Download When looking at the notion of globalization from a development

1. When looking at the notion of globalization from a development perspective we begin to
look at the global economy. The global economy points out the impacts that go beyond
national borders and the international dimensions of economic activity. Four important
factors to the fundamentals of global economy are international trade and finance,
international institutions and agreements, foreign aid, and multi-national corporations
(MNC). All four of the factors of the fundamentals of global economy have huge impacts
on our lives not only on national levels but also in our local communities. These factors
tend to be complicated to understand but are strong and effective nonetheless. In the
twentieth century, the global economy has token some exceptional changes. The changes
will open up opportunities for those who are able to take advantage of them and continue
to foster greater insecurity, uncertainty, and a decline in economic prospects mostly in the
less developed countries (LDC) of the Global South. The notion of globalization from a
modern perspective is usually linked with the free movement of trade of goods and
services. It is also linked with ideas, technology, and financial capital that is free by state
control. We can link this to the strengthening of interconnections between numerous
countries, institutions, and societies that exist around the world. To include political,
social, cultural, and other dimensions in the notion of globalization goes well outside the
economic world. However, the economic world forms perhaps its most vital single
driving force.
With the notion of globalization comes plenty of potential effects which can either be one
of the two: negative or positive. In globalization we tend to see more negative effects
than positive effects. Beginning with the negatives effects, we notice that they are more
expressed in terms of the quality of life one lives, the distributional factor, and real
economic issues. The first negative effect of the notion of globalization is the reduce role
in national boundaries, more noticeable in the economic world which in turn becomes
more difficult to control and regulate economic activity. This reduces the power of
government as it does not allow them to make decisions on how resources are allocated
or used. It also reduces the government’s ability to set independent distributive and
stabilization policies as well as development strategies. This can cause for retaliation
from those who are out of hand elsewhere due to the reduced roles having a bearing on
the location of economic activity which occurs through the market. Some people believe
that the notion of the nation state no longer have any relevance and that we are on our
way to a borderless world. It is also believed that the market forces in the process of
globalization are sabotaging the development prospects of the LDC’s. Economic progress
on the basis of national resources and initiatives would be close to impossible. The
second negative effect of the notion of globalization is due to the large flows of financial
capital which allows for smaller and weaker markets to be weakened. Countries in the
past such as Mexico, Brazil, and Argentina and countries presently such as Italy and
Spain are places that have been ample proof of their markets being weakened. This is
why LDC countries are predominantly vulnerable to this issue which the same issue is
also existing in industrial countries as well, especially the relatively smaller ones.
Instability is than presented due to the over-reliance on international trade on the part of
the LDC’s. The third negative effect on the notion of globalization is the widening gap
that is already large between rural and urban areas in LDC’s. Due to the widening of the
gap we begin to see that globalization aims to promote uneven development where
redistributive and allocative powers of the government are weak. Underprivileged
peasant farmers, rural workers, and the urban poor will be the strongly affected by this
process. We will begin to see migration to urban areas likely improve the amount of
urban poverty while increasing the large urban informal sector or underground economy.
The fourth negative effect on the notion of globalization is the wealthy being targeted by
corporations at the global level which leaves consumers out in the more remote areas and
countries. The targets of the corporations are called transnational consumers. Large
amounts of the population in third world countries are becoming increasingly less vital
both as consumers, producers, or markets. As a result of this, they are more powerless
and marginalized. The fifth negative effect on the notion of globalization is that it
increases the control of multinational corporations and transnational corporations (TNC).
These corporations have advantages over local producers specifically small scale ones
and new technologies that are emerging which they developed and control it. This helps
the MNC and TNC become increasingly greater and enhance their power and influence.
With the affects that MNCs have on the preferences and tastes of goods and service that
they produce leads to problems where people would see it as disagreeable. An example of
this would be in favor of McDonald’s hamburgers and coca cola which they would shift
the consumption. A huge problem that they are beginning to see is that the mass
production of consumer goods which is based solely on the drive of profit, would not
encourage wellness and human welfare so that it represents a gross misallocation or
misuse of scarce resources. The sixth negative effect on the notion of globalization is that
it favors owners of financial capital or lenders at the expense of workers. The problem
with this is that the owners of financial capital can send their capital across national
boundaries that they do not have to move. This gives an advantage to the owners of
financial capital by directing there money towards more profitable places. When the
owners of financial capital get into trouble, governments and international institutions are
expected to help them out. When this happens we end up with the socialization of costs
and the privatization of profits. It than leaves unskilled labor to fight for themselves
because of unemployment and economic crisis. The seventh negative effect of the notion
of globalization is it promotes standardization, which makes sure that all products are
similar. It than becomes easier to shift the production of goods and services that are not
connected to a specific resource or geographical location. Furthermore, it also weakens
local production. The eighth negative effect of the notion of globalization is it creates a
rise in the mobility of production which causes a rise in risk and uncertainty. This occurs
because of a small amount of employment security. Risk and security is not only
damaging to workers but also other countries, communities, and regions. It can also cause
for a break down between employers and employees based on the traditional agreements
of interests. Globalization than allows for owners of production units to move their
operations to another place where they can employ the same workers for lower wages.
The ninth negative effect on the notion of globalization is the scare of globalization
putting a downward pressure on wages in high wage countries moving in the direction of
levels that exist in lower wages. MNC’s and the dependence on trade on behalf of LDC,
will be inhibit any increase in LDC wages. This will cause problems in labor standards
especially in the child labor side of things. These problems usually include the notion of
“race to the bottom”. Restricting or getting rid of child labor will cause children to look at
other ways of making an earning such as prostitution and petty crime. The tenth negative
effect on the notion of globalization creates a scare that globalization will reduce
problems with ecological issues and weaken local cultures and traditions. The
environment is important because it is linked to our survival and also it is basically global
in our nature. When there is a rise in the flow of goods internationally it creates more
pollution and environmental degradation. The eleventh effect on the notion of
globalization is by making everything similar causes globalization to have a contagion
effect. Similar institutions and cultures believe that if something is to happen anywhere in
the world it will manage to spread to them. The people who will suffer from the problems
of something happening in the world and spreading over to them will be carried by the
weaker countries. Large continents like North America would not be effected if
something goes wrong somewhere else in the world. The twelfth effect on the notion of
globalization is the concern with terrorism, international crime, and pandemics. We have
seen a significant rise in criminal acts, for example, human and drug trafficking,
organized fraud, and financial manipulation. We’ve also seen that diseases have begun to
spread quickly and terrorism is changing the way we live our lives.
The positive effects on the notion of globalization allows the division of labor to be
carried out at the global level leading to greater productivity and output. Based on
comparative advantage, trade specialization will begin to expand. Lower wage countries
will be able to specialize in more-unskilled labor intensive areas of production. Income
levels will begin to increase as a result of greater productivity. The second positive effect
on the notion of globalization is it provides lower costs of production and increases
efficiency by letting firms exploit economies of scale through larger production units and
longer production runs. With lower production costs translates into lower prices, allowing
things to be more open to people. Efficiency is significant because it is able to maximize
the amount of output with the resources that are available which will allow for no
wastage of resources. The third positive effect on the notion of globalization is it allows
financial capital to be put in the best possible position due to greater mobility across
national borders. Obstacles that arise from the shortage of capital from inhibiting
moneymaking investment opportunities which include developing countries are
prevented. The fourth positive effect on the notion of globalization is that it creates larger
production for the international market that guarantees that products are at the highest
quality and the specs of the products are at the highest standard. Consumers are than
reassured in all countries due to a wide range of products to choose from. The fifth
positive effect on the notion of globalization acknowledges that all countries should be
integrated and gain from global economy which in turn guarantees higher standards of
living and improvements in environmental and labor practices. LDC’s would benefit
from the transfer of technology which speeds up their development process. The sixth
positive effect on the notion of globalization takes into consideration against
unacceptable social, economic and other practices through the rest of the world and the
flows of ideas and information. In turn, we would see the elimination of practices such as
discrimination and child labor. The seventh positive effect on the notion of globalization
promotes better contact between people of different ethnicities which in the process
promotes a better understanding and appreciation of differences. With the integration of
ideas in local cultures we would see improved due to the contact between people of
different ethnicities. Nevertheless, rather than weakening different cultures, it would be
better to preserve them and make them more dynamic. The eighth positive effect on the
notion of globalization improves the possibility of co-operation at a global scale that
allows them to deal with global issues that are related to development and the
environment. This would lead people to act as global citizens. The ninth positive effect
on the notion of globalization helps better individual freedom.
We than see that the globalization process is shaped by policies that involve the flow of
trade, finance, ideas, and the whole institutional framework. In order for the globalization
process to abide by these policies we need to build institutions that are consistent with the
type of world we want to promote and support. This than allows the globalization process
to be directed by policy actions. People, governments and institutions will all have their
own roles that they will play in what type of world system we want in place. The most
important thing is that in the decision making process we need to guarantee that
legitimate interests and concerns of all three parties will not be ignored or sabotaged and
the three parties having the opportunity and capacity to participate effectively. We need
to understand though that implementing the right policies leads to issues of human action.
Having good intentions could have its problems when its associated with ignorance and
lack of understanding of the existing realities and circumstances. We need to overcome
the differences in interests, objectives, and the like among people and nations.
The importance of the notion of globalization of production is the trend that relates to the
notion of national product that means any product or service associated with a certain
area or country is less important. Components and parts of products are usually designed
in one country, than made in another country, and then put together in another country
and then sold in another. Due to this we see an increase in world trade through an intraproduct basis or through intra-industries that involve intermediate products or component
parts rather than do trade in final products. An example of this, is in the automobile sector
where we see a shift of the assembly in German, American, and Japanese cars to Mexico.
As a result of this we see that the process of production is split up into different tasks
which could be designated to different countries with different traits. What usually
happens than is that the poorer countries get designated with the production of
components due to the fact that involve fewer skills and are not paid that much money
wise the wealthier countries are usually given jobs or products that require greater skills.
We also see in the globalization process through the means of production that there can
be a comparative advantage or a competitive advantage. A comparative advantage
decides where production is to be taken place. A competitive advantage decides where
the items will be produced by the company on its own and then are subcontracted or
bought from other independent producers. We than move on to see that MNCs are the
major beneficiaries of the global production process. These corporations are global and
have plenty of advantages over local and national producers such as marketing channels,
brand associations, and majority of up to date technology. MNC’s usually enter the
markets through franchising, licensing, and other arrangements. We see this with our own
eyes with businesses like Subway, KFC, and Tim Horton’s on James St., Antigonish.
They also usually enter countries through subcontracting or networking. We can also
notice that global production is driven by buyers usually through subcontracting. An
example of this is Wal-Mart who are only sellers but outsource their production all over
the globe. In the electronic and automobile industry in global production it strictly
producer driven. In these industries, the main competition is amongst producers which is
solely based on prices, production differentiation and the speed at which products are
able to hit the market. The importance of the notion of globalization of consumption is
that it is becoming more globalized due things we buy. We are starting to become more
dependent on international standards, which MNCs set and cater to their interests. We are
also affected by the marketing and advertising that happens on the global scale at the
hands of MNCs. The effects of advertising that catch are taste and preferences makes
substitute away from local goods and services and purchase products that usually are
inferior and more expensive. The notion of globalization on from the third world
countries is seen right now as a bit on the positive side as we are starting to see an
advancement in technology which LDC countries are benefitting the most from at the
moment LDCs able to access internet, cable, and even have mobile phones. This allows
to be caught up on news around the world and even in their communities. It allows them
to now interact with their friends near and far around the globe.
2. The effect of globalization on governments is seen in two separate views. One view
believe that national governments are still relevant as regulars of economic activity which
rests on the perception of nature and the extent of globalization but more importantly on
the limits of markets. The other view believe that national governments will play an
increasingly smaller role. In the view that national governments are still relevant as
regulars of economic activity which rests on the perception of nature and the extent of
globalization but more importantly on the limits of markets, believe that economic
activities still need to take place somewhere in a geographical area and national
boundary. As a result of this, governments will still be able to regulate activities that take
place in their national boundaries. They also believe that enterprises can operate in
certain locations that are profitable and superior to other locations. In order for these
operations to be maintained and thrive they would follow local rules and regulations. We
see an example of this in the case of Unisys, an Indian company with operations in the
US that obey with American sexual harassment laws. Furthermore, they believe that
despite trade and capital flows, the majority of economic activity takes place inside
national boundaries. We see this in Canada where trade between provinces is greater than
trade with the outside world including states and regions south of the border. In effect,
mobility in the circumstance of physical capital is exaggerated. This is due to the
existence of barriers to trade, transportation, historical facts such as Canada’s national
policy, costs of trading due to different currencies and the risks that it entails, and a home
bias by consumers linked to a wide range of things including ignorance and lack of
information about goods and services of other countries, cultural factors, and differences
in taste and preferences. In this view it is also noticeable that though they believe there
has been a bit of shift in power to international institutions such as the IMF, World Bank,
and GATT/WT). However, we need to consider that these institutions were created by
national governments and therefore under their collective control. As a result, these
institutions are mechanisms of national states, and promote and support their interests.
We also need to consider that in order for the world economic system to be ran smoothly
cooperation is needed especially in the powerful countries, mainly the US an G7 and G8
countries. Thus, larger countries are likely to have even more power. In this view we see
liberalization and the expansion of trade and capital flows have pointed out the
weaknesses of national governments in the economic world. Governments have also
formed alliances which has helped them to pursue separate internal policies and resulted
in greater policy harmonization, that leads to a larger amount of control over trade and
reduces the impact of capital flows. While the movements being made are towards a
capitalist market, different versions of it can co-exist. This means that globalization and
the dependence of international financial flows do not limit or prevent countries from
choosing policies that endorse greater equity, greater social protection and the
establishment and maintenance of a generous welfare state. It also does not mean that it
will lead to a merging between national policies, strategies and institutions. The role of
the nation state cannot be replaced by any international institution because the whole
notion of globalization rests on the existence of such entities. Some could argue that
international trade and finance have moved hand in hand with the rise of strong and
stable nation states. Some will argue that the enforcement of rules to guarantee that
markets will work effectively cannot be achieved at the global level. As a result without a
strong national government that are able to implement common sets of rules locally, it
will be close to impossible to have efficient world markets. The notion that national
governments can be eliminated and everything can be enforced at a distance by
international institutions in combination with domestic interests is not a credible one.
Cheating, collusion, and violation of rules and standards will get out of hand. Some will
also argue that the nature of the market in promoting inequality and in generating both
winners and losers, which are not the same around the world, need an effective
redistributive mechanism which is necessary. This cannot be dealt with at the global
level, even in the presence of a legitimate global government. International institutions
and even if a world government that was established based solely on regulating market
activities would not allow for the efficient supplying of non-market goods or services.
Due to this we would see an increase in inefficiency and a reduction in welfare-enhancing
economic activity. We would also see instability and strife due to the absence of effective
entities that carry out fundamental stabilization functions that deal with growth, inflation
and employment. On the other view that believes national governments will play an
increasingly smaller role have numerous reasons why this will occur. They believe
economic activities are beginning to gradually exceed the regulatory reach of national
governments which in turn we would see a reduction in the role of government and
would no longer regulate economic activity or implement policies that are designed to
generate desired outcomes. They also believe that if given the mobility of capital, the
abilities of countries to manage their economies will be reduced because in economic
activity, a shift would occur which would be more in line with their interests. This result
would include the adoption of policies that are similar to those adopted by other countries
that are consistent with the needs and requirements of MNCs. Government involvement
in the economy would be kept to a minimum. It would also include a transformation of
national governments into nothing more than platform builders which would attract
economic activity. Furthermore, they believe that governments would no longer be able
to provide existing social welfare safety net programs. Thus, would allow us to see wages
and other labor costs be reduced and would see an increase in profits. We would also see
an increase in the competitiveness of cost in domestic businesses and foreign investment
would be promoted. As well we would see more profit making opportunities created by
for the private sector and profit driven enterprises would take over functions previously
assumed by the private sector. An example of this is the privatization of specific medical
procedures and functions.