of capitalism. David Held and Anthony McGrew write that globalization can be conceived as a process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions, expressed in transcontinental or interregional flows and networks of activity, interaction and power.

There is no agreed starting point that when did globalization begin? But understanding of globalization is helped by considering these facts. The first great expansion of European capitalism took place in the 16th century, following the first circumnavigation of the earth in 1519 to 1521. There was a big expansion in world trade and investment in the late nineteenth century. This was brought to a halt by the First World War and the bout of anti-free trade protectionism that led to the Great Depression in 1930. Some see this period as an interruption to the process of globalization commenced in the late 19th century.

A sense that the world was united was generated by the establishment of the International Date Line and world time zones, together with the near global adoption of the Gregorian calendar.

The end of the Second World war brought another great expansion of capitalism with the development of multinational companies interested in producing and selling in the domestic markets of nations around the world. The emancipation of colonies created a new world order. Air travel and the development of international communications enhanced the progress of international business. The fall of the Berlin Wall and the collapse of the Soviet Union ended the Cold War between the forces of capitalism and socialism with capitalism triumphant. The development of the internet made possible the organization of business on a global scale with greater facility than ever before.

There are many critics of globalization, including environmentalist groups and developing country organizations. Environmentalist groups blame global corporations for global warming, the depletion of natural resources, the production of harmful chemicals

and the destruction of organic agriculture. They have particular criticisms of global investment, which they argue takes advantage of the lack of regulation in poorer developing countries. Hence, global companies may locate polluting industries in poor countries, log tropical forests, or develop mines with inadequate controls. They oppose the production, use and global trade in toxic chemicals, nuclear materials and other products of which they do not approve, such as genetically modified foods, or endangered wildlife, including fish.

They oppose the existing rules of the World Trade Organization, which do not allow countries to ban imports of goods just because their production may have damaged the environment in the country of origin. Environmental groups argue that WTO rules are unacceptable from the environmental perspective and they want the rules amended to give them the right to present arguments in its appeals court.

Developing country organizations share a concern that the global organizations such as the international Monetary Fund and the World Bank are not doing enough to alleviate poverty and, indeed, maybe contributing to it. They argue that poor countries should have their debts to international banks excused. Some are critical of the World Trade Organization saying that its rules favor companies from wealthy countries. They argue that by making it difficult for countries to protect their own industries with discriminatory tariffs, it is hard for poor countries to build domestic industries.

Left critics of capitalism including Marxist organizations see globalization as the spread of capitalism, in which the labour of the poor is exploited for the benefit of the rich. Left organizations have mounted the series of “global action days” starting with the WTO summit in Seattle in September 1999, and targeting meetings of the World Bank, the IMF and the private business conference organization, the, World Economic Forum.

Many business organizations are threatened by international competition. These companies in rich countries oppose globalization because they fear that competition from imports will cost them money. Such companies are typically found in industries such as textiles and footwear. These are among the few industries in which poor countries can provide effective competition. Many business organizations that may support the world trade system in general will oppose specific measures to reduce tariffs, which is one of the principal means for‘ building global trade.

Some trade unions in rich countries oppose globalization, saying that it leads to a lowering of wage and workplace standards. The argument generally presented is that globalization encourages the trade in goods produced in countries which do not allow unions to defend their workers’ rights. They undercut the goods produced in countries where unions do defend unions‘rights. This leads to a ‘race to the bottom’ as the markets are won by those with the lowest standards. Cultural

nationalists regard globalization as the spread of American culture and influence.

Pro-globalization includes many international organizations such as WTO, IMF World Bank and the United Nations. The WTO argues that the growth of trade between countries increases the wealth of everyone. Trade allows the production of goods and services by those who are most efficient, thus maximizing their availability at the best price. The growth of trade is helped by the lowering of barriers, such as tariffs and import quotas, which is the object of WTO agreements.

The International Monetary Fund (IMF) and The World Bank claim that world prosperity is enhanced by greater exchange between nations and that this is made possible by everyone agreeing to abide by rules. The United Nations has become a promoter of globalization, arguing that individual states have a dual role with responsibilities to both their own citizens and to the world society as a whole. The United Nations says the broader global responsibility requires international institutions. lt supports the case for reform of international institutions, including its own Security Council, to make them more representative. The UN has sponsored a Global Compact to establish and promote a shared set of core values in the areas of labour standards, human rights and environmental practices between the UN and the business community.

One of the driving forces of globalization “is the advance of telecommunications in general and the internet in particular. Representative organizations regard the spread of communications technology as a benefit without qualifications . For example, the international Telecommunications Union sees globalization as the innate human desire for the integration of individuals in villages and cities and the integration of people of all races and backgrounds into nations. Other organizations are concerned that the free spread of communications technology proceeds without impediment of censorship or any other official constraint.

Unfortunately there is global inequality, and it is getting worse. The gap between the rich and poor nations of the world is increasing. Over the past ten years, the number of people earning $1 a day or less has remained static at 1.2 billion while the number earning less than $2 a day has increased from 2.55 billion to 2.8 billion people. The gap in incomes between the 20% of the richest and the poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995. By the late 1990s the fifth of the world’s people living in the highest-income countries had:

  • 86% of world GDP-—the bottom fifth just 1%.
  • 82% of world export markets—the bottom fifth just 1%.
  • 68% of foreign direct investment-—the bottom fifth just 1%.


  • 74% of world telephone lines, today’s basic means of communication—the bottom fifth just 1.5%.

Critics of globalization say that rising inequality is the inevitable result of market forces. Given free reign, market forces give the rich the power to add further to their wealth. Hence, large corporations invest in poor countries only because they can make greater profits from low wage levels or because they can get access to their natural resources. The free market does nothing to address re-distribution of wealth. It assumes that wealth will ‘trickle down‘ to the poor.

The facts of global poverty are beyond debate, however supporters of globalization argue that there is no ground to place the blame upon multinational corporations and world trade. The causes of poverty are complex, but they include poor health and education along with weak and corrupt government institutions. There is evidence that, among the poorest countries, those that trade with other nations the most achieve the highest rates of growth in income per head, and the greatest decline in poverty. Poor countries that have lowered tariff barriers have gained in employment and national income because labour and capital shifts from import-competing industries to expanding, newly competitive export industries.

Here the question arises that what are the costs and the benefits of free trade? Anti-globalization argues that the World Trade Organization agreements on free trade have functioned principally to pries open markets for the benefit of transnational corporations at the expense of national economies; workers, farmers and other people; and the environment. This is seen in agriculture, where the ‘small scale agriculture on which the large majority of the world’s poor depends, is undercut by global competition, while new export industries that are established, such as cotton, do nothing address the need of the poor for food security.

The rules of free trade insist that international corporations be treated equally with local companies. Local policies aimed at rewarding companies that hire local residents, use domestic materials or adopt environmentally sound practices can be illegal under the WTO. Under the WTO, developing countries cannot pursue the same policies that the developed countries used to gain their advantage by protecting their nascent industries. The allied freeing of financial markets has brought global instability, as evidenced in financial crises in Asia and Latin America and the continuing marginalization of sub-Saharan Africa.

On the other hand” pro globalization argues that ‘international trade and investment have been the engines of world growth over the past 50 years. The tones of goods traded around the world have grown by 16 times since 1950, reflecting the lowering of tariff barriers. The growth of trade in services is even greater. The benefits of that growth have been shared. The countries that are getting poorer are those that are not open to world trade, notably many nations in Africa. China’s

opening to world trade has brought it growth in income from $1460ia head in 1980 to $4120 by 1999. ln 1980, American’s eared 12.5 times as much as the. Chinese, per capita. By 1999, they were only earning 7.4 times as much. The gap between rich and poor is also shrinking with most nations in Asia and Latin America.

Many people believe that exports create jobs, and imports cost jobs and that it therefore makes sense to have barriers against imports. This thinking led to the Great Depression in 1930, because so many countries had erected barriers against imports that global trade fell with catastrophic consequences.

Most exports also use some imports. To take a simple example, a country might export packaged sugar, but import the packets. Lowering import barriers makes export industries even more efficient and competitive in world markets. Countries that lower trade barriers concentrate their national energies in industries they are good at, where they have an intemationally advantage. Import barriers encourage countries to focus efforts in industries where they do not have any advantage. It leads to wasteful and lazy investment. There is evidence that developing countries that erect barriers to imports have slower growth in incomes than those that are open to trade. Companies of all sizes are involved in world trade – the benefits do not just flow to large multi-nationals. In most trading nations, ranging from Thailand to France, small firms employing less than 200 people account for between 10 and 25% of exports.

The pioneering thinker about the media, Marshall McLuhan, coined the term, “the global village” in the $960s to express his belief that electronic communication would unite the world. The advent of the internet over the -past 10 years has paralleled the emergence of globalization as a concept. Proponent and critics of globalization have very different perspectives on the internet’s role.

Anti globalization argue that although the internet started off as a communal medium for sharing information, principally among academics, it is increasingly becoming the tool of transnational corporations to market their information products around the world. Because it is rich countries generating most- of the content on the internet, it becomes a form of cultural imperialism, in which western values dominate. English is the language of the internet. The internet is also creating new gaps between the rich and the poor. Rich countries have much greater access to the internet and communications services generally. We are moving from an industrial age, in which wealth was created by manufacturing, to an information age in which wealth is created by the development of information goods and services, ranging from media, to education and software. Poor countries are not taking part in this information revolution and are falling further behind.

Pro globalization claims that many within developing countries see the internet as an opportunity to gain access to knowledge and

services from around the world in a way that would have been unimaginable previously. Internet kiosks, mostly facilitating email with overseas relatives, for example, are springing up in many parts of Asia and Africa. The internet may also facilitate opportunities for economic development in industries such as tourism. The internet and technologies such as mobile telephony allow developing countries to leapfrog steps in their development of infrastructure.

Globalization has drastically improved access of technological latecomers to advanced technologies and, to the extent that technological upgrading is important for development, it provides a unique opportunity for low-income countries to raise per capita income. Research shows that improved access to technology imports is improving the demand for skilled labour in many low-income countries.

Many thinkers say that globalization shifting power from nation- states to undemocratic organizations. ln this regard anti-globalization says that there are two strands to the argument that globalization is undermining nation-states. First, it is that it is empowering corporations at the expense of the nation-state, and secondly, that the international institutions such as the WTO and World Bank are not democratic. There is an issue of sheer size. lt is noted that many corporations are larger than nation-states -_ more than half the 100 largest economies in the world are corporations. The sales of American Ford and General Motors combined are greater than the combined GDP of sub-Saharan Africa while those of the six largest Japanese trading companies are almost as big as all the nations of Latin America combined.

Critics of capitalism say the problem starts with laws of the early 19th century, which meant individual managers, and directors could not be held liable for the actions of the corporation. It is argued that globalization was not a democrat choice but was pursued by corporations to suit their own ends of maximizing profit by playing one nation off against another. The international organizations, such as the World Trade Organization, the World Bank and the IMF are making it their mission to open the world to the influence of transnational corporations. The IMF rules make it hard for nations to legislate to stop currency speculators from attacking their economy. The World Bank insists that nations to which it makes structural adjustment loans privatize government enterprises, often handing them to transnational’s. The World Trade Organization’s effort to break down trade barriers is designed to open markets to transnational corporations. None of these supranational organizations are democratically constituted, and they make their decisions behind closed doors.

In this regard pro globalization claims that the major multilateral institutions acknowledge the need to improve the transparency of their decision making and each has programmes to make themselves more open to outside contributions and develop better information flows. However they are. all organizations composed of governments. In the

case of the World Trade Organization, the practice has been that no decisions are made unless a consensus of governments is achieved. This guarantees that the WTO reflects the will of its member nation- states. As the work of the United, Nations has demonstrated, globalization is more effective when there are strong governments, with sound domestic institutions, Globalization benefits both big and small business, together with the citizens of those countries that embrace international trade. There are no grounds for asserting, however, that large companies are bent on subverting governments. Large corporations generate employment, tax revenue and wealth for the nations in which they operate. They invest in proportionately more research and development than smaller- businesses.

Capitalism has brought unprecedented advances in living standards. As the economist, Brad De Long, notes, at the end of the 19th century, average life expectancy in the world was 40 years, a quarter of all babies died in their first year and barely a quarter of adults could read and write. Today, the world population’s average life expectancy is 67, only 6% of babies die in the first year, and more than 80% of the world’s adults can read and write.

Globalization affect culture all over the world. Many people term it “Americanization”. A report by the UN Educational, Scientific and Cultural Organization (UNESCO), showed that the world trade in goods with cultural content almost tripled between 1980 and 1991: from 67 billion dollars to 200 billion dollars. -At the core of the entertainment industry – film, music and television – there is a growing dominance of US products. World Trade Organization rules do not allow countries to block imports on cultural grounds._lt is argued that one ‘of the consequences of globalization will be the end of cultural diversity, and the triumph of a uni- polar culture serving the needs of transnational corporations. Hence the world drinks Coca-Cola, watches American movies and eats American junk food. American culture is seen to be dominated by monetary relationships and commercial values replacing traditional social relationships and family values.

Pro-globalization ridicules the claim by saying that it does not make sense to talk of a world of 6 billion people becoming a monoculture. The spread of globalization will undoubtedly bring changes to the countries it reaches, but change is an essential part of life. lt does not mean the abolition of traditional values. indeed, new global media, such as the internet, have proven a powerful means of projecting traditional culture (and the culture of radical opponents of globalization).

Capitalism is essentially diverse, as the traveler from Tokyo to Hong Kong, Zurich, Buenos Aires and New York will discover. The fact that American cultural products are successful in world markets reflects no more than their popularity. US cultural exports are strong, and it is influential. That reflects the success of the US economy and the popularity of its products. American culture should no more be vilified

than should non-American culture be placed on a pedestal beyond criticism. To the extent that globalization does imply some integration of culture, this may be no bad thing. Tribalism, and fundamentalism have been divisive sources of violent Conflict throughout history.

There are environmental impacts of globalization. anti- globalization claims that one of the drivers of globalizations that transnational companies want to place environmentally degrading industries in countries that do not have adequate environmental controls. A famous internal memo from a former chief economist at the World Bank, Lawrence Summers, argued the case for locating ‘dirty’ industries in less developed countries because, among other reasons, the loss of earnings caused by higher death and injury rates would be much lower in poor countries than in rich ones. Resource industries such as forestry, mining and fisheries exploit the resources of poor countries with little regard to either the long term cost to the country in terms of the loss of a national resource, or to the environment. Agricultural seed companies are destroying the biodiversity of the planet and depriving subsistence farmers of their livelihood.

Processes of industrialization are leading to global warming and a deterioration of the atmospheric quality. Developing countries have been excluded from the Kyoto Protocol, providing a loophole for transnational companies. The World Trade Organization does not make it possible to block the trade in goods and services that are produced by environmentally damaging methods.

Pro-globalization answers that the world population has grown from 2.5 billion people to 6 billion people in the past 50 years, at the same time the average per capita income of the world has increased two and a half times. The combined effect is a world economy that has a much greater impact upon the environment. This can be seen in global warming, air pollution, deterioration of water systems and loss of bio- diversity etc. The major cause of environmental damage is market failure. Market failure is when those who are producing or consuming goods or services do not have to bear the full costs of their actions, such as the cost of pollution.

The remedy is to make the polluter pay. Indeed the principle that the polluter should pay underlies both the Kyoto Protocol greenhouse gas emissions and agreements to control acid rain in the United States and Europe. What is required to impose ‘polluter pays’ principles on a global basis is stronger democratic institutions so that those who feel the impact of pollution can exercise their political rights to have it stopped. The idea that global companies are engaged in a wholesale migration of polluting industries to developing countries has no basis in fact. Pollution control is a very small component of the cost of production in any industry. It would not be worth closing a factory and shifting it overseas just to avoid pollution control More likely is that companies in democratic

countries respond to political pressure to innovate and improve their environmental performance.

Global businesses are working hard to improve their, environmental performance, with greater emphasis upon environmental reporting. A growing number of companies in sensitive industries, such as mining, forestry and chemicals, are producing independently audited environmental reports. WTO rules expressly permit countries to take actions to protect human, animal or plant life or health, and to conserve exhaustible natural resources. However, such restrictions must pursue legitimate environmental objectives, and not be a disguised form of trade protectionism. The WTO rules do not prevent countries from banning or restricting the marketing of genetically modified organisms.

ln the West some many people claim that globalization is resulting in industries in developed countries being undermined by industries in’ developing countries with inferior labour standards. Globalization results in the exploitation of millions. of workers in countries that do not give workers rights to organize. Workers in poor countries may have to work 12 hours a day, seven days a week with few protections for health and safety. In some countries, globalization leads the exploitation of child, and prison labour. Goods produced in such countries under these conditions undermine those produced in richer nations. The result has been a call for ‘fair trade’, as opposed to ‘free trade’.

Within richer countries, there is growing inequality as unfair competition from countries repressing workers’ rights to organize pushes down the earnings of the less skilled sec ions of the workforce. The WTO is interested in defending intellectual property and investors’ rights, but not those of workers.

To counter this pro globalization claims that the growth in ‘trade between nations has contributed to lifting 3 billion people out of poverty over the past 50 years. Reducing tariff barriers, which makes it easier for nations to trade with each other, lifts the wealth of all nations by allowing them to concentrate on those where they have greatest expertise. It is true that there has been some contraction in employment in labour intensive industries such as textiles and footwear in rich countries over the past 20 years as production has moved to countries in which labour is cheaper. However this is part of the process of development. lt would be condemning less developed countries to even greater poverty to ban restrict their ability to compete in industries like textiles in rich markets.

The campaigns by the unions are allied to those of textile manufacturers in rich countries. They are less concerned with supporting worker rights in poor countries than they are with protecting declining industries in rich ones. Wage levels differ between countries according to the levels of education and productivity. The experience in countries like Korea is that as countries develop, their wage levels rises and the focus

of their industry shifts from labour intensive to more capital and knowledge intensive industries.

Concluding the topic the question arises that “is there any alternative to globalization?” What if the tide could be rolled back? What would those who oppose globalization want to see? There is a wide range of opponents to globalization, some of whom have quite different visions, ranging from Marxist revolution to less defined objectives, such as the ‘end to poverty’. However there is a current of opponents who favor devolution of power from the global to the local. There is a worldwide desire that the mandate and powers of the WTO should be significantly reduced in accordance with the following.

The future is possible for humans and other species only if the principles of competition, organized greed, commodification of all life, monocultures, monopolies, and centralized global corporate control of our daily lives enshrined in the WTO are replaced by principles of protection of people .and nature, the obligation of giving and sharing diversity, decentralization and self-organization enshrined in our diverse cultures and national constitutions. Global trade and investment rules should be subordinated to national and local governments‘ decisions about conditions on investment within their borders. Every government has the right to set development priorities, protect the commons, set performance requirements on investment, control financial speculation and curb capital flight. Global trade rules should be subordinate to global environmental agencies and agriculture should be eliminated from global trade rules to allow countries to pursue food security and sustainable farm policy. There should be a fund created to alleviate poverty with revenue raised through a tax on currency transactions, along with other forms of global taxation.

Supporters of globalization argue that it can be rolled back and point to the period between the first and second world wars as evidence. The increase in world trade as a proportion of world GDP was proportionately greater between 1870 and 1914 than it has been since 1975. That expansion was stopped, not just by the First World War, but by the loss of support for free trade which followed. Tariffs and controls on capital were imposed around the developed world. This led directly to the 1930 depression and indirectly to the Second World War. There is clear danger in the gathering strength of opposition to globalization that it could be halted again. The consequences of a decline in world trade would immediately be felt with rising unemployment throughout the trading world. The poorest countries of the world would also be affected by a fall in aid and opportunities for trade.

A weakening of the institutions of the global order, such as the WTO, would leave them unequal to the task of adjudicating between nations. The fate of the League of Nations at the end of the 1930s provides a parallel example of the cost of weak international institutions. lt is not clear what alternate form of economic production to the

corporation the opponents of globalization have in mind. However the sharing of risk in the limited liability corporation has proven a robust framework for the development of innovation, wealth and the advance in global living standards. Although trade and economic integration could be undone by concerted political opposition, it is not possible to turn back the global sing influence of communications technology.

Private: Essay on Globalization Or Neo-Colonialism?

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