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Abstract
Globalization has become a common term today when discussing international trade and economics. The topic has been widely discussed by economic specialists, scholars and other interested parties around the world. The economic aspect of globalization has attracted the attention of many debaters, with some supporting it and others strongly opposing it. Those supporting globalization cite the improved economic conditions caused by increased globalization as indicated by per capita income, social welfare and GDP. Those who oppose globalization cite specific issues such as the bad working conditions of employees of multinationals in foreign countries and the failure of third world countries to develop despite the increase in world economic integration. There is, however, a limited amount of knowledge on the part of some critics, and some of their arguments are seen to be highly subjective. In this paper, I have discussed the points proposed by both parties and I have concluded that globalization does more good than harm to the economies and social lives of people worldwide.
Is Globalization Good or Bad?
Globalization is the process of integration of countries’ political, social and economic aspects on a worldwide scale. This trend of economic interdependence and integration is responsible for the increase in international trade witnessed in the twentieth century, with many multinational companies today sustaining operations in foreign countries. The trend in globalization has seen an increase in global per capita income. There are, however, concerns by critics on the effects of this trend on ‘sweatshop’ workers and the development of third world countries.
Globalization as we know it today began in the mid-nineteenth century. The trend is attributed to the rapid growth in technology in transport, communications and energy production during this time. The trend slowed down between the first and second world wars and resumed during the reconstruction phase in the early 1950s. The two oil shocks that took place between 1973 and 1990 slowed down globalization efforts again, but the information age in the last two decades has increased the pace of globalization tremendously. Globalization efforts got a boost in 1995 with the establishment of the World Trade Organization. This is the major platform for multilateral discussions on economic integration.
Globalization has benefitted the world economy and also individual countries. The global per capita income has been on the rise throughout the twentieth century and the early twenty-first century, and the trend is expected to continue. This is an indicator of a constant improvement in global economic conditions. Critics have, however, been quick to point out the increase in the gap between the rich and the poor. An analysis of the empirical studies used for comparison between globalization and trends in poverty and inequality, however, indicates that there are many globalization policies, each of which has a different effect on an economy. Eastern countries like China have followed different globalization policies from those followed by African countries. The development level of a country therefore depends on which globalization policies it follows.
The integration of countries has enabled an increase in the movement of factors of production, among them labor and capital. Companies are able to produce their goods and services in any part of the world where the cost of labor and inputs is favorable. This has seen multinationals to set up production plants in developing nations such as China, where there is a large population of skilled labor, relatively low average wages and potential for growth. This has resulted in a lower cost of production, cheaper products and corporate efficiency. This has caused a cycle where availability of cheaper technology has made technological capital more accessible, therefore increasing production.
The plight of workers of multinationals in these foreign countries has been a subject of debate. Critics have pointed out the nature of working conditions in foreign factories, with the phrase ‘sweat shop’ now becoming common in defining these factories. Research, however, reveals that conditions in these factories are much better than those in factories owned by local companies, with the wages paid by multinationals being double that paid to workers of local companies.
Critics have been concerned about the control that multinationals have on local governments, with some claiming that multinationals force governments to make policies that suit them while contributing very little in tax. Williamson (2002) explains that multinationals can not dictate terms to governments because governments have vast resources and mobilising power which companies lack. Research also indicates that by 2002, governments globally were collecting more tax than ten years before, a trend attributed to globalization.
The world today is also more socially interconnected than ever before. With the availability of technology such as the internet and mobile telephony, communication has become real time. This serves to keep people informed while promoting cultural tolerance. The transport sector is also growing fast, and it is now possible to book a flight to any part of the world. Infrastructure for transport and communication is available anywhere in the world owing to world trade. As a result, developing countries have a chance to catch up with the rest of the world without having to create their own forms of technology.
Despite the accessibility of these benefits of globalization to developing countries, critics are still concerned about the power these counties have in making globalization policies. International development partners have been known to dictate terms to developing countries, with the best example being the structural development programs adopted by African countries in the early 1990s. The programs failed to deliver the much anticipated development to the target countries. The main reason for their failure, however, is the westernized approach which ignores the special circumstances in a developing world setting. There is also rampant corruption in these countries which causes loss of development funds.
As is evident from the discussion above, globalization has many benefits including social and cultural integration, increased availability of technology, free movement of factors of production, economic efficiency and increased tax revenue. Critics of globalization have failed to provide any concrete evidence of the relationship between globalization and economic vices such as poor working conditions and unequal development. Even though globalization has triggered some of these vices, it is the policies adopted by the individual jurisdictions that have resulted in their current situations, whether positive or negative. Globalization is therefore advantageous to individual economies and the world at large.
References
Aisbett, E. (2007, March). Globalization and Poverty. Retrieved May 29, 2013, from http://www.nber.org/chapters/c0113.pdf
Elliott, K. A., Kar, D., & Richardson, J. D. (2002). ASSESSING GLOBALIZATION’S CRITICS: “TALKERS ARE NO GOOD DOERS???”. Retrieved May 29, 2013, from http://www.iie.com/publications/wp/02-5.pdf
Srinivasan, T. N. (2002, December). Globalization: Is It Good or Bad? Retrieved May 29, 2013, from http://www-siepr.stanford.edu/papers/briefs/policybrief_dec02.pdf
Stief, C. (2008, July 7). An Overview of Globalization and Its Positive and Negative Aspects. Retrieved M ay 29, 2013, from http://geography.about.com/od/globalproblemsandissues/a/globalization.htm
Williamson, L. (2002, October 31). Globalisation: good or bad? Retrieved May 29, 2013, from http://www.guardian.co.uk/world/2002/oct/31/globalisation.lewiswilliamson
