Globalization is a term used to describe the political, economic and cultural climate of today’s world. Some say it is the movement of people, language, ideas, and products around the world. Others see it as the dominance of multinational corporations and the destruction of cultural identities. Since the dawn of man, economies have been changing and expanding, but most importantly, converging. In recent years, although economic convergence has been occurring for ages, this idea has become a hot topic of political and economic debate.However one chooses to describe it, globalization is surrounded with controversy.
With a discussion on globalization comes a set of competing views. Is globalization a force for economic growth, prosperity, and democratic freedom? Or is it a force for environmental devastation, exploitation of the developing world, and suppression of human rights? These two different views will be covered in this essay. The paper is divided into three different sections: the first one depicts the advantages of globalization. The second section provides a discussion about the treats or short-comings brought by globalization.The last part will explore the myths about globalization. 2 Globalization is a positive trend 2. 1Globalization’s Benefits for the World As we move further and further into the twenty-first century, the more clearly we are seeing the advantages of globalization.
It has unlimited economic, technical, social and cultural benefits for developing countries. Globalization can mean sharing technological know-how, such as better methods of farming, or it can mean building roads or a dam to give people access to clean water or electricity. In a statistical analysis, globalization proves to have many advantages.During the 20th century global per capita GDP increased almost fivefold, the flow of private capital sharply increased, and technological innovation occurred. These are the factors of globalization and also the factors that sustain and improve standard of living. Standard of living is the most accurate measurement of a nation’s well-being. From 1960 to 1999, the infant mortality rate in Mexico dropped from 93 to 29.
The life expectancy for the Chinese citizen increased from average 36 to 70 years.Even the countries of sub-Saharan Africa made improvements in infant mortality, life expectancy, and adult literacy. Everyone gains from globalization. The advantages of globalization also can be seen in the internet. Now, it is possible to have global communication. Someone in Africa can talk to someone in Canada in real time. Or, someone in the United States can email a friend in India and have it arrive in their mailbox in less than one minute.
The transmission of information over the internet is making people who live in underdeveloped countries aware of what is possible.The advantages of globalization mean that news is transmitted around the world as it happens. It is a lot harder to keep people in the dark about events happens in the rest of the world. The advantages of globalization on the international economy are substantial. Countries can invest in one another, loan money to one another, and develop trade with other countries. Businessmen can sell their goods in new foreign markets. The more goods that are sold, the more jobs are created.
Even in economic difficulties, the world is a better place because the global market is more open and free.The movement of freedom and democracy is another one of the advantages of globalization. The world is becoming closer; all human beings share the earth with one another. It brings about cooperation in trying to make the earth a better place to live. The ultimate goal of globalization is the peace of the world–all countries becoming accepting of one another and the diversity of cultures and beliefs that exists in the world. Globalization can go beyond economic concerns to address such other issues as the environment.Whether it be disappearing forests, global warming, fishing laws, or helping to save endangered species of animals, people working together in a global way can have far-reaching consequences.
2. 2 The Shortcomings of Protectionism The shortcomings of protectionism can be highlighted through the basic and logical principles of free trade and comparative advantage. Comparative advantage is the idea that two parties are both better off by specializing in the production of the product that they can produce for a comparatively cheaper opportunity cost and then trading at a rate which brings surplus to both parties.For example, the United States has a comparative advantage in producing services and highly skilled labor activities; therefore, the U. S. should produce highly skilled services and import other goods and services from nations that can produce them more cheaply. It is difficult to accept the fact that manufacturing, agricultural, and other such jobs will leave the United States and go to India, China, Russia, etc.
, but one must recognize that the United States economy as a whole benefits.Comparative advantage admits to the protectionists that a few jobs are lost, but different jobs are created and the economic well-being is improved. Trade, free from tariffs, extends a nation’s surplus. Exporting and importing both have the power to hurt and benefit consumers and producers, but both yield a greater total surplus. For example, the U. S. may import bananas from Brazil because Brazilian bananas are a cheaper price than U.
S. domestic bananas. At the new price, consumers gain a considerable area of surplus and producers lose some, but the total magnitude of surplus increases.When countries implement tariffs and anti-globalizing and protectionist policies, they suffer an efficiency loss, as well as a smaller surplus than trade without barriers. Brazilian producers, without tariff, enjoy a large increase in surplus, while the country’s domestic consumers do have a small loss. Comparative advantage and trade keep economic growth. Without economic growth, the United States would lose its power on the global playing field and its standard of living.
3 Globalization is a threat to the developing countries 3. 1 The Increasing Number of UnemployedThe most important disadvantage of globalization is the increasing number of the unemployed. After the industrial revolution, some countries became a power in industry. However production decreased and so unemployment was raised in the other countries. Another reason of the unemployment rise is that the need of less manpower. Many workers found themselves suddenly unemployed, as could no longer compete with machines which only required relatively limited work to produce more product than a single worker. 3.
2 Cultural invasion Another major damage of globalization is that some cultures are getting lost.The cultures of the countries that have more economic power are more dominant than others. Because, wealthy countries produce many things that can affect cultures, for example, clothes, movies and technologic products. While the global community is increasing, more and more people have became ignorant about social, ethical and moral values which are various in certain groups. Therefore, globalization damages small cultures which are in risk of being extinct. 3. 2 difficulty of competition The final significant effect of globalization is the difficulty of competition.
With globalization, trade between the countries has been started to remove limits. Enterprises have prepared the ground to be in constant competition with not only national competitors but also international competitors. Therefore, business requires being in a more rigorous and challenging competitive atmosphere to maintain continuity and development. Rising of monopole companies and trough among production costs are the main effects of this hard competition in business. Undeveloped countries choose to use foreign capital for their improvement however it disposes the equality and stability instead. . 3 Unparalleled Growth and Inequality in Economy and Society It must be recognized that there is great opposition to globalization due to the fact that some of the data points to globalization as a force which allows for unparalleled growth and inequality economically and socially.
Globalization, as an impeller of capitalization, threatens the growth and prosperity of developing nations. The idea that “the faster poor countries open their economic boarders and deregulate their markets, the faster they’ll experience the benefits of economic growth” is open to criticism. Hodari, 2002) The link between poverty and globalization is evident by the widening gap between the privileged elite and the deprived masses. “The world’s 497 billionaires in 2001 have a combined wealth of $1. 54 trillion, well over the combined gross national products of all the nations of sub-Saharan Africa ($929. 3 billion) or those of the oil-rich regions of the Middle East and North Africa ($1. 34 trillion).
It is also greater than the combined incomes of the poorest half of human. ”(Shah, 2005) The increase in the gap between the classes has been widening for a long time.The IMF reports that the most recent World Economic Outlook studied 42 countries, representing almost 90 percent of world population, for which data are available for the entire 20 century. It reached the conclusion that output per capita has risen a little bit but that the distribution of income among countries has become more unequal than at the beginning of the century. One reason that globalization is often blamed for the growing inequity in wealth distribution is that debt repayment in developing countries has been linked to poverty.Institutions like The IMF and the World Bank lend money to less developed countries under the condition that the countries adjust policies and cut social expenditures. “The developing countries now spend $13 for every $1 it receives in grants”.
(Shah, 2005) In addition, LCD’s accept development aid in exchange for policy intervention. The developed nations institute policies which open free markets and trade in the LDC, the imports brought into the country often lead to the decline in the export of primary commodities. The 48 poorest countries account for less than 0. 4 per cent of global exports. ”(Shah, 2005)These circumstances have increased poverty in many developing countries. 4 Myths about globalization No discussion of globalization would be complete without remove some of the myths that have been built up around it: Globalization has not caused the world’s multinational corporations to simply search the globe for the lowest-paid laborers.There are numerous factors that enter into corporate decisions on where to produce products, including the supply of skilled labor, economic and political stability, the local infrastructure, the quality of institutions, and the overall business climate.
In an open global market, while jurisdictions do compete with each other to attract investment, this competition incorporates factors well beyond just the wage level. According to the UN Information Service, the developed world has two-thirds of the world’s inward FDI.The 49 least developed countries account for around 2 percent of the total inward FDI stock of developing countries. Nor is it true that multinational corporations make a consistent practice of operating sweatshops in low-wage countries, with poor working conditions and low wages. While isolated examples of this can surely be uncovered, because multinationals, on average, pay higher wages than what is standard in developing nations, and offer higher labor standards. Globalization is irreversible: In the long run, globalization is likely to be an unrelenting henomenon. But for significant periods of time, its momentum can be hindered by a variety of factors, ranging from political will to availability of infrastructure.
Indeed, the world was thought to be on an irreversible path toward peace and prosperity in the early 20th century, until the outbreak of Word War I. That war, coupled with the Great Depression, and then World War II, dramatically set back global economic integration. That fragility of nearly a century ago still exists today—as we saw in the aftermath of September 11th, when U.S. air travel came to a pause, financial markets shut down, and the economy weakened. These episodes are reminders that a breakdown in globalization—meaning a slowdown in the global flows of goods, services, capital, and people—can have extremely adverse consequences. Openness to globalization will, on its own, deliver economic growth: Integrating with the global economy is a necessary, but not sufficient condition for economic growth.
For globalization to be able to work, a country cannot be saddled with problems provincial to many developing countries, from a corrupt political class, to poor infrastructure, and macroeconomic instability. 5 Conclusion As globalization has progressed, living conditions have improved significantly in virtually all countries. However, the strongest gains have been made by the advanced countries and only some of the developing countries. The income gap between high-income and low-income countries has grown wider is a matter for concern.And the number of the world’s citizens in poverty is deeply disturbing. But it is wrong to draw the conclusion that globalization has caused the divergence, or nothing can be done to improve the situation. To the contrary: low-income countries have not been able to integrate with the global economy as quickly as others, partly because of their chosen policies and partly because of factors outside their control.
No country can afford to remain isolated from the world economy. Every country should seek to reduce poverty.The international community should endeavor by strengthening the international financial system, through trade, and through aid to help the poorest countries integrate into the world economy, grow more rapidly, and reduce poverty. That is the way to ensure all people in all countries have access to the benefits of globalization.
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