Globalisation
Questions
1. Define Globalisation
2. List a few brands which are globalise in all five continents
3. Explain the process off De-industrialisation.
4. What are multinational companies?
5. List a few multinational companies.
6. OUTLINE positive and negative aspects of globalisation.
7. How can globalisation be measures?
8. OUTLINE some effects of globalisation.
9. Explain Trade barriers
10. Benefits of Trade barriers
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Globalisation
Answers
1.
Globalisation is generally referred to as the incorporation of the world’s economical market into one single market.
This allows the economic environment to be characterised as a single environment.
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Brands which are in all five continents:
McDonalds
Snickers
Coca-cola company
Nike
Sony
See box:
What is de-industrialisation?
Commentators often talk of the long decline of industry in the British economy. In simple terms this is what we mean by deindustrialisation - a fall in the contribution made by the manufacturing sector to national output, employment and income. We can
consider manufacturing as a whole, or focus on individual industries such as steel and clothing and textiles
De-industrialisation is a long-term process of structural change in an economy - leading to a change in the composition of national
output, and important alterations to the structure of our labour market.
There is a number of different ways of measuring the extent to which our manufacturing sector is experiencing deindustrialisation:
(1) The Relative Decline of Manufacturing
Manufacturing industry might actually be growing from year to year, but if other sectors of the economy are expanding at a faster
rate, then the share of total output or employment may still be falling - this is called relative decline. So three important measures of
relative decline might be as follows:
A falling share of manufacturing in total national output (GDP)
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Globalisation
A falling share of industrial employment in total employment
A declining share of UK manufactured exports in world trade
(2) The Absolute Decline of Manufacturing
An absolute decline is an actual fall in output, employment, profits or investment spending. For example during the summer of 2001
it became clear that total UK manufacturing output was falling - in technical terms, the manufacturing sector is now in a recession.
This is both absolute and relative decline because UK real GDP continues to grow - other sectors of the economy are expanding.
Three measures of absolute decline:
A decrease in total employment
A shrinkage in manufacturing output by sector
Falling levels of real capital investment spending
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Evidence for Deindustrialisation:
There is little doubt that the British industrial sector has experienced deindustrialisation in recent years both in relative and also in
absolute terms. Three times since 1990, manufacturing industry has fallen into technical recession (defined as a time period of two
successive quarters when output falls).
The share of total GDP taken by manufacturing has declined from 23% in 1989 to just under 19% in 2000. Less than 16% of the
labour force is now employed in this industry - indeed employment has declined by over 1.2 million since 1989.
Source: http://www.tutor2u.net/economics/content/topics/manufacturing/deindustrialisation.htm
4. Multinational companies are companies which have a great amount of production and business within at least two
countries. These companies can fall into the primary product category, manufacturing company or may simply be service providers
such as Starbucks. Most multinational companies have outputs greater than several countries in the present time.
5. List
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of multinational companies:
American Express Bank
Bacardi Martini
Citibank
DHL
Electronic Arts
Virgin
Polo Ralph Lauren
JP Morgan
Federal Express
Philips
Johnson & Johnson
Globalisation
6. See box:
Globalization’s Positive and Negative Aspects:
Globalization has positive and negative aspects. On top of its positive aspects comes the tremendous development of new
information and communication technology. This progress helped bring the various parts of the world closer and disseminate
knowledge particularly through the Internet which created a new and open world, a world with unified feelings and with
increasingly closer cultures and interacting civilizations. However, globalization was planned in a rush. It is a momentous
phenomenon indeed. Was it acceptable to leave its handling to large capital and international financial organizations, created to
serve capitalism and provide conditions for its limitless movement around the world?
This has become a reality in which the shaping of globalization is being dominated by the financial dimension. Even the
economic dimension was less important than the financial one. Political, cultural and intellectual considerations are subordinate
elements that will eventually melt down into the financial and economic dimensions.
All this raises fears that other decisive mutations will take place, change the face of the world and severe all links with the past.
Modern states that have no ancient civilization, do not fear for their identity nor for their civilization, because they are new ones
with no legacy, no heritage and no prosperous history to be proud of and to build on to engage in the future.
These fears are not specific to the South. Some countries of the North, are also aware of such threats, based on their
attachment to the principles of homeland, borders, nationalism, the flag, the national anthem, history and national sovereignty.
These countries’ fear is also nurtured by their pride of their nations’ role and concern to see them swallowed by globalization, a
globalization whereby the strong dominates the weak.
Globalization might appear as premature for a majority of countries, in the North and in the South, particularly in countries
where the Nation-State still plays the leadership in societies and that are not up to the level of societies for which globalization
was tailor-made.
The societies that rightfully fear the negative aspects of globalization are those where national capitalism is unable to spread its
hegemony for the simple reason that either it does not exist at all or that it is too weak. Such societies also cannot relinquish
their Nation-State that has not yet fulfilled its objectives, and where civil society and the private sector are still unable to take
over the State’s authority and leading role, particularly in social areas. Moreover, in those societies, privatization is impossible
because the private sector is unable to replace the public sector, i.e. the societies where privatization is a squandering of the
State’s wealth and resources in favour of foreign companies.
The fear of globalization goes as far as considering it as a system that sweeps all the principles known to the civilized world,
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Globalisation
including the protection of the weak by a strong Nation-State from exclusion, unemployment and poverty and the provision of
social security to its weakest citizens.
Some opponents of globalization see in its system a mere reflection of the dominion of the social aspects by the financial ones.
They even consider it as a new form of occupation, not a political or a military one, but rather a financial occupation that
imposes a uniform type of thinking and erases all national historical heritages.
The opponents of globalization adopt various forms of opposition. They did not restrict themselves to staging demonstrations
and other movements of protest, similar to the first one held in Seattle. Experts and thinkers amongst these opponents are now
devising a social and economic counter-project to outline new foundations for a fair, egalitarian and human globalization based
on a balanced world economy and catering for the interests of developing countries. This new type of globalization builds a new
unified world where the plurality of concepts, values, culture and specificities is not excluded. This project adopts the positive
aspects of globalization and dismisses the negative ones.
The theoreticians of the alternative globalization have already started to declare the fundamental principles of this system that
they will present in the form of a charter to the United Nations to give it an international legitimacy after being submitted for
debate at the world level. Globalization that was imposed on the world as a fait accompli never proceeded in this way.
Nevertheless, globalization remains a complex and ambiguous phenomenon for which analysts give different analyses.
Globalization architects say it means the generalization of wealth and prosperity, as it targets the promotion of economic
exchanges, the increase of foreign investments and the development of modern technology that secures the advancement of
information and communication means.
Other analysts and experts among opponents believe globalization is an excessive hegemony of capitalism, as it enriches the
rich and impoverishes the poor countries that are called by euphemism developing nations, while some of them head steadily
towards more backwardness. Such a situation only plunges the majority of the world’s population into yet more exclusion and
marginalization.
Therefore, globalization appears as a dual phenomenon with two antagonistic dimensions. Seen from one perspective, it looks
like a system of wealth, prosperity or even the promised heaven. From another, it appears as a system of exclusion and
marginalization. For some, it is a merciful angel, while for others, it is Satan.
Looking at globalization from one single perspective is short-sighted, because it has both positive and negative aspects.
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Globalisation
In a speech to the General Conference of UNESCO on October 15, 2001, President Jacques Chirac of France said “globalization
can be described neither as positive nor negative, for such a judgement gives it a moral dimension that it does not have and
intentions that it does not pursue.” “Making a judgement of globalization will ascribe to it unspecified and unclear social projects,
while globalization deals with material objects only. It is these objects that we should judge as positive or negative and not
globalization itself.”
We believe that the French President’s statement is different only in terms of methodology that does not rid globalization of its
negative aspects.
We believe that attachment to identities and specificities cannot be eliminated overnight from the consciousness of peoples and
nations. Moreover, globalization cannot conquer the impenetrable fortresses of these identities and specificities through mere
adventurous and non-pondered practices.
The approach of the new American Republican Administration under President George W. Bush regarding international issues
and its deviant and abnormal practices in matters of international cooperation as well as its attempt to put its national law above
the international law and its rejection of the Kyoto Protocol on the environment and of the constituent charter of the
International Criminal Court, specializing in war crimes, are a clear indication that attachment to specificity is for the United
States itself stronger than an all-out globalization.
The United States of America is globalizing the world and refuses to go global.
The world that the peoples aspire to is a world wherein globalization would not swallow identities and specificities and make it a
world with mechanical traits and trends, wherein the individual becomes a sheer photocopy and humanity is denied the right to
diversity and difference in colour and in the way of thinking and life style. In short, the features associated with a distinctive
identity and the enriching diversity of the human communities.
The positive aspects of globalization need to complement the peoples’ identities and specificities in order to make of the world of
tomorrow both a unified and diversified place to live.
Source: http://www.isesco.org.ma/Islam.Today/Eng/20/P1.htm
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7. Globalisation can be measured in an economical way by focusing on these categories:
 Economic
 Social
 Political
All these areas can be measured with the help of individual country charts and graphs which will allow areas of interest
to be measured. Currently there is an index which records measurements of globalisation amongst countries.
8. See box:
Globalization has various aspects which affect the world in several different ways such as:
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Industrial (alias trans nationalization) - emergence of worldwide production markets and broader access to a range of foreign
products for consumers and companies
Financial - emergence of worldwide financial markets and better access to external financing for corporate, national and sub
national borrowers
Economic - realization of a global common market, based on the freedom of exchange of goods and capital. Globalization,
when consider in a sociological context, has increased economic inequality throughout the world and within the United
States.
Poorer countries are at disadvantage: While it is true that Globalization encourages free trade among countries on an
international level, there are also negative consequences. The main export of poorer countries is usually an agricultural good.
It is difficult for these countries to compete with stronger countries that subsidize their own farmers. Because the farmers in
the poorer countries cannot compete, they are forced to sell their crops at much lower price than what the market is paying.
o Exploitation of foreign impoverished workers: The deterioration of protections for weaker nations by stronger
industrialized powers has resulted in the exploitation of the people in those nations to become cheap labour. Due to
the lack of protections, companies from powerful industrialized nations are able to force workers to endure extremely
long hours, unsafe working conditions, and just enough salary to keep them working. The abundance of cheap labour
is giving the countries in power incentive not to rectify the inequality between nations. If these nations developed into
industrialized nations, the army of cheap labour would slowly disappear alongside development. With the world in this
current state, it is impossible for the exploited workers to escape poverty. It is true that the workers are free to leave
their jobs, but in many poorer countries, this would mean starvation for the worker, and possible even his/her family.
o Shift from manufacturing to service work: The low cost of off-shore workers have enticed corporations to more
production to foreign countries. The laid off unskilled workers are forced move into the service sector where wages
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and benefits are low, but turnover is high. This has contributed to the widening economic gap between skilled and
unskilled workers. The loss of these jobs has also contributed greatly to the slow decline of the middle class which is a
major factor in the increasing economic inequality in the United States. Families that were once part of the middle
class are forced into lower positions by massive layoffs and outsourcing to another country. This also means that
people in the lower class have a much hard time climbing out of poverty because of the absence of the middle class
as a stepping stone.
The rise of contingent work: As Globalization causes more and more jobs to be shipped overseas, and the middle
class declines, there is less need for corporations to hire full time employees. Companies are less inclined to offer
benefits, or reduce benefits, to part time workers. Most companies don’t offer any benefits at all. Such benefits
include health insurance, bonuses, vacation time, shares in the company, and pensions. Even though most of the
middle class workers still have their jobs, the reality is that their buying power has decreased due to decreased
benefits. Job security is also a major issue with contingent work.
Weakening of labour unions: The surplus in cheap labour coupled with an ever growing number of companies in
transition has caused a weakening of labour unions in the United States. Unions loss their effectiveness when their
membership begins to decline. As a result unions hold less power over corporations that are able to easily replace
workers, often for lower wages, and have the option to not offer unionized jobs anymore.
Political - political globalization is the creation of a world government which regulates the relationships among nations and
guarantees the rights arising from social and economic globalization. Politically, the United States has enjoyed a position of
power among the world powers; in part because of its strong and wealthy economy. With the influence of Globalization and
with the help of The United States’ own economy, China has experience some tremendous growth within the past decade. If
China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a
major reallocation of power among the world leaders. China will have the enough wealth, industry, and technology to rival
the United States for the position of leading world power.
Informational - increase in information flows between geographically remote locations
Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities such as Globalism which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and
practices, and participate in a "world culture"
Ecological- the advent of global environmental challenges that can not be solved without international cooperation, such as
climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Many
factories are built in developing countries where they can pollute freely.
Social - the achievement of free circulation by people of all nations
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Transportation - fewer and fewer European cars on European roads each year (the same can also be said about American
cars on American roads) and the death of distance through the incorporation of technology to decrease travel time.
Greater international cultural exchange
o Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood
and Bollywood movies). However, the imported culture can easily supplant the local culture, causing reduction in
diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but
Sinicization of cultures has taken place over most of Asia for many centuries.
o Greater international travel and tourism
o Greater immigration, including illegal immigration
o Spread of local consumer products (e.g. food) to other countries (often adapted to their culture)
o World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol series, YouTube, Orkut,
Facebook, and MySpace.
o World-wide sporting events such as FIFA World Cup and the Olympic Games.
o Formation or development of a set of universal values
Technical/legal
o Development of a global telecommunications infrastructure and greater trans-border data flow, using such
technologies as the Internet, communication satellites, submarine fibre optic cable, and wireless telephones
o Increase in the number of standards applied globally; e.g. copyright laws, patents and world trade agreements.
o The push by many advocates for an international criminal court and international justice movements.
Sexual awareness – It is often easy to only focus on the economic aspects of Globalization. This term also has strong social
meanings behind it. Globalization can also mean a cultural interaction between different countries. Globalization may also
have social effects such changes in sexual inequality, and to this issue brought about a greater awareness of the different
(often more brutal) types of gender discrimination throughout the world. Women and girls in African countries have long had
to deal with genital mutilation as a form of control enforced by the men in their society. In Muslim cultures in the Middle East,
women are discriminated against with beatings, unfair trials, and sometimes even honour killings. In China, women are
treated as property and less valuable than their male counterparts. The gender oppression is so extreme that over 157,000
Chinese women commit suicide per year.
Source: http://en.wikipedia.org/wiki/Globalization#Effects_of_Globalization
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9. See box:
- Tariffs or Import Duties: These are taxes on imported goods. They raise the price to customers and make them less attractive
- Quotas: These are limits on the quantity of a product that can be imported into a country e.g. 100,000 cars
- Regulations: This includes laws and safety guidelines
Source:www.tutor2u.net/economics/gcse/revision_notes/international_trade_protectionism_trade_barriers_and_free_trade.htm
10. See box:
1. Protectionism keeps UK firms away from genuine competition. They may become lazy and inefficient
2. Free trade forces UK firms to produce quality goods and services as they face much foreign competition
3. If the UK puts up trade barriers then other countries are likely to retaliate.
4. Free trade encourages firms to export and import. This should encourage a greater choice for consumers and a higher standard of
living
5. Trade barriers increase the cost of trading. For example, a tariff would mean that UK firms and consumers may have to pay more
for imports of raw materials or consumer goods
Source:www.tutor2u.net/economics/gcse/revision_notes/international_trade_protectionism_trade_barriers_and_free_trade.htm
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