Globalization has many characteristics that can benefit some countries while undermining others. To some, globalization is bringing choices and opportunities, while to others it is a disruptive force that threatens lives, jobs, and traditions. In a global economy markets are without boundaries. Free market capitalism, which is the notion where “all economic decisions regarding transfers of money, goods, and services take place on a voluntary basis, free of coercive influence,” (Wikipedia.com) is often referred to as the driving idea behind globalization. As a result, countries that are willing to participate in the global marketplace are encouraged to open their economy to free trade, private ownership, and competition.
Economically, globalization has been greatly encouraged since World War II, with the introduction of free trade agreements such as GATT (General Agreement on Tariff’s and Trade). Additionally, regional trade agreements have also been developed, which have included single markets established by the European Community and NAFTA (North American Free Trade Agreement). However, by the 1970’s the effects of globalization became increasingly visible, both in terms of the benefits and the disruptive effects. However, it was not until the collapse of the former Soviet Block in the late 1980’s and the general acceptance of the free market and democracy, coupled with the emergence of the ‘Tiger’ economies (South Korea, Taiwan, Singapore, and Hong Kong) of Pacific Asia, that the term globalization has taken on true significance.
The improvement of communications this century from sailing ship to satellite has contributed directly to the globalization of the world’s economies and political systems. Technological globalization of Information Technology has moved across cultural and physical barriers, effectively eliminating the capacity of countries, however too harsh, to isolate themselves from the world outside. Despite this, Iran has recently banned the use of satellite television, but control will be difficult, if not impossible, to achieve because the information revolution which has also provided e-mail and the Internet has democratized information. It may seem nonsensical for the need to obtain a visa to physically visit someone to whom you are able to talk too electronically on a daily basis. The result is that free speech and civil liberties are becoming increasingly international. Borders will no longer act as boundaries, especially with respect to information. For example, IT has effectively eliminated the capacity of countries to keep out foreign influences, good or bad and the flow of finance and crime. Therefore, numerous problems can only be tackled in collaboration with other countries.
Globalization of the economy has not been based purely on free trade but on the free movement of capital. This has promoted direct foreign investments from one country into another which has had a strong influence on the globalization of the national economies. Globalization supporters suggest that global competition and cheap imports keep a closure on prices and provide more choices for consumers, so inflation is likely to overturn economic growth. Globalization contributes to the making of high-quality products at a lower price, leaving the consumers to be the true winners of a global economy. As a consumer, the benefits of globalization are favorable in the long run. Companies will do their best to provide consumers with high quality products and services to succeed in the global marketplace. However, the global economy will only succeed if the World Trade Organization would reform their questionable policies and strictly enforce trade agreements that would only promote fair business practices (OECD.com). Perhaps by establishing a new international organization or by reinventing the current ones, (United Nations, IMF, World Bank, and WTO) that would only be dedicated to implementing fair global economic laws.
Global progress should be achieved in a fair manner to all. Each participating country and multinational corporations should strictly be held accountable for their actions and practices in the global marketplace. The new global economy laws should concentrate to preserve human rights, protect the environment, promote fair trade agreements, and enforce fair labor laws around the world. Multinational corporations should be penalized if they violate these laws. They also should be indebted to promote fair business practices around the globe or the consumers can boycott them for failing to do so. Another constructive approach is to enhance the competitiveness of the richer nation’s business and labor through education and training to continuously lead in the global marketplace. The competitiveness would lead to higher standards of living and a more diverse line of products. Training and education play a very important role in securing one’s place in the global economy. The concerns of the opponents of globalization are valid. They are very important issues that we need to address through high standards of education, stronger legislation, and policing in order for globalization to succeed.
Technology has now created the possibility and even the likelihood of a global culture. The Internet, fax machines, satellites, and cable TV are sweeping away cultural boundaries. Global entertainment companies shape the perceptions and dreams of ordinary citizens, wherever they live. This spread of values, norms, and culture tends to promote Western ideals of capitalism. Will local cultures inevitably fall victim to this global consumer culture? Will English eradicate all other languages? Will consumer values overwhelm peoples' sense of community and social solidarity? Or, on the contrary, will a common culture lead the way to greater shared values and political unity?
Globalization is arguably both a cause and a consequence of the information revolution. It is driven by dramatic improvements in telecommunications, exponential increases in computing power coupled with lower costs, and the development of electronic communications and information networks such as the Internet. These communications technologies are helping to overcome the barriers of physical distance. Globalization empowers individuals to create their own destiny through on-line investment. The freedom to invest in stocks locally and internationally by use of the Internet is giving individuals the power to control their investments. Moreover, globalization supporters believe that an open economy supports innovation with fresh ideas from around the world. Globalization will greatly contribute to the increase of exchanging ideas and completing financial transactions by computer. Monetary exchanges will become increasingly effortless as computers automatically monitor transfers and currency exchange rates. Consumers can now use debit cards instead of money and checks. The success of these programs may lead to cash-less society which could possibly decrease theft and fraud and add a measure of safety to everyday monetary transactions. Overall, supporters of globalization will continue to promote that lowered trade barriers will bring peace, provide more consumer choices, and raise incomes and living standards around the globe.
Globalization does indeed give greater communication and understanding of different countries. Although cultures may lose some ethnicity, they will form a sense of a melting pot. It leads to less discrimination and preformed ideas about other groups of people. Most importantly, supporters of globalization believe that it is creating millions of jobs, generating prosperity, and raising living standards around the world. Business Week’s November 6th, 2000 issue reported that globalization has undeniably contributed to America’s new economy boom. It has created millions of jobs from Malaysia to Mexico and an abundance of affordable goods for Western consumers. It has brought phone service to some 300 million households in developing nations and a transfer of nearly $2 trillion from rich countries to poor countries through equity, bond, investments, and commercial loans (BusinessWeek.com).
While globalization is transferring numerous decisions to the international arena, political and constitutional reforms in many countries involve attempts to decentralize decision-making from central government to more regionally independent authorities to provide for a sense of local identity (OECD.org). These trends appear contradictory, but in practice they are causing the development of new multi-level policy systems. Consequently, borders are becoming increasingly difficult for governments to define and maintain. Therefore, national governments are being forced to redefine their roles, responsibilities and policy relationships. In the same way, multinational companies will find that they will not only have to deal with global trends but also the local laws and customs of their intended markets and manufacturing centers.
Law has traditionally been the region of the nation state, whose courts and police enforce legal rules. By contrast, international law has been comparatively weak, with little effective enforcement powers. But globalization is changing the contours of law and creating new global legal institutions and norms. The International Criminal Court promises to bring to justice hateful public offenders based on a worldwide criminal code, while inter-governmental cooperation increasingly brings to trial some of the most notorious international criminals (Ansom.net). Business law is globalizing fastest of all, as nations agree to standard regulations, rules and legal practices. Diplomats and jurists are creating international rules for bankruptcy, intellectual property, banking procedures and many other areas of corporate law. In response to this internationalization, and in order to serve giant, transnational companies, law firms are globalizing their practice. The biggest firms are merging across borders, creating mega practices with several thousand professionals in dozens of countries.
Globalization has raised fears that the sovereignty of nation states is being undermined (Globalize.org). If sovereignty can be defined as the ability to exercise control without outside interference, then nation states are clearly experiencing diminishing sovereignty (Globalize.org). Governments must recognize and work on the assumption that most issues they are required to deal with are affected by or will affect to some extent the international competitiveness of the country. Governments' own responses to globalization or the search for joint solutions to global problems have further effects upon sovereignty. Participation in international organizations or the adoption of international agreements puts limits on policy options available to governments. This may even require modifications to long-standing domestic policies and practices.
Interdependence is narrowing the degree of domestic policy independence. Independent action may not be the most effective way to achieve policy goals. Many other important policy goals cannot be met by governments acting alone. In combating environmental problems and international crime, the interests of individual nations, therefore, may only be protected by collective action. Monetary and fiscal policy decisions can no longer be taken on the basis of exclusively domestic considerations. Currently more than 10 times the amount of finance needed to support the current volume of world trade is traded daily on the world currency markets. This means that 90 per cent of that activity could be seen as pure currency speculation (Oneworld.org). This is far in excess of what central banks can hope to influence through their own interventions, especially in the absence of any joint action. In recent years, the Labor Party in the UK, after four successive election defeats has gradually moved its economic policy broadly in line with that of the current Government (Oneworld.org). This may be seen as an attempt to gain credibility with the UK electorate but perhaps most importantly, to gain credibility with the International Money Markets which will have the opportunity of voting with their funds.
The globalization of trade finance and information is perhaps the tip of the globalization iceberg. The challenge to governments may be made more severe by a host of other internationalization’s under-way, which include areas such as crime and population movement .Even if it is considered by some to be less than desirable, the increasing globalization of the world seems unavoidable. In the long term, little may be gained by nation states resisting the impacts of globalization, which may ultimately prove to be ineffective and counter-productive.
The competition for international investment encouraged by the activities and mobility of multinational enterprises means that most traditional domestic policies such as education and training, taxation, social protection, economic regulation and labor legislation have become international. Even a nation's domestic management policy is a matter of great concern to its trading rivals, because this will ultimately affect a country’s efficiency and consequently its competitiveness. Government policies must increasingly be made more consistent with or competitive against those of their main trading rivals.
To conclude, the ever-improving technology and consequently communications available to businesses have enabled the creation of a global economy of production and finance, enabling industry to make use of territorial divisions, playing one country or trade-block off against another to maximize subsidies, and guarantees of political stability and favor. With this, a new political structure is emerging with national sovereignty being an ever-looser concept which is contributing to the emergence of a phenomenon described by Robert Cox as ‘macro-regionalism’. He considers there to be three macro-regions in the making: Europe based on the European Union; an Eastern Asian sphere centered on Japan; and a North American sphere centered on the USA and looking to embrace Latin America (OECD.org). Perhaps the emergence of these macro-regions is part of a natural evolution towards a truly global state?
Executive Summary
Human societies across the globe have established progressively closer contacts over many centuries, but recently the pace has dramatically increased. Jet airplanes, cheap telephone service, email, computers, instant capital flow, all these have made the world more interdependent than ever. Multinational corporations manufacture products in many countries and sell to consumers around the world. Money, technology and raw materials move ever more swiftly across national borders. Along with products and finances, ideas and cultures circulate more freely. As a result, laws, economies, and social movements are forming at the international level. Many politicians, academics, and journalists treat these trends as both inevitable and, on the whole, welcome. But for billions of the world’s people, business-driven globalization means uprooting old ways of life and threatening livelihoods and cultures. The global social justice movement, itself a product of globalization, proposes an alternative path, more responsive to public needs. Intense political disputes will continue over globalization’s meaning and its future direction. Globalization expands and accelerates the movement and exchange of ideas and commodities over vast distances. It is common to discuss the phenomenon from an abstract, global perspective, but in fact globalization's most important impacts are often highly localized. It is impossible to measure an imprecise concept like globalization precisely, but increasing interconnectedness is readily apparent in a host of economic, demographic, technological, and cultural changes. Globalization is a complex, abstract phenomenon, but civil society has shown that it is neither unalterable nor inevitable. Citizens all over the world--human rights advocates and religious leaders, environmentalists and trade unionists, ordinary people from the global North and South, work together to make concrete improvements in people's lives.
