The positive and negative effects of Globalization

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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 ...

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