What is globalisation and is it a new phenomenon?
What is globalisation and is it a new phenomenon?
Many argue that the phenomenon of globalisation is new and that it is present in our lives only the past 20 years. This essay will research the phenomenon of globalisation, pointing at its advantages and disadvantages. This document is going to discuss how globalisation affects the global economy and how it is caused, as well as if it benefits only the developed world or if the developing countries gain as well.
Globalisation can be defined as the ability of firms to transfer raw material, capital and labour anywhere in the world, take advantage of domestic conditions where they might locate and sell wherever they wish (usually internationally) make profits and transfer them wherever they want. Another definition of globalisation is ‘‘The innumerable interconnections – economic, cultural, technological, political – which bind the local and national into the global community; the consequence of neo-liberal economic policies which see everything, including education, as a commodity to be sold to the global market place’. (Hicks D, in Hicks, D. & Holden, C.2007)
Also, as Garlake states, another opinion about what globalisation is, is the following: ‘…..the process through which individuals, groups, companies and countries become increasingly interdependent. This growing interconnection has accelerated since the end of the Cold War in the late 1980s, and today we can feel its impact on our lives.’ (Garlake T. 2003)
The OECD defines globalization as “The geographic dispersion of industrial and service activities, for example research and development, sourcing of inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets”. The International Monetary Fund defines globalization as “The process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies”. As regards if globalisation is a new phenomenon most books will tell you that it is not, but if you take into consideration soft drink companies or the automobile companies, which they have gone global in the decades of the 40s and 50s.
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However, according to an article that was published in the ‘Economist’ in July 20th 2009, globalisation is the more or less simultaneous marketing and sale of identical goods and services around the world. So widespread has the phenomenon become over the past two decades that no one is surprised any more to find Coca-Cola in rural Vietnam, accenture in Tashkent and Nike shoes in Nigeria. According to Nick Stern the former Chief Economist of the World Bank globalisation is not new. He actually suggests that there are three waves of globalisation among the years. The first wave is identified to have began in 1870 and to have ended in the 1930s. In 1944 the International Monetary Fund was established in order to establish a healthy economy especially in the countries of Europe and Asia that were at that time devastated. The third and last wave is the one that we are facing nowadays with the GDP rising and with a sustained increase in capital flow. However because one of the causes of globalisation is the advance in technology and in particular the Internet many argue that globalisation is a recent phenomenon. The statistic that perhaps best reflects the growth of globalisation is the value of cross-border world trade expressed as a percentage of total global Gross Domestic Product: it was around 15% in 1990, is some 20% today and is expected to rise to 30% by 2015. There is also the idea that globalisation is a phenomenon that ages back to the 18th century when England was trading porcelain and tea with China. Another form of a global economy that suggests that globalisation is not a new phenomenon is global education. The fact that for so many decades people from around the world leave their countries in order to study somewhere else can also be described as a form of globalisation. Another disadvantage of globalisation is that increases the chances of civil wars in developing countries. Also, it deteriorates the environment in developing countries since they have only a few regulations as concerns this fact. In the developing countries the governments are usually corrupted and this is another reason why big multinational companies choose to establish their factories there. In these countries it is easier to buy out permits in order to do work that suggests the pollution of the environment. Moreover, the governments of developing countries have to obey the wills of the multinational companies. If they do not do so, multinationals have the right to leave that specific country and move their plant somewhere else. As a result this will high unemployment rates to the country as well as with “environmental catastrophe” that will not even benefit them financially.
Globalisation has been encouraged by the liberalisation of markets and in this way big multinational companies such as Coca-Cola and Nike are not only selling their products in all countries but they are also producing their goods in countries such as Thailand, even though their headquarters are always settled in the EU or the United States. One of the main and most powerful arguments that multinational companies put forward in favour of globalisation, is the fact that by building their factories in developing countries they give work to thousands of people . On the other hand, one could argue that multinational companies exploit the workers since they are paid very poorly and they even employ children. Moreover, globalisation minimises the phenomenon of cultural barriers since people learn to work together and co-exist.
Politicians also have a response for globalisation nowadays, as each national government has its own point of view for the global economy. The EU is one of the biggest trading blocks. This means is that trading between the EU is easy without barriers and the prices of the goods are more or less the same in all European countries. On the other hand other countries, outside the EU, find it sometimes tougher to trade with these countries as there are high barriers to entry. As a result this does not help the developing countries since they cannot afford this trading process. Another trading block is NAFTA, which is the North America Free Trade Agreement that takes place between the government of Canada, Mexico and the United States.
In conclusion, the main idea of globalisation is that trade is becoming more and more open between countries and barriers to entry are constantly decreasing. Finally the overall conclusion of the essay is that globalisation is not a new phenomenon even though some believe that it is, because of the fact that it is more popular in the last 20 years due to technological advances. Globalisation will continue in the near future as countries like China and India are the new big powers and they will continue to increase the export of goods and services. Now as the UK is concerned, it is certainly a country that is playing a big part in the process of globalisation since is the centre of all business transactions especially in the European Union.
Brah, Avtar (1999). Global Futures Migration, Environment and Globalisation
Coate, Roger (1982). Global Issue Regimes, USA, Praeger
Garlake T. (2003) ‘The Challenge of Globalisation: a handbook for teachers of 11-16 year olds’. Oxford, Oxfam
Hambleton, Robin (2002). Globalism and Local Democracy, Great Britain, Palgrave
Hicks D, in Hicks, D. & Holden, C. (2007) Teaching the Global Dimension, London, Routledge