Assignment -1
Global Business Environment
Topic: Pro-Globalist Vs Anti-Globalist
Pro-globalist vs. Anti-globalist, the seventh Secretary-General of the United Nations, addressed the force of globalization in his quote, “It has been said that arguing against globalization is like arguing against the laws of gravity. What is Globalization? It is the integration of the world, technologically, economically and politically, wherein the barriers between the national borders are removed to facilitate the flow of goods, capital, services, labour. Global production has created global markets which offer extraordinary growth for organizations in terms of growth & profits. It has led to sharing of ideas & technology, which further leads to innovation and technological progress. However, it is also blamed for increasing the gap between rich and poor, destruction of the environment, and threatening human rights. In the last three years, the anti-globalization movement has staged protests at meetings of the World Trade Organization, the European Union, the World Bank, the International Monetary Fund, the World Economic Forum, and the G-8. Globalization is a powerful real aspect of the new world system, and it represents one of the most influential forces in determining the future course of the planet. Globalization has many dimensions: economic, political, social, cultural, environmental, security, and others. Different people have different interpretations on Globalization. Due to these different interpretations, there are very different reactions, some consider it as a danger to the world economic system, this group of people is referred to as Anti-globalists & others consider it as advancement to the world economy, referred to as Pro-globalists. It is an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and execution. * Sources of Globalization: * Technological advances that have significantly lowered the costs of transportation and communication and dramatically lowered the costs of data processing and information storage and retrieval. ➢ Trade liberalization and other forms of economic liberalization that have lead to reduced trade protection and to a more liberal world trading system. ➢ Changes in institutions, where organizations have wider reach, due, in part, to technological changes and to the more wide-ranging horizons of their managers, who have been empowered by advances in communications. ➢ Global agreement on ideology, with a convergence of beliefs in the value of a market economy and a free trade system. ➢ Cultural developments, with a move to a globalized and homogenized media, the arts, and popular culture and with the widespread use of the English language for global communication. * Positive Impact of Globalization Globalization has various aspects which affect the world in several different ways such as: Severalfold Rise in Trade: Emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. China's trade with Africa rose sevenfold during 2000-07 alone. Commercial Gains: Emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. Emerging Economies: Realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however, meant that an economic collapse in any one given country could not be contained. New employment opportunities:
Views of Pro-globalists: * New Employment Opportunities - Globalization will create new employment opportunities in various parts of the world. For each office being setup, companies will be requiring hundreds of people to work in them at different levels. * Cultural Growth: Access to cultural diversity promotes peace and understanding between people, there has been an increase in international travel and tourism, sports events such as FIFA World cup and the Olympic Games. * Rise in Competition and Better Technologies: Adopting new technology & practices has increased productivity and competition. Availability of better & innovative products and services due to rise in competition. For operating worldwide, companies in various industries have to upgrade their products using better technologies to face increased competition. * Increase in Information Flow: Increase in information flows between geographically remote locations. This is a technological change with the advent of fiber optic communications, satellites, and increased availability of telephone and Internet.
Views of Anti-globalists
The anti-globalist zone is divided into two camps. One, belonging to developed countries like USA and European nations, their argument is mainly based on the threat of losing jobs due to globalization and increase in unemployment of skilled people. Second, is from developed and developing countries, who consider globalization as a threat to the economy, cultural & social values and political independence. They believe that globalization will give access to their country's economy to MNCs which will use it for their own benefits ignoring the overall growth of the country. * Environmental Degradation: The removal of forests and large oil consumption is leading to ecological imbalance and severe pollution. * Easier spread of Diseases: the flow of information, goods, capital and people across political and geographic boundaries, has also helped to spread some of the deadliest infectious diseases known to humans. * Drug and Illicit Goods Trade: * Unemployment in Developed Countries because of cheap labor: the view is that availability of cheap labour in Asia, Africa and South America will lead to companies shutting down their operations in the host country, leading to the people being laid off and forced into unemployment. * A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United States, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in recent decades. However, Chinese textile and clothing exports have recently encountered criticism from Europe, the United States and some African countries. In South Africa, some 300,000 textile workers have lost their jobs due to the influx of Chinese goods. The increasing U.S. trade deficit with China has cost 2.4 million American jobs between 2001 and 2008, according to a study by the Economic Policy Institute (EPI). A total of 3.2 million – one in six U.S. factory jobs – have disappeared between 2000 and 2007. Concentration of wealth in the hands of few dozen people: Anti-Globalist in these countries having protesting against the concentration of wealth in the hands of few dozen people. This unequal distribution of wealth is voiced by anti-globalist as frightening and dangerous for the society. Anti-Globalist of Developing Countries Cultural Export: Anti-globalist view the effect of globalization on culture as a rising concern. Along with globalization of economics and trade, culture is being imported and exported as well. The concern is that the stronger, bigger countries such as United States may overrun the other smaller countries' cultures leading to those customs and values being faded away. This process is also sometimes referred to as Americanization or McDonaldization. Poverty Export: Anti-globalist see the globalization as the result of foreign businesses investing in the country to take advantage of the lower wage rate. One example used by anti-globalization protesters is the use of sweatshops by manufacturers. According to Global Exchange these "Sweat Shops" are widely used by sports shoe manufacturers and mentions one company in particular – Nike. There are factories set up in the poor countries where employees agree to work for low wages. Then if labor laws alter in those countries and stricter rules govern the manufacturing process the factories are closed down and relocated to other nations with more conservative, laissez-fair economic policies. There are several agencies that have been set up worldwide specifically designed to focus on anti-sweatshop campaigns and education of such. International Inequality: The World Bank defines inequality as the disparity of income and standard of living among nations and their citizens. * The income gap that exists between rich and poor countries has become substantial. Although great strides have been made in improving income from poor nations, many regions of the world have 25% or more of their population living off less than $1 per day (World Bank, 2005). Anti-globalist think that with the poor people having limited earning capacity, they also have limited access to the world’s wealth. In 2003, the richest fifth of the world's population received 85% of the total world income, while the poorest fifth received just 1.4% of the global income. The UN's Human Poverty Index is a measurement of poverty that factors in illiteracy, malnutrition among children, early death, poor health care, poor access to safe water, vulnerability to famine or flooding, lack of sanitation, exposure to disease, a diet poor in nutrients, and the absence of education (Infoplease, 2005). Inequality among rich and poor nations exists in terms of income and living conditions. Rich nations have tried to address this issue by distributing aid packages aimed at specific needs of each poor country. These aid packages ranged from literacy programs to food handouts and health programs. Poor nations need more than aid packages; they need economic conditions that can sustain growth. Brain Drain: An opportunity in richer countries drives talent away from poorer countries, leading to brain drains. Brain drain has cost the African continent over $4.1 billion in employment of 150,000 expatriate professionals annually. Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion annually. Food Security: The head of the International Food Policy Research Institute, stated in 2008 that the gradual change in diet among newly prosperous populations is the most important factor underpinning the rise in global food prices. From 1950 to 1984, as the Green Revolution transformed agriculture around the world, grain production increased by over 250%.The world population has grown by about 4 billion since the beginning of the Green Revolution and most believe that, without the Revolution, there would be greater famine and malnutrition than the UN presently documents (approximately 850 million people suffering from chronic malnutrition in 2005). It is becoming increasingly difficult to maintain food security in a world beset by a confluence of "peak" phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish. Growing populations, falling energy sources and food shortages will create the "perfect storm" by 2030, according to the UK government chief scientist. Drawback of linking of economies: The world today is so interconnected that the collapse of the sub-prime mortgage market in the US has led to a global financial crisis and recession on a scale not seen since the Great Depression. * Conclusion - The pro-globalization lobby argues that globalization brings about much increased opportunities for almost everyone, and increased competition is a good thing since it makes agents of production more efficient. The two most prominent pro-globalization organizations are the World Trade Organization & the World Economic Forum. The anti-globalization group argues that certain groups of people who are deprived in terms of resources are not currently capable of functioning within the increased competitive pressure that will be brought about by allowing their economic to be more connected to the rest of the world. This group includes Friends of the Earth, Greenpeace, Oxfam, G77, the U.S. textiles & European farm lobby, as well as the Australian and U.S. trade union movements. For most of the 20th century, rich nations gave aid to poor nations only to see it squandered. The people of the country must have the political will and capability to select leaders that choose a path of economic growth instead of cultural stagnation. Many of these countries are poor and have an unequal distribution within the country itself due to corrupt government leaders that view international aid as a source of personal income. Several of the poorer nations do not want to open up to international trade due to fear of losing their own identity, when in fact they are losing an opportunity for its people to move out of poverty. Many of the poorer nations have an agrarian economy that is labor intensive, without technology. They are changing over to an industrial economy that is not as labor intensive. During this transition, they will provide cheap labor markets for multinational corporations, and wages for these people will increase. Globalization is a double-edged sword. It increasingly affectively the way we live and work positively and negatively, while industrial countries enjoy the merits of globalization, developing countries have to learn how to compete, otherwise, will remain dependent on others.