Evaluation of Globalisation from Two Perspectives.
As an Emotive Force, in Being Beneficial and a Key to Future World Economic Development as well as Being Inevitable and Irreversible.
And as a Force that Increases Inequality Within and Between Nations, Threatens Employment and Living Standards and Thwarts Social Progress
Introduction
Globalisation as a word is that utilized in differing contexts within the public lexicon. It is one of “… the most widely used- and misused – keyword … in recent years, as well as being “, one of the most rarely defined, the most nebulous and misunderstood, as well as the most politically effective …” (Beck and Camiller, 2000, p. 19). We tend to think of globalisation is as a modern term, first defined in the Merriam Webster Dictionary in 1944 (University of Pennsylvania, 2005) its historical roots in terms of it being a part of human history can be traced back “… at least 5,000 years” (Wallerstein et al, 1980, p. 15). Said beginnings, “… In the fifteenth and early sixteenth century …” is when the “… European world-economy …” came into existence as “… a kind of social system the world …(had) … really known before and which is the distinctive feature of the modern world-system” (Wallerstein et al, 1980, p. 15). The underpinnings of why Wallerstein et al (1980, p. 15) take this view is that is represented an economic rather than political entity that differed from the “… empires, city-states and nation-states …” that preceded it. Eisnstadt (1968, P. 41) helps to clarify the preceding by defining empire as a term utilized “… to designate a political system encompassing wide, relatively high centralized territories …” which consisted of an emperor and “… central political institutions …” And while empires were a primitive means by which economic domination was conducted, they laid the foundations for globalization through economic flows as represented by trade (Eisenstadt, 1961, pp. 82-107).
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The preceding has been utilized as an historical guide to the roots of globalisation, which is generally credited as being the individual credited with using it in an economic sense (Tedlow and Abdelal, 2005). Levitt’s definition of globalisation is based upon its applicability to corporations and products and what he termed as ‘homogenized demand’ (Tedlow and Abdelal, 2005). That view, while revolutionary at the time, in hindsight is a narrow conception of the broader concept that we understand globalisation to be in today’s terms. Shariff (2003, pp. 163-178) states that globalisation is the global process representing the homogenising of prices, wages, products, interest rates and profits that relies upon three forces, 1. human migration, 2. international trade, and 3. the swift movement of capital along with the integration of financial markets. Bhaqwati (2005, p. 3) advises that globalisation “… can mean many things”. He focuses on globalisation as being economic, constituting the “… integration of national economies into the international economy through trade, direct foreign investment (by corporations and multinationals), short term capital flows, international flows of workers and …. flows of technology …” (Bhaqwati, 2005, p. 3).
The World Bank, which agrees with Beck and Camiller (2000, p. 19) and states that there is no precise and universally agreed upon definition and, adds that over time it, globalisation, has come to encompass “… cultural, political and other connotations in addition to the economic” (PREM Economic Policy Group and Development Economics Group, 2005). Their explanation of globalisation tends to focus on the economic side of the ledger, but adds that it, globalisation, is not uniform stating that in the poorer lesser developed countries it is more a case of being excluded from it rather than being impoverished by it (PREM Economic Policy Group and Development Economics Group, 2005). Hirst and Thompson (2001. p. 3) agree with the fact that there are broadly differing contexts attached to globalisation and that in today’s terms it largely means placing economic aspects in the forefront, keeping in mind the cultural, political, and social variables that are intertwined. The International Monetary Fund (2000) combines pieces of definitions from the preceding in stating that globalisation represents “… a historical process …” which is attributable to “… human innovation and technological progress”, and “… refers to the increasing integration of economies …” on a global basis “… particularly through trade and financial flows”.
Stiglitz (2003, p. 4) asks the question as to “Why has globalization – a force that has brought so much good – become so controversial?” Bhaqwati (2005, p. 4) also asks this question as to “Why are the critics of globalization so agitated?” Hist and Thompson (2001. p. 2) also are quizzical as to this phenomenon. What is it about globalisation that has proponents lined up on one side, and antagonists on the other? This examination shall seek to equate both sides of this highly charged arena, looking at the views that see globalisation as an emotive force, where some see it as a process that is beneficial, representing a key to future global economic development that is not only inevitable, but irreversible as well. And on the other side of the fence there are those that view globalisation with hostility, and believe that is increases inequality between nations as well as within them, threatens employment along with living standards and thwarts social progress.
According to Giddens (2006), we are in the second phase of the debate on globalisation. His perspective is that there were discussions regarding the phase and attempting to determine what is was and is while it was unfolding. Giddens (2006) views us as being in the second phase of the debate as globalisation is firmly entrenched in economics, politics, cultural and social areas, as we again attempt to determine what it is, along with its consequences and how it can be properly accommodated. Whether one subscribes to this view is a matter of opinion, but the point is there is a debate on globalisation with one side seeing it as representing benefits to society, and the other as promoting inequalities and other negative connotations. Or, is that actually the case? Could it be that it is parts of globalisation that opponents are against? Could it be that the problem with globalisation is its inequality in that there are the nations gaining from it and distancing themselves from those lagging or being left behind? The questions are almost endless. In seeking to reach a determination, this examination will look at both side of the globalisation issue, offering those facets for and those against it.
Ohmae (Ray, 2005) sees globalisation as the liberalisation of individuals, consumers, business corporations as well as regions from the confines of the nation state. He sees the world as representing a global village “… because wealth will migrate across national borders”. He sees, in commercial terms, as well as in consumer terms that the world is “… an increasingly borderless economy, a true global marketplace” with political influences seeking to control the process (Ohmae, 1996, p. 8). Yip (1989, p. 29) sees the process of globalisation as a ‘must’ facet that major business corporations have to participate in as a result of almost all products having foreign competitors. This preceding view not only means that a company needs to look at this from its own domestic market and staving off competition, but also from the viewpoint of growth and profits as there are customers to be won in foreign markets as well (Yip, 1989, p. 29).
Yip’s corporate focus on globalisation looks at falling trade barriers as governments and regions understand the importance of opening their markets to enable them to enter others in a quid pro quo. The corporate process of globalisation results in increased competition, jobs, better products, innovation and lower prices as the lines between products, goods and services have become increasingly transparent, with consumers as the beneficiaries in the process. The opening up of markets, and the loosening of trade restrictions and borders is a positive contribution of globalisation as it makes the new battlefield one of profits, markets and expansion as opposed to conquest, war and destruction (Held et al, 1999. pp. 32-35).
Globalisation’s main engine has been a result of economics, it is money that has underpinned the flow of products, printed materials, the Internet, documentaries and other informational exchanges, along with products, goods and services. The elements of increased trade have brought the need to stabilize currencies in order to permit the corporations within countries to effectively compete on the global stage and is an important underpinning resulting in the formation of the euro in the European Union. The foregoing has brought about a “… high degree of economic interdependence among today’s economies …” and the preceding reflects “… the historical evolution of the world’s economic and political order” (Carbaugh, 2006, p. 3).
Evidence of the equalization process of globalisation can be found in the example of the United States which was the most dominate economic and political nation after the end of World War II (Carbaugh, 2006, p. 3). This has been referred to as neocolonialism, which represents Imperial powers controlling other societies through economic means on the international stage, which resurfaced after WW II, having similarities to the colonialism periods of the sixteenth through twentieth centuries (Selfa, 2002). The foregoing is driven by economic means as capitalism represents “… an economic mode … that … operate within an arena larger than … any political entity can totally control …” (Wallerstein, 1976, pp. 230). The preceding has provided capitalists, and thus globalisation, with the foundation to pursue consistent “… economic expansion of the world-system …” which Wallerstein (1976, pp. 230) argues is skewed in its distribution of rewards. Globalisation is thus a combination of political aims to strengthen national economies through “… political power, authority and forms of rule …” (Held et al, 1999, p. 32) that aids capitalism, commerce and companies.
Globalisation has since evened the playing field as nations, regions and countries have devoted their efforts into strengthening their competitive positions in the commerce arena through regional trading blocks such as the European Union, ASEAN, SAARC, Organization of Petroleum Exporting Countries and other organizations evolved “… the world community into a complicated system based on a growing interdependence among nations” (Carbaugh, 2006, p. 3). China has risen from a developing nation into a world power through its march into capitalism via the innovation of socialist economics, which retains the centralized Party control. Globalisation has aided in the preceding as well as the development of the Chinese military into a sophisticated technologically equipped force (Wortzel, 1994, pp. 168-170). The market reforms of 1978 has enabled the country to harness the commercial potential of its market of 1.3 billion citizens under ‘socialism with Chinese characteristics’ which has transformed China from the 32nd largest trading nation in 1978 to second in terms of GDP purchasing power behind the United States (Dellios, 2004). The power of participation in the international flows of globalisation has proven its ability and potential to transform economies and nations as well as the economic balances of power.
Globalisation is for most intents and purposes a Western dominated process that is influenced and guided by corporations. In pursuing international markets multinational corporations have opted on a course of standardising their product lines to permit them to make adaptations to reach foreign consumers in the quest for increased market share (Hayler, 2006). Localisation represents the adaptation of products, goods and or services to address the tastes, preferences, cultural “… and other requirements of a specific target market” (W3C, 2007). A key example of standardisation combined with localisation can be found in portable telephones. Companies need a standardised approach to the production of basic components in a globalised economy for framing, wiring and related components to permit a universal platform of manufacture. With facilities in 15 countries and sales in over 130, Nokia is a prime example of a globalised company (Nokia, 2001). However, individual markets require localisation to appeal to consumers in the face of competition, as well as the recognition of preferences, tastes and needs. Nokia innovated the first mobile phone that was designed to provide “… commands in English, Chinese, Thai, Bahasa for Indonesia and Malaysia, and Spanish for the Philippine market (Hoberg-Petersen et al, 1999). The preceding is an example of the combined utilization of standardisation and localisation required to capture consumers in the competitive globalised marketplace. Nokia’s deft understanding of the variables of the international marketplace represent the application of Porter’s (1998, pp. 59-61) value chain organization, which represents the various activities inside as well as outside a company, equating logistics, operations, marketing and sales, support activities, procurement, technology development, company infrastructure and utilizing the inputs and results from these activities to improve operations by adapting and changing where needed to meet the demands of the marketplace.
The importance of an international stance in the today’s global economy enables corporations to cope with international competition by leveraging their domestic operations overseas and learns lessons from the unique characteristics of foreign markets to bring back to its own domestic market. The preceding expands the company’s innovation by coming to grips with specialized needs that can translate into new features and approaches that boost sales. Accepting the principle of globalisation is not a luxury that companies can afford to ignore in the face of foreign competition. It is an undeniable facet of competition as any product, goods or services that has a representative market domestically, will be under attack sooner or later by some company or companies seeking to expand. Evidence of the impact of globalisation is shown by the fact that the ratio of exports plus imports as calculated against the global gross domestic product has increased from 16% in 1960 to 40% in 2001 (World Bank, 2002). The forgoing seemingly suggests that localizing products, goods and services from a standardised format to meet the needs of individual markets has proven successful. But, in the larger scheme of things, is globalisation actually helping to increase inequalities between nations and threatening living standards, social progress and employment? As in all questions, there are two sides to every story.
The preceding is a highly complex principle to equate as well as measure, as such is dependent upon the relative sophistication of a country’s ability to meet the varied demands of globalisation called for through institutions, infrastructure development, educational systems, professional and skilled worker training and development, access to raw materials, governmental practices and internal policies. It is simple enough to look at examples of inequality, and related factors, however, in the case of Africa and Latin America, they have only recently opened their markets, beginning in the 1980s, as opposed to the United States, Europe and Japan, which were all engaged in the process shortly after World War II (Bardhan, 2006). China adopted market reforms and changed the precepts of socialism to accommodate a process that enabled them to harness their educational, industrial and internal systems and infrastructure to utilize globalisation to reinforce the power of the state. Their example points to the internal resourcefulness of government to utilize means to transform the way things were done, into what they viewed as needing to be done (Bardhan, 2006). In a free market system inequalities mark the underpinnings of the business process as companies seek lowered costs via which to produce what they are in business for. Such means moving facilities and or processes to those locales that will enable them to maintain quality, but cut costs, and labor, represents the largest cost item.
In a report titled “A Compendium of Inequality” (Martens, 2005) which refers to a United Nations Development Report published in 2005, found that approximately fifty countries, of the total one hundred and seventy-five countries studied, lost ground in terms of their economic standing, GDP and other areas. In order to achieve economic progress, reduce poverty and improve their quality of life, developing countries need increased employment opportunities, improved labor productivity and governmental incentives to attract industry and business as well as to develop them internally. Achievement of the foregoing requires a sustained productivity growth along with increased capacity of the country’s populace in skills and development that will foster the conditions for the attraction of multinational companies and permit the country to compete on the international stage (Little, 2005). Multinational companies bring with them advanced production and management techniques as well as offer increased wages in terms of relative practices thus increasing the standards, thereby attracting the better labor from the available employment pool. The process is slow, yet effective, and the foregoing represent facets used by China, India, Brazil, and the Asian Tigers, South Korea, Taiwan, Hong Kong and Singapore, that aided these countries in making progress in global commerce.
Conclusion
Globalisation can trace its roots back over 5,000 years, with the modern application of the term credited to Levitt (Tedlow and Abdelal, 2005). The consistent evolution of globalisation has caused theorists and scholars to define and redefine the term with the understanding that in its present complexities that there is no universally agreed upon definition to adequately describe the process that includes economics, social processes, cultural facets, political considerations and the complex entangled web of interdependent relationships these areas have. In this examination, the term globalisation has been narrowed to focus on its economic and business ramifications in examining whether the process is beneficial, and a key to future world economic development that is inevitable and irreversible, or is it a process that promotes inequality within as well as between nations that threatens employment along with living standards and thwarts social progress. And while globalisation does have its less than desirable effects, it has proven its worth in lowering international borders to increase trade, migration and stabilize currency and capital flows in an era that has seen unprecedented growth in innovation, communications and the seeking of a better understanding of humanity’s needs.
The process is not going to disappear or reverse itself as whether we like it or not, the world is driven by economics and the interests of corporations to generate profits on behalf of stockholders, and stakeholders in addition to the vested self interests of governments to protect and foster favorable business conditions for corporations that generate employment and pay taxes to support the political structure. The preceding has been and will continue to be an interdependent relationship that has existed since the Chinese dynasties, through the Egyptian era, as well as the Greek and Roman empires. It is not a question of what direction the world is going in, but one of the direction the world has always been going. Corporations are not going to disappear and our way of life that has been evolving change. Commerce, trade and the migration of people has always been with us, globalisation is just the present form that has manifested itself as have as conquests, exploration and wars in addition to trade and commerce been the former means that mankind has utilized from the beginnings of civilisation.
As history has taught us, the more advanced nations use the less advanced to further their ends, with the offshoot of the process that the weaker nations through this association, become stronger and sooner or later establish their own independence and dominance in a never ending cycle of ebbs and flows that has seen shifts in political and economic power. Such was the case with the British empire, the rise of the United States, the emergence of the European Union, the development of regional trading blocks and the ascension of China. This examination has shown that while globalisation does have its inequalities and less than desirable points, it, as in all human endeavours, is an evolutionary process that is still learning from itself. As we progress as a race of peoples, so to does our understanding of our mistakes and the drive to correct them. Institutions such as the United Nations are proof of this evolutionary process. Thus, the faults in globalisation do not lie in its process, but in our application of them, which those whom opposed to it aiding in pointing out its shortcomings. As we learn, we listen and reshape ourselves to devise ways to better serve ourselves as well as humankind. The examples presented herein point to the foregoing.
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