Table of Contents
Introduction 2
A. Trends of Globalization 4
B. Characteristics of Globalization 13
C. Impacts of Globalization 17
Conclusion 21
The Characteristics and Impacts of the Trends of Globalization
Introduction
To be able to understand the characteristics, impacts, and trends of globalization, its history and development must first be given emphasis. It has been perceived that species once spread across the earth slowly, and flourished in deep oceans and varying climates on land. Human beings settled from Africa to other parts of the world, taking more than one million years. From their settling, human civilization started, thus, starting human trade and communication in varying degrees and in different ways. Trade and communication between different races dated back more than 2,000 years, when different products began to travel between China and Europe through the Silk Road. After a few centuries, the Silk Road also became an instrument for the flourishing of Buddhism from India to China. In addition, it can be perceived that through the trade of products between countries and continents, European nations were driven to develop great sailing ships in the 15th century, leading to the breakage of Venetian monopoly on trade with Asia, thus, causing their discovery of the Americas in 1492. Such sailing ships became the technology, which allowed the transport of large numbers of plants, animals, people, and other organisms from one continent to another. This started the trend for colonialism.
The European colonial period enabled transport of traders, invaders, settlers, and slaves from one continent to another. Through the colonizers, new diseases and exotic species were introduced to new populations and races, ravaging such populations and ecosystems, including in the different countries in Asia, Africa, Australia, and the Americas. From ships, the modes of transportation changed over time, and the speed with which products are transferred also changed. The speed of transportation led to the development of new communications and technologies, thus, hastening the development of modern trade organizations, such as corporations, governments, and militaries that participated in the significant transfer of goods, services and information from one continent to another.
Such transfer of goods and services, with increased communication and interdependence among countries and continents is known as the process of globalization. Two American political scientists defined such interdependence as globalism, which specifically is a state of the world involving networks of interdependence at multi-continental distances (2000). In this regard, it can be perceived that through the centuries, globalism has been increasing throughout modern history. As such, its continued process is termed as globalization.
As such, this paper aims to discuss the different characteristics and trends of the process of globalization in the world. This would provide better understanding of the concepts and the changes involved in the process, thus emphasizing its significance in the different aspects of life, such as in the economy, politics, communication, technology and society. Moreover, the impacts of the process of globalization are to be emphasized, which would stress on the many effects that can be observed due to globalization. Through the discussion, evaluation of the process of globalization can be derived, thus, helping to contemplate on its positive and negative aspects.
A. Trends of Globalization
Various aspects can be identified in the process of globalization, including economy, culture, education, information technology, and society. Economic globalization is defined as the expansion and intensification of international trade and investment. On the other end, political globalization is the diffusion of liberal political ideology and institutional forms and the organization of transnational governmental and regulatory institutions. Another important aspect in the process is cultural globalization, which is often but not always, the spread of Western ideas and cultural practices from one continent to another, as the environment knows no borders. Through cultural practices, the transfer of language, communication and technologies is also achieved.
In detail, it has been reported that the globalization of culture has a long history, and includes the formation and expansion of the great world religions, which are profound examples of the capacity of ideas and beliefs to cross great distances with decisive social impacts ( 2005). With this long history, the concepts of globalization and culture have become intertwined. In addition, it has been mentioned that globalization maintains the huge transformative processes of our time, and cannot be entirely described and properly understood until it is grasped through the conceptual vocabulary of culture (1999). In this regard, it can be perceived that culture is one vital element in the hastening of the process of globalization. In terms of economy, globalization is now regarded as new economic, as well as political and cultural order, where countries and peoples live in a borderless world. This means that nation states are no longer significant actors or meaningful economic unites, and consumer tastes and cultures are now homogenized and satisfied through the provision of standardized global products generated by global corporations with no allegiance to place or community ( 2003). This emphasizes the importance of world economy, where all other countries, both developed and developing rely on. Following such changes in culture, economy, and politics are the changes in education, which play an essential role in the improvement of society. In this regard, this era of globalization brings urgency to the need for a new world order in which nation states can develop policies and regulations that will contribute to and sustain forms of international governance, including education policies (2004). The update and changes in culture, economy, politics and technology of different societies also alter and improve education. Lastly, changes in technology can also be observed with the changes in the society, as brought about by globalization. Technology can be transferred from one country to another through patents, licenses and contracts, and typically flows from developed countries to developing ones. It has been reported that the dynamics of technology flows, comparative advantage, and prosperity will then largely depend on the rate at which an underdeveloped country can absorb new technologies (1998). As such, transfer of technologies provides faster globalization.
In the contemporary or modern era of the 19th century, the process of globalization saw its advancement generally in among today’s developed countries. For many of the developed countries, trade and capital market flows relative to their GDP or Gross Domestic Product, which tends to be higher than in others in recent years. However, the peak of globalization in the first half of the 20th century was ceased due to the change in the trend of many societies, along with the rise of growing protectionism in the context of bitter national and great power strife, world wars, revolutions, rising authoritarian ideologies, and massive economic and political instability in many nations. Nevertheless, during the last 50 years of the 20th century, the process of globalization continued to hasten and flourish, as international relations have become more tranquil among nations. Such international relations have been continually supported by the creation and consolidation of the United Nations system, being a means of peacefully resolving political differences between nations. Under the United Nations system, institutions like the GATT, now the WTO or the World Trade Organization, provides a framework of polices and regulations for different countries to help manage their commercial policies. Such developments marked the end of colonialism, which brought scores of independent new actors onto the world scene, while also removing a shameful stain brought about by the many issues and problems in the early 19th century episodes of globalization.
In relation to culture and society, it can be assumed that the future population growth of developing countries will continue to rise despite control measure. Thus, by the middle of this century, more than 80% of the world’s population will be concentrated in the developing world. In addition, if the current demographic trends continue, the world’s population will almost double to about 11 billion in the latter part of the twenty-first century, shifting the geographic distribution of the world’s population and decreasing the share of people living in developed countries (2005). It can also be assumed that the process of globalization would also lead many societies to be increasingly multicultural and culturally diversified. As such, no exclusive cultures can be observed, as combinations of cultures can be seen among peoples of the world.
The process of globalization brings about a number of significant changes in the economy of many countries around the world. Such changes include changes in the trend of international trade, direct foreign investments, and capital market flows. Aside from the significant contribution of the developed countries in the process of globalization, it has been reported that the 1994 Uruguay Round of the GATT saw developing countries become engaged on a wide range of multilateral international trade issues for the first time. In this regard, it can be seen that the process of globalization in the modern world involves the contributions of both developing and developed countries, thus, emphasizing their interdependence with one another. In terms of international trade, a growing share of spending can be observed on importation and exportation of goods and services. This growing share of goods and services is produced by different countries to be sold as exports. From such imports and export activities, the share of international trade among developed countries rose from 27 to 39 percent between 1987 and 1997 in total output, which is the combination of the exports and the imports relative to GDP. On the other hand, the total output of developing countries rose from 10 to 17 percent in the same period ( 2000). In this regard, it can be observed that export and import activities between and among countries serve to contribute significantly to the process of globalization.
Another important aspect that must be taken note off in the development of economy in the process of globalization is the significant role played by Foreign Direct Investments or FDI. Firms based in a particular country increasingly make investments to establish and run business operations in other countries. In relation to this, different firms in the United States invested US3 billion abroad in 1998, while other foreign firms invested US3 billion in the United States. This led to the overall world FDI flows of more than tripled between 1988 and 1998, from US2 billion to US0 billion, with the share of FDI to GDP generally increasing in both developed and developing countries. Due to the increase in FDI, developing countries received an average of about a quarter of world FDI inflows between the period of 1988 and 1998, despite fluctuation of shares annually. Thus, this flow of investment is now the largest form of private capital inflow to developing countries.
Aside from the increased flows in Foreign Direct Investments, capital market flows also increased. In many developed countries, savers increasingly diversified their portfolios to include foreign financial assets, such as foreign bonds, equities, and loans, while borrowers increasingly turn to foreign sources of funds, along with domestic ones. In addition, it has been observed that similar flows of capital markets to developing countries also rose sharply in the 1990s, as markets have been much more volatile, compared to either trade or FDI flows. The restriction on a narrower range of ‘emerging market’ countries also contributed to the increase in capital markets. In relation to this, free market economies have also flourished. The process of development of free market economies have been accelerated and have determined the future of the world’s economic systems. Countries, such as India and China were presumed to develop more rapidly with free market economies. This is because a free market economy, by its nature, enables countries to become open to foreign institutions, requiring a completely different structure, and bearing in mind international specialization, along with much more significant share of imports. Thus, restructuring of its industry requires rapid growth of investment outlays destined for advanced technology 2006). Free market economies then plays significant roles in the changing of trends brought about by globalization.
The increase in free markets and capital markets leads to the increase in global alliances and tie-ups. Global alliances are more common among multinational enterprises. Global tie-ups are motivated by the fact that firms need to gain easy access to new markets, to share costs of expansion, and to increase skills without having to develop them within the organization. Such partnerships take place through collaboration and partnership. In making global alliances, the lead-time for setting up one’s own operations can be considerable. In the process, certain factors can be taken note off, such as the expenses that can be incurred, the level of risks taken, and the various forms of partnerships that provide a viable and frequently exercised option, most especially, if one is seeking to establish a new business or develop an already existing business within a new territory. In addition, the need for global tie-ups are speeded up by rapid changes taking place in global markets where consumer tastes and preferences are becoming universal on account of the ever-increasing exposure to the global media.
In today’s generation, global alliances can be observed in both the service and manufacturing sectors. Airlines around the world are seeking closer ties with each other to gain economies of scale and new markets. For instance, Lufthansa has made moves to form a new entity incorporation the former East Germany’s Influg Airline, along with making moves in developing closer ties with Air France. Similarly, Singapore Airlines is also forming a joint venture with Sabena of Belgium, while Alitalia is establishing commercial arrangements with Iberia of Spain and US Air. Such alliances are all signs of the desire of organizations to improve efficiency and better preparation for increased competition.
Increased in alliances and tie-ups in the global scene also increases the need to develop human resources capable of handling global operations. This is because the alliances and tie-ups lead to the diversification of many organizations, thus, presents more cultural, language, and communication problems in the organization, due to the fact that global forms operate in multiple cultural environments. In this regard, the policy of employing nationals from home countries and sending them out to run foreign operations has been the standard practice of traditional global forms. Attractive hardship allowances and improved prospects in return are among the incentives provided. Some factors that expatriates consider in overseas postings are whether they will be able to afford the same lifestyle in terms of modern living, and if they will be able to establish a social circle, good schooling available for children, chances of advancement when they return to their country, language difficulties, and concern about safety and medical care. The common Western practice is an extension of the same approach. However, with comfort and security levels improving in many parts of the world, expatriates in some countries of Asia and Africa, having tasted the benefits and having adapted to a new country are often reluctant to return home. If opportunities for growth are lacking within one area, expatriates often switch jobs and continue to live in these societies for decades, sometimes even marrying locally. This results to social issues, such as the concept of “brain drain” in some countries, where professionals immigrate to more developed countries due to increase in compensation, monetary gratification, and work satisfaction, rather than staying in their home country, which would only provide them less in terms of compensation and benefits.
In this regard, the trend in this generation is towards increasingly finding global managers, such as the global managers in the realm of the American Apple Corporation and Compaq’s chief operating officers, who are both German nationals. This type of manager can skip easily across frontiers, from function to function and industry to industry, though they are most often wanted for special, rather than general talents. Another example is when the UK-based advertising giant Saatchi & Saatchi was looking for the global answer, its CEO selected a Frenchman, with no advertising background and who had made his mark running a medical market-research firm in the United States. This resulted to effective management, as the language skills of such managers are most often impeccable and their knowledge of management and management practice outstanding. In addition, their flexibility is greatest displayed by managers at any time in business history, and with some having more than a couple of important international jobs before the age of 40, an age where their ambitions, like their experiences know no frontiers.
Such changes and advancements would not be transferred and hastened under the process of globalization without the support of technologies. Technological changes will be the hallmark of this century, as rapid developments continue in the field of electronics, microelectronics, lasers, computers, and many other gadgets. The use of such technologies around the world will facilitate better and more effective communication and business worldwide, and its integration into all aspects of communication and business will mark the development of telecommunications. In addition, companies that create technological breakthroughs in the fields of agriculture will be the major gainers in the future generations with increased population pressures, along with countries and firms, which who would be spending more on Research & Development and technology in general. As such, it can be perceived that the trend of globalization focuses on hastening and facilitating changes in different aspects of society, including the economy, politics, technology, culture, and communication.
B. Characteristics of Globalization
The different characteristics of globalization can be determined based on its trends, as discussed earlier. Friedman (2000) reports of distinct characteristics of globalization. One characteristic of globalization is that free-market capitalism is its driving idea. As discussed earlier, due to the process of globalization, many countries, such as India and China are now opening their markets to many Western countries for increased foreign trade. This serves to be a great advantage, as free market capitalism enables foreign countries to reach their target markets effectively and strategically, with an offering of increased revenues and investments in the host country. Other benefits of free market capitalism is the increased in job offerings in the host country, thus, leading to the productivity of citizens and new opportunities for growth and development. The second characteristic of globalization is having a dominant culture, which is typically Western or American. As also discussed earlier, the trend for globalization is the increased tendency to make the Western culture visible and highly influential to other countries. This is mainly because Western organizations are associated with the success of businesses, thus, associating the fact that the Western or American culture can be equated with success in the culture of businesses. The third characteristic of the process of globalization is the spread of technology. As also mentioned, technology plays a vital role in the process, as it is involved in the spread of processes, communication and culture from one country to another. In addition, the process of globalization is being hastened with the use of technology, being responsible for the significant changes of how organizations and individuals handle organizations and issues in the society. Another important characteristic of globalization include demographic changes, such as migration from one region of the world to another. It has been mentioned in the discussion of the trends of globalization that many individuals from developing countries transfer and migrate from their home country to developed countries to obtain better working conditions, better pay, and better compensations. However, such trends result to loss of skills, talents and intellect in their home country due to the increase in migration. The last significant characteristic of globalization is the evident power structure between nations and global markets, and between individuals and nations. A power structure is said to be the edge of many developed countries and successful companies and organizations around the world, which somehow contribute to the improvement and development of the world economy and politics.
Given such characteristics, it can be perceived that the increase in global trade can be observed among nations of the world. However, certain policies, regulations and treaties must still exist among countries in order to observe fair and peaceful international trade. In this regard, an international framework that helps in the transfer of goods and services across borders exists, while still allowing for the imposition of restrictions and controls by their respective governments. While various common agreements exist, the development of a globally uniform regulatory framework has been a slow process due to differences in levels of development, ideologies and perceptions of priority of different issues by different nations. Nevertheless, the existence of international organizations that govern international trade has been essential in the peaceful coexistence of nations around the world.
One of the organizations responsible for coming up with trade treaties and regulations among and between countries is the World Trade Organization or WTO. It has to take into account such issues as social policies, workers’ rights, minimum wages, and even competition policies. Such policies are needed, as there remains a scope for more liberalization and tariffs in newly covered sectors, which are still too high. Because trade policies are regarded as major tools for pushing globalization, groups in societies and countries that oppose globalization are also resisting further liberalization of world trade. Instead, such groups are demanding a democratization of trade policies as well as democratic WTO, being the major agent of free trade (2001). In this regard, the role of the WTO must be given significance, through the different existing treaties and agreements that would benefit all countries involved.
Another policy is the IATA or the International Air Transport Association, which came into being in 1919 at The Hague between one Dutch, one German, and three Scandinavian airlines. Due to the IATA, regular conferences based on geographic zones are now held, rates and frequencies between global ports modulated. Rates are recommended by the conferences and the stability of air costs is largely due to the conception of IATA. Such conferences enable more globalization between and among countries, as they provide airlines with increased opportunities for trade and transport of goods, peoples and services from one region of the world to another. In this regard, the IATA becomes relevant in today’s generation, being responsible for the trade that exists between countries and organizations.
Moreover, there are several other conventions and conferences held to simplify and standardize global trade. Such conventions and conferences include the United Nations Conference on Trade and Development or the UNCTAD, which was held in 1964, during which the developing countries pressurized industrialized nations for preferences in exports. Several industrial countries have complied and several special agreements have been developed to allocate production and to raise the export earnings of markets in the developing world. Furthermore, aside from international trade organizations, nations in various regions have also come together to form their own economic communities or groups for improved economic and trade integration within their regions. These include the European Economic Community or the EEC, the European Free Trade Association or the EFTA, the Latin American Free Trade or the LAFTA, the Council for Mutual Economic Assistance or the COMECON, the Arab Common Market or the ACM, the Asian Free Trade Area or the AFTA, the West Asian Nations or the ASEAN, and the Asia-Pacific Economic Cooperation or the APEC. Such integrations hope to achieve regional competitive advantage in global markets, by aiming for free trade areas, where tariffs are abolished between members, by aiming at common external tariff to non-members, by aiming for access to common markets, by coming up with common or harmonious national economic policies, and by completing economic integration. In this regard, through the many conferences and conventions that govern trade agreements, it can be perceived that increased globalization can be achieved.
C. Impacts of Globalization
Contemporary globalization represents a real evolution in human affairs, and introduces a massive change in the way that civilization is organized. In the previous discussions, it can be perceived that advantages and benefits of many countries can be achieved through the process of globalization. However, in this regard, the process of globalization is a double-edged sword. In this part of the discussion, the disadvantages or problems brought about by the process of globalization will be discussed and given emphasis.
One of the issues associated with rapid globalization is the increase in the risks of spreading economic maladies. Due to the fact that all key economies are closely interrelated in the globalization process, such countries are now mutually vulnerable. This just means that various forms of economic diseases can spread rapidly from one country to another. In this regard, economic contagion is being hastened in the process of globalization. Another economic problem is vulnerability, which refers to the rapid capital movements and the associated destabilizations of currencies. Destabilization of currencies presents more economic problems to countries, as it depreciates the value of the currency and decreases its purchase power. Predators can make a lot of money speculating on currencies. However, they also risk heavy costs at the expense of the countries being attacked. In this regard, due to the interrelated economies of countries, many are being vulnerable to depreciation and inflation. Another problem is the problem with dislocation. Globalization is accompanied by a related human tragedy in displaced workforces. This includes the wandering heavy industries that move frequently from one country to another. A particular example of this is the tennis shoe industry in Asia, which moved every few years from one country to the next, leaving behind displaced workers while jobs are created in other countries. The process of globalization also brings about the problem with the exploitation of workers and of natural resources. This exploitation has been taking place since the beginning of the Industrial Revolution. However, the exploitation of cheap labor has increased greatly, as did the devastation of natural resources in poorer countries. In addition, such a phenomenon has been intensified as large organizations establish their businesses in the developing countries, thus, allowing them to use natural resources and labor in the region. Such has been happening in the city of Juarez in Mexico, as the NAFTA allowed American factories in Juarez to employ women, thus, further contributing to the increase in crimes against them. This can be described as “an old wine in a new bottle”.
In addition, the creation of a unified national economy in the second half of the 19th century through the fusing together of the different regional economies, involved the same processes. Just as national economic integration produced benefits, so too can global economic integration. However, national economic integration also brought problems, and such problems have been addressed through the creation of modern governments. Addressing the problems raised by global economic integration is more difficult because of the deeper political problems, and because of the lack of proper structures of international economic governance. At the beginning of the 19th century, production took place on the factory floor while management sat above in overlooking offices. Today, companies can be headquartered in New York while production takes place thousands of miles away in China. In this regard, the economic problems pointed out also extend and bring about political problems as well. Moreover, it has been discussed that the process of globalization is driven by economic policies. However, such policies have sought to remove barriers to the flow of goods and capitals between countries, thus, increasing the international integration of national economies.
Through the past discussions, certain benefits of the process of globalization have been determined, including increased market competition, lower prices, improvements in quality, production efficiency, and improvements in the provision of financing, which has helped developing countries acquire the capital necessary for their own development. However, such benefits go hand-in-hand with disadvantages, such as creating new forms of wage and workplace competition that have twisted the distribution of income in favor of the most well to do. The process has also twisted and changed the economic structure of many countries, thus, leading policy-makers to face a pattern of incentives that compelled them to run economic policies for the benefit of corporate interests that have been empowered by the globalized economy. Another setback of the process of globalization is the tendency to demand leak outs in the national economy, due to the increased propensity to import goods. This increase in macroeconomic leakiness is true for almost all industrialized countries, with increased trade share by more than 50 percent over the last 30 years. This further leads to the leaking out of jobs, if labor markets are not sufficiently flexible, or if profit taxes are relatively unfavorable compared to conditions elsewhere. Microeconomic leakiness has been promoted very much by technological developments that have lowered costs of transportation and costs of coordinating production. Economic policy has also contributed to increased microeconomic leakiness by bringing down trade barriers and making it cheaper and more economically feasible to shift production between countries. Another form of leakiness is “financial leakiness” whereby money flows between countries. Today, more than .5 trillion is traded in foreign exchange markets every day, whereas the actual value of international trade is less than three percent of this amount. The existing structure is unstable, and gives financial interests too much sway over domestic and international economic policy.
In this regard, the globalization of capital markets has brought a new kind of competition among currencies, since international investors will pull their funds out of any currency in which they lose confidence to. This has produced a sustained bias toward tighter fiscal and monetary policies around the world to reassure international investors. Once again, this change has been driven by technological innovations in the form of lowered costs of electronic communication and transacting. It has also been driven by policies, which have removed controls on the international movement of money. Moreover, macroeconomic leakiness has tended to promote an increased reliance on exports, which means that countries are more exposed to shocks originating overseas. Macroeconomic leakiness means that countries rely more heavily on imports so that demand leaks out of the economy when policy makers try to expand economic activity. On the other hand, microeconomic leakiness poses a different set of problems. In particular, it has increased the bargaining power of business vis-à-vis both labor and government. Thus, a recent study found that after NAFTA was implemented there was a 33 percent increase in business use of threats to relocate production during wage bargaining rounds. Government has also been put under pressure using threats to move and to win tax concessions. If tax conditions are deemed relatively less favorable than elsewhere, business now threatens to invest only in those places where conditions are more favorable. Furthermore, export-led growth also fosters wage competition, deteriorated work place conditions, degraded environments, and weakened systems of governmental social support. This is because countries and businesses have an incentive to try to gain international competitive advantage by any means possible.
Conclusion
From the discussion, it can be perceived that globalization is a process that has profound impacts in the lives of workers everywhere, as it brings problems as well as benefits. It is changing the very structure of our economy, politics, culture, and technology, thus, establishing patterns of incentives, changes in the attitude and perception of the workforce, and influence the changes in the political structure of organizations that can have long-term negative societal effects in the future. The current state of globalization and regionalization suggests that the international system is unevenly structured. Both private and public institutional financial structures need to be restructured to ensure human security, sustainable development, and non-discriminatory trade regimes. Theories on international trade and finance have not yet produced long-term strategies for a just, fair and balanced global competition in the face of proliferating multinational enterprises. Given this, state-based political decisions and actions in the developing world will continue to play a major role in the social sector despite the fact that developing nations are under severe pressure from the WTO, and developed countries are urging them to introduce faster economic reforms for foreign investment, free trade regimes and capital flow. The developing countries need to convince the rich North that fetterless capitalism and borderless globalization must adjust to the hard-boiled realities of poor developing nations.
Globalization is not a natural process over which we have no control of. Instead, it is being driven by the choices of business, governments, and international policymakers. The shift in power structure will continue to inform the international system. A mix of geo-strategic, geo-economics and geo-cultural factors are likely to propel public decision makers to fashion their countries’ foreign policies and reinvent new diplomatic strategies accordingly to fit in the potential currents of globalization and regionalization. The issues of global governance and environment, global culture and democracy will continue to lure international theorists and policy practitioners into working out new formulations, paradigms and conceptual underpinnings. As such, it can be perceived that the process of globalization presents both complications and advantages, depending on the approaches of organizations and other concerned individuals. In this regard, this matter does not only mean the sole interdependence and communication between and among the different countries around the world, but also means the economic, political, cultural, and societal problems as well.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment