Globalization an overview

Name:_________________________________

1

Globalization: An Overview By Jerome Yip

The term "globalization" refers to the large scale partnering of world economies and cultures. Globalization is a controversial concept. Its proponents praise the benefits of an integrated international market where goods, labour, capital and ideas can flow freely and promote economic development at all levels of society. Critics consider globalization to be a gateway to unbridled capitalism, allowing powerful corporations to displace local enterprises and further widen the gap between the very wealthy and the very poor. Globalization is a process through which international communities, organizations, corporations, and individuals have become increasingly interconnected through economics, politics, culture and the earth's environment. It is characterized by increasing the flow of capital, labour, goods and ideas between societies, and is often defined as the increasing development of a borderless world or "global village." Globalization has spurred both economic development and cultural and political strain, as countries learn to cope with the effects of globalization on their individual countries.

Understanding the Discussion         

Capital: Resources used as factors in producing more goods or services. Foreign Direct Investment: An investment made in a company of a foreign economy. Free Trade: A form of international trade wherein countries may exchange goods without restriction or tariffs. Goods: Objects produced, sold and consumed within an economy. Gross Domestic Product (GDP): The measurement of the total market value of goods or services produced within a country. Labour: Work accomplished by people. Protectionism: A set of policies and regulations, such as the raising of tariffs or restrictions of certain goods or services, enacted to discourage the importation of foreign goods or services. Tariff: An imposed tax on goods or services exported from or imported into a country. World Merchandise Trade: The sum of export and import trade carried out between countries of the world.

History The historical origins of globalization are widely debated. While some academics posit that it began in modern times, other place its beginnings during the time of the Roman Empire, the Middle Ages, or nineteenth century maritime trade between European powers and their colonies. Nonetheless, numerous scholars agree that there have been times throughout history during which domestic policies and politics have conflicted with international economic integration. For example, the twentieth century witnessed a breakdown in the 1 Works Cited Yip, JeromeEaton, Sarah Elaine. "Globalization: An Overview." Canadian Points Of View: Globalization (2009): 1. Canadian Points of

View Reference Centre. Web. 1 Apr. 2013.

Name:_________________________________

2

development of a global economy due to the severely protectionist economic policies instituted after the World Wars. During the period between 1913 and 1950, per capita income growth dropped below 1 percent. International investment also plummeted. The World Wars were not only severe obstacles to international economic, political and cultural connectivity between the nations involved, but they also hindered economic development in other nations around the world. After the Second World War, newly revitalized industry and new technologies helped to generate a boom in both world population and the international economy. The end of the wars and the fall of barriers and tariffs in Europe created a significant increase in the exchange of goods. Global trade nearly tripled between 1980 and 1999. Economic growth in China, India, Mexico, Thailand and Vietnam and international trade agreements became the groundwork for the global economy. In addition, the creation of international economic organizations such as the World Trade Organization, the International Monetary Fund and the World Bank helped to accelerate trade and economic cooperation. The establishment of multinational alliances such as the European Union also occurred. Through such multinational networks, goods, labour, capital and ideas now flow at an unprecedented pace and volume from one country to another. Although the concept of a "global village" has become a reality through technologically powered economic integration, globalization also brings about social, political, economical, cultural and environmental disruptions. Globalization creates favourable conditions for the transfer of jobs and industry from developed Western nations to developing countries. This process is referred to as "offshoring." Jobs and industries are most often transferred to countries with lower production costs, particularly lower employment costs. In developed economies, such as Canada or the United States, production costs are higher because they are bound and influenced by currency rates and minimum wage requirements. In Canada, wages are further affected by strong unions, such as the Canadian Automobile Workers (CAW) union. The minimum wage for a factory worker in China stands around $0.54 USD per hour. In China, 7.45 Renminbi (RMB, or yuan), which is equivalent to about $1 USD, can feed a person for an entire day. In 2010, Canada's minimum wage varied between $8.00 to $10.25 CAN per hour by province or territory. The Canadian minimum wage worker earns between thirteen to fifteen times more than the Chinese factory worker. While a Canadian company can achieve lower production costs, an increased profit margin, and greater competitiveness by relocating their manufacturing operations to China, other Canadian companies may be forced to close because of their reduced ability to compete. Off-shoring has lead to the closure of factories and a widespread elimination of jobs in Western countries. Developing economies often have poorly enforced or non-existent labour and environmental standards. While this may represent an opportunity to increase profit margins for multinational corporations, anti-globalization activists have accused such corporations of abusing the rights of workers at off-shore operations. Operations with extremely low wages in comparison to developed countries, and excessively long and poor or hazardous working conditions are often referred to as "sweatshops." The often ill-defined labour standards of developing nations have given rise to a 2 Works Cited Yip, JeromeEaton, Sarah Elaine. "Globalization: An Overview." Canadian Points Of View: Globalization (2009): 1. Canadian Points of

View Reference Centre. Web. 1 Apr. 2013.

Name:_________________________________

3

considerable amount of labour rights infringements. China's State Administration of Work Safety (SAWS) estimates economic losses of $40 billion USD a year due to occupationrelated disease, disorder, infirmity or death. These occur in part because heavily pollutive industries often choose to off-shore their operations to avoid environmental barriers present in nations such as Canada. In developing markets, polluting companies are often left unchecked by local and federal regulations. Such markets are known as "pollution havens." Within a technologically powered and economically integrated global market, environmental changes in one location on the planet may have sizable effects in another location. Issues such as climate change and other environmental changes attributed to industry have tied globalization and the environment together.

Globalization Today On November 22, 1999, tens of thousands of protesters rallied in Seattle, Washington, during the first World Trade Organization (WTO) meeting in the United States. The WTO is an international organization of 151 member states with the mandate to regulate and liberalize international trade. Activists protested against the impact of free trade on both developing and developed economies, the environment and human rights. Critics argue that globalization's institutional mainstays, the WTO, World Bank, and the International Monetary Fund (IMF), are creating a world where capitalism and corporate interests take precedence over the human rights and the earth's environment. In Canada there are also protests against globalization. In 2010, a branch of the Royal Bank in Ottawa was the target of an attack protesting against the G8 and G20 gatherings scheduled for the following month in Toronto. In recent years, developing economies have outperformed many of the developed nations in terms of gross domestic product (GDP) percentage growth. The liberalization of trade and the establishment of the global market have contributed to increases in people’s quality of life. In 2007, China outperformed the United States as the main contributor for world economic growth. India followed closely behind. Issues such as income distribution inequality, labour rights violations, human rights infringements, trade imbalances, and environmental degradation remain important and widely debated. Economic analysts, diplomats, critics and environmentalists continue to study how to best integrate environmental standards and regulations in a global market. Meanwhile, trade disputes continue to result in tension. From August 2006 to August 2007, the United States exported $41.2 billion USD of goods and services to China, while China exported $205.1 billion USD of goods and services to the United States, leaving the U.S. with a $164 billion USD trade deficit with China. The situation is further complicated by China's $1.43 trillion USD in foreign exchange reserves or reserves of US currency. In November 2007, when Chinese officials announced their intentions to diversify their foreign exchange reserves into stronger currencies other than the U.S. dollar, the trade value of the U.S. dollar fell to a fifty-seven year low against the Canadian dollar, and to lows against sixteen of the most internationally traded currencies. 3 Works Cited Yip, JeromeEaton, Sarah Elaine. "Globalization: An Overview." Canadian Points Of View: Globalization (2009): 1. Canadian Points of

View Reference Centre. Web. 1 Apr. 2013.

Name:_________________________________

4

Although globalization remains a widely debated concept, few doubt that economic integration and the rise of emerging markets has permanently altered the world's economy and impacted international politics for generations to come. This interconnectedness was demonstrated during the global financial crisis that began in 2008. The collapse in market price of complicated financial products whose values were based on the US real estate market and the uncovering of misleading and corrupt investment schemes at some of the world's largest investment firms, negatively impacted the economy of nearly every country in the world, including Canada. While Canada’s real estate market is structured quite differently from that of the United States and, as a result, there were far fewer foreclosures, nevertheless, the price of real estate plummeted and the impact on the economy was substantial. In the effort to save the world's economy from total collapse, government based financial bailouts were implemented on an unprecedented scale. Critics of globalization saw the events of the financial crisis as vindication— or proof of the problems inherent in a system of global trade rooted in financial co-dependency. However, proponents of globalization argue that the problems of the financial crisis, once alleviated, will result in a strengthened, more reliable system of global finance and trade that will continue to improve quality of life for everyone. Bibliography Books Hackmann, Rolf. Globalization: Myth, Miracle, Mirage. Lanham: University Press of America, 2005. Inda, Jonathan Xavier and Renato Rosaldo, eds. The Anthropology of Globalization: A Reader. Malden, MA: Blackwell Publishing, 2008. Kumaravadivelu, B. Cultural Globalization and Language Education. New Haven: Yale University Press, 2008. Michie, J. The Handbook of Globalisation. Cheltenham, UK: Edward Elgar, 2003. Weinstein, M.M. Globalization: What's New. New York: Columbia University Press, 2005. Zedillo, Ernesto, ed. The Future of Globalization: Explorations in the Light of Recent Turbulence. New York: Routledge, 2008. Periodicals "China Trade Syndrome." Economist 385.8549 (6 Oct 2007): 62. Kwok, Vivian Wai-yin. "Toy Maker Finds China May Not Be Cheapest." Forbes (2 Nov. 2007). Kearney, Chris. "Globalization." Vital Speeches of the Day. 75.5 (May 2009): 210-214. Martin, John P. "MIGRATION AND THE GLOBAL ECONOMY: SOME STYLIZED FACTS." Canadian Diversity. 6.3 (Summer 2008): 22-25. Ransom, David. "The Age of Possibility." New Internationalist. 421. (Apr. 2009): 12 Olsen, Kelly. "Asia seen ready to take stronger leadership role in world economy." The Canadian Press. (18 Jun 2009) "The future is another country." Economist. 390.8612 (3 Jan 2009): 43-44 Weidenbaum, Murry. "The Role of Economics in Reconciling Trade and Environmental Policies." Vital Speeches of the Day. 75.3 (Mar 2009): 136-138. Websites Centre for Research on Globalization. http://www.globalresearch.ca/ Johnston, Donald J. Globalization: Canada Tomorrow. Canadian Business Magazine 17 Oct 2007. http://www.canadianbusiness.com/after_hours/opinions/article.jsp?content=20071001_198703_198703. Jordan, Pav. Protesters take aim at Canada G20, G8 summits. Reuters 20 May 2010. http://www.reuters.com/article/idUSN2014709020100520 Mendelson, Michael and Pamela Divinsky. Canada 2015: Globalization and the Future of Canada’s Health and Health Care. Caledon Institute of Social Policy, 2002. www.caledoninst.org/PDF/55382024X.pdf.

4 Works Cited Yip, JeromeEaton, Sarah Elaine. "Globalization: An Overview." Canadian Points Of View: Globalization (2009): 1. Canadian Points of

View Reference Centre. Web. 1 Apr. 2013.