The fall of communism and the motive of capitalism to maximise returns through cheap labour has increased the movement of foreign direct investments to developing countries such as India, Philippines etc. This form of investment could benefit either sides or either one side of the party. A firm such as Reebok, having their factories and selling their products in the Philippines would benefit the employees and the organisation Reebok, however; when the benefits are weighed the gain to the organisation out weighs that of the locals.
The employed workers of Reebok would have an income to spend or invest, nevertheless, the firm would enjoy cheap labour cost making them very competitive in the international market. Most of these multi national are very powerful and influential which could put them in a position to ask for lenient labour and environmental degradation laws, in order to invest in that country. Some multi nations operating in a country would help improve the local economy, but there may be an unequal distributing of benefits as the multi nationals gain more than the locals, from operating in that country. For that reason, is globalisation through foreign direct investment, exploitation, or is it the inequality incorporated within the term globalisation? An example of this could be the Bhopal Disaster that occurred in India. This is inequality of Globalisation through multi nationals on the local and national level.
On an international level, the flow of FDI’s and trade could be seen in a Traide, this is the trade and investments between some countries and continents such as America, Europe and Japan with south East Asia. This traide brings these countries closer together which could increase peace and corporation between these regions, on the other hand, the current definitions of globalisation means all nations from different continents trading together to benefit from trade, and this is not truly the case because in reality, there is an unequal distribution of wealth through trade as some continents such as Africa, Latin American and other Asian countries are excluded from the traide and most trades. This also brings the question of globalisation being defined as an equal interdependence between different nations in the world. This is also not the case because in reality, there is an unequal interdependence of nations. Maybe an equal interdependence may exist in the traide but this is not true for many other countries.
Jonathan Michie explains, Technological innovation in the field of communication and information together with advances in the field of transportation is one cause of the globalisation processing. He also explains another cause is organisational innovation particularly, in the organisation of production across countries has also helped in this process. An advance in technology through communication has made it much easier to trade or have an overseas business partner, which would in turn increases the flow of trade between Nations. The Internet in addition has also brought the world to our doorsteps since; one could buy or sells products from any location to anyone in the world.
Although these advances in technology has help increased globalisation, “At present only about 15% of humanity accesses the Internet” and more households in the Northern part of the world have access to a variety of communication methods “Mobile phones, Landlines, MSN etc” than those in the South. Therefore there seems to be an existence of imbalance in the distributions of technologies around the world. In addition, advanced technology has reached the urban cities more than the global rural areas “ Africa and other 3rd world countries”.
The free trade system has benefited a lot of nations around the world and it is also one major cause of the modern globalisation process. The purpose of free trade is to encourage nations to trade according to their comparative advantage, which would then benefit all nations as they trade to their strength’s and production efficiency. Most countries around the world have freed their market, making the market forces control supplies and demand, however some countries still protect their market against foreign competition. An example of this is the UK and other EU countries subsiding agriculture. Most developed countries have moved from a production base to a service based culture and on the other hand, most third world countries are still in their agricultural and production based culture. Most of these 3rd world countries gain their income through trades from their agriculture products. Hence, protecting the market, limit’s their benefits from trade, as less income would lead to less development and innovation, decreasing their future progress locally and internationally. Consequently, the act of free trade is unequal and the spread of globalisation through free trading imbalanced, as one party gains and the other looses.
Analysing these arguments, “The trend of globalisation has involved propertied and professional classes more than poorer and less literate circles. Women and people of colour have generally had less access to global spaces than men and white people”. Therefore is globalisation, marginalization? Whereby, certain groups in the global society are excluded from the participation and benefits of globalisation. Globalisation going hand in hand with Marginalization could bring about the act of, us and them, putting a barrier between the developed nations and the underdeveloped. This act could also increase the global economic inequality that exists in the world’s society. Further analysis of these cases has also brought to light that; globalisation mostly benefits the nations with power and influence on the world market.
For globalisation to have an equal economical effect on all nations, the developed countries would have to free up their markets cutting out subsidies or any protection of any kind. This would then force them to trade according to their comparative advantage leading to a more equal benefit from trade. This would also help increase the income of most 3rd world countries, which could in turn, help them invest into technology for further development.
Globalisation in itself would benefit all nations involved in the morden day trading system, however developed countries protecting their market, is the first stage of creating global economic inequality.
Until all protectionist policies are abolished, global economic inequality would always exist in the global society. Till then, the definition of globalisation would remain unknown, as there is an unequal interdependence, distribution of wealth and benefits and existence of marginalization in the global society and this is all due to an unfair globalisation going hand in hand with global personal benefits, making one party better off, and the other worse off.
Bibliography
Quote from - Jan Aart Schulte – Globalization a critical introduction – Second Edition.
Exchange controls - Restrictions imposed by the central bank or other government authorities on the convertibility of a currency, or on the movement of funds in that currency -
Ghana – A West African country that was previously known as the Gold Coast.
Bhopal Disaster - On the night of Dec. 2nd and 3rd, 1984, a Union Carbide plant in Bhopal, India, began leaking 27 tons of the deadly gas . None of the six safety systems designed to contain such a leak were operational, allowing the gas to spread throughout the city of Bhopal - www.bhopal.org/whathappened.html
Triade – This explains the main flow of trade and investment in the Global market. Trade mainly between America, Europe and Japan with South East Asia. – Peri Yavash – lecture, Coventry.
Jonathan Michie – The Handbook of Globalisation.
Quote from – Jan Aart Scholte –Globalization a critical introduction.
Comparative advantage – When a country is able to produce a good more cheaply relative to other goods produced domestically than another country. – Alain Anderton – Economics Third edition.
Qoute from – Jan Aart Scholte – Globalization a critical introduction.
Marginalization - The feeling of exclusion that is frequently encountered by people who are not part of the majority culture -
Marginalization - Marginalisation or marginalization (US) refers in general to the overt or subvert acts and trends within societies whereby those perceived as lacking function or desirable traits are killed or otherwise excluded from existing systems of protectionism, thereby limiting their means for survival. -