The word Globalization is frequently used whenever there is a discussion on development, trade and economy. Globalization is therefore understood as a process integrating the economies around the world so that they together constitute a global economy and is operated with the implementation of global policy making. This interlinking arises not only out of the movement of people, goods and capital but also due to the merger of many cultures across the economies. This paper evaluates the basic question of whether globalization brings equivalent benefits and opportunities to the developed and developing nations or it contributes to enlarging the gap between rich and poor nations. The analysis is illustrated in the two side analysis provided. The paper also focuses on highlighting the limitations and the merits of the models used in analyzing the above mentioned question. A comprehensive conclusion is provided at the end.
Porter and Marquez (n.d.) have provided with two opposing views on the argument under discussion. The first view has taken an optimistic approach towards globalization. It contends that for each economy, the definition of success involves acquiring financial stability, growth and high standard of living but the way through which each economy chooses to achieve this level of development and climb higher on the scale of success, differ for each economy. However, the basic ingredients are still the same which includes investments, spread of technology, strong institutions, a flourishing market economy and the capacity of the developed countries to participate and integrate with the global economy.
Porter and Marquez (n.d.) while providing this positive approach do not ignore the blatant reality that poverty still exists in Asia and sub-Saharan Africa which is impeding these economies capabilities of integrating with the global economy. However, they believe that such conditions prevail not because globalization has done any harm to these countries but they have not yet been fully exposed to globalization. For this purpose, Porter and Marquez (n.d.) have emphasized these nations to tap on to these opportunities along with confidently handling the risk that comes in a package with new ventures. The developing nations should not be inhibited by the risk factor but along with the help of international agencies like the international monetary fund, these nations can minimize the risk factor by taking assistance in matters pertaining to policy making, exchange rates etc.
However, Porter and Marquez (n.d.) not only provides with one side story, rather it draws our attention to the opposing view as well which focuses on how globalization has enhanced the gap between rich and poor nations by contributing to increase in income inequality and low standard of living. The differences between the two contradictory views, drawn from studying them, are as follows. The proponents of globalization define it to be free movement of people, goods, and spread of technology. On the flip side of the coin, the opponents believe that there have been serious limitations on the movement of people particularly after the 9/11 attacks and the movement of goods and diffusion of technology has created a considerable degree of economic interdependence between the rich and poor nations.
The second difference is drawn from the repercussions of globalization whereas the proponents argue that globalization leads to employment opportunities, income equality across the countries encompassing globalization. The opponents have a significant counter argument. The opponents are of the view that many countries are diverging rather than converging in their within country income patterns. Porter and Marquez (n.d.) argues that in China, only the well offs have witnessed their incomes moving at a fast pace but there is still a stark difference in the income levels of urban and rural China. Same is the scenario with India. Not only has this, but the increasing capital mobility with labor immobility has pushed the labors to work in informal sectors causing a rise in the unemployment and a depression in the wage rates. In fact the opponents have put forward a blatant realization that western countries have started shaping the policies in such a manner that they are capable of taking advantage of the cheap labor available and this can be demonstrated by the evidence that many Asian countries are still plunged in poverty despite of following the policies shaped by World Bank consultants.
Based on the above discussion, it can easily be established that globalization has many different facets each with their supporting evidence. Which side, the proponents or opponents are correct is a never ending debate but the similarity in both the approaches is that they both are predicting the future outcomes. The second similarity is that findings from both the views support the fact that countries must first weigh the risk and benefits of globalization and poverty reduction can be targeted by more peacemaking policies than leaving the countries on their own to achieve progress (Mallaby, 2005). These policies can be directed at developing strong social institutions, providing education and training for the labors to furnish their skills and transferring technology to combat poverty.
Todaro and Smith (2008) have brought two different perspectives under the limelight. One of them is a model on comparative advantage that contends that globalization helps the countries realize their true potential by helping them specialize in what they can produce best. This would eventually earn them an absolute advantage of producing that thing efficiently and at a lower cost compared to others. The underlying theory of this model is in congruence with proponent side of the view because it is also promoting the benefits of integrating with the global economy. The other model is the dualistic development thesis which promotes the opponent side of the view. It asserts that although the rich and poor nation may exist on the same platform but there is a center –periphery relation existing between them which have been fostered by globalization. This is evident from the fact that the interrelations between superior and inferior nations are such that superior nations are doing nothing to pull up the inferior nations from poverty.
The two views of the proponent’s and opponent’s, along with the other two perspectives were based on certain assumptions. These assumptions, when applied to the real world highlight the limitations in these models. According to Osland (2003) the limitations of comparative advantage model and proponent’s views is that they assume that factors of production are completely mobile between the different production activities, consumers are rational, the technology is freely available to all these nations and the nations are capable of adjusting to the changes in the prices of the products and factors without any dislocation. The reality is indeed different, because it is not farfetched to comment that the resources are dwindling in supplies and the demand for a product is not generated by rational choices made by the consumers but rather by the advertising campaigns. Also technology is largely aided by the government whereas the governments of developing nations are so indulged in the debt crises that they can’t extend resources to buy technology.
The limitations of the opponent side of the view and the dualistic dependence model in the view of Osland (2003) are that although they offer explanations of why the poor countries have remained poorer despite of the prevalence of globalization and have also identified what the developed world can do to help the developing nations but they have not highlighted how these countries can initiate development on their own and sustain the opportunities derived from globalization. The merits of both of these models are that by understanding their workings, countries can frame their policies really well.
The conclusion derived from the above discussion is that globalization is a necessary element in achieving economic growth despite of all the limitations. While it may bring benefits to those who have already initiated their drive towards development and are completely engaged in benefiting from the basic ingredients of globalization like diffusion of technology, it doesn’t harm those who have not been properly exposed to this phenomenon and yet have to push themselves to achieve the result. Thus to achieve the success, countries must tap on to the opportunities offered by globalization and free their social systems from corruption.
References
Mallaby, S. (2005, Feb 28). Making globalization work. The Washington Post. Retrieved from http://search.proquest.com.libraryproxy.griffith.edu.au/docview/409767388?accountid=14543
Osland, J. S. (2003). Broadening the debate the pros and cons of globalization. Journal of Management Inquiry, 12(2), 137. Retrieved from http://search.proquest.com.libraryproxy.griffith.edu.au/docview/203316120?accountid=14543
Porter, R. and Marquez, P. (n.d). ENMN 325: Business and society. McGraw-Hill
Todaro, M. P. and Smith, S. C. (2008). Economic Development: Tenth edition. Pearson Education.
