Critique Of Globalization: Understanding The Positive And Negative Effects Of Trade, Financial Integration, And Technology

The Recent Phenomenon of Globalization: Positive and Negative Effects

Discuss about the Collapse of Global trade, murky protectionism and the crisis.

The subject of globalisation has become one of the most significant among different scholars. It has always been an areas of interest of the social workers, business world as well as political leaders as well.  Globalisation has been considered to be a recent phenomenon prevailing in the twentieth century which has brought both the positive as well as negative effects to the population, society and economy (Eisenstadt 2017). When the phenomenon of globalisation has starts in the world in various different forms, it was considered to be something that is positive and inevitable in order to create a long lasting benefit to every participants. However, it is to note that globalisation is a process of interaction and integration that might occurs in between different government, people or companies. It is considered to be a movement which has now become universal towards financial integration, economic, trade and communications. The concept of globalisation implies on the broadening outlook of a world that is interconnected and inter-dependent and has free transfer of the capital, goods and services. However, it is also to mention that there are many economists who correct that, such a free transfer of goods or capital is not inclusive of the free movement of labour. Hence, the economies which are smaller hurt by the obstructed movement of the human resources. This paper has been critique and elucidate the true concept of globalisation as it has been practised or understood in the recent decades. It would elaborate on presenting an explanation to whether the trade borders are really collapsing or we are just seeing, post GFC, a resurgence in them. Also, the paper would be present a brief analysis of the reason behind the extreme demonstrations against the concept of globalisation at WTC and the G7 conferences. Furthermore, it is going to shed light on the view of Pankaj Ghemawat, a Global Strategy professor at the IESE school of Barcelona, who stresses to despise this accepted view of the world. In his book titled World 3.0, he claims the world to be semi globalised with cultural and other barriers gradually being bridged. With the same, the paper would present a brief on the idea of Antony Giddens on globalisation and ana analysis of the concept of “End of Poverty” movement and the contrary assertion that “Trade NOT aid” is the only way towards a more globalised world which mitigates against poverty.

Critique and Elucidation of Globalization in Recent Decades

In a report titled “The collapse of Global trade, murky protectionism and the crisis”,  Richard Baldwin and Siman Evenett has presented their views about the phrases such as “the shrinking world” and the “border less world” are false (Kee, Neague and Nicita 2013)). As the matter of fact that trade is universally suffering or undergoing a globally synchronised collapse and that is both severe and sudden. Many of the economists have accepted the fact that the unsuccessfulness towards gaining global stability which is considered to be important for the global order since the factor that they aided most of this failures. For example, one of the notable incidences that have highlighted such shortcomings in a global context is that of the attack of 9/11 as the leaders all over the world have seen the true image that there is indeed an urgent security risk if the terrorists, who have access to massive and explosive weapons are not controlled (Gupta, Pouw and Ros-Tonen 2015). With the same, one of the most significant and important challenges to the universal order in the current years was that of a credit crisis during the period between 2007and 2008 that have threatened the collapse of the global system of finance. Such an economic collapse has taken place because the global leaders were not able enough to survive with the security and economic challenges prevailing. Within the period of 30 years, the international trade and foreign investment have become very notable to the universal or global economy.

The movement of “End of Poverty” is all about people revealing about the huge figures of the world poverty but this is to note that there has always been a danger regarding the messages which people need to spread through means of demonstration such as the ones outside the G8 summit are reduced (Kovacic 2014). People belief that informing the political leaders about the poor prevailing in the world would turn the plight of poverty stricken individuals. Hence, there is an urgent of an agenda to end the poverty but that agenda could not be inclusive of the capitalism, markets and neo-liberalism (Giesler and Veresiu 2014). This is in fact quite impossible in a world where lots of political leaders or advisors are neo-liberal are mainly focused on making and earning profits. In the business world of todays, the world trade is very must base on the investments in the areas such as technologies and in nations that is under developed and is not equipped with proper technology suffers a lot because of its lack. Technology is one among the many aspects of globalisation which has assisted in changing the concept of time and distance. By means of technology, the perception of the people regarding distance and time has greatly changed. Technology has assisted people in feeling closure to their friends and families. However, in contrast, (Dupas 2014) has stated the fact that there are still about 65% of the total population that is still living under 2,000$ every year. A majority percentage of this owns television, telephones and they also have access to the internet as well. This, the “Maslow’s Triangle of Needs” has been inverted in this way. Globalisation has helped people to have an access to both information and technology. 

The Collapse of Global Trade and Murky Protectionism

However, unlike in this sector, in trade sector the things are quite different because many meetings in relation to international monetary, environmental and trade organisations have never ever used to gather any attention but now such meetings are drawing attention of various anti-globalisation activists. The primary reasons behind such demonstrations are budgets of some corporations which are greater than the GDP (Gross Domestic Progress) of man countries in the world. As according to the studies, the top 100 economies comprises of 49 different nations and 51 multinational corporations and post of the very great financial crisis, people could see dry up within trade finance (Li 2013). It is to note that international trade refers to the process of one company purchasing from another company that involves profits and risks. The GFC has influenced the trade finance in two different ways- providing fewer opportunities to the traders who used to do such kind of trades and the traders are now choosing to trust their early partners because of the fear of unknown. As because of the fact that a back does not trust other banks, this is contributing in the paired credit to break down.

Along with this, the other reason behind such an extreme demonstrations against the globalisation at the conferences of WTC and G7is murky protectionism. In the recent years, there are many examples that witnesses for murky protectionism in which none of them were violations about to WTO obligations but they are all of abuses of the legitimate or legal discretion that are being taken into consideration as discriminate against the companies, workers, investors and foreign goods. According to the recent survey, 78 trade measures which the governments have enacted on 17 were of the offenders from G20 (Evenett 2013). The developing countries were establishing all the forms of protection such as tariffs and border measures. One of the best suited examples in this context would be of the rise in tariffs in Russia on used cars. The non-tariff measures consists of the example from Argentina where the no automatic licensing was applied on the televisions, textiles, shoes and leather goods. In some of the developing nations, the government has tighten the standards and this has resulted in slowing down the imports (Asmelash 2015). Example of such condition include the case of India where the China made toys were restricted and banned. The green policies are also one of the forms of murky protectionism tactics. In countries such as France, most of the banks were bailed out on one condition and that was of the fact that they need to lend to airlines as cancelation of the new Airbus planes must not take place. Hence, it can be said that the nature of protectionism is indeed murky and this is making it difficult to enumerate further. Also, it is also to note that there is a lack of transparency which is making it hard for the politicians to respond against the measures of the trading partners.

Challenges Posed by Credit Crises

Men have been facing an ambiguity in choosing between the concepts of globalisation and integration. These two concepts have been juxtaposed by the concepts of increasing regulations in various fields and protectionism in some other fields. Ghemawat actually perceives the human universe as an amalgamation of regulations and integrations side by side.

He argues that there is a huge gap between people’s conceptions of globalisations and the real extent of globalisation. Ghemawat provides for a survey that he conducted among people in random. On asking people what percentage of their calling minutes are engaged in cross border telecommunications, frequently they replied with numbers like 40 or 50 or 60 percentages (Ghemawat, 2017). However on larger revelations, it was confirmed that only 2 % of all telephone calls made, are international calls.

Ghemawat used another instance to solidify his view. He threw light upon the figures of the entire investment activity around the globe. Out of the total investment the rate of Direct Foreign Investments (FDI) is remarkable low. According to the opinion of Ghemawat, the real percentage of FDI is 10% at the most. Whereas economists generally work with consideration that the value of FDI is between 20 to 40% (Ghemawat, 2017). According to him, people are segregated and have their own perceptions about globalisation, most of which are not substantiated by real facts.

In fact Ghemawat hold the view that if people perceive that the level of globalisation achieved is not up to the extent what people assume it is in real, then the full growth potential of globalisation can be perceived by the end of the 21^st century. To quote the words of P. Ghemawat: “It’s not too much of an exaggeration to say that much of the debate about globalisation occurs in a data-free zone”

A Matter of Facts: Ghemawat provide the strongest argumentation in his statement of the fact that technology has immense power that might obliterate cultural barriers and differences in political perspectives. However, according to the views of Agnew (2017), this exaggerated eulogy about the transforming power of technology makes it highly sellable. He also makes the physiological dimensions of the misperceptions regarding globalisations evident. Primarily people encourage the concept of globalisation because it seems to be an innovative and exciting idea. They conceive themselves as exponents of modernism if they can associate themselves with the concept of globalisation.  Since he was himself associated with Business studies, he could define the discrepancy regarding the concept of globalisation that men learn from the student phase. They are foretold that once if they can master the elaborate Business Administration course, they would become adaptable to manage business problems all around the world.

The ‘End of Poverty’ Movement: Trade vs. Aid

Perception of Globalisation in Ghemawat’s Books: The professor’s books attempts to provide further insight to the accurate measurement of globalisation in the world. Fore mostly people must realise that the human world have become integrated no doubt. However, that does not necessarily have the potential to disregard the political barriers that still remains and with equal emphasis. In aligning business with the falsehood that exists in the perception of globalisations he uses the law of Distance. According to the postulates, in the modern world cross border business transactions are limited. On top of that, major percentage of the cross border transactions take place among countries which are not only geographically close to each other but also similar to each other in their culture or political layout. In his book, Ghemawat uses the evidence of USA. The major proportion of the business transactions of US occurs with her direct northern neighbour country, Canada. According to Guillotin and Mangematin (2015), Canada is USA’s largest bilateral partner in terms of business transactions. For evidence Canada imports maximum Crude Oil from America and outbound telephone traffic of USA is highest with Canada.

The business implications of these facts is immense. Business personalities, according to Ghemawat tend to disregard localisation accept globalisation as the truth. However, Hamilton and Webster, (2015) states that in business, Globalisation exists only at a superficial level. According to Ghemawat, the key factor of succeeding in cross border business is to realise and acknowledge the fact that border differences do have high impact upon business. According to Ghemawat’s views, when an organisations decides to expand in other nation states, they should consider the business advantages they receive in their native country. It is evident they would get similar strategic advantage in a foreign country that shares the same political, cultural and social values. For evidence, an apparel brand would not tend to spread business in Egypt or some other countries of the Middle East (Hirst, Thompson and Bromley, 2015).

The phrase “Borderless World” is to be considered as myth as of the fact that the United States comprises of 25% of the world total economy (Essien and Dickson 2014). Therefore, in a borderless world, the trade consisting of both the import and export would each make up the remaining 75% when the transactions of sales and purchases of it would be distributed equally all around the world, However, the truth is the trade level of United States is just 29& and that consists of both the imports and the exports. In the upcoming years, it is believed that America would also be importing less and would this have less global economy. Even in the nations such as United States and Canada where the borders are adjacent, national border does exists there. Hence, it could be stated that the world economy is indeed a thin crust of global economy that might appeared thick because of the presence of luxury goods, media and technology. The world economy is a large network of national economies which are domestically related over many sectors. The nation state is also very economical relevant as majority of the people live in the same nation where they were born. Hence, it makes their economic fortune dependent on the levels of consumptions and the wage within their society and country. Although, It is also to stated that with the advancement in science and technologies all around the world, the concept of liquid capital is all about the transferring of the money all over the world in a flash but it is also to note that it is only a small fraction which is considered to be only 10% as according to a research. The non-human capitals such as that of the financial capital, infrastructure and real estate do not flow to that extent. This is further assisting in tying the output capital to some countries. Hence, the termination of the nation state is not at all significant or notable in the coming future.

The Views of Prominent Scholars on Globalization, Culture, and Regulation

Conclusion

Hence, from the above discussion it could be stated that the phrases such as “flat world”, borderless world” as well as “the shrinking world” do not properly describe the present existing trade, economic and political conditions. Hence, the users of such phrases are unhooking and are unthinking the leaders off their hooks. Analysing the views of Ghemawat, it can be concluded that business organisations should focus on target markets that can generate values for them. Again, in order to replicate a successful business model they would require an analogous foreign market, again, as long as these critical factors exist, globalisation cannot be perceived as a reality. It is only a hypothetical truth

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