ECONOMIC, ENVIRONMENTAL AND

SOCIAL IMPACTS OF ECONOMIC

GLOBALISATION
&
ECONOMIC GLOBALISATION AND THE
SOVEREIGNTY OF NATIONS
What are the economic, environmental and social impacts of economic
globalisation?
Economic Impacts: According to the World Bank (2016), economic globalisation
has delivered high growth and technological progress in the developing world,
and has led to increased development in some countries.

Who has benefited the most from economic globalisation?

China and to some extent India have been big winners. A big reason for the rising
share has been the growth of globalization and trade and China's emergence as a
manufacturing giant. On the other hand, this has meant that the share of some
countries in world GDP has come down. Many argue that this is welcome, as it has
helped raise living standards in much poorer countries and reduced the
development gap between countries.
Did all countries benefit from Economic globalization?
While 'emerging and developing Asia' increased its share of global GDP, many other
areas of the world stagnated. Sub-Saharan Africa's improvement in share of GDP
between 1990 and 2016 was tiny and extreme poverty has begun to increase. But we
need to understand how the GDP shifts in relation to world events such as wars and
The Great Depression, as well as the impact of difference economic ideologies such as
Keynes-ism and Neoliberalism.

Emerging markets now constitute a much larger chunk of the global economy than
they did in 1990. Taken together, they now account for 58% of the world economy,
compared to 36% in 1990. But apart from developing Asia, other developing
countries have not seen a significant gain in their share of global GDP, while many of
them have seen their share declining. In relative terms, Asia and especially China has
gained the most from globalization. (Chakravarty, 2017).
 Vietnam - a success story
◦ In 1986, the government introduced a series of economic and political
reforms. Today, Vietnam is a rising economic star.
◦ Vietnam's exceptionally globalized economy is a result of its focus on exports
for economic growth. Vietnam opened up its cheap labor market to foreign
investors and became a center for low-cost manufacturing.
◦ Globalization has been good for Vietnam. In 2017, Vietnam's trade as a
percentage of GDP reached over 200%.
◦ The proportion of people in extreme poverty fell from above 70% in the early
1990s to around 10% in 2016. The World Bank notes that this is due to job
creation by Vietnam's export sector.
The Development Gap: Has globalisation decreased inequality?
◦ The Development gap refers to the difference in levels of development between the richest
and poorest countries in the world. This can be the gap across countries.
◦ Globalisation and international trade has been partly responsible for a decline in inequality
across countries since the 1980s.
◦ However, inequality within countries has risen. Some research has shown that less-skilled
workers in developing countries are generally not better off.
◦ Many argue that globalisation has led to a small number of wealthy people becoming even
wealthier.
◦ BRICS refers to an association of five emerging national economies (Brazil, Russia, India,
China and South Africa). These countries are still considered developing countries but are
developing quickly and already have many attributes of developed countries. In developed
countries, the gap between rich and poor has also worsened.
Definitions
◦ Absolute poverty is when a person's income is too low for basic human
needs to be met, potentially leading to homelessness or hunger.
◦ Relative poverty is when a person's income is too low to maintain the
average standard of living in a particular society.
◦ Zero-sum game means one person gains because another person loses.
◦ The Gini coefficient measures income inequality within a country. It is a
number between 0 and 1, where 0 corresponds with perfect equality
(where everyone has the same income) and 1 corresponds with perfect
inequality (where one person has all the income-and everyone else has
zero income).
Environmental impacts of economic globalisation.
◦ One way to measure the environmental impact of globalisation is by comparing income per capital
with ecological footprint. An Ecological Footprint is a measure of the resources used by a
country or person over a year, measured in global hectares.
◦ The most pressing global environmental issue is climate change. Scientists, political leaders,
business leaders and people from all areas of work now recognize that the climate is changing and
the changes are caused by increased carbon in the atmosphere. Industrialization, with its reliance
on burning fossil fuels, has caused the earth's climate to change and become warmer.
◦ Because of global supply chains, manufactured goods which are globally produced, and then
shipped around the world create a massive ecological footprint. Our food is also often shipped
hundreds, perhaps thousands of kilometers around the world. A bottle of Fiji Water, for example,
travels 20,000 kms from Fiji to the UK.
◦ When MNCs closed their factories in developed countries and opened factories in developing
countries like China, Vietnam, Indonesia and other developing countries, where they did not have
worry about environment protection and the labor costs were cheaper.
How does economic globalisation challenge the
sovereignty of nations?
◦ Multinational Companies are so powerful today that they seem to threaten the sovereignty of national
governments. This can be through tax avoidance. Another way that MNCs challenge the sovereignty of
nation states is through Investor State Dispute Settlement Mechanisms (ISDS). These are clauses in
some free trade agreements that allow MNCs to sue governments if there are changes to the law that
threaten their investments and profits.
◦ As part of this 'small government' agenda, many neoliberal governments in the West privatized state
owned assets such as public transport, hospitals, schools and even prisons. Now, many public services
are run by MNCs for profit and some say that this has led to higher costs and poorer public services.
◦ Countries in economic difficulties that require assistance from the IMF in the form of emergency loans
often find that their sovereignty is compromised through a combination of measures. These measures
involve huge cuts to government spending, debt repayments, the selling of public assets to foreign
investors and the removal of trade barriers that destroy domestic industries and jobs.
◦ Britain voted to leave the European Union (EU) partly because of claims that the EU was threatening
Britain's sovereignty through the imposition of laws decided by the EU and not by London.