Download The positive and negative effects of Globalization

The positive and negative effects of Globalization
Globalization is a broad concept and the angle taken to define it can lead us to
interpret the idea in many different ways. There is much controversy about what
globalization actually means and many definitions fail to encompass social,
cultural and technological exchanges between world systems. John Pilger
suggests that “it is a jargon term which journalists and politicians have made
fashionable which is often used in a positive sense to denote a ‘Global village’ of
free trade, hi-tech marvels and all kinds of possibilities that transcend class,
historical experience and ideology.” (J.Pilger 1998:63). Taking a broader point of
view, Bilton et al defines globalization as “The process whereby political, social,
economic and cultural relations increasingly take on a global scale, and which
has profound consequences for individuals, local experiences and everyday
lives.” (Bilton et al 1996:5)
The process of globalization has certainly had many changing effects to the world
we live in; it has also changed the way many factors operate. Globalization is said
“to have transformed the structure and scale of human relationships that social,
cultural, political, and economic processes now operate at a global scale with a
consequent reduction in the significance of other geographical scales.”(The
Dictionary of human geography 2004:315)
Globalization has had both positive and negative effects on a local, national,
international and global level. Globalization often brings benefits at one level
which cause negative effects at another; these results and the scale at which
they manifest are often uncertain and unpredictable. The very nature of its
unpredictability causes instability and introduces risks to all actors involved
(many of these actors unwillingly). The economics of globalization is very
relevant in understanding how processes work and how it affects other issues.
Without the notion of a truly global economy many of the other consequences
such as culture and politics would either cease to be sustained or become less
threatening. In our modern world, finance and economics is the driving force
behind globalization, and globalization is serving capitalism well. From an
economic point of view Globalization can be seen as “a primarily economic
phenomenon, involving the increasing interaction, or integration, of national
economic systems through the growth in international trade, investment and
capital flows.” (Globalization guide)
Improvements in transportation and communication have encouraged large
cooperation’s to move outside of their regulatory national boundaries and into
other areas worldwide. The movement of these companies can be seen as a
positive effects as corporations are ‘opening up’ new markets and therefore
there are greater opportunities, benefiting both the actual company and
members of the community in that location. Multinational companies (MNC’s)
such as ‘Ford’ are attracted to less economically developed countries due to a
cheaper labor force and cheaper raw materials. The globalization of
manufacturing has given rise to many large MNC’s. Initially this can be seen as a
mainly positive effect as large corporations bring in the promise of market
integration, employment and greater wealth into counties in which they
operate. Industrial expansion in the less economically developed world has
spawned some very large companies. For example, industrial growth in South
Korea was achieved largely through activities of major companies such as,
Samsung and LG. The introduction of MNC’s has also led to the multiplier effect
whereby further indirect positive effects are caused by the establishment of a
company, for example social benefits. Globalization and the increase in MNC’s
have accelerated the flows of investment into areas which are lacking in
development. In a report taken from the UN (2003) in the last 20 years more
than 70 countries have strengthened legislation to promote investment in
extractive industries such as coal and oil. Investments in developing countries
increased from 1,219 in 1988 to 5,671 in 1997. Investment in these areas can
have direct positive effects on the population and the local economy.
Investments in mining exploration and investment in Africa has doubled
between 1990 and 1997 (UN). From a negative point of view investment into
these countries does not always go straight into the local economy. A freemarket means that little is done to address re-distribution of wealth and money
is not reinvested back into the community but directly to the company owners.
These countries can be exploited by the MNC’s and therefore receive little
benefits.
Corbidge discusses how the concept of globalization has increased recognition
alongside processes of deterritralization, the flow of capital and technology
across national boundaries reduces the importance of national space in
economic decision making. This change in power structure means that
multinational companies are now able to transcend traditional regulatory
boundaries set by the nation states. Generally the traditional role taken by the
nation state is to facilitate both economic and social development. Since the
introduction of MNC’s the role of the nation state has been weakened and it has
now shifted to one run by money capitalists whose prime objective is the
accumulation of capital. This does not necessarily lead to beneficial development
of areas where these companies choose to ‘set up’. The United Nations state the
level of benefit that globalization brings depends upon the strength and
effectiveness of the government and the stability of domestic institutions. The
countries which lack this political power and stability are those which do not reap
the benefits or on the contrary are exploited by the MNC’s. Institutions such as
the World Bank, World Trade Organization (WTO) and International Monetary
Fund (IMF) have been created as the new regulatory systems on a global scale to
regulate MNC’s. However, while these supranational organizations make
decisions behind ‘closed doors’ they continue to be undemocratic and favour
those with power at the expense of others. This is a prime example of how
globalization has had a negative effect on developing countries. Only true
restructuring of these systems will enable them to effectively bring positive
change throughout the world.
A major negative effect of globalization has been the gradual division of the
North and the South (more economically developed countries and less
economically developed countries) It can be argued that globalization has
decreased the difference between MEDC’s and LEDC’s. By looking at figures
from the HDI in the UN development Report 1999 some countries have
increased income due to globalization. China's opening to world trade has
brought it growth in income from $1460 a head in 1980 to $4120 by 1999.
However, although some countries have benefited from economic development
through globalization many countries remain poor. “The gap in incomes
between the 20% of the richest and the poorest countries has grown from 30 to
1 in 1960 to 82 to 1 in 1995.” (UN development report 1999) Many of the
countries that are not developing are those which are not open to world trade.
Jonathan Barton highlights the importance of understanding the North-South
divide in his analysis of the political geography of South America. The research
into issues of global development by the Brandt Commission in 1980 and 1983
emphasizes the importance of understanding complex inter-relations in terms of
production and consumption, health and welfare and the environment. A
greater understanding of these issues is essential to prevent further division
between the North and South.
Many people believe that globalization has decreased poverty and inequalities in
global income. China’s opening to world trade has encouraged huge
development of the economy and industries and therefore this has encouraged
further social development within the country. This statement can be supported
by looking at the Human Development Index (HDI) which is a measure of a
country's development that takes into account life-expectancy, educational
enrolment, adult literacy and per capita income. In 2001 China was ranked 99th
out of 174 countries, in 2001 it was ranked 106th. The growth of income per
capita has increased dramatically and this is a direct cause of development
through globalization. The Spread of globalization is thought to benefit many
newly developing countries which will decrease the divide between the more
economically developed and the less economically developed. Although
countries have benefited from globalization, for example, the newly
industrializing countries such as Korea and China. Many countries remain poor
and the gap between the rich and the poor nations is continually increasing, this
is the case for many African and Eastern European countries where the HDI has
fallen. It is believed that increasing inequality is a direct result of market forces.
Large corporations give the rich the power to add to their wealth and they also
have the freedom to ‘set up’ in poor countries to make greater profits from low
wage levels and exploitation of resources.
With the United States as the super power we have seen a dramatic
homogenization towards the American way of life. This ‘Americanization’ brings
with it a culture of consumerism, competition and life styles which are
apparently free from social and environmental responsibility. This change and
the following of ‘the American dream’ is not generally positive and many cultures
are being lost or ‘swallowed up’. For many cultures the new diversity that
globalization brings is disquieting and disempowering.
People fear that their countries are becoming fragmented and that traditional
values and cultural identities are being lost. There are many driving forces which
help spread Americanization but the main contributing factors are the huge multi
national corporations. There are no brand names that have the same global
resonance as McDonalds and Coca Cola. These corporations have a stranglehold
on the world and they are a huge driving force behind globalization and changing
international attitudes. “There is growing fear of being taken over by new types
of technology and the general ambivalence towards globalization, of which
McDonald’s has become a symbol” (The Guardian 1999).
The US has been dramatically responsible for transforming communication by
the invention and democratization of the internet. “speed is the defining
character of the internet age, this new technology has shrunk the world
radically, making globalization a reality.” (The Guardian 1999). The increased
access to communications through the media has heightened public awareness.
However, John Pilger sees the media as simply propaganda of western power, by
its manipulation of language and omissions, which often prevents us from
understanding the meaning of contemporary events. Increased consciousness
about world events has also lead to increased uncertainty which can arguably
be linked with an increase in fear. As we learn more about what is happening in
the world our consciousness about the instability also grows. The recent surge
in terrorism is a new global threat that is linked to attacking Americanization and
protecting cultural and religious beliefs. To a large extent it is built on fear from
the growing uncertainty that we face and the organization of groups and attacks
which has been made quicker and easier through the increased communication.
However the Zapatista movement in Mexico managed to largely avoid violence
by the use of the internet is an example whereby globalization has served to
mobilize forces outside of the locality in a new way to reap positive results.
Conclusion
In Conclusion there are evidently positive and negative consequences of
globalization. These effects are either direct results of globalization or indirect
results caused by factors linked to globalization. Throughout this essay I have
stated many of the major effects globalization has caused to our world system.
Many of these effects have been around since the beginning of globalization
however some are more recent issues such as the internet and terrorism. It is
clear that globalization has had many positive effects to world markets.
Globalization has helped open up new trade areas where LEDC’s can benefit from
a range of beneficial outcomes such as new employment opportunities and
greater economic development. As stated previously not all countries have
benefited from the spread of globalization and in fact many countries have been
exploited. In order to sustain globalization and to limit negative outcomes MNC’s
need to be regulated to stop further exploitation. If globalization continues to aid
the flourishment of global capitalism a sense of social responsibility needs to
develop along side it. As our awareness or access to knowledge grows we must
take responsibility for our actions.
Failure to do so means we will live in a continually polarized world where the
gap between the rich and poor continues to cause global atrocities and
growing instability such as global terrorism that we are witnessing now.
Bibliography
Pilger J, (l998), Hidden Agendas , London. Chapters 1 and 5
The Guardian, Monday Nov 8th 1999, Planet USA
Bilton et al (1996), Introductory Sociology: 3rd Edition, Macmillian
Barton J.R, (1997), A political Geography of Latin America, London, Routledge
www.globalisationguide.org