The Dimensions Of Globalisation And Its Effects Economics Essay

In Thomas (2000), globalisation is defined as a concept which refers to the ways in which developments in one region can rapidly come to have significant consequences for the security and well being of communities in quite distant regions of the globe. Thomas specifically refers to Alan Greenspan’s quote “there can be no ‘island of prosperity’ in an ocean of economic instability” in a bid to stress the point that globalisation can neither be resisted nor halted. Globalisation expresses the widening scope, deepening impact and speeding up of interregional flows and networks of interaction within all realms of social activity from the cultural to the criminal.

Four Dimensions

Thomas also identifies four specific dimensions to globalisation. Globalisation is also about change, and these changes are characterised by four different dimensions. These include the stretching of social, political and economic activities across political frontiers, regions and continents. Globalisation also promotes intensification of investments, migration, flow of trade and culture. This growing interconnectedness (extensive and intensive) is linked to the speeding up of global interactions, aided by the global transportation and communications systems which increase the flow of ideas, goods, information, capital and people. These three dimensions give rise to a deepening impact which creates a global reality in which something that happens in one places can have profound impacts on a far off place. This creates a blurring between the boundaries of what is local and global.

Challenges to Development

One way of looking at development is through the historic processes, in which societies were transformed over long periods in a somewhat unplanned way. Economic development and accompanying social and political transformations occur as a result of the continuing development of societies. (Fawssett et. Al.)

Sense of increased powerlessness/insecurity

Globalisation is perceived as a force that cannot be ignored. This implies greater difficulties for countries trying to isolate themselves from the global marketplace. It promises growth prospects to national economies, as long as they satisfy its requirements in terms of flexibility and competitiveness, which include designing and implementing domestic policies to meet global requirements, typically those set by the International Monetary Fund and the World Bank. It is also argued that countries can be exposed to new technologies and ideas, which can create jobs, improve incomes and reduce poverty.

Environmental Sustainability

As more emphasis is put on the globalization of industry, the need for environmental sustainability is quite often not given its due importance. This is problematic in that as trade and capital mobility restrictions are continually lifted between nations, the impact big business can have on the environment is enormous.. This process theoretically sets in motion the creation of a set of common principles between nations whereby cooperation takes precedence over competition.

Environmental sustainability is of equal importance to economic prosperity, and in fact, the two are very much tied together. One reason why so many industrial jobs have left the most developed nations is because of the environmental regulations their governments have imposed. In order to protect the environment, strict limitations are placed on pollution and waste. A consequence of these restrictions is that the companies that employ people send the jobs to countries where the environmental standards are much less stringent. Thus, although the environment is better served by the laws against environmental degradation, the economies of those nations suffer. And although jobs come to the less developed nations, boosting the economies there, the environment suffers because the restrictions against pollution are less strict.

This reality seems to indicate that globalization and environmental sustainability are mutually incompatible. Indeed, their beneficial coexistence rests on the ability of the nations of the world to freely exchange goods and services while at the same time placing limitations on how much damage each can do to the environment. At worst, the world could become a single economic entity with absolutely no regard for the ecosystems of the earth or one large environmentally protected zone where each economy is forced to curb its industrial output to meet international regulations. Unless a more balanced compromise is made between the two ideas, they will continue to be at odds with one another.

Employment

While expanded trade has generally resulted in more jobs, the parallel growth in competition has forced many companies to shed workers in order to cut costs, boost efficiency and increase profits. Higher productivity only becomes a plus for the overall economy if output grows quickly enough to generate employment for the whole workforce. In the industrialized world, where a number of countries are currently grappling with the problem of growth without jobs, high unemployment has become a political issue. Developed countries have been especially affected by new information and communication technologies that boost efficiency but make some white-collar workers redundant.

Some less-developed countries have also had to deal with jobless growth. China, which has experienced an economic boom in recent years, has begun to struggle with unemployment, particularly in urban areas. The need to cut unit labour costs to compete in the global market has led to the elimination of guaranteed employment and over staffed factories. Unemployment has also grown as a result of proliferation of low-cost imports from low-wage countries. Though these imports are a small part of the total, they are concentrated in labour-intensive sectors such as shoe-clothing and toy-making.

The loss of livelihoods is deeply rooted in the macro-economic development model of corporate-led globalization. It promotes too many enterprises that are the main drivers of biodiversity loss: the large-scale, export oriented agricultural industry; unsustainable commercial logging companies; fish farms and factories; and the mining industry.

These companies are fostered and actively promoted through trade liberalization and other forms of corporate-led globalization. Unchecked by effective national or international rules, they are able to plunder the earth’s resources for the benefit of distant shareholders while the communities that lived more harmoniously with these resources for generations are left with a ravaged earth.

The policies of the World Trade Organization, multilateral development banks like the World Bank, and export credit agencies together exacerbate this plundering with their promotion of export-oriented economic models and the further commercialization of biodiversity.

Winners and losers

While globalisation offers new opportunities for accelerating development and poverty reduction, it also poses new challenges for policy makers. Globalization and the turn to the market have clear benefits for developing countries, both in terms of aggregate growth and poverty reduction and in terms of mobility and opportunity for low-income people. Yet new opportunities have come hand-in-hand with new vulnerabilities. Not surprisingly, public opinion about globalization and market reforms is mixed.

The downside of globalisation is most vividly evident at times of global financial and economic crises. The costs of the repeated crises associated with economic and financial globalisation appear to have been borne overwhelmingly by the developing world, and often disproportionately so by the poor who are the most vulnerable. On the other hand, benefits from globalisation in booming times are not necessarily shared widely and equally in the global community.

Small and medium sized businesses that form part of local economies, meet local needs and are more accountable to local people are undermined and unable to compete with huge multinationals. In the battle of economies, big is beautiful and local is expendable.

1B. Explain how consideration of POWER is relevant to debates on GLOBALISATION.

Power has to do with relationship, structural and functional, between all living beings in and between their communities. Power is thus a very important part of the globalisation debate.

It touches on various topics some of which we will look into closer details below. In this sense power can refer to the control over others or the capacity to choose and be able to act, hence bringing up the issue of empowerment. Power is also relevant when it comes to issues related to power relations such as gender, class and ethnicity.

Politically speaking, globalization, the breakdown of socialist states, the crisis of modern liberal nation states, and upheavals in traditional or semi-traditional despotic states, raise new questions about power. The nation state structures are to be questioned radically for they are the unit structures of political powers that have been most powerful. The global market agencies are emerging as the most powerful agencies of power, which determine global power structures and power relations on a global scale. These agencies dominate over nation states in power terms as a new reality of power is being formed in the context of the global market

The significant gender differences and disparities with respect to decision-making powers, participation, and returns for effort that prevail in different societies need to be taken into account when responding to the forces of globalization. Because of gender inequalities and discrimination in all parts of the world, women can be affected negatively by globalization processes to a greater extent than men. On the other hand, there can be significant gains for women with globalization. It is necessary to systematically monitor the gender impact of change so that the goals of gender equality and the expansion of human capabilities are not sacrificed.

Over the years, the greater economic, social, and technological interconnectedness of the international system has transformed social trends and national policies. These interaction dynamics have also seemingly changed security. The mainstream media frequently oversimplify the causes of the wars, with claims they are rooted in religious or ethnic differences. A closer inspection reveals that the underlying source of such conflicts is economic in nature. Financial instability, economic inequality, competition for resources, and environmental degradation-all root causes of war-are exacerbated by globalization. This could offer one explanation to Thomas (2000) who argues that the prevalence of wars has continued to rise in the early 1990s and that it is apparent that most of these wars are not being fought between states. In contrast to the historic wars, these more recent wars are being fought in parts of the world which are relatively poor and which are least equipped to recover quickly.

Yet, as a concluding note one can observe that the ability to influence the course and the content of globalization is not simply a matter of control over material resources or military might. Because of the way power is translated through webs of relationships, it is changed and can be realigned. Weaker actors, by building coalitions and enrolling the help of others, can have a significant influence on globalization.