The positive and negative effects of Globalization

Globalization is a broad concept and the angle taken to define it can lead us to interpret the idea in many different ways. There is much controversy about what globalization actually means and many definitions fail to encompass social, cultural and technological exchanges between world systems. John Pilger suggests that “it is a jargon term which journalists and politicians have made fashionable which is often used in a positive sense to denote a ‘Global village’ of free trade, hi-tech marvels and all kinds of possibilities that transcend class, historical experience and ideology.” (J.Pilger 1998:63). Taking a broader point of view, Bilton et al defines globalization as “The process whereby political, social, economic and cultural relations increasingly take on a global scale, and which has profound consequences for individuals, local experiences and everyday lives.” (Bilton et al 1996:5)

The process of globalization has certainly had many changing effects to the world we live in; it has also changed the way many factors operate. Globalization is said “to have transformed the structure and scale of human relationships that social, cultural, political, and economic processes now operate at a global scale with a consequent reduction in the significance of other geographical scales.”(The Dictionary of human geography 2004:315)

Globalization has had both positive and negative effects on a local, national, international and global level. Globalization often brings benefits at one level which cause negative effects at another, these results and the scale at which they manifest are often uncertain and unpredictable. The very nature of its unpredictability causes instability and introduces risks to all actors involved (many of these actors unwillingly). The economics of globalization is very relevant in understanding how processes work and how it affects other issues. Without the notion of a truly global economy many of the other consequences such as culture and politics would either cease to be sustained or become less threatening. In our modern world, finance and economics is the driving force behind globalization, and globalization is serving capitalism well. From an economic point of view Globalization can be seen as “a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows.” (Globalization guide)

Improvements in transportation and communication have encouraged large cooperation’s to move outside of their regulatory national boundaries and into other areas worldwide. The movement of these companies can be seen as a positive effects as corporations are ‘opening up’ new markets and therefore there are greater opportunities, benefiting both the actual company and members of the community in that location. Multi national companies (MNC’s) such as ‘Ford’ are attracted to less economically developed countries due to a cheaper labour force and cheaper raw materials. The globalization of manufacturing has given rise to many large MNC’s. Initially this can be seen as a mainly positive effect as large corporations bring in the promise of market integration, employment and greater wealth into counties in which they operate. Industrial expansion in the less economically developed world has spawned some very large companies. For example, industrial growth in South Korea was achieved largely through activities of major companies such as, Samsung and LG. The introduction of MNC’s has also led to the multiplier effect whereby further indirect positive effects are caused by the establishment of a company, for example social benefits. Globalization and the increase in MNC’s have accelerated the flows of investment into areas which are lacking in development. In a report taken from the UN (2003) in the last 20 years more than 70 countries have strengthened legislation to promote investment in extractive industries such as coal and oil. Investments in developing countries increased from 1,219 in 1988 to 5,671 in 1997. Investment in these areas can have direct positive effects on the population and the local economy. Investments in mining exploration and investment in Africa has doubled between 1990 and 1997 (UN). From a negative point of view investment into these countries does not always go straight into the local economy. A free-market means that little is done to address re-distribution of wealth and money is not reinvested back into the community but directly to the company owners. These countries can be exploited by the MNC’s and therefore receive little benefits.

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Corbidge discusses how the concept of globalization has increased recognition alongside processes of deterritralization, the flow of capital and technology across national boundaries reduces the importance of national space in economic decision making. This change in power structure means that multinational companies are now able to transcend traditional regulatory boundaries set by the nation states. Generally the traditional role taken by the nation state is to facilitate both economic and social development. Since the introduction of MNC’s the role of the nation state has been weakened and it has now shifted to one run by money capitalists whose prime objective is the accumulation of capital. This does not necessarily lead to beneficial development of areas where these companies choose to ‘set up’. The United Nations state the level of benefit that globalization brings depends upon the strength and effectiveness of the government and the stability of domestic institutions. The countries which lack this political power and stability are those which do not reap the benefits or on the contrary are exploited by the MNC’s. Institutions such as the World Bank, World Trade Organization (WTO) and International Monetary Fund (IMF) have been created as the new regulatory systems on a global scale to regulate MNC’s. However, while these supranational organizations make decisions behind ‘closed doors’ they continue to be undemocratic and favour those with power at the expense of others. This is a prime example of how globalization has had a negative effect on developing countries. Only true restructuring of these systems will enable them to effectively bring positive change throughout the world.

A major negative effect of globalization has been the gradual division of the North and the South (more economically developed countries and less economically developed countries) It can be argued that globalization has decreased the difference between MEDC’s and LEDC’s. By looking at figures from the HDI in the UN development Report 1999 some countries have increased income due to globalization. China's opening to world trade has brought it growth in income from $1460 a head in 1980 to $4120 by 1999. However, although some countries have benefited from economic development through globalization many countries remain poor. “The gap in incomes between the 20% of the richest and the poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995.” (UN development report 1999) Many of the countries that are not developing are those which are not open to world trade. Jonathan Barton highlights the importance of understanding the North-South divide in his analysis of the political geography of South America. The research into issues of global development by the Brandt Commission in 1980 and 1983 emphasizes the importance of understanding complex inter-relations in terms of production and consumption, health and welfare and the environment. A greater understanding of these issues is essential to prevent further division between the North and South.

Many people believe that globalization has decreased poverty and inequalities in global income. China’s opening to world trade has encouraged huge development of the economy and industries and therefore this has encouraged further social development within the country. This statement can be supported by looking at the Human Development Index (HDI) which is a measure of a country's development that takes into account life-expectancy, educational enrolment, adult literacy and per capita income. In 2001 China was ranked 99th out of 174 countries, in 2001 it was ranked 106th. The growth of income per capita has increased dramatically and this is a direct cause of development through globalization. The Spread of globalization is thought to benefit many newly developing countries which will decrease the divide between the more economically developed and the less economically developed. Although countries have benefited from globalization, for example, the newly industrializing countries such as Korea and China. Many countries remain poor and the gap between the rich and the poor nations is continually increasing, this is the case for many African and Eastern European countries where the HDI has fallen. It is believed that increasing inequality is a direct result of market forces. Large corporations give the rich the power to add to their wealth and they also have the freedom to ‘set up’ in poor countries to make greater profits from low wage levels and exploitation of resources.

With the United States as the super power we have seen a dramatic homogenization towards the American way of life. This ‘Americanization’ brings with it a culture of consumerism, competition and life styles which are apparently free from social and environmental responsibility. This change and the following of ‘the American dream’ is not generally positive and many cultures are being lost or ‘swallowed up’. For many cultures the new diversity that globalization brings is disquieting and disempowering. People fear that their countries are becoming fragmented and that traditional values and cultural identities are being lost. There are many driving forces which help spread Americanization but the main contributing factors are the huge multi national corporations. There are no brand names that have the same global resonance as McDonalds and Coca Cola. These corporations have a stranglehold on the world and they are a huge driving force behind globalization and changing international attitudes. “There is growing fear of being taken over by new types of technology and the general ambivalence towards globalization, of which McDonald’s has become a symbol” (The Guardian 1999).

The US has been dramatically responsible for transforming communication by the invention and democratization of the internet. “speed is the defining character of the internet age, this new technology has shrunk the world radically, making globalization a reality.” (The Guardian 1999). The increased access to communications through the media has heightened public awareness. However, John Pilger sees the media as simply propaganda of western power, by its manipulation of language and omissions, which often prevents us from understanding the meaning of contemporary events. Increased consciousness about world events has also lead to increased uncertainty which can arguably be linked with an increase in fear. As we learn more about what is happening in the world our consciousness about the instability also grows. The recent surge in terrorism is a new global threat that is linked to attacking Americanization and protecting cultural and religious beliefs. To a large extent it is built on fear from the growing uncertainty that we face and the organization of groups and attacks which has been made quicker and easier through the increased communication. However the Zapatista movement in Mexico managed to largely avoid violence by the use of the internet is an example whereby globalization has served to mobilize forces outside of the locality in a new way to reap positive results.

Conclusion

In Conclusion there are evidently positive and negative consequences of globalization. These effects are either direct results of globalization or indirect results caused by factors linked to globalization. Throughout this essay I have stated many of the major effects globalization has caused to our world system. Many of these effects have been around since the beginning of globalization however some are more recent issues such as the internet and terrorism. It is clear that globalization has had many positive effects to world markets. Globalization has helped open up new trade areas where LEDC’s can benefit from a range of beneficial outcomes such as new employment opportunities and greater economic development. As stated previously not all countries have benefited from the spread of globalization and in fact many countries have been exploited. In order to sustain globalization and to limit negative outcomes MNC’s need to be regulated to stop further exploitation. If globalization continues to aid the flourishment of global capitalism a sense of social responsibility needs to develop along side it. As our awareness or access to knowledge grows we must take responsibility for our actions. Failure to do so means we will live in a continually polarized world where the gap between the rich and poor continues to cause global atrocities and growing instability such as global terrorism that we are witnessing now.

Bibliography

Pilger J, (1998), Hidden Agendas , London. Chapters 1 and 5

The Guardian, Monday Nov 8th 1999, Planet USA

Bilton et al (1996), Introductory Sociology: 3rd Edition, Macmillian

Barton J.R, (1997), A political Geography of Latin America, London, Routledge