University of Malaya

Faculty of Business and Accountancy

CIB 3003: International Business Management

Book Review

Prepared by :Glenys Adhitiawarman NEX180398

 1
Introduction – The Globalisation Controversy

Globalisation for all its infamy, is actually a relatively new term. Anthony Giddens, the
term Globalisation was hardly used before the late 1980s and came from nowhere to be
everywhere in a period of just a decade. The earliest scholars used the term ‘Global’ was Peter
Dicken. More importantly, he used the term ‘Global’ instead of ‘International’, which again is
probably due to his background in geography. Dicken found that falling transport and
communications cost was making it possible to divide up the value chain of production.
Different stages of the production can be carried out in different parts of the globe, depending on
the comparative advantages of alternative production sites. Jeffrey Henderson wrote a book
entiled The Globalisation of High Technology Industry. Soon, the term became more popular
and was used by scholars from other disciplines including political science and business strategy.
Scholars from different academic background, began to have their own interpretations
and definitions of globalization. The widening understanding of the term resulted in an increase
in the number of definitions. In fact, according to Scholte at least five broad definitions of
‘globalisation’ can be found in the literature.
1. Globalisation as internationalization
Here globalization is viewed as “simply another adjective to describe cross-border
relations between countries”. It describes the growth in international exchange and
interdependence.
2. Globalisation as liberalization
‘globalisation’ refers to ‘a process of removing government imposed restrictions on
movements between countries in order to create an ‘open’, ‘borderless’ world economy’’
(Scholte 2000:16).
3. Globalisation as westernization
In the use, ‘global’ is used in the sense of being ‘worldwide’ and ‘globalisation’ is “the
process of spreading various objects and experiences to people at all corners of the
earth”.
4. Globalisation as westernization or modernization
‘globalisation’ is understood as dynamic, “whereby the social structures of modernity
(capitalsm, rationalism, industrialism, bureaucratism, etc) are spread the world over.
5. Globalisation as deterritorialisation
‘globalisation’ entails a “reconfiguration of geography, so that social space is no longer
wholly mapped in terms of territorial places, territorial distances and territorial borders’’.
The various definitions or perspectives on the concept of globalization serve to increase
the complexity of discussing the phenomenon as well as its implications. They will also
likely find it very difficult to reselve their different opinions and come to a meaningful
conclusion. One of the major reasons as to why the debates on globalization have been so
confusing to many and why them have beem going on for many years. According to
writers who understand the term as referring to the concepts of ‘liberalisation’,
‘westernisation’ or ‘de-territorialisation. Globalisation is indeed a new phenomenon. The
emphasis by these writers is that something new is happening to be world in that it is
becoming a ‘single place’.
However, for other writers who understand globalization as universalization or
internasionalisation.

Globalisation – Good or Bad?

In chapter 1, we discussed the debate as to whether the phenomenon of
globalization is new or old. In this chapter, we will discuss the conflicting points of views
as to whether is its beneficial or harmful to societies affected by it.
Benefits from Free Trade
The main advantages to be gained from free trade are efficiency and choice for
cunsumers.
Efficiency
Trade encourages specialisation and specialisation results in efficiency, productivity and
quality. By trading their output people are able to exchange high quality. By trading their
output people are able to exchange high quality goods among themselves at the cheapest
price thereby leading to situation of maxium efficiency and maximization of welfare for
all. Internationalising those activities simply extend their geographic scope which can
only add on the benefits mentioned earlier.
Free trade also benefits consumers by making available to them products from around the
world to choose from The ability to choose from a wide variety of products from
different countries.
Job Losses
The association of job loss to globalization is probably the most important contributing
factor to the controversy of the term globalization it self. According to the International
Labor Organisation (ILO) worldwide unemployment affects one billion people, or nearly
one third of the global workforce.
Proverty
The issue of poverty can be very emotive issue, especially from the point of view of less
developed countries. It seems scenario as far as the issue or poverty and income
distribution is concerned. But it is one thing to highlight the fact that the process of
globalization is accompanied by a worsening poverty scenario and another thing to say
that the process of globalization is the cause of the situation.
Instabilities and economic crises
Economic crises are not new and have taken place long before term globalization became
fashionable. In fact, the story of economic crises is as old as the story of humanity itself.
Globalisation has resulted in strong financial linkages between countries.

3
Causes of the Problems of Globalisation

The question that must now be answered is why proverty, unemploymenet,

disparity of wealth and the destruction of the environment accompany the process of
globalization? As proven by Ricardo and other economists, free trade is supposed to be
accompanied by an increase the welfare of societies which are involved.
Walter Wriston, for example, wrote:
Today we are witnessing a galloping new system of international finance. Our new
international financial regime differs radically from its precursors in that it was not built
by politicians, economists, central bankers or finance ministers, nor did high level
international confernces produce a master plan. It was built by technology by men and
women who interconnected the planet with telecommunucations and computers.

International trade or globalization of economic and business activities are good

things. Their man benefit is increased efficiency which allows consumers to obtain the
best products and services at the best price. Producers also benefit from intenational trade
because not only are they able to source for components and raw materials for their
production process form overseas suppliers. Globalisation, in so far as it relates to the
ability for firms to market and produce their products anywhere in the world, is certainly
and without any doubt a beneficial development for the welfare of people everywhere.
The opposite of globalization is economic autarchy where international trade is
completely banned. Some opponents of globalization may restate their position and say
that what is desired is a position halfway between economic autarchy and complete free
trade. In many cases especially in less-developed and developing countries, the term
‘favouredindusty’ is also inextricably linked to the terms cronyism and nepotism.
The process of globalization continues relentlessly and will inevitably be
accompanied by negative developments discussed earlier ush as job losses, increased
financial crises, accelerated erosion of cultural values, etc.
I have argued in this book that the problems are not outcomes of globalization per se, but
rather outcomes of the forces that push the process of globalization to move along at a
pace that’s is too strong and too fast. Some people may argue that there is nothing wrong
with a financial system that legalizes lending for profit. They will further argue that
blame should be placed on the borrowers for borrowing recklessly. In other words,
according to them, the solution to the problem lies in educating the borrowing groups.
These presumably include individual members of the public, managers of corporations
and leaders of countries.
The fact of the matter is trade negotiators from every country will want to protect
weak industries in their home markets from foreign competition and at the same time
want other countries to open up their markets for their competitive firms to enter. The
challenge to convince people of the need to abandon the usury-based financial system is
daunting indeed. Changing people’s mind to see the practice of charging interest as being
evil is probably more difficult than convincing people that smoking is bad for them.