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Economics - Have you ever wondered about the negative side of globalization?

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Economics. Have you ever wondered about the negative side of globalization? Nowadays there is hardly any economist who isn't talking about its benefits, especially for low-development countries who get a chance to obtain foreign investments. However, we oftentimes forget about the dark side of globalization. During the recent years globalization has had a very important influence on the environmental issues. As the countries get more connected with one another through the globalization tendencies which are very strong nowadays, the problems of environment protection and pollution rise more sharply than ever during the previous years. The capital which is flowing to the developing countries from highly-developed ones becomes one of the causes of damage which the world environment is getting nowadays. Even though many of such projects are presented as those which are favorable for the environment or at least the ones which don't do any harm to them, the real situation is very dangerous, since the pollution of low-developed countries is facing their nations. In 1991 Lawrence Summers who was at that time US Treasury Secretary in the Clinton Administration and Chief Economist for the World Bank was supporting controversial adjustment policies. The report which he wrote and announced was dealing with the necessity of moving the dirty industries, i.e. those which pollute the atmosphere, to the lower-development countries. In his opinion, only this action could help the industrialized world at this moment, and it was the best possible alternative. ...read more.


However, there are some issues to consider regarding the suggested policy. In the economic sense, the argument is very logic because the costs of pollution are actually going to be non-linear due to the low costs of labor and low health-impairing costs in lower-developed countries. People who are going to work for the industries in those countries will be receiving much lower wages in comparison with the wages of employees who would otherwise be working for the industries in highly-developed countries. It will also be much easier to overcome the results of pollution in those countries due to the low costs of such measurements. The policy which was declared by Lawrence Summers is very similar to the policy which International Monetary Fund and World Bank are providing. In the situation of globalization, they also stand for shifting dirty industries to developing countries in order to get benefits from their comparatives advantages. As far as experience shows, some companies were really successful when putting into life the suggested approach. It had a positive impact both on the activity of companies and the problem of minimizing environmental costs. For example, Nike moved its production to the Asian countries. G.M. started using Mexico as the territory for producing the cars. As the companies' management mentions, the technologies of production have remained the same. The only difference is that companies provide their production in countries with low wages, and thus they get many advantages. ...read more.


Illegal logging is leading to further erosion and deforestation" (R,Mokhiber, R.Weissman, 2). It's also very easy to understand that the policy which Lawrence Summers is providing is very close to racism. The suggestions he makes are very useful for industrialized countries in the economic sense because they help those countries to get rid of harmful industries. However, the attitude towards developing countries is in general sense nothing but racism. Globalization brings nations closer together but it also leads to advantages which highly-developed countries will get over the developing ones. We all know about the case with American oil company Texaco which had been polluting Amazon for many years (total, it dumped 16 millions of gallons of oil). There was a famous law-suit with this company which it lost. A tape was found in which the managers were talking to one another, and calling African-American workers "black jellybeans". There is no wonder the managers didn't care about dumping the waste in Amazon- they simply didn't care about any other nations except theirs which is an example of racism. Therefore, this issue raised by Lawrence Summers appears very complicated. In the economic sense, it's a very good suggestion because it would be beneficial for the world economy. The total costs of pollution would be much lower in case of shifting the "dirty" industries into developing countries. However, the environmental issues are very important in this case, too, and they would have to be considered very carefully. ...read more.

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