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Our world is shrinking every day, thanks to more trade between nations and faster and easier travel. The smaller the world gets, the bigger the repercussions of globalization seem to be. So, is this a good or a bad thing? Read on...
I am a cosmopolitan, I like science, fiction is fun to me and entertains me. So, of course I like science fiction movies. What do they have in common with globalization? Well, if we take Starship Enterprise for example, what is presented there is the strong notion of unity and believe in one another — the optimists among us call this teamspirit ;-]
It does not matter whether you are young or old, male or female, human or Vulcan, straight or gay, tall or short, skinny or fat or all the shades in between... I think those are the opportunities globalization brings us... unity, peace and prosperity. It might not happen during the next three or so years, not everywhere and not for everybody, but in general, I think that is what we will see for the majority of people in a few decades from now — something that just is not the case right now and thus needs to improve.
If we talk about globalization we are also interested in effects and and changes caused by globalization, something this subsection takes a closer look at.
Only a few decades ago, traveling abroad from the Indian subcontinent was so rare that the adventurous traveler's entire family would accompany him to the airport along with much pomp and circumstance, including occasionally a brass band, to bid him farewell.
Today, people think nothing of having breakfast on one continent and dinner on another. And many people go abroad to work, either permanently or temporarily. The money they send home helps their families and boosts their home country's economy.
On the other hand, greater international labor mobility increases risk of brain drain. But several developing economies are attracting their educated citizens back by creating good business environments for people to use their entrepreneurship.
Trade drives globalization. Modern transportation and telecommunications have made it easier to export to and import from far-away places. But international rules, regulations, and practices can still make it difficult for developing countries to compete against developed countries.
For example, there is the problem of Dumping. For instance, some manufacturers dump goods in other countries at prices lower than the goods can be manufactured, undercutting local producers. One example occurs when farmers who receive subsidies export surplus crops and drive down international prices
Then there is the problem with Market Access and Regional Trade Agreements. Countries often try to protect their industries by imposing taxes on goods from other countries. These import tariffs make imported goods cost more and make it harder for poor countries to compete in richer markets.
RTAs (Regional Trade Agreements) are transnational trade deals, and are becoming increasingly widespread. A regional free trade agreement removes all barriers to trade. Unfortunately, when these agreements happen between developed and developing nations, they often do not benefit the weaker economy.
Poorer countries can not develop their own industries with cheap imports from rich economies entering their markets. To ultimately reduce poverty, international trade negotiations need to uphold the interests of developing economies.
We also see issues with Labor Rights. Globalization has brought millions of people into the workforce and raised living standards in developing countries. But some believe it has undermined labor standards in developed countries/regions like for example Europe and the USA, and increased pressure to work faster, longer or for less money.
Overall, global trade has grown dramatically over the past three decades, and developing countries have now become important players in the global marketplace. Their share of world trade has increased greatly over the past 30 years. For example, China's share of the global marketplace has risen to 5% in 2010, that is three times as much as it was in the mid-1980s. India and several Latin American countries seem ready to make similar jumps in global trade.
Globalization has had dramatic effects on health. Treatments for diseases such as HIV/AIDS are more widely available, and their prices have fallen thanks to international agreements. Modern medical equipment to detect, measure and treat known and emerging diseases is being used all over the world.
The Internet with its many tools and applications, the WWW (Wold Wide Web) and email amongst the most widely used and popular, spread knowledge of health issues, while global action among national institutes, international bodies, and civil society is helping to increase awareness, monitor developments and create solutions to health problems.
On the other hand, cross border travel more easily spreads AIDS, SARS, and other infectious diseases, and could hasten a pandemic. The movement of meat and poultry products spreads diseases such as mad cow disease and avian influenza, especially in countries where regulations are weak and food standards are poorly enforced. Globalization also means that harmful products, such as cigarettes and alcohol, can wreak devastating consequences worldwide.
The movement of qualified health professionals from developing to developed countries has weakened the health systems of some developing countries, which now face shortages of qualified health providers.
It is said that the movement of a butterfly's wings can create atmospheric changes that could cause a hurricane at the other end of the world. Sure, this is all mathematical and/or philosophical theory but did you know that brown tree snakes from Australia are causing power outages in Guam on a regular. Ha!
International travel, trade and transport have become leading causes of invasive alien species. While many of the species that reach new lands do not survive in their new environments, others thrive. Left unchecked, they can transform entire ecosystems and even threaten other species to the point of extinction. Globally, the estimated costs of invasive alien species are in the area of $350 billion USD they say... it is probably three times that, but who knows. That is for another story.
Globalization is linked to the environment in many other ways as well. Strict environmental regulations in some countries lead corporations to move their operations to countries with less stringent rules, something that has been common in the financial sector for a very long time already and has to do with OFCs (Offshore Financial Centres).
In other cases, free trade agreements prevent governments from adopting legislation to protect the environment. Destroying forests to produce timber and crops for consumers in other countries is another example. Climate change, of course, is a big issue associated with globalization, as it affects everyone, and it is in every country's interest to combat the threat it poses.
Thanks to globalization, we know much more about other cultures today than people did in the past. It has opened our minds to other ideas and traditions, and has made this a very exciting time for our generation and those to come.
However, many argue that today globalization merely equals westernization and will soon be replaced by sinicization — this might take generations though... Some fear losing their values and languages to external influences and are threatened by the influence of other cultures on their own.
Other effects and changes caused by globalization are
If we open a newspaper today, connect to the Internet, etc.... whatever we do, we read and hear about globalization. It is funny though, if we ask ten people, it might be so that not a single one can give us a straight answer when asked: What is globalization? — preferably with one sentence and so that anybody who made it through elementary school would understand. Read on and you will have your answer!
I just read an article about Russian orphans growing up American. Yesterday I watched a documentary about Ford Motor Company and its CEO. When asked what he thinks about the good old rhyme What is good for Ford, is good for America he did not hesitate and cut right to the point saying, That is long gone history! It is, would you not agree?
The point is, globalization is everywhere... and by everywhere I am not talking about places... well sure that too, but what I am talking about and referring to is: Globalization is everywhere, at our workplace, in our homes, even on our shopping list when we head out to run an errand. Do not fight it, accept it, learn it, use it to your own advantage.
However, that still does not answer the question about what globalization is. Now, without looking things up online or making the cumbersome hike from our desks to the bookshelves (for those who still own such a thing), how would you describe globalization? For me it is:
Globalization can be described as a process by which the people of
Or in short: Globalization is the growing integration of economies and societies around the world. There it is, our one sentence answer anybody can understand.
Globalization is an inevitable phenomenon in human history which is bringing the world closer together through the exchange of goods and products, information, knowledge and culture. Over the last few decades, the pace of this global integration has become much faster and dramatic because of unprecedented advancements in technology, communications, science, transport and industry.
While globalization is a catalyst for and a consequence of human progress, it is also a messy process that requires adjustment and creates significant challenges and problems. This rapid pace of change can be unsettling and most societies want to control or manage it, something which can only go wrong — if at all, globalization can only be managed and controlled by the international community i.e. together it is possible to not just face the challenges involved with globalization but also manage them.
Globalization has sparked one of the most highly charged debates of the past decade. When people criticize the effects of globalization, they generally refer to economic integration. Economic integration occurs when countries lower barriers such as import tariffs and open their economies up to investment and trade with the rest of the world. These critics complain that inequalities in the current global trading system hurt developing countries at the benefit of developed countries.
On the other side are the supporters of globalization who say that countries like China, India, Uganda and Vietnam, all of which have opened up itself to the world economy, have significantly reduced poverty.
Money can't buy happiness, but neither can poverty.
Critics argue that the process has exploited people in developing countries, caused massive disruptions and produced few benefits. But for all countries to be able to reap the benefits of globalization, the international community must continue working to reduce distortions in international trade (e.g. cutting agricultural subsidies and lifting trade barriers) that favor developed countries and to create a better (read fair and more efficient) system.
The people's good is the highest law.
Over the last few years, there have been protests about the effects of globalization in the USA and Europe. But in a lot of developing countries there is very strong support for different aspects of integration, especially trade and direct investment, according to a recent survey conducted by The Pew Center. For example, in Sub-Saharan Africa, 75% of households said they thought it was a good thing that multinational corporations were investing in their countries.
Philosophical allures aside, we can probably agree that right now (2010), globalization refers to the absence of the walls and matchboxes that every country had, between themselves based on suspicion, mutual distrust and ambition. We were, in fact we still are for the most part, different countries, divided into worlds even, and therefore could never manage to deal with natural disbelieve, genuine distrust, and deadly epidemics, which time and again challenged us.
Globalization has strengthened the nexus and has helped us to know each others need in a better way. It has helped to demolish those walls that separated us and curbed our natural identity of being fellow human beings. As I mentioned above, unfortunately globalization has primarily become a fiscal term but its impact is not limited to the economy of the countries only, the term globalization actually refers to every aspect of our lives e.g. cultural, social, psychological and of course, political ones.
It is true that the impact of globalization is visible and affects largely the politics and the economy of the country but its effect on the mindset and the culture is noticeable gradually in the way people think and react. It is like the Iceberg theory wherein what we do and say are at the tip and what we think and believe is at the base. The base is not visible but manifestations at the top are conspicuous. It applies here, as well where people do not change abruptly but may be after a decade, that the change starts showing and seems radical.
You, like everybody else, thinks globalization started 20 years ago?! Boy, you are wrong...
Globalization is not a new phenomena, the base was laid long back when the Dutch East India Company and the British East India Company started trading with India. In history there were trade relations between different countries like Arab and Egypt and now in modern times that has translated into globalization or free trade.
It is true that ultimately all the free trade resulted in the white man taking the burden proactively but then globalization leads to more employment and higher standard of living, especially among the developing countries. Theories suggest that globalization leads to efficient use of resources and benefits all who are involved — it is probably fair to question that, but from what I have seen, it is true.
According to libertarians, globalization will help the whole world to deal with crises like unemployment and poverty — again, it is probably also fair to question that... currently, even if Europe and the USA is loosing jobs, in the long-run I can imagine that is true and it will be a win-win.
It will help us to raise the global economy only when the involved power blocks have mutual trust and respect for each others opinion. Globalization and democracy should go hand in hand — it should be pure business with no colonialist designs as it were back then with the Dutch East India Company and the British East India Company.
The way we have developed in the last 15 years, globalization seems to have given us good returns. Globalization has made the life of the third world citizen completely a different story. There are so many foreign companies that have made way to Orient and have made India a brand name all over the world.
Globalization is a bumpy road, a what they call African massage, but ultimately I think it is a good thing. It is exciting, that is for sure... we just need to be attentive and act with foresight, mutual respect and understanding, honesty and fairness to not run our vehicle off the road... something that almost happened in 2008 when the financial meltdown hit.
Poverty wants much, but avarice everything.
What is the international community doing with regards to globalization and helping developing countries to take advantage? The answer is, in part, with the World Bank.
One of its employees (David Dollar) describes globalization as a fast train for which the countries need to build a platform to get on. This platform is really about creating a foundation to make sure the country functions well. It includes property rights and rule of law, basic education and health for the people, reliable infrastructure (such as ports, roads, telecommunications, and customs administration), etc.
International organizations, such as the World Bank, bilateral aid agencies and NGOs, work with developing countries to establish this foundation to help them prepare for global integration.
When governments do not provide this foundation and basic services, poor people can not take advantage of opportunities that globalization offers and are left behind.
It is equally important that the government governs well and is transparent. If a country's government is corrupt, incompetent and/or totalitarian/authoritarian, outside agencies really will not be able to make a difference.
It is dangerous to be right when the government is wrong.
If you live in a Developed Country:
If you live in a Developing Country:
Knowledge is power.
Globalization has made way for free trade and business and has established a wealth of communication between various parts of the globe. It has potential to make this world a better place to live in. It is changing the dynamics of politics, thus deep-seated problems like unemployment — poverty and shift in power are coming to the picture. The marginal are getting a chance to exhibit in the world market. The term brand is catching up in the Asian countries.
It, however, is not only modernizing but also westernizing and to an extent also sinicizing native cultures. The power play is leading to the linguicide or linguistic, cultural and traditional genocide. This is probably where we need to keep a check and not let diffusion go wild. There has been significant de-localization which leads individuals to be more tolerant since face-to-face interaction is no more the order of the day.
For example, these days one European is trying to sort out billing issue of his mobile phone with an Indian who is mostly not even a direct employee of the service provider where the European has his mobile phone contract. Now, that sounds complicated and all but none the less, has to be dealt with carefully.
Globalization can be something great if we just take a little care and be passionate, open minded and fair about it, in the end, it is all about personal attitude...
Earth provides enough to satisfy every man's need,
Globalization can be win-win for developing and developed countries alike. Populations are aging in the developed countries, but it is there where they have a lot of capital and technology. Developing countries have large and young populations and need to create massive numbers of jobs over the next few decades.
Globalization can benefit both, developed and developing countries if it supports the movement of capital and technology to developing countries and the movement of labor to the developed world. This will not be easy, of course, but the key to successful integration will lie with creating appropriate institutions and policies.
On the whole, we live in a much more integrated world as a result of technological advances in transportation and communications such as the Internet. For example, a natural disaster such as the Asian tsunami is quickly known all around the world and people from far away send help. So, integration has created more of a global community that did not exist in the past, we are about to become one people.
So, are there significant downsides to globalization or is it just a matter of perception and left-party lobbying when they say things like that? Is globalization going to improve a lot of things for a lot of people or is it quite the opposite? And what about nature and everything aside humans?
As mostly, it depends on who you ask but one thing remains true... whoever we ask about globalization can just provide a biased statement, his very personal point of view on the matter, so let us have a common look at it:
This subject has three angles really, the individual, countries and of course, businesses.
We can not escape globalization so we should understand it and try to take advantage. If we go to our local supermarket, we can buy grapes from Chile or tomatoes from Mexico or Spain.
If we call the help desk for the computer we just bought, the person we talk to is in India. If we purchase a shirt, it will bear a tag from China, Indonesia or El Salvador. If we go through our daily routines then we will almost surely encounter people who have immigrated to the USA/Europe and who speak languages and come from cultures we know little about.
All these are examples of globalization. John Todd Stewart of the Institute for International Economics defines this trend as the increased cross-border flow of goods, services, people and capital.
In Europe and USA alike, this trend has meant bad news for some workers. Manufacturing jobs, especially unskilled ones, have moved to other countries. Fast-paced technological change and the lowering of long distance phone rates in the 1990s led to the outsourcing of white-collar service jobs to other countries, particularly call centers and software programming.
However, according to Ben S. Bernanke, former chairman of the economics department at Princeton University and a governor of the Federal Reserve, outsourcing is not likely to affect many of the more skilled jobs.
The only good is knowledge and the only evil is ignorance.
Some jobs outside Europe and the USA are well paid. Other positions may offer only a stipend for living and perhaps free housing, medical insurance and a travel allowance, but they provide rich rewards in terms of personal growth and later career opportunities.
The real payoff comes in the non-tangibles: the chance to serve, to learn a language, to acquire job skills and to get to know other cultures.
A large number of non-profit, educational and religious organizations offer positions in education, health and environmental and development projects. These positions can be an excellent way to acquire skills and experience that may ultimately lead to a better-paid position back home, in Europe or the USA as well as abroad.
The way the individual can take advantage of globalization is by increasing its market value — you heard right, market value! As I mentioned above, nowadays a persons knowledge/skills must be thought of as product. A product for which in fact there now is a global market.
So how do we increase our market value? Easy, we do it by acquiring more (quantity) and/or better (quality) knowledge and skills. This however might just not be good enough — we have to be smart and start acquiring skills and knowledge in areas and domains with future demand. Even this might not be enough since formal education can only get you so far... those who mimic others or their career path will never be at the top of their game, those who go their own way probably will be.
Formal education will make you a living; self education will make
There are mixed views about globalization, but if harnessed in the right direction it can be tremendously beneficial to both, developed as well as developing countries. Developing countries must:
If those basic guidelines are followed, chances are good to become a developed country rather sooner than later.
The benefit of being a developing country these days certainly is that common mistakes made by developed countries can be avoided — like, for example, building more efficient transportation, building more effective tools to fight crime and corruption, etc.
So, now that we looked at developing countries, what is in for developed ones? First and foremost, we need children, the more the better! Especially Europe, as it has a quickly aging populating and thus a ticking demographic time bomb at its hands. The same is true for the USA, even if its not as dramatic.
It is disputable how the gains of economic growth are being distributed but that is capitalism and free market. Those who can adapt better and faster to the new reality will succeed.
Even if that sounds like what is the case for individuals, it is also true for any business and country there is. Globalization has produced unprecedented opportunities, threats, and uncertainties for professionals and businesses amidst increasing access to a global human capital, as well as a global marketplace. Offshoring, in many market segments, becomes the lifeline, no longer only benefits, to stay in business.
In free market economy, professionals and businesses alike must find value and realign themselves and/or ones business into a new value-profit chain. National prosperity will be determined by a country's businesses, its citizens (including its workforce), and the governmental policies (an integrated approach to social, foreign, and economic policies) and institutions that organize and manage the economy in light of a global economy.
So how does a businesses benefit from globalization? I am not a pundit in economics, more like with technology. However, I think that in many cases the simplest answer is the best one. In my opinion success is dependent on six things:
This is true for any business, any individual as well as any country. So, actually, as we can see, nothing much changed with this everlasting equation except that now, we need to think global and act local (glocal) — it is all about the how and where we get those components.
Any business that manages to get the most quantity and best quality in resources the fastest, and thereby manages to give the least of its own resources in return, that business will be the most competitive and most successful.
For the most part this is true — competition is getting more fierce and we are going to see more of what is called survival of the fittest more often and in more dramatic ways in today's economy. However, I would add to it that, more often than not, success also comes with sharing and when teaming up and maybe melt two or more businesses into a single one. As my father always used to say: I prefer owning just a fraction of something big an good rather than owning 100% of something tiny which basically is crap all along.