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Is Globalization Good or Bad?

Keywords: is globalisation good or bad

Globalisation is a wildly popular subject of discussion in today's literature. It is a phenomenon which has many different proportions, which include economical, ethnical, environmental and politics issues. There is a wide spectral range of different thoughts about its roots, present effects and future results. Moreover, nearly every globalisation aspect is a subject of a very heated academic controversy. The topic is so debatable that there is no one conventional description of globalisation. Nevertheless, it could be narrowly defined as the international integration of marketplaces in goods, services and capital. Thomas Friedman defines globalisation as "that loose blend of free trade agreements, the Internet and the integration of financial market segments that is erasing edges and uniting the entire world into a single, profitable, but brutally competitive software industry. " Whereas Dicken identifies globalisation as "a more advanced and complex form of internationalization which indicates a amount of practical integration between internationally dispersed economic activities" (Dicken, P. 2003).

There are numerous different ways to approach the issue of globalisation. Most usually the academic controversy on this issue of globalisation can be split into three specific camps: hyperglobalists (Ohmae, Friedman, Giddens), sceptics (Hirst and Thompson, Ruigrok and van Tulder, Sachs and Warner) and realists (Dicken). While hyper-globalists acknowledge globalisation as an undeniable fact and generally understand it as an advantageous process, sceptics argue that the characteristics of the occurrence have already been seen at other moments ever sold and that it is generally negative in its effects. Realists contain the middle ground between these opposing views and support the theory that benefits can come up from globalisation, however it is also critical to determine some sort of legislation. Nevertheless, before considering any theoretical frameworks or any high level academic analysis, I would like to think about a 'hard' socio-economic information on which most of the above thinkers arguments are established.

In the main body of might work I would like to consider positive and negative results of globalisation which will be dominantly structured around six main socio-economic factors, such as: effects on employment, expansion in inequality, environmental destruction, international institutions, power of government authorities and foreign direct investment (FDI).


In regard of employment many sceptics dispute that the procedure of globalisation contributes to relocation of work to developing countries from developed, which in effect boosts unemployment in the developed world and causes greater exploitation of workers in the countries to where re-location occurs. To elaborate on these argument I could say that it was certainly true at the early stages and in most cases still is that there are many places on the planet, like South-East Asia, where conditions created by large multinational companies are generally inhumane. Notoriously famous creation sites of Nike in Vietnam and China aren't as appalling as they used to be, however most developed country workers would still consider them as undesirable. It also true that many thousands of employees in countries like Britain, Germany and US continue loosing their careers to less expensive sites elsewhere. A good example would be Dyson's and Dark colored and Decker's relocation from Britain to lower cost centres in china and taiwan and central Europe. Also there exists another terrifying aspect in changes of the global job patterns, which is semester in the true wages. This pattern shows up especially strong in the US labour market. Probably it happens because of upsurge in wage bargaining power of large multinational enterprises, which now can use reason of relocation and increased international competitiveness to ditch an additional pay surge.

On the other hands, it could be argued that the conditions provided by multinational companies in expanding countries the majority of the time are an extended step ahead of local business's and continue improving. One needs to consider a notion of the opportunity cost to start to see the true picture of what is going on. If the so be employee of the Nike manufacturer would not take a job at the factory he would most likely end-up doing work for a lower wage in worse conditions or being forced to provide the 'dark market' with any personal services they could, which in most cases aren't of the very most pleasant nature. One study found 'wage high grade' associated with FDI of 12% for blue collar and 22% for white training collar workers. It can also be argued that the 'sweatshops' are simply a step in the procedure of industrialisation, which really helps to eradicate uncertainties related to the agricultural societies. A good example of South Korea can serve as a good illustration. In 1960's the country was doubly poor as North Korea, however due to the insurance policy of openness followed by the Southern Korean government the united states experienced a breathtaking period of economical growth; it is currently as wealthy as Portugal and an associate of OECD. South Korea also started as a provider of basic services like clothe making, and now it is the biggest shipbuilder, metallic producer and provider of broadband internet on the globe.

(other employment quarrels: labour costs are dependant on the amount of labour used, as well as by prevailing local income. Whereas, the price tag on a Nike shoe is set relating to what individuals are willing to pay for it. We've chosen to leave in democratic societies based on the rules of capitalism and free market economy, so figure out how to live with effects of your choice or move to North Korea.

As well arguments like - the staff at the factory would not be able to afford even to buy a one footwear they make with the monthly wages. JUST WHAT EXACTLY, employees at Ferrari factory can't manage to buy Ferraris or chambermaids at Ritz Hotel London can't find the money for to remain at Ritz. The underline is that individuals do not work in order to consume what they produce).


Another major facet of globalisation is its influence on world inequality. There is absolutely no better problem facing the planet at the beginning of the 21st century than that of world poverty. One in five of the world's 6 billion people live on significantly less than a dollar a day, almost fifty percent on significantly less than on 2 us dollars a day. Almost a billion don't have usage of clean drinking water, 2. 4 billion to basic sanitation. Eleven million children under five pass away each year from preventable diseases. (HERE YOU COULD ARGUE BOTH WAYS: EITHER START ATTACKING GLOBALISATION OR SAY THAT IT IS THERE TO HELP). There are several basically contradictory studies on the problem. I also suspect that a few of the findings made by globalisation followers and sceptics alike can be a subject to 'data-mining'. Nevertheless, it is argued that the development in definite income differentials between 'North' and 'South' becomes wider. For instance, 1990-2001 difference between average GDP per brain increased from $16, 100 to $19, 100. On the other hand, two French economists at Delta, a research institute in Paris - Francois Bourguignon and Religious Morrison have chartered the change in the global inequality since 1820. They discovered that world inequality increased gradually between 1820 and 1980 - the distance between the typical person's income and the average widened from around 40% to around 80% - but that between 1980 and 1992, inequality fell a little. Another way to assess inequality is to check out what has happened to people moving into extreme poverty. Between 1987 and 1998, the share of the world's population living on significantly less than a dollar per day dropped from 28% to 23% (very little if you think about how much profit multinationals manufactured in the same time period).

* Strong romance between openness and growth, which contributes to reduction in the globe poverty and inequality - e. g. Singapore, South Korea, Taiwan since 1960's. India and China lately.

* Effects on skilled and semi-unskilled employees in america.

(WORLD BANK) Physique 4 shows that there is absolutely no simple connection between changes in trade openness and changes in inequality. Certainly there are many well known instances of countries where inequality has risen as they truly became more integrated into the world market. Wages of senior high school educated guys in the U. S. dropped 20 percent between your middle 1970s and mid 1990s. Income inequality increased in countries such as Argentina, Chile, Colombia, Costa Rica and Uruguay once they liberalized trade at differing times in the last three decades. China, one of the fastest integrating countries, also experienced one of the major inequality, however this was from a situation of very high levels of economic equality prior to integration. Growth was still fast enough to massively reduce poverty. Global Economic Prospec2004 found the number of folks living on less than $1 a day in China dropped from 361 million in 1990 to 204 million in 2000. But, as Shape 4 suggests, there's also about as much cases where inequality dropped with more trade openness.


Another very important feature of globalisation is its effect on the environment. According to Thomas Bode (Greenpeace): "The present day current economic climate is a fire-breathing vampire of petroleum which is slowly but surely cooking our planet". It really is a favorite fact that globalisation is associated with increase in pollution levels, which is largely induced by increased travel and more powerful use of earth's resources. Within the post Second World Battle time, the globalization of environmental degradation has been massively accelerated by lots of factors: fifty many years of remarkable resource-intensive, high-pollution growth in the OECD; the industrialisation of Russia, Eastern Europe and the ex-Soviet states; the breakneck industrialisation of many elements of the South; and an enormous climb in global population. In addition, we are now able to perceive risk and environmental change with much higher depth and correctness. Humankind faces an unprecedented selection of truly global and local environmental problems, the reach of which is higher than any single countrywide community (or generation) and the solutions to which cannot be tackled at the amount of the nation-state by themselves; included in these are, most certainly, global warming, ozone depletion; destruction of global rainforests and loss of biodiversity; oceanic and riverine air pollution; global level nuclear threats and risks. In the twentieth century these transformations have been paralleled by the unprecedented progress of global and local environmental motions, regimes and international treaties. However, nothing of these organizations has as yet had the opportunity to amass sufficient political power, home support or international specialist to do more than limit the worst excesses of some of these global environmental risks.

There can be an urgent need for some world-wide enforceable regulation which would eliminate opportunities for the top multinational to cut sides in complying with the World environmental requirements. (Use good examples: Union Carbide in Bhopal India; Western forestry companies in south America; Shell and Brent Spar).

On the other hand, It should be noted that debate against globalisation can be viewed as as an argument against economic development in general. It really is true, however, that development in growing countries is combined with severe environmental degradation. However, recent facts suggests a far more subtle and complex relationship between monetary development and environmental coverage. The environmental impact tends to decline with economical expansion of a country. A 1998 World Bank or investment company study of organic and natural water pollution discovered that pollution intensity dropped by 90 per cent according to capita income rose from $500 to $20, 000, with the fastest decline occurring prior to the country reached middle class status (Physique 6. Hettige, Mani and Wheeler, 1998). Average air quality in China has stabilized or better since the mid-1980s in monitored towns, especially large ones - the same period where China has experienced both immediate economic growth and increased openness to trade and investment.

Moreover, openness to trade and investment provides expanding countries with both the incentive to adopt, and the access to, new technologies, which may give a cleaner or greener way of producing the nice concerned. For example, much foreign investment is for export markets. The quality requirements in those market segments encourage use of the latest technology, which is typically cleaner than old technologies. A World Standard bank study of material creation in 50 countries found that wide open economies led shut economies in the adoption of cleaner technologies by vast margins, resulting in the open economies being 17 percent less pollution-intensive in this sector than shut down economies (Wheeler, Huq and Martin 1993).

Another concern relates less to environmental results and even more to environmental rules. It is argued that increased international competition for investment will cause countries to lessen environmental restrictions (or even to sustain poor ones), a "race to underneath" in environmental expectations as countries battle to attract international capital and keep home investment at home. However there is no evidence that the price of environmental safety has ever been the determining element in international investment decisions. Factors such as labor and uncooked material costs, transparent regulation and protection of property rights will tend to be a lot more important, even for polluting industries. Indeed, foreign-owned plant life in expanding countries, exactly the ones that based on the theory would be most enticed by low specifications, have a tendency to be less polluting than indigenous plant life in the same industry. Most multinational companies adopt near-uniform standards internationally, often well above the local government-set standards (Dowell, Hart and Yeung 2000; Schot and Fischer 1993).

International Institutions, decrease in power of government authorities and growth in power of multinationals.

There are many different critiques published on the topic of globalization, however one of the very most effective ones according to my view are on the inefficiency of large international governing bodies, which likely to direct the procedure of globalization towards the higher good.

Our national leaders tell us that top-down corporate and business globalization can be an inevitable, naturally-occurring occurrence. But the terms of globalization have been described by a few powerful organizations that operate without transparency or democratic oversight.

There never was economical evidence in favor of capital market liberalization. There still isn't. It increases risk and doesn't increase expansion. You'd think [defenders of liberalization] would tell me right now, 'You haven't read these 10 studies, ' nevertheless they haven't, because there's not one. There isn't the intellectual basis that you'll have thought required for a significant change in international guidelines. It was all predicated on ideology. "

- Joseph Stiglitz, past Key Economist of the World Bank

The World Trade Business is the most effective legislative and judicial body on the planet. By promoting the "free trade" agenda of multinational corporations above the pursuits of local areas, working young families, and the surroundings, the WTO has systematically undermined democracy around the world. In the eight many years of its life, WTO panels made up of corporate lawyers have ruled that: the US law safeguarding sea turtles was a barrier to "free trade"; that US climate standards and regulations safeguarding dolphins are too; that europe law banning hormone-treated beef is illegal. According to the WTO, our democratically elected general population officials no longer have the protection under the law to protect the environment and open public health. Unlike United Nations treaties, the International Labor Organization conventions, or multilateral environmental contracts, WTO guidelines can be enforced through sanctions. Thus giving the WTO more power than any other international body. The WTO's specialist even eclipses nationwide governments.

Created after World Warfare II to help avoid Great Depression-like financial disasters, the World Standard bank and the IMF are the world's largest general public lenders, with the Bank managing a total portfolio of $200 billion and the Fund supplying member government authorities with money to beat short-term credit crunches. However the Standard bank and the Fund are also the world's biggest loan sharks. When the Bank and the Fund provide money to debtor countries, the amount of money includes strings fastened. These strings come by means of coverage prescriptions called "structural modification plans. " These policies-or SAPs, because they are sometimes called-require debtor governments to start their economies to penetration by overseas corporations, allowing usage of the country's employees and environment at great deal cellar prices. Structural modification policies suggest across-the-board privatization of open public resources and publicly had industries. They indicate the slashing of federal budgets, resulting in cutbacks in shelling out for healthcare and education. They indicate centering resources on growing export crops for professional countries somewhat than supporting family farms and growing food for local areas. And, as their imposition in country after country in Latin America, Africa, and Asia shows, they lead to deeper inequality and environmental destruction.

International trade agreements such as NAFTA (the North American Free Trade Contract) and GATT (the General Arrangement on Tariffs and Trade) were compiled by staff of large firms plus they function in the interests of large companies. For example, thorough studies by Open public Resident and other watchdog organizations show that in the seven years of NAFTA, transnational businesses from the three signing countries (Canada, USA, Mexico) have benefited as the middle classes and working classes of these countries have experienced. More careers have been lost credited to NAFTA than have been created. Several generations of the GATT have lowered corporate taxes by the trillions of dollars, thus assisting to bankrupt governments round the world and make sure they are dependent on borrowing from the entire world Lender, International Monetary Account and the private lenders. This indebtedness then gives immense policy affect to the bankers, who are mainly considering the money pattern not the life cycle.

The power of influence over governments in shaping the global market in the corporate interest is of enormous value to global corporations. Some argue that globalisation erodes the ability of governments to: increase taxation, regulate markets and manage currencies. That it becomes the "race to underneath". Governments are told to follow two paths. First, deregulate and privatise. It has been pursued in over 90 countries through structural modification insurance policies of the World Bank or investment company and International Monetary Fund. The bitter legacy keeps growing poverty in all parts of the expanding world, except China.

Second, leave business to modify itself. Organizations have promised to look at voluntary ethical benchmarks in response to growing general population concern over sociable and environmental damage. But these have often been a public relations exercise to deflect criticism and the few companies that are utilizing these standards compete at a downside to nearly all companies that don't.

(may use eg. Research study ERM 1992 - UK and Italy were required to devalue their currencies. Central banking institutions are powerless in striving to control international speculators - George Soros is a GANGSTER).

On the other hands, there's a substantial information that governments didn't are more constrained; occasionally there was a rise in their comparative powers. For example, there's a systematic increase in the duty burden in the OECD (Organisation for Economic Co-operation and Development) countries. (CAN'T FIND ARGUMENTS TO SUPPORT ABOVE Affirmation - think of something yourself).

As well, growing ability of multinationals is not such a negative thing in the end. It can become a new form of international governance. Multinational companies have quite strong financial bonuses to respond ethically. If companies will not pay attention to the issues of CSR (commercial communal responsibility) their share price can decrease, which than leaves than susceptible to hostile take-overs. There's a growing concern among consumers on the planet towards support of moral plans, eg. Fare Trade Policies - Starbucks statements to be a devoted supporter of good trade policies. Therefore, businesses may face consumer boycotts, whereas governments are just about immune to short-run fluctuations in the popular opinion.

Also, some ideas of internationalisation argue that MNC's must have higher efficiency than other companies and governments. Regarding to classical monetary theory administration spending is highly inefficient, because civil servants lack appropriate motives to search for the perfect use of available resources. Authorities spending also contributes to 'out crowding' of fund available to the private sector, meaning the firms have to handle an increased cost of borrowing if indeed they want to increase their spending. Governments tend to be more corruptible (MAYBE ). Consider about it - our governments collect generally nearly 50 % of their countries GDP, 50 percent of all income generated by the economy during the calendar year. And what they do with it?! Devote to defence or some doomed governmental projects largely focused to stir general public opinion in their favour in order to win next basic election. Think about everything money which has been misused because of bureaucracy. US authorities only collects 30% of GDP in taxes and US is the richest country in the world.

Multinationals are excellent innovators: (e. g. Dunning and 'ownership specific advantages', Rugman and the 'flagship' organization).

+ can link to multiplier result and wage premium.

FDI (overseas direct investment) / Trade.

As portrayed in ratio of the global gross domestic product (gdp), the share of the merged inward and outward overseas immediate investment (fdi) stocks and options rose from 19. 2% in 1990 to 34. 0% in 1999 and around 38. 2% in 2000. (I am sorry but I'm too bored to death to write in detail about trade or FDI).

Basic argument is the actual fact that almost all of the trade and FDI happens between Japan, US and Europe. 69% of FDI would go to developed countries. Some continents are marginalised, eg. Africa only gets 2% of global FDI. However, to my judgment it is completely normal. These are the major economies on the planet. GDP of US has ended 12 trillion, whereas GDP of Japan (second most significant economy) is over 6 trillion, GDP of EU is approximately 7 or 8 - you cant expect these countries to get almost all of their money in Eastern Europe, Africa or South-East Asia. Combined economies of these are dwarfs in comparison to economies of developed countries. Huge spending in these countries will breed inefficiencies, which than can be followed by another Asian crises (1997) or Russia defaulting on its payments. The expense of finance should indicate its true market value. From the business enterprise stand point money should only be spent if they can generate increased prosperity, if there are not enough profitable opportunities to bypass developed countries shouldn't be competing with each other by providing cheap loans, but focus on their locations. Undervalued financing create slack attitude, breads bureaucracy, corruption and also have a great potential of destroying powerful efficiency of growing world (can compare to governments supporting national champions). (VERY CAPITALISTIC VIEW).

Nevertheless, expanding countries are world wide web recipients of international direct investment anyway.

e. g foreign firms commit more in Africa than Africa firms invest in other places.


(use your own depending which view you support).

(Can contrast different theoretical standpoints - check the finish of International Business lecture hand-out, week 3 - A BIT BORRING - BE ORIGINAL).

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