Reviewed by: Jayne Thompson, LLB, LLM
Globalisation Essay: The Positive and Negative Impacts of Globalisation on the Developing World What is Globalisation? Free 3000 words Globalisation Essay: The concept of globalization is currently a popular but very controversial issue, and has been one of the most widely debated issues since communism collapsed. This report explores a range of interlinking questions, starting with what is globalization, what are the effects of globalization in developing countries and developed countries, this is in terms of positive and negative effects. Globalization is something that affects all of us, no matter what our profession or interest is. The 2016 election of Donald Trump in the United States and the British vote to leave the European Union (known as the Brexit) have also contributed to the anti-globalization movement. These trends have been driven by anti-immigration sentiments in Europe, although 2018 election results veer more pro- than anti-globalization. How globalization impacts social determinants of health? The main debate surrounding economic globalization concerns its true impacts on people`s lives, and in particular, the lives of poor people around the world, is it a positive or negative force for human development. 12 Negative Aspects of Globalization. Globalization sets up a currency “race to the bottom,” with each country trying to get an export advantage by dropping the value of its currency. Because of the competitive nature of the world economy, each country needs to sell its goods and services at as low a price as possible.
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Reviewed by: Jayne Thompson, LLB, LLM
'Globalization' is a term that describes the growing interconnectedness of nations through trade and communication. With easier access to communication and transportation worldwide, globalization has become a key dynamic in the world marketplace and in corporate development. It has both positive and negative effects in social, political and economic terms and also on the environment, which is a complex issue with many contributing factors. Mitigating the negative environmental effects of globalization will continue to be an important issue as globalization increases, so that we can keep the positive effects of a growing global community without unduly harming the environment.
The Composition Effect
Liberalization of trade, or the reduction of restrictions, tariffs and other barriers to free trade, has an effect on countries' industry composition, which can have a positive or negative environmental impact. If liberalization has the effect of increasing a nation's industrial or manufacturing segment, the result can be more pollution and more strain on the country's natural resources. On the other hand, if trade liberalization results in a shrinking heavy industry concentration and increasing growth in the services sector, the opposite may be true for that country. As companies expand, it is important to consider overall business and expansion plans to ensure they are fair, ethical and contribute to overall well-being of people and the environment, rather than subtract from it.
Cheaper Consumer Goods
While greater competition resulting in lower prices, more choice and better service for consumers is often touted as a positive effect of globalization, it has a downside. With more households gaining access to affordable consumer goods, more manufacturing and more intense use of natural resources put strain on the environment in the form of pollution and depletion of resources. Production, transportation and use of consumer goods results in more waste, pollution and fuel use. While this wear and tear on the environment is heartbreaking, cheaper goods are also often produced in part through forced labor or human trafficking. Less than ideal conditions for the environment and for people create an atmosphere where it is important to consider ethics and integrity in globalization efforts.
Lower Environmental Standards
As countries compete for global trade opportunities, they experience increased pressure to offer lower prices. In areas of the world without sufficient regulatory oversight, dirty industries and practices can thrive by exploiting resources for profit, resulting in a pocket of intense environmental damage. This also gives countries with stricter environmental regulations a comparative disadvantage against countries without stringent oversight, possibly leading countries to relax their own environmental rules to lower the compliance costs on their industries. Some of the poorest countries in the world have the most relaxed environmental standards, leaving them vulnerable to exploitation by industries that are looking for inexpensive places to produce goods, without the expense of environmentally conscious production practices required in more affluent countries.
Overexploitation of Resources
Competition to meet global demand can result in overexploitation of natural resources. With greater opportunities to export products, many countries have pushed their resources to the limit to maximize production. Without sustainable practices for harvesting, resources can be exploited to the point of no return. Deforestation and overfishing are examples of problems exacerbated by the liberalization of trade around the world. The African continent is rich with natural resources and valuable goods, yet overexploitation of those resources in the presence of other social conditions creates an atmosphere where the environment is harmed and African people never see the wealth of their own abundant resources.
Globalization is not a new concept in the world. It may be farther along and advancing at a faster rate than ever before, but globalization has been around for hundreds and, arguably, thousands of years. The Silk Road spanned one-sixth the diameter of the planet – literally connecting the West and the East – and began during the Han Dynasty (roughly 200 B.C.).
Integrating a global economy is nothing new, but the modern implications in global business are bigger and stranger than ever before. Below we examine what it means to play a part in a global market, but you can bring yourself up to speed with this course on the geography of globalization and how it simultaneously shapes our cultures and economic relationships.
What, Exactly, Is Globalization?
There are two ways of looking at globalization. One is as an accidental or inevitable affect of economic growth; industry, technology, communication, etc. As the economy grows, it is only natural for a global market to become established in previously local areas. For this to happen, free trade and the free movement of capital are essential. Globalization is not just expansion; it is, as Merriam-Webster nots, “an increasingly integrated global economy.” For integration to occur, economic freedom is necessary. Expand your knowledge of our global economy with this five-star course on finding success in global business.
The second way of looking at globalization is as a deliberate process, and this is almost certainly more accurate. Yes, there is a degree of inevitability involved, but this is due in large part to the agreements made between nations, between corporations, etc. Business wants globalization and it has almost single-handedly caused it to happen. The Silk Road was not a humanitarian effort. It was about a vision of business. And these visions become grander and more easily conceived as technology and politics progress so fast that globalization does, after all, seem inevitable.
Negative Impact Of Globalization
Globalization: A Purpose
There is not one purpose of globalization; there are many, many more than I can list. But from this point forward I want to abandon this general talk of globalization and focus solely on the economy; or, more specifically, globalization and business.
So why do businesses actively work to make globalization happen? An initial answer is easy: cheaper production costs and more consumers to sell to. Globalization has a hand even in the smallest businesses (at least, in first-world countries). And where do these businesses go for cheaper production costs? China is the cliche example, but other popular options include India, Brazil, Russia, Mexico, Bolivia, Indonesia and a number of Eastern European countries.
The first company I worked for when I lived in New York employed about 15 people, yet all of our production was out-sourced to China. Even a small business can benefit from the incredible production savings to be found overseas, and this (along with the obvious fact that there are more people to sell to) is why businesses actively and aggressively promote globalization.
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In the end, globalization is all about competition. Lower production costs? That’s a competitive advantage. More consumers? Another competitive advantage. Untapped markets, different services, investment opportunities . . . all competitive advantages. As soon as the first company went global, everyone else had to follow suit to keep up. Globalization is about growth, sure, but it is also about establishing the ultimate competitive position: diverse resources, diverse interests, diverse markets, diverse acquisitions; in a word, a portfolio so diverse it can only be attacked piece-meal, i.e. the proverbial “unsinkable ship.”
If you’re anxious to learn how to create your own competitive advantage, check out this post featuring 7 competitive positioning tips and strategies.
The Benefits Of Globalization
For some people, globalization is synonymous with world destruction. In the end – who knows – maybe this will be true. But in reality there are many good things that have resulted from globalization. In this section, I will still focus on the economy, but I would also like to touch on some social advantages, as well. For more information regarding the positive impact of globalization, check out this blog post on the benefits of globalization in the modern era.
- More Efficient Markets
Many Americans do not appreciate how efficient our markets are (efficiency here meaning supply and demand). These efficient markets allow economies to grow, and in a global world, when one economy grows, it spurs growth in all the other economies that are connected to it. In this way, reverberations of success are felt across the world, even when they are most profound in one area. Needless to say, this is a very good thing.
- Wealth Equality
This is partially a result of what I just mentioned, but wealth equality around the world goes much deeper than that. Perhaps a better phrase than wealth equality is “standard of living.” Globalization does several things nobody can deny: it creates jobs, it improves infrastructure and it allows more people to live at a higher global level every day (access to medicine, clean water, food production, housing, etc.).
- Friends With Benefits
Globalization results in partnerships between countries and organizations. This makes relations much more stable between both. Agreements are agreed to, and as long as these are upheld, a kind of world-cooperation is sustained. Having these friends with (economic) benefits provides both stability and security for countries that wish to remain peaceful and prosperous.
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- New Solutions
Globalization allows important processes to happen more efficiently and important ideas to become reality. There is a certain irony involved in this, however. For example, globalization is going to allow the world to work together to (hopefully) solve our apocalyptic environmental predicament; but of course, this predicament is a result of globalization.
Still, it allows the human race to push forward, which at this point we must recognize as a necessity of our species. Progress is written in our DNA, and globalization has allowed us to accomplish truly incredible things (the International Space Station being one of the most far-reaching).
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The Disadvantages Of Globalization
Because globalization is 100% inevitable, we must tell ourselves that the benefits outweigh the disadvantages. But do they? It depends where you’re coming from, but let us first take a look at what these disadvantages are before we form an opinion. Get a different opinion from this post by Nick Gibson on the pros and cons of globalization.
- Competition: Someone Has To Lose
Unfortunately, while competition is generally thought to be a good thing, it does not come without a sour side. If I were to say, “Some companies won’t survive because of globalization,” then you might say, “Then they don’t deserve to survive; that’s the beauty of it; the companies worth sticking around usually do.”
I won’t deny the truth in that, but what about the borderline monopoly that the largest companies in the world have created for themselves? Apple, Exxon, Google, etc. Whereas they were once innovators, they are now so big that politics and strategy are more important than innovation. The result of this is that smaller companies with innovative ideas have an incredibly difficult competing. And how can they? If they’re lucky, they’ll be bought out and walk away with a pay check; if not, they’ll just be crushed, often purposefully, by a competitor that is literally a billion times bigger than them.
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- When The Home Team Loses
I was raised in what was once the Apple Capital of the World: Winchester, VA. Over the last two or three decades, this title has (inevitably) been stripped from us; first it was by Pennsylvania, but then Pennsylvania had it stolen by China.
So now China is the Apple Capital of the World. They produce the cheapest apples, which account for roughly half the world’s supply of apples. A lot of people up and down the East Coast lost their jobs, but here’s the kicker: China isn’t allowed to export apples to the U.S. This might change soon, but for the time being, China is able to put a lot of people on the East Coast out of business without even selling apples in the same country.
The lesson of the story is that another country can do what you do better and put you out of business without even looking you in the eye. That’s globalization. But to be fair, the damage we’ve done to China and the benefits we took advantage of (cheap labor) are vastly more significant. Sorry, did I say “to be fair”?
- Environmental Devastation
I hardly need to spell this out, but I will add a thought or two. Globalization has created a global-sized need for energy and industry, and this need has been abused and ignored to the extent that the future of life as we know it has been brought into question. You may or may not believe in global warming, but you cannot deny the existence of the conversation. Does the fact that this conversation is happening not say something in itself?
Have we bulldozed our planet into trouble? Obviously, yes. The argument against this fact is that we could not possibly have caused so much destruction to our enormous planet. The facts say otherwise: we’ve logged over half of the world’s tropical forests. And as far as how difficult it would be to change the composition of the atmosphere? The atmosphere ends a mere 60 miles above the surface of the Earth. It’s just not that voluminous. It’s not limitless. It’s actually small, and when we work together globally, even the negative side effects of all the amazing things we accomplish are, in a word, globalized.
Good, Bad, Inevitable
Unfortunately, or maybe fortunately, globalization is simply and utterly good, bad and inevitable. Hopefully the good will out-weigh the bad, but the continued existence of both is inevitable. Because of this, we are better off accepting the truth and, like we do best, moving forward. But make no mistake: environmentalism is gaining speed. Whether you want to join the cause or just be on the front lines of a new opportunity, this course on energy, economics and the environment can help you make your choice.