What is Globalization?

A Simple Definition : Globalization means the speedup of movements and

exchanges (of human beings, goods, and services, capital, technologies or cultural
practices) all over the globe.

The Benefits of Globalization

Globalization has benefits that cover many different areas.

It reciprocally developed economies all over the world and increased cultural
exchanges.

It also allowed financial exchanges between companies, changing the paradigm of

work.

Many people are nowadays citizens of the world. The origin of goods became
secondary and geographic distance is no longer a barrier for many services to
happen.

The Engine of Globalization

The most visible impacts of globalization are definitely the ones affecting the
economic world. Globalization has led to a sharp increase in trade and economic
exchanges, but also to a multiplication of financial exchanges.

In the 1970s world economies opened up and the development of free trade
policies accelerated the globalization phenomenon. Between 1950 and 2010, world
exports increased 33-fold. This significantly contributed to increasing the
interactions between different regions of the world.

This acceleration of economic exchanges has led to strong global economic

growth. It fostered as well a rapid global industrial development that allowed the
rapid development of many of the technologies and commodities we have available
nowadays.
 Knowledge became easily shared and international cooperation among the
brightest minds speeded things up.

According to some analysts, globalization has also contributed to improving

global economic conditions, creating much economic wealth (thas was, nevertheless,
unequally distributed – more information ahead).

Globalization Benefits
At the same time, finance also became globalized. From the 1980s, driven by
neo-liberal policies, the world of finance gradually opened. Many states, particularly
the US under Ronald Reagan and the UK under Margaret Thatcher introduced the
famous “3D Policy”: Disintermediation, Decommissioning, Deregulation.

The idea was to simplify finance regulations, eliminate mediators and break
down the barriers between the world’s financial centers. And the goal was to make
it easier to exchange capital between the world’s financial players. This financial
globalization has contributed to the rise of a global financial market in which
contracts and capital exchanges have multiplied.

Together with economic and financial globalization, there has obviously also
been cultural globalization. Indeed, the multiplication of economic and financial
exchanges has been followed by an increase in human exchanges such as migration,
expatriation or traveling. These human exchanges have contributed to the
development of cultural exchanges. This means that different customs and habits
shared among local communities have been shared among communities that (used
to) have different procedures and even different beliefs.

Good examples of cultural globalization are, for instance, the trading of

commodities such as coffee or avocados. Coffee is said to be originally from
Ethiopia and consumed in the Arabid region. Nonetheless, due to commercial trades
after the 11th century, it is nowadays known as a globally consumed
commodity. Avocados, for instance, grown mostly under the tropical temperatures
of Mexico, the Dominican Republic or Peru. They started by being produced in small
quantities to supply the local populations but today guacamole or avocado toasts are
common in meals all over the world.

At the same time, books, movies, and music are now instantaneously available
all around the world thanks to the development of the digital world and the power of
the internet. These are perhaps the greatest contributors to the speed at which cultural
exchanges and globalization are happening.

Why Is Globalization Bad? The Negative Effects of

Globalization
Globalization is a complex phenomenon. As such, it has a considerable
influence on several areas of contemporary societies. Let’s take a look at some of
the main negative effects globalization has had so far.

The Negative Effects of Globalization on Cultural Loss

Apart from all the benefits globalization has had on allowing cultural
exchanges it also homogenized the world’s cultures. That’s why specific cultural
characteristics from some countries are disappearing. From languages to traditions
or even specific industries. That’s why according to UNESCO, the mix between the
benefits of globalization and the protection of local culture’s uniqueness requires a
careful approach.

The Economic Negative Effects of Globalization

Despite its benefits, the economic growth driven by globalization has not been
done without awakening criticism. The consequences of globalization are far from
homogeneous: income inequalities, disproportional wealth and trades that benefit
parties differently.

In the end, one of the criticisms is that some actors (countries, companies,
individuals) benefit more from the phenomena of globalization, while others are
sometimes perceived as the “losers” of globalization. As a matter of fact, a recent
report from Oxfam says that 82% of the world’s generated wealth goes to 1% of the
population.

The Negative Effects of Globalization on the Environment

Many critics have also pointed out that globalization has negative effects on
the environment. Thus, the massive development of transport that has been the basis
of globalization is also responsible for serious environmental problems such as
greenhouse gas emissions, global warming or air pollution.

At the same time, global economic growth and industrial productivity are both
the driving force and the major consequences of globalization. They also have big
environmental consequences as they contribute to the depletion of natural
resources, deforestation and the destruction of ecosystems and loss of biodiversity.

The worldwide distribution of goods is also creating a big garbage problem,

especially on what concerns plastic pollution.

Globalization, Sustainable Development, and CSR

Globalization affects all sectors of activity to a greater or lesser extent. By

doing so, its gap with issues that have to do with sustainable
development and corporate social responsibility is short.

By promoting large-scale industrial production and the globalized circulation

of goods, globalization is sometimes opposed to concepts such as resource savings,
energy savings or the limitation of greenhouse gases.

As a result, critics of globalization often argue that it contributes to

accelerating climate change and that it does not respect the principles of ecology. At
the same time, big companies that don’t give local jobs and choose instead to use the
manpower of countries with low wages (to have lower costs) or pay taxes in
countries with more favorable regulations is also opposed to the criteria of
a CSR approach.

Moreover, the ideologies of economic growth and the constant pursuit of

productivity that come along with globalization, also make it difficult to design a
sustainable economy based on resilience.

On the other hand, globalization is also needed for the transitioning to a more
sustainable world, since only a global synergy would really be able to allow a real
ecological transition. Issues such as global warming indeed require a coordinated
response from all global players: fight against CO2 emissions, reduction of waste, a
transition to renewable energies. The same goes for ocean or air pollution, or ocean
acidification, problems that can’t be solved without global action. The dissemination
of green ideas also depends on the ability of committed actors to make them heard
globally.

There is no question that globalization has been a good thing for many
developing countries who now have access to our markets and can export cheap
goods.

Globalization has also been good for Multi-national corporations and Wall
Street. But globalization has not been good for working people (blue or white collar)
and has led to the continuing deindustrialization of America.

Globalization is a complicated issue. It is necessary to evaluate the pros and

cons before drawing any conclusions.

Pros
Supporters of globalization argue that it has the potential to make this world
a better place to live in and solve some of the deep-seated problems like
unemployment and poverty.
 1. Free trade is supposed to reduce barriers such as tariffs, value added taxes,
subsidies, and other barriers between nations. This is not true. There are still many
barriers to free trade. The Washington Post story says “the problem is that the big
G20 countries added more than 1,200 restrictive export and import measures since
2008

2. The proponents say globalization represents free trade which promotes

global economic growth; creates jobs, makes companies more competitive, and
lowers prices for consumers.

3. Competition between countries is supposed to drive prices down. In many

cases this is not working because countries manipulate their currency to get a price
advantage.

4. It also provides poor countries, through infusions of foreign capital and

technology, with the chance to develop economically and by spreading prosperity,
creates the conditions in which democracy and respect for human rights may
flourish. This is an ethereal goal which hasn’t been achieved in most countries

5. According to supporters globalization and democracy should go hand in

hand. It should be pure business with no colonialist designs.

6. There is now a worldwide market for companies and consumers who have
access to products of different countries.

7. Gradually there is a world power that is being created instead of

compartmentalized power sectors. Politics is merging and decisions that are being
taken are actually beneficial for people all over the world. This is simply a
romanticized view of what is actually happening.

8. There is more influx of information between two countries, which do not

have anything in common between them.

9. There is cultural intermingling and each country is learning more about

other cultures.
 10. Since we share financial interests, corporations and governments are
trying to sort out ecological problems for each other. – True, they are talking more
than trying.

11. Socially we have become more open and tolerant towards each other and
people who live in the other part of the world are not considered aliens. True in many
cases.

12. Most people see speedy travel, mass communications and quick
dissemination of information through the Internet as benefits of globalization.

13. Labor can move from country to country to market their skills. True, but
this can cause problems with the existing labor and downward pressure on wages.

14. Sharing technology with developing nations will help them progress. True
for small countries but stealing our technologies and IP have become a big problem
with our larger competitors like China.

15. Transnational companies investing in installing plants in other countries

provide employment for the people in those countries often getting them out of
poverty. True

16. Globalization has given countries the ability to agree to free trade
agreements like NAFTA, South Korea Korus, and The TPP. True but these
agreements have cost the U.S. many jobs and always increase their trade deficit

Cons

1. The general complaint about globalization is that it has made the rich richer
while making the non-rich poorer. “It is wonderful for managers, owners and
investors, but hell on workers and nature.”
 2. Globalization is supposed to be about free trade where all barriers are
eliminated but there are still many barriers. For instance161 countries have value
added taxes (VATs) on imports which are as high as 21.6% in Europe. The U.S. does
not have VAT.

3. The biggest problem for developed countries is that jobs are lost and
transferred to lower cost countries.” According to conservative estimates by Robert
Scott of the Economic Policy Institute, granting China most favored nation status
drained away 3.2 million jobs, including 2.4 million manufacturing jobs. He pegs
the net losses due to our trade deficit with Japan ($78.3 billion in 2013) at 896,000
jobs, as well as an additional 682,900 jobs from the Mexico –U.S. trade-deficit run-
up from 1994 through 2010.”

4. Workers in developed countries like the US face pay-cut demands from

employers who threaten to export jobs. This has created a culture of fear for many
middle class workers who have little leverage in this global game

5. Large multi-national corporations have the ability to exploit tax havens in

other countries to avoid paying taxes.

6. Multinational corporations are accused of social injustice, unfair working

conditions (including slave labor wages, living and working conditions), as well as
lack of concern for environment, mismanagement of natural resources, and
ecological damage.

7. Multinational corporations, which were previously restricted to commercial

activities, are increasingly influencing political decisions. Many think there is a
threat of corporations ruling the world because they are gaining power, due to
globalization.

8. Building products overseas in countries like China puts technologies at risk

of being copied or stolen, which is in fact happening rapidly

9. The anti-globalists also claim that globalization is not working for the
majority of the world. “During the most recent period of rapid growth in global trade
and investment, 1960 to 1998, inequality worsened both internationally and within
countries. The UN Development Program reports that the richest 20 percent of the
world's population consume 86 percent of the world's resources while the poorest 80
percent consume just 14 percent. “

10. Some experts think that globalization is also leading to the incursion of
communicable diseases. Deadly diseases like HIV/AIDS are being spread by
travelers to the remotest corners of the globe.

11. Globalization has led to exploitation of labor. Prisoners and child workers
are used to work in inhumane conditions. Safety standards are ignored to produce
cheap goods. There is also an increase in human trafficking.

12. Globalization is an economic tsunami that is sweeping the planet. We can’t

stop it but there are many things we can do to slow it down and make it more
equitable.

What is missing?

Leadership – We need politicians who are willing to confront the cheaters.

One of our biggest problems is that 7 of our trading partners manipulate their
currencies to gain unfair price advantage which increases their exports and decreases
their imports. This is illegal under WTO rules so there is a sound legal basis to put
some kind of tax on their exports until they quit cheating.

Balanced Trade – Most of our trading partners can balance their trade
budgets and even run a surplus. We have not made any effort to balance our trade
budget and have run a deficit for more than 30 years resulting in an $11 trillion
deficit. The trade deficit is the single biggest job killer in our economy, particularly
manufacturing jobs. We need the government to develop a plan to begin to balance
our trade deficit even though this is not a political priority in either party.

Trade Agreements – Both the NAFTA and the South Korean Korus trade
agreements might have been good for Wall Street and the multi-national
corporations but they eliminated jobs in America and expanded our trade deficit.
The upcoming Trans Pacific Trade Agreement will do the same thing and Congress
should not fast track this bad agreement for a dozen reasons.

Enforcing the rules – China ignores trade rules and WTO laws with reckless
abandon. Besides currency manipulation they subsidize their state owned companies
to target our markets, and provide funding to their state owned companies that dump
their products in America. They also steal our technologies, sell counterfeit versions
of our products, and impose tariffs and other barriers anytime they want - as we do
nothing to stop them. China does not deserve to be on our most favored nation list
and we need to tax their exports to us until they stop these illegal activities.

What is good for third world countries, like Kenya, or countries with
tremendous growth, like China, has not been good for American workers.
Globalization is deindustrializing America as we continue to outsource both
manufacturing blue collar and white collar jobs. Supporters of globalization have
made the case that it is good because it has brought low priced imported goods, but
they have not matched the decline of wages in the middle class and will not offset
the loss of many family wage jobs

Globalization is like being overwhelmed by a snow avalanche. You can’t stop

it – you can only swim in the snow and hope to stay on top. I would like to make the
argument that the US should try a lot harder to swim in the snow and stay on top.
We can’t stop globalization but there are many policies and strategies we can use to
make it more equitable. We can enforce the trade laws, force the competition to play
by the same rules, and stop giving our competitors the tools (technology and R& D)
to ultimately win the global war.