GLOBALIZATION: PROS AND CONS: The 1980s and 1990s liberalization has swept the World economy
Dr. Tanvir Orakzai
July 03, 2006
Globalization refers to the worldwide economical, political and cultural exchange of ideas among the states in the modern world. It is used to describe how world is becoming economically and politically one. The economic aspects of globalization include trade, investment and migration across the countries. Globalization believes that human being should have greater access to vast number of goods ranging from cheap labour in third world countries to bigger overseas investments. The 1980s and 1990s liberalization has swept the World economy. The 1980s democratization changed the landscape of the business and trade and industry, connecting every country in the world through globalization. The decentralization of economies and goods allowed trade, commerce and services to be transferred to other countries, regardless of distance. Globalization is not only confined to economic sectors, but it has also given rise to the adaptation of social, political and administrative aspects of other countries For example the integration of EU made the region competitive by following the common EU foreign policy. EU remains an example where balance is maintained by social solidarity, allowing freedom of movement and establishment across different states.
The anti-globlist view globalization as a negative phenomenon that has is making rich richer and poor poorer. They argue that globalization has increased poverty and diluted responsibility to the capital owners, slashed down the jobs and increased threats to resources in poor countries with no solution in place. While others mention that positive impact of globalization has removed barriers across the states, accelerating the growth of reforms and allowed greater information access to all parts of the world. The arrival of global market has allowed the aspiration of big players to expand their niche and derive maximum profit in the global market through geo-economic expansion. Globalization guarantees this sustainable competitiveness through a steady leadership of technological networks, generating added value and production facilities with unlimited human capability. It contributes more to the global development producing greater scientific and technological resources. Even the countries that do not have such vast resources still yet play essential role in over all global development.
Globalization is competition and reorganization, attracting countries that were in need of investment and such investment improved their economic condition. One such example is Mauritius, where per head income has increased from $500 to 1600 due to foreign investment. The foreign direct investment involves a long reflects a lasting interest in the host country. It implies that the investors have enormous control in another country’s economy due to its own interest, which ultimately leads to economic development. Thus any increase in FDI flow is directly associated with increase in GDP. FDI is undertaken by large and technologically advanced firm, which accelerate the speed of economic pace on one sided and also helps in transfer of technology in the host country with heavy return for the firms and provides more jobs in the countries where jobs are scarce.
For example when Toyota setup car plants in countries outside Japan, it requires higher level of standard to maintain the quality of it products, which means training the local workers. Thus if Toyota gets the competitive advantage, the host countries gets the skills and jobs.
The recent joint ventures of China with Japanese companies are also such move by the Chinese entrepreneurs to get skill directly by working with Japanese. A few successful examples are the Asian Tigers; Singapore, Korea and Taiwan which have gained from such experience. The economies of these countries prospered through export led strategies with the use of cheap labour becoming skillful and creative. Korean Samsung, Kia and Hyundai and Singapore’s Creative are few examples of successful MNCs that were born due to transfer of technology from foreign firms. Similar policy has been adopted by China, which has attracted huge amount of FDI at the cost of cheap labour. While the ASEAN economies, such as Malaysia, Thailand, Indonesia and the Philippines are moving towards the status of new industrialized countries and following the path of Singapore and Korea.
Despite all the benefits of globalization a large number of developing countries have not made much progress as anticipated. For example other than few Asian countries majority of African countries have made little progress or in some cases have even lost the track becoming poorer. In Asia other than China and India, such as Maldives, Philippines, Indonesia, Burma, and Nepal and many other countries are becoming much poorer than they were which shows that the gap between the rich and poor countries is increasing.
The greatest concern is that governments in the developing countries often make deals with foreign companies, which affect millions of people without giving any substitute to these people. Critics mentions that the dangers of global economy is that investors come into a particular country, present certain conditions and government often accept them without asking the people who will be affected, which is a violation of workers rights. It often happens under such deals when state companies are bought over by foreign companies, thousands of workers are laid off under so called structural adjustment program to cut the cost, while workers are pushed for longer hours and prohibited from labour unions. The whole purpose behind this way of working is exploitation of the foreign market to gain greater profit. Globalization is part of the changing world, but the way it is coming in developing countries lacks humanity
Like every other phenomenon globalization has its pros and cons, few of which have been discussed above, while much more can be explored. Today mankind is part of this process and little can be understood, when globalization is still in the process. Perhaps when mankind look back somewhere in the future at the globalization, the true cost can be known by estimating gain and loss.
The anti-globlist view globalization as a negative phenomenon that has is making rich richer and poor poorer. They argue that globalization has increased poverty and diluted responsibility to the capital owners, slashed down the jobs and increased threats to resources in poor countries with no solution in place. While others mention that positive impact of globalization has removed barriers across the states, accelerating the growth of reforms and allowed greater information access to all parts of the world. The arrival of global market has allowed the aspiration of big players to expand their niche and derive maximum profit in the global market through geo-economic expansion. Globalization guarantees this sustainable competitiveness through a steady leadership of technological networks, generating added value and production facilities with unlimited human capability. It contributes more to the global development producing greater scientific and technological resources. Even the countries that do not have such vast resources still yet play essential role in over all global development.
Globalization is competition and reorganization, attracting countries that were in need of investment and such investment improved their economic condition. One such example is Mauritius, where per head income has increased from $500 to 1600 due to foreign investment. The foreign direct investment involves a long reflects a lasting interest in the host country. It implies that the investors have enormous control in another country’s economy due to its own interest, which ultimately leads to economic development. Thus any increase in FDI flow is directly associated with increase in GDP. FDI is undertaken by large and technologically advanced firm, which accelerate the speed of economic pace on one sided and also helps in transfer of technology in the host country with heavy return for the firms and provides more jobs in the countries where jobs are scarce.
For example when Toyota setup car plants in countries outside Japan, it requires higher level of standard to maintain the quality of it products, which means training the local workers. Thus if Toyota gets the competitive advantage, the host countries gets the skills and jobs.
The recent joint ventures of China with Japanese companies are also such move by the Chinese entrepreneurs to get skill directly by working with Japanese. A few successful examples are the Asian Tigers; Singapore, Korea and Taiwan which have gained from such experience. The economies of these countries prospered through export led strategies with the use of cheap labour becoming skillful and creative. Korean Samsung, Kia and Hyundai and Singapore’s Creative are few examples of successful MNCs that were born due to transfer of technology from foreign firms. Similar policy has been adopted by China, which has attracted huge amount of FDI at the cost of cheap labour. While the ASEAN economies, such as Malaysia, Thailand, Indonesia and the Philippines are moving towards the status of new industrialized countries and following the path of Singapore and Korea.
Despite all the benefits of globalization a large number of developing countries have not made much progress as anticipated. For example other than few Asian countries majority of African countries have made little progress or in some cases have even lost the track becoming poorer. In Asia other than China and India, such as Maldives, Philippines, Indonesia, Burma, and Nepal and many other countries are becoming much poorer than they were which shows that the gap between the rich and poor countries is increasing.
The greatest concern is that governments in the developing countries often make deals with foreign companies, which affect millions of people without giving any substitute to these people. Critics mentions that the dangers of global economy is that investors come into a particular country, present certain conditions and government often accept them without asking the people who will be affected, which is a violation of workers rights. It often happens under such deals when state companies are bought over by foreign companies, thousands of workers are laid off under so called structural adjustment program to cut the cost, while workers are pushed for longer hours and prohibited from labour unions. The whole purpose behind this way of working is exploitation of the foreign market to gain greater profit. Globalization is part of the changing world, but the way it is coming in developing countries lacks humanity
Like every other phenomenon globalization has its pros and cons, few of which have been discussed above, while much more can be explored. Today mankind is part of this process and little can be understood, when globalization is still in the process. Perhaps when mankind look back somewhere in the future at the globalization, the true cost can be known by estimating gain and loss.
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