Globalization
(or globalisation)
refers to the increasingly global interconnectedness of cultures,
people and economic activity. Most often, it refers to economics:
the increasingly global distribution of the production of goods and
services, through reduction in barriers to international
trade
such as tariffs,
export fees, and import
quotas
(as well as invisible barriers such as complex and slow bureaucracy)
and the transfer of such goods and services to consumers. It also
involves the freer movement and circulation of workers around the
world, delocalization (relocation of factory and service providers
from one country to another) and glocalization of products and
services. Globalization contributes to economic growth in developed
and developing countries through increased specialization and the
principle of comparative
advantage.
All this helps
to lower the price of goods and thus benefits the consumer and raises
the standard of living. Globalization of financial markets makes
money available at low interest rates for investment.
The
rapid increase in the process of globalization has been the result of
a number of factors: the end of the Cold War and the end of the
relative isolation of countries like Russia, the old Warsaw Pact
states and China, and their integration into the global trading
system; the work of the World Trade Organization to eliminate or
reduce trade barriers; the work of the World Bank, which is a lending
institution whose aim is to help integrate countries into the wider
world economy and promote long-term economic development; the work of
the International Monetary Fund which aims at promoting global
monetary cooperation and financial stability and thus supporting
trade; developments in transport technologies, infrastrucure and
procedures and thus reductions in transport costs, e.g. container
ships and ports, low-cost airlines; developments in Information and
Communications Technologies (ICTs) that facilitate trade, e.g. the
internet, cell phones and satellite technologies.
Supporters
of globalization also argue that it promotes peace. In the 1960s
and’70s there was very little trade between the West and the
Communist bloc. Today the level of trade between, for example, the US
and China or the EU and the Russian Federation is very high, and it
is difficult to imagine how such trading partners could become
involved in a conflict without seriously damaging their own economies
(even in a situation like that in Ukraine where tensions are high).
The
countries that gain least from globalization will be those least
integrated within the global trading system, either by choice (by
political decision and the maintenance of strong trade barriers) or
through a lack of the necessary infrastructure (e.g. ports, airports
and roads), or know-how and expertise, or technology, or an adequate
industrial base or a secure business environment (e.g. failed or
partially failed states or states with high levels of corruption,
bureaucracy, red-tape and insecurity of ownership).
The
term globalization can also refer to the transnational circulation of
ideas, languages, and popular
culture,
particularly via the internet and social media or on satellite TV
across political borders. Many Western political commentators
identify its most positive effects in the spread of democratic and
human rights values at a grass roots level, a phenomenon which
authoritarian regimes may find difficult to control. Paradoxically,
cultural globalization in this sense may actually lead to tension and
political instability, at least in the short term, as the rapid
changes taking place in the Arab world demonstrate. On the other
hand, globalization may lead to a mixing of cultures and an enriched,
more vibrant multicultural society. This is an important argument
both for the EU and for a city like New York.
Globalization
also means the growing role of international organizations, both
global and regional, like the UN, the WTO, the IMF or the EU and AU,
and the diminishing ability of nation states to confront their
problems alone – problems which are now often global challenges
requiring international cooperation at an ever increasing level.
Critics
of globalization make a series of points:
Globalization
encourages competition to lower prices. This may damage developed
economies with strong social welfare systems which find themselves in
competition with countries like China where social welfare costs for
companies are small or non-existent, and overheads may also be
relatively low. Many Europeans commentators would argue that this
aspect of globalization outweighs the benefits to Western consumers
of low-cost goods because European companies will be unable to
compete and either close, move their factories and other production
facilities abroad where costs are lower, or outsource part, or all,
of the production process to other companies located in low-cost
areas. This will lead to more unemployment in the developed
economies. They call for trade limits on countries like China until
those countries provide their own workers with adequate health care,
education and pensions. The freer movement and circulation of workers
around the world has also been criticized as leading to a decline in
salaries as workers from the host state compete with migrants (often
willing, or forced, to work at lower pay rates and usually less
organized in terms of unions), and a rise in social tensions between
these two groups. There may also be rising friction due to cultural
and linguistic differences.Further criticisms in this field concern
the risk of increased threats to security, terrorism and pandemics.
The greater volume of trade makes it difficult for the customs
authorities to effectively check the goods being transported and this
has, it is argued, made illegal trafficking in drugs, arms, organs
and human beings easier. The same argument is made for the increased
number of people moving across borders.
Globalization
is criticized as producing a tendency towards a global monoculture
(and the destruction of local cultures) and towards a monoculture of
crops, which reduces agricultural biodiversity and could put the
world at risk of sudden reductions in food production due to crop
diseases.
Since
the start of the current economic recession in 2008 many experts have
argued that globalization makes the spread of a financial or economic
crisis more likely because of the interconnectedness of the world
economy, and thus renders the global trading system less stable,
rather than more stable as supporters claim. However, other
economists point out that this interconnectedness is not a new
phenomenon as the Wall Street Crash of 1929 and the Depression of the
1930s demonstrates. In fact, they argue that today’s global
institutions and our awareness of global economic realities have made
it possible for countries to react more effectively this time by
adopting common policies rather than pursuing protectionist policies
as happened in the 1930s. However, the globalization of financial
markets and the removal of or reduction in the rules controlling
financial and banking transactions, together with the availability of
credit on easy terms to those who were not really credit-worthy led,
in the opinion of many critics, to a financial culture of
irresponsibility based on short term gains from the stock market and
property markets, and lending to high-risk borrowers rather than
sound, long term investment of this money in industrial and
technological projects and research. This, they say, led directly to
the financial bubble and crisis in the US real estate market, in
particular the sub-prime mortgage market (but also in the Spanish and
Irish real estate markets). It also allowed too much lending to some
states and now too much speculation against these states and their
currencies (e.g. Greece, Greek Treasury bonds and the Euro) on
financial markets. Critics argue that a distinction should be made
between the real economy (the production of goods and services) where
the bankruptcy of even the biggest company will not create an
economic crisis for a government, and the financial sector where
financial institutions may lend on such an enormous scale that should
they face bankruptcy they put the country’s entire economic system
at risk. This argument leads to the conclusion that financial
institutions require much stricter regulation and oversight than
other types of companies.
Critics
argue that poor countries, particularly small poor countries with
little or no industrial base, and thus dependent on the export of
agricultural produce or raw materials are under pressure from
developed economies and emerging economies to open up their economies
to foreign companies. They may thus be exploited or face very great
fluctuations in the global price of the commodities that they export.
See the current situation:
This
may prevent them from accumulating enough capital to develop and grow
their economies. It is argued that they may need to protect strategic
industries, with trade barriers and national institutions and
management, in the early stages of the development of these
industries, as most developed countries themselves (e.g. Italy and
Japan) did and China still does.
Globalization
has also been criticized for prioritizing global economic growth (in
which it has been very successful) over global issues such as
sustainable development, climate change, deforestation, the reduction
in biodiversity and global warming. A series of conferences (the most
recent, the UN Climate Change Conference in Paris November 2015, in
Lima in December 2014, and at UN HQ in New York in September 2014) )
have attempted to address these issues, but there is great
disagreement among commentators as to the effectiveness of these
conferences and the extent of the progress made. Some praise
conferences as a ‘breakthrough’ (the UN) in terms of commitment,
while others see them as too little, too late (many NGOs).
Cultural
globalization has also been criticized as leading to a dehumanized
monoculture based on materialist and essentially Western values. In
this context we should note the rising criticism, in the more
traditional fringes of some cultures, of international institutions
like the WTO, the World Bank, the IMF and even the UN itself as
Western (i.e. ‘foreign’) and imperialist.
Finally,
globalization has also given international criminal and terrorist
organizations more space to operate and these threats to security
will require an ongoing, collective response.
Conclusion
– a sudden reversal of the trend to economic globalization would,
in the opinion of most economists be disastrous, but the
reintroduction of effective rules to govern international finance is
an aim shared by the EU and the Obama administration (Donald Trump?).
A re-examination of the terms of trade between developed, emerging,
and developing countries is also clearly necessary and the goal of
ongoing global negotiations. Moreover, as many of the problems of the
21st
century are now on a global scale only shared global strategies and
cooperation will succeed in dealing with them (e.g. climate change
and the COP21 meeting in Paris in 2015). As Sustainable
Development Goal 17 makes clear, in order to deal with the problems
caused or made worse by population trends a global partnership will
be necessary.
However, critics argue that
so far negotiations on global challenges have produced only modest
consensus and even less in terms of practical results.
https://www.theguardian.com/commentisfree/2011/aug/25/dead-end-globalisation-youth-rage
https://www.theguardian.com/sustainable-business/2015/sep/28/peak-globalisation-have-we-reached-it-uk
https://www.theguardian.com/sustainable-connections/2016/aug/15/trade-global-economy-tpp-trans-pacific-partnership
