Urgancioglu 1
Can Urgancioglu Reviewed by: Annie Chen
Dr. Gayle
English 812
10 April 2015
Advantages of Globalization Economic-Wise
In today’s world, each and every nation on earth interacts with each other whether
economically, culturally or politically. Specifically, this fact is brought by globalization.
Globalization has been felt all over the world, and influences that come along with globalization
are mainly economical, cultural, political and environmental. In addition, these influences of
globalization have both positive and negative effects to the world. Furthermore, Kofi Annan,
Former Secretary General of the United Nations, claims that “it has been said that arguing
against globalization is like arguing against the laws of gravity” (“UN: Secretary-General,
Accepting Moscow Award, Says Strength of Russian Spirit "is Your Country's Greatest Natural
Asset”). As Annan argues, globalization is an inevitable and irresistible aspect of today’s world.
Nevertheless, many scholars argue against globalization. For instance, economic perspective of
globalization is one of the most criticized aspects of globalization. While it is true that
globalization causes inequality between nations, other sides of globalization must also be taken
into account. For example, globalization is an effective power to enhance the world’s economy.
Globalization’s advantages economy-wise exceed its disadvantages since globalization expands
the world economy overall.
One way that globalization expands the world economy is that globalization improves
economies of developed countries. Since the first time that the effects of globalization were seen,
one of the most common ways that globalization functions is the exchange of products
Urgancioglu 2
internationally. In other words, exports and imports are one of the leading aspects of
globalization. Additionally, developed countries are behind this aspect of globalization. To
clarify, it is the West who sells its products or culture to all over the world. To demonstrate,
Rice-Oxley, a correspondent for the Christian Science Monitor, states that “down in the mall,
between the fast-food joint and the bagel shop, a group of young people huddles in a flurry of
baggy combat pants, skateboards, and slang. They size up a woman teetering past wearing
DKNY, carrying Time magazine in one hand and a latte in the other. She brushes past a guy in a
Yankees' baseball cap who is talking on his Motorola cellphone about the Martin Scorsese film
he saw last night. It's a standard American scene-only this isn't America, it's Britain” (163). By
this quote, Rice-Oxley illustrates that people from the U.K. highly consume American products
and culture, which are a symbol of globalization since they are consumed highly by the rest of
the world. Since developed countries such as the U.S. are given a market, the rest of the world, to
sell their products, they can obtain and maintain their economic wealth. In addition, this
advantage is provided by globalization. To put it another way, if globalization did not exist,
developed countries would not be able to advertise and sell their products to the rest of the world,
and as a result, their economic growth would not be at a peak as it is currently.
As globalization helps the West sell its products to the world, globalization is also a way
that helps the West in terms of production. Multinational corporations, which are powerful
sources of globalization, make the process of production cheaper for the developed countries. An
illustration to this claim would be Nike, which is a U.S. based company, since most of its
productions are manufactured in developing countries in order to decrease the costs of
production. To illustrate, Kahle, Boush and Phelps, from University of Oregon, claims that
“Although Nike is a United States (U.S.) company, virtually all of its manufacturing is done
Urgancioglu 3
overseas in countries with low wages.” In addition, Nike has one hundred-fifty factories with
over 450,000 employees in more than one hundred-fifty countries. (Boush, Kahle, and Phelps)
As Kahle, Boush and Phelps assert, the reason why multinational corporations such as Nike
highly manufacture in developing countries is the fact that people from developing countries
demand a lower wage proportional to their needs. To demonstrate, the average pay from Nike to
its workers in Vietnam is fifty-two dollars monthly. (Boush, Kahle, and Phelps) On the other
hand, if Nike produced in the U.S., an employee would earn the same amount which is fifty-two
dollars in less than eight hours. Also, the fact that Nike has more than 450,000 employees
worldwide must also be taken into account. If all of those workers were from the U.S., Nike’s
total profit would diminish dramatically since the United States’ minimum wage is much higher
than it is in the developing countries such as Vietnam. To sum up, multinational corporations,
which are main sources of globalization, have given the ability to decrease costs of production to
developed countries. As a result of decreased costs of production, developed countries can
maintain higher profits, which will lead to economic growth nationwide in the long run.
Another way that globalization expands the world economy is that globalization
improves economies of developing countries. Multinational corporations play an important role
in this side of economic expansion as well as in the developed countries’ side. Although it
seemed as developing countries are exploited by developed countries in the previous claim,
developing countries, also, benefit from multinational corporations. Even though workers in
developing countries are paid extremely lower amounts compared to the West, the average pay
given by multinational corporations is a couple times higher than state-owned enterprises in
those countries. To demonstrate, Norberg, the writer and the presenter of the documentary called
Globalization is Good, suggests that “they compare the work at Nike with the way they lived
Urgancioglu 4
before, or the way their parents or neighbours still work. And the facts are revealing” (205). In
this claim, Norberg refers to Vietnamese workers who work for Nike established in Vietnam. As
Norberg illustrates, workers from developing countries, Vietnamese workers in this case, are
willing to work for multinational corporations, and the reason for that is the other option they
have instead probably cannot afford paying as much as multinational corporations do. As a
result, workers from developing nations are paid much higher amounts compared to the past due
to multinational corporations. Consequently, Norberg illustrates this shift brought by
globalization as “ten years ago, when Nike was established in Vietnam, the workers had 6 to
walk to the factories, often for many miles. After three years on Nike wages, they could afford
bicycles. Another three years later, they could afford scooters, so they all take the scooters to
work (and if you go there, beware; they haven't really decided on which side of the road to
drive). Today, the first workers can afford to buy a car” (205). As Norberg demonstrates,
economies of developing countries are and will be improved by globalization.
Higher wages obtained by workers in developing countries from multinational
corporations do not only improve developing economies by themselves, but also can contribute
other factors that enhance economies. Anderson and Keys, who are in Department of Finance
from Florida International University, claim that “individuals and societies at large capture
significant benefits from training and education” (57). Specifically, education is a major human
capital that allows economies to expand rapidly. By education, developing nations can be more
productive, which is an important factor in terms of economy. Although education carries high
costs, workers from developing countries are able to send their children to school and also
benefit from trainings all due to multinational corporations. For instance, Norberg provides an
important statistical fact by stating that in ten years 2.2 million children have gone to school
Urgancioglu 5
from child labor in Vietnam (206). In addition, the ten year time period that Norberg refers to is
the period after Nike was established in Vietnam (205). Norberg concludes that multinational
corporations have helped increase education in developing countries. Specifically, this shift is
brought by increased wages given to workers. As a result, education opportunities brought by
high wages will result in economic growth in developing countries. In short, the high wages do
not only improve economies by themselves in developing countries, but also they contribute to
education, which is a major factor for economic growth.
Another aspect of globalization that expands economies of developing countries is that
multinational corporations creates more job opportunities for workers in those countries. As
more workers are employed, economic growth will be achieved. To demonstrate, L. Duguleana
and C. Duguleana, both professors at Transilvania University, claims that “potential GDP
depends on the level of full employment and capital stock.” In addition, potential GDP is an
important factor that determines the current situation of an economy. As C. Duguleana and L.
Duguleana point out, full employment is an important factor that affects potential GDP, and
therefore economic growth. Similarly, Cai and Lu, both professors at Institute of Population and
Labor Economics, Chinese Academy of Social Sciences, assert that “a reduction in the working
age population will directly reduce the potential GDP growth rate” (2). By this claim, Cai and Lu
claim that as less people work, potential GDP will decrease. As a result, economic growth
possibilities will decrease. However, in developing countries, other this situation is not faced
because of multinational corporations or briefly globalization. In brief, multinational
corporations provide more job opportunities to people from developing countries, and this
advantage benefits those countries in terms of economic growth.
Urgancioglu 6
In conclusion, globalization is a major and irresistible aspect of today’s world, and affects
countries worldwide in many different areas such as politics, economics, culture and
environment. Many scholars argue against globalization, specifically, economical aspect of
globalization. Nevertheless, globalization expands world economy overall, and therefore
advantages brought by globalization outweigh its disadvantages. The reasons how globalization
enhances world economy are by improving economies of developed countries and developing
countries. Even though scholars argue that globalization brings inequality between nations, it
improves them all in some extend, and as globalization spreads out to the world in the future,
more nations will benefit from globalization economic-wise.
Urgancioglu 7
Works Cited
Anderson, Gary A., and James D. Keys. "Building Human Capital through Education." Journal
of Legal Economics 14.1 (2007): 49-73. ProQuest. Web. 14 Apr. 2015.
Cai, F. and Lu, Y. “Population Change and Resulting Slowdown in Potential GDP Growth in
China.” China & World Economy, 21: (2013) 1–14
Duguleana, C., and L. Duguleana. "Potential GDP In Romania." Bulletin of the Transilvania
University of Brasov. Economic Sciences. Series V 7.2 (2014): 221-8. ProQuest. Web. 10
Apr. 2015.
Kahle, Lynn R., David M. Boush, and Mark Phelps. "Good Morning, Vietnam: An Ethical
Analysis of Nike Activities in Southeast Asia." Sport Marketing Quarterly 9.1 (2000):
43. Web. 13 Apr. 2015.
Norberg, Johan. “The Noble Feat of Nike.” Muller, Gilbert H., ed. The New World Reader:
Thinking and Writing about the Global Community. 3rd ed. Boston: Wadsworth, 2011.
204-207. Print.
"UN: Secretary-General, Accepting Moscow Award, Says Strength of Russian Spirit "is Your
Country's Greatest Natural Asset"." M2 Presswire: 1. Jun 06 2002. ProQuest. Web. 12
Apr. 2015
Rice-Oxley, Mark. "In 2000 Years, Will the World Remember Disney or Plato?” Christian
Science Monitor, 2004: 163-67. Print.