Globalisation – good or bad?

| December 22, 2016

Introduction

Globalisation has become a subject of an ongoing debate in the literature. According to Williamson (1998) globalisation can be characterized as ‘between-country integration of commodity, labor and capital markets’. Hence, globalisation is a process of growing exchange of people, economic activities and culture that leads to the increased production of goods and services as well as to stronger interconnections amongst the countries and regions (BBC, 2012). Undoubtedly, globalisation has both positive and negative impact on the global economy. The most important benefits are trade liberalization and growth of Foreign Direct Investment (FDI) which lead to the faster access to new products, technology and information. On the other hand, there are rising concerns over the costs of globalisation such as growing income inequality, environmental problems or the decline of cultural diversity (Nistor, 2007). Positive and negative consequences of globalisation have been discussed in the article, Globalisation – good or bad? The author emphasizes a consistent argument, that globalisation has a positive outcome to all nations. However, he fails to demonstrate strong support of this argument. The only solid evidence is that the developing countries are major beneficiaries of globalization as it contributes to their economic development, internal stability and poverty reduction.  Further, the author pays little attention to the negative effects of globalisation. While the article mentions the dominance of multinational corporations (MNC’s) and labour exploitation, it takes no notice of large environmental and socio-cultural costs of globalisation.

 

The author demonstrates strong evidences on MNC’s and their contribution to the global economy. MNC’s are a powerful force and have the ability to spread wealth, work, technologies that raise living standards. It results in greater occupational mobility and decrease unemployment globally (McComrick, 2003). Nonetheless, MNC’s are reasonable global actors that seek profits maximalization. Hence, there is no guarantee that the revenues of MNC’s will benefit developing states and their citizens. More likely, the incomes will be transferred to the company’s country of origin. Similarly, these companies might relocate their production between the countries if they assume that operating costs are lower in another country. It can lead to sudden employment changes within developing regions (BBC, 2012). Further, MNC’s often contribute to the bankruptcy of local businesses, unable to compete with these powerful companies. Not only does it influence on employment but also it might affect real incomes of the households in case MNC’s obtain monopoly position and shape prices in poor countries. MNC’s can also have negative consequences for the advanced economies. Offshoring[1] results in a lower demand for low-skilled workers in developed countries and hence, increases unemployment within this group. It indicates that people have to stay longer in education in order to gain higher qualifications. Hence, the government needs to increase public spending on education (Nistor, 2007).

 

It is hard to undermine some positive impact of globalisation on the economies of the developing countries. Trade liberalization and growing FDI led to faster economic growth as well as to higher level of national incomes in the developing world. The national governments assisted by international organizations are able to increase spending on education, health care and other public policies and to tackle poverty. In fact, over the last two decades the poverty has declined in all regions of the world but Central and Western Asia (Appendix 1). However, there is no clear evidence on the reduction of income inequality across the globe, postulated by the author (Guy Palmer 2010). While the decline of income inequality is visible in some developing regions, an increase of income inequality[2] is observed in Sub-Saharan region and a number of developed countries (The World Bank, 2012).

 

Arguable is also author’s emphasis on free market development and criticism of protectionism. Indeed, trade liberalization is beneficial. However, it must be conducted slowly in developing regions.  Sudden removal of barriers had dramatic consequences in the past. One of the examples is an economic crisis in Latin American countries in the early 2000s (Agnoli and Vilan, 2007). Moreover, while the developed countries stress the importance of trade liberalization, they often maintain high important barriers in order to support domestic companies. It is strongly visible in the EU’s countries that develop various protective measures in reference to agricultural products to protect own farmers (Nistor, 2012).

 

The author postulates that developing countries do not benefit from globalisation as they do not participate in it. He undermines the fact that developing countries have a little experience in trade liberalization and poor knowledge of Western values. They need a strong assistance from the international organization. These organizations aim to contribute to the economic development of poor regions and to promote universal values such as democracy, good governance or freedom. Nonetheless, the conditionality of international aid is a highly ineffective tool (Williamson, 2002). Developing countries have been donated significant financial capital each year and have been assisted at establishing trade links with other regions. At the same time, most of the developing countries have still been characterized by non-democratic governments and high level of corruption (Appendix 2), (Transparency International, 2011). Moreover, each year the Amnesty International[3] reports cases of significant human rights abuses in the developing world (Amnesty International, 2011).

 

Finally, the author focused on two costs of globalisation such as labour exploitation and the dominance of multinational organizations. He proves that these issues have rather minor negative effects. However, he completely overlooks serious environmental and socio-cultural costs of globalisation.  Considering environment, globalisation contributed to the development of harmful practices. For instance, the companies move their production to the countries with low environmental standards. It results in increased pollutions and environment degradation in developing regions, characterized by a low capacity to protect environment. Further, the countries are allowed to trade their CO2 emissions that do not add to CO2 emissions reduction (Panayotou, 2003, Nistor, 2007). In the socio-cultural terms, globalisation led to the strong dominance of Western culture[4] across the globe and the decline in cultural diversity. Moreover, globalisation facilitated global migrations. Immigrants often come from different backgrounds and culture and have problems with adaptation in new countries. It leads to social exclusion. As the newcomers are not always willingly accepted by citizens of the country it might also result in increased violence and crime (BBC, 2012, Nistor, 2007).

 

In conclusion, the author of the article postulates that globalisation has numerous positive effects and is particularly beneficial for the developing world. However, the evidences demonstrated by the author are highly questionable. Further, he argues that the costs of globalisation, underlined by Anti-globalists have minor negative consequences. Nonetheless, this argument is based on two fragile examples of the globalisation costs, while the serious socio-economic, cultural and environmental effects have not been discussed at all. Hence, the author fails to present a balanced and objective analysis of globalisation and to demonstrate that the positive effects of globalisation overcome its negative impact.

 

 

References:

 

Williamson, J., (1998). Globalization, labour markets and policy backclash in the past. 12th ed. Harvard: Harvard University.

 

Williamson, L., (2002). Globalisation: good or bad?. [online] Available: <http://www.guardian.co.uk/world/2002/oct/31/globalisation.lewiswilliamson>  (Accessed on  22/04/2012).

 

Nistor, C., (2007). Positive and negative effects of globalization. Bucharest: Universityof Bucharest

 

Angoli, M. And Vilan, D., (2007). Financing trends in Latin America. BIS Paper no. 36

 

Palmer, G., (2010). Income inequalities. [online] Available: http://www.poverty.org.uk/09/index.shtml  (Accessed on 23/04/2012).

 

The World Bank, (2012). The World Bank Database Available from: < http://data.worldbank.org> (Accessed on 22/04/2012).

The United Nations, (2011). The Millennium Development Goals Report. New York: The United Nations

 

McCormick, R., (2003). Debate: Globalisation – good or bad? [online] Available: <http://news.bbc.co.uk/1/hi/business/1790941.stm> (Accessed on 22/04/2012).

 

Panayotou, T., (2003). Economic Growth and the Environment. Economic Survey of Europe, 2, p.45-72

 

BBC, (2012). Globalisation [online] Available: < http://www.bbc.co.uk/schools/gcsebitesize/geography/globalisation/globalisation_rev5.shtml> (Accessed on 24/04/2012).

 

Amnesty International, (2011). Annual Report 2011. The state of the world’s human rights. New York: Amnesty International

 

Transparency International, (2011). Corruption Perception Index 2011 [online] Available from: < http://cpi.transparency.org/cpi2011/results/> (Accessed on 23/04/2012)

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