Globalization Good or Bad?
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The purpose of this paper is to analyze the criticisms of globalization by comparing and contrasting the positive and negative effects as they pertain to both pro-globalization and anti-globalization. Focusing on the related effects of current developments of information technology, outsourcing for developed countries and its positive effect; contrasting with the inequities and exploitation of developing countries in the process.
GLOBALIZATION: GOOD OR BAD?
Globalization has been defined with numerous and widely differing meanings dating back to 1870 as “economic integration through trade, migration, capital flows and communication” (Mann, 2005). Considering current impact, globalization indicates the social process, highly influenced by technological development, increasingly rapid means of transport and the “information revolution”, which has created a truly worldwide web of spatial connections and functional interdependence (Defining Globalization). With such immense impact on the world economy, globalization has many defenders and dissenter about the overall good or bad it provides.
The true effects of Globalization are the development of new information and technology, increasing global competition, economic prosperity for developing countries, labor and outsourcing along with exploitation and inequities shared with developing countries, via labor, environmental, and politically factors. Thomas Friedman states in his book _The Lexus and the Olive Tree_ that” Globalization can be incredibly empowering and coercive and can democratize opportunity and democratize panic. It makes whales bigger and minnows stronger. It leaves you behind faster and faster, and catches up to you faster and faster”. This statement has been proven prevalent as the effects of globalization have increase many nation through access to information, ease of communication and trade over the past two decade and in turn has left behind many developing countries behind even faster.
The changes of globalizations intertwine a complex position making it difficult to summarize positive or negative effects. With globalization comes wealth and new markets, at the same time causing disorder, exploitations, and unrest. It is both a source of repression and a catalyst for global movements of social justice and emancipation (Global Policy Forum, 2009). The totality of effects that globalization have vast and objective, thus this paper discusses the “Good or Pro-Globalization” views more specifically, information technology and outscoring and the “Bad or Anit-Gloalization”, specifically the inequality and exploitation of developing countries in this process.
GOOD OR PRO-GLOBALIZATION
Globalization has set in motion a process of far-reaching change that is affecting everyone (World Commission on the Social Dimension of Globalization, 2004). This process has connected more people together than every before with new technologies and open trade policies. International trade has said to be an important factor for the advancement of developing countries and their integration into the global economy. Catalysts for globalization including economist, politicians, and corporations promote policies encouraging free trade, free investment, deregulation, and privatization, with the promise of economic growth (Thomson, 2001). This agenda has lead to the development of trade agreements such as the North American Free Trade Agreement (NAFTA) in 1993; the creation of the World Trade Organization in 1994; the expansion of the European nations’ plus the creation of regional free trading blocs in Latin America and the Far East (Thomson, 2001). Globalization has provided developing countries the opportunity to increase income, their standard of living, through outsourcing new jobs to these countries, exposing them to new technologies, which expands their ability to trade.
INFORMATION AND TECHNOLOGY
The 21st Century has encompassed the “Information Age” with the advent of fiber optic communication, satellites the flow of information and communication is now without borders. Access to information and the ability to communicate instantly with anyone around the word has become readily available through application and platforms used over the Internet. Table 1 shows that since 1995 the worlds total population who used the internet increased from 0.4% in 1995 to 23.3%. Advances in information and communication technologies have reduced the business cost, as an example, “Cisco Systems is one of the world’s largest companies and only owns three factories to make the equipment used to help maintain the Internet.
Cisco subcontracts the rest of its work to other companies around the world. Information platforms, such as the World Wide Web, enable Cisco’s subcontractors to bid for business on Cisco’s Web site where auctions take place and where suppliers and customers stay in contact” (Globalization, 1997-2009). As new technology is discovered and put to use by Multi-National Enterprises, a firm with operations in different nations (Gibson, Ivancevich, Donnelly, & Konopaske, 2009) located in LDC’s, the LDC’s then adapt this new information and allows them to produce and trade in the most efficient way so that the highest attainable welfare for all countries is reached (Mann, 2005).
Outsourcing is the process of companies moving or contracting some or all of their service operation or manufacturing to another company overseas (Gibson, Ivancevich, Donnelly, & Konopaske, 2009). This process takes advantage of lower labor cost, natural resources or other services available in developing countries. Today’s leading U.S. companies are relocating operations-software development, call center, payroll, and loan and insurance claims processing, etc.-to an offshore locations” (Gibson, Ivancevich, Donnelly, & Konopaske, 2009) to take advantage of the lower labor cost avaiable. The labor wages for these operations are vastly lower. For example, a computer chip designer with a master’s degree in electrical engineering and five years’ experience often earns $12,000 a year in India compared to $85,000 a year in the United States (Globalization, 1997-2009). Communication has also played a vitial role in outsorcing these job as current methods allow compnies to intersct with employees in other coutires through video conferences, internet calls, instant messaging, and email.
The agreements such as (NAFTA) have instilled confidence in Multi-National Corporations in outscoring as it provides protection of foreign investors against economic and political threats, while reducing barriers of setting up financing and communications in the host country (Globalization, 1997-2009). Outsourcing also provides a tax benefit for U.S. Corporations by allowing them to indefinitely defer any federal tax on profits earned over seas and only pay taxes on income when profits return to the U.S. (Globalization, 1997-2009). Outsourcing provides great benefits for cost reduction corporations and an increase standard of living and greater opportunity for the laborers from the developing countries who work these jobs.
BAD OR ANTI- GLOBALIZATION
Antiglobalization movement is not against globalization itself but the predication of a “borderless economy” with power of sovereign nations reduced to powerlessness as every factor of production (commodities, labor, and capital) moves effortlessly across border increasing inequity between nations. These inequities include financial, quality of work and social environment. Globalization increase in trade, provides the ability to eradicate poverty and sustained economic growth; however the argument that global standards of living are actually undermined through lowering workers wages’, eroding workers rights, increasing unemployment, and creating a global race to the bottom (CAFTA and the Scourge of Sweatshops, 2007). Globalization has the impact to reduce poverty-stricken counties and advancing economics with new technology and job opportunities, however the regulation over the methods that Multi-National Corporations and governments utilize globalization must benefit both countries verses the current inequality and the exploitation of these Host country nationals and their resources.
The rapid growth of financial and trade globalization over the past two decades has further the gap of income inequalities form the rich countries to poor countries. Anti-Globalization supporters agree the overall benefits of globalization not equal among the citizens of countries involved, with clear loser in the relative and possibly even absolute terms (IMF). Today 20 percent of the world’s population living in the highest-income countries has 86 percent of the world’s income with the bottom 20 percent having only 1 percent (Globalization, 1997-2009). Approximately one-sixth of the world’s population earn less than one dollar a day depicting the growing inequality that exist, which is growing worse.
With more companies outsourcing their manufacturing labor, the wages paid, workers conditions and overall environmental impact of these operations have been under great scrutiny over the last decade. Accusation of providing in-humane working condition and paying an unlivable wage a plagued many global companies such as Nike and retail giant Wal-mart. All global corporations have implemented new initiatives dedicating time and capital into improving these issues, to limit public conception of unacceptable behavior, which can damage the reputation of a corporation. Globalization is a tool of capitalism that necessitated theses inequalities and perpetuates them.
IMPLICATION FOR MANAGERS
Globalization has the ability to great opportunities for the global community. Managers must understand the positive and negative effect of globalization to maximize the advantages and minimize the negative effects. Training managers in global strategy, cultural diversity management, team building, organization, communication and transfer of knowledge is necessary for effective management into the 21st century (Gibson, Ivancevich, Donnelly, & Konopaske, 2009). With increased competition, multitude of international competitors and the frequent upgrading of technologies competitive pressure for managers are high and needs effective management (Giddens, 2000).
The debate that is globalization good or bad reveals the direct relation with positive and negative effects, as companies maximize profits through globalization developing countries can be exploited create greater inequalities, which deters global economic growth over time. Creating value over time in the global community will help the growth continue to all nations. The global community should determine the following about globalization, who benefits and who does not, how the benefits and the costs of these processes can minimize inequalities, and how mitigated risk can maximize the opportunities.
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