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globalisation and contemporary issues

the contemporary world faces numerous challenges, such as poverty, climate change, terrorism and extremism

the extent to which globalisation resolves these issues is widely debated

some regard globalisation as part of the solution, while others believe that it is part of the problem


economic globalisation: reducing poverty

the world economy is moving towards a single, global economy

economies are increasingly integrated into the market and poverty is falling

globalisation has driven the development and growth throughout most of the world and drives cultural and political globalisation

states support the global accepted rules of trade, and the bodies of global governance like the IMF, representing their commitment to economic globalisation

TNCs bring with them jobs, workforce training and upskilling and access to modern technologies, so are welcomed by states


economic globalisation: increasing inequality

economic globalisation is uneven both between states and within states, this is creating inequalities

areas like sub-Saharan Africa and marginalised groups within states are being left behind

globalisation benefits developed states and TNCs, but not the developing states that are mostly located in the global South

increasing and deepening global crises with very negative impacts for the poor

the consequence of increasing inequality is the higher chance of conflict both within and between nation states


cultural globalisation: reducing conflict

technology and TNCs, especially media corporations, have created a more uniform global culture built around liberal values, global goods and a global flow of news and information

there is a move towards a single global community where people feel a connection and obligation to each other, creating shared norms and views in areas like human rights

this is weakening state sovereignty and increasing cooperation and peace


cultural globalisation: increasing conflict

a backlash to cultural globalisation has emerged in recent years as it has been seen as a form of cultural imperialism and Americanisation

there has been a rise in anti-globalisation, anticapitalist and green movements which argue that globalisation is responsible for poverty, inequality and environmental degradation

ethnic nationalism (Chechnya) and cultural nationalism (Catalonia) has grown, and nationalism and the nationstate (Trump’s ‘America First’ doctrine has strengthened)

there has been a rise in religious fundamentalism to combat cultural flattening my globalisation — this backlash seems to threaten the existing global order, leading to an increased chance of conflict

it also weakens the ability of international institutions to tackle global issues such as poverty, human rights violations and environmental degradation


political globalisation: creates peace and harmony

growing political globalisation has created a rule and norms based international system that limits sovereignty and restricts the behaviour states

it is also supported by most states

comprises international institutions and international law, which breed cooperation, peace and harmony on the global stage

the spread of economic and political liberalism lessen the chance of conflict and human rights abuses


political globalisation: ineffective in dealing with global issues

without an authoritative global decision-making body with enforcement powers, political globalisation struggles to deal with poverty and inequality, environmental degradation and human rights abuses

political globalisation is stalled by national sovereignty, which is the cornerstone of the international order

9/11 and the global crises have decreased the importance of political globalisation and increased importance of states


in what ways has economic globalisation reduced poverty?

convergence between the Global North and South

globalisation and consumers

breaking out of the poverty cycle


economic globalisation has reduced poverty: CONVERGENCE BETWEEN THE GLOBAL NORTH AND SOUTH

what is the North-South divide?

arguably, globalisation has done more than anything else in history to address and resolve the problem of global poverty

the North-South divide, first coined in the Brandt reports in 1980 and 1983, highlights the economic and social divisions between the developed world (the Global North) and the developing world (the Global South)

living standards, high wages and industrial productivity are mostly found in the Northern hemisphere, while poverty, low wages, agriculture and structural disadvantage are mostly concentrated in the Southern hemisphere


economic globalisation has reduced poverty: CONVERGENCE BETWEEN THE GLOBAL NORTH AND SOUTH

how has economic globalisation bridged the gap between the North and South?

free trade liberalism, spread by economic globalisation, has created more convergence between the North and South by creating new jobs in manufacturing across the world

as a result of greater trade between countries, gross world production has radically increased from $41 trillion in 2000 to over $77 trillion in 2014

the number of people living in extreme poverty has also dramatically decreased as people across the world gain higher paying jobs and have access to cheaper food and medical equipment — according to the World Bank, the numbers living on less than $1.25 a day has dropped from 1.9 billion in 1980 to 702 million in 2015

this statistic is even more remarkable when we take into account that the global population has increased by almost 3 billion since 1980, yet poverty has still decreased


economic globalisation has reduced poverty: CONVERGENCE BETWEEN THE GLOBAL NORTH AND SOUTH

what has free trade, spread by economic globalisation, allowed developing countries to do?

as a result of the enhanced trading opportunities that free trade creates, developing countries have been able to break into global markets and use their comparative advantage in cheap labour to lift millions of their citizens out of extreme poverty

in the developing world, output per person almost doubled between 2000 and 2009, with an average annual rate of growth over the decade of 7.6% (which was 4.5% higher than the rate seen in rich countries)

free trade encourages countries to specialise in what they produce most cheaply, so reducing the cost to sell it globally and providing them with their own niche market to exploit

as a result, the developing world has made huge advances — in 1980, 84% of China’s population lived in extreme poverty but this number has decreased to 12% by 2010

similarity, in 1980, 60% of India’s population lived in extreme poverty, which has decreased to 33% by 2010


economic globalisation has reduced poverty: CONVERGENCE BETWEEN THE GLOBAL NORTH AND SOUTH

what does this mean for the North-South divide?

globalisation has lifted more people out of poverty than ever before

by opening up their markets to foreign investment, less-developed countries have been able to climb the development ladder to prosperity which has created greater convergence between them and the developed world

challenging the relevance of the division of the world into a prosperous global North and poverty stricken global South


economic globalisation has reduced poverty: CONVERGENCE BETWEEN THE GLOBAL NORTH AND SOUTH (continued)

evidence for greater convergence between the North and South

China has used its enormous supply of cheap labour to manufacture low-cost goods which it sells globally — in 2015, exports from China amounted to over $2.2 trillion, an increase of 20.2% from 2011

in 2015, South Korea was the 6th largest exporter specialising in computers, cars and wireless telecommunications equipment

its companies, including Hyundai, Kia and Samsung, have global recognition today and its engagement in global free trade means that its industrial output is now 17 times larger than that of North Korea

Taiwan was initially focused on the export of cheap toys and textiles, but the capital this created was then used to diversify into more high-priced goods — in 2016, Taiwan’s technology-intensive economy was ranked 22nd in the world in terms of GDP

many African countries have also been able to take advantage of new trading opportunities by concentrating on those sectors in which they possess comparative advantage — for example, Botswana and diamonds, Ethiopia and coffee (one of its main exports), Kenya and tea

investors are increasingly investing in Africa as they appreciate the potential value of its growing urbanised and better skilled workforce — for example, the president of the Huajian Group, which manufactures Ivanka Trump branded shoes, has moved production to Ethiopia and has said that he intends to create 30,000 new jobs there by 2020

as a result of such confidence in Africa’s future as a manufacturing hub, foreign direct investment in the continent in 2015 reach $60 billion, making it second only to the USA in terms of investor attraction


economic globalisation has reduced poverty: GLOBALISATION AND CONSUMERS

globalisation has also driven down the cost of consumer goods, providing most people in the world with the opportunity to own sophisticated material possessions that used to only be available to the very wealthiest

in the developing world, 8 out of 10 people own a mobile phone and in 2016, the world’s cheapest smart phone was launched on the Indian market at just £2.79


economic globalisation has reduced poverty: BREAKING OUT OF THE POVERTY CYCLE

employment opportunities created by economic globalisation provide people in the developing world with a chance to break out of the poverty cycle

protected economies stagnate since markets are restricted and the lack of competition encourages complacency and inefficiency

whereas opening up these economies to free trade has the opposite effect, encouraging growth and employment

jobs in factories may not seem very attractive but they can provide the opportunity for people to enjoy a regular wage, have the potential for career development and accumulate the capital necessary to give their children a better education

as Paul Collier states in the Bottom Billion (2007): “globalisation provides virtually infinite possibilities of expansion.... this expansion creates jobs, especially for youth”


in what ways has globalisation entrenched poverty?

greater inequality

a race to the bottom


globalisation has entrenched poverty: GREATER INEQUALITY

although globalisation has created greater wealth than ever before, it has also had dramatically negative consequences

too often, the wealth that is generated through global free trade is concentrated in the hands of the elite, which dramatically increases the gap between the rich and the poor

in China, in 2016, it is estimated that the poorest 25% owned just 1% of the country’s total wealth, while the richest 1% of households owned 1/3 of the country’s wealth

therefore, globalisation may be raising everyone’s wealth but is not raising all people equally and is thus entrenching inequality and poverty

Amy Chua, in the World on Fire (2002) has argued that by obviously concentrating wealth in the hands of a very small number of individuals, resentment and dissatisfaction is created among the majority, who although they may be becoming practically better off, do not feel as though they are better off

this undermines social cohesion and can encourage the rise of destabilising political movements


globalisation has entrenched poverty: A RACE TO THE BOTTOM

global capitalism is based upon the maximisation of profit, so it is in the interest of international businesses to seek out the lowest costs in which to do business

this can create a race to the bottom, in which states compete to attract business and investment by keeping regulations as minimal as possible

a number of shocking incidents have shown how developing countries cut corners in order to attract business — e.g. the deaths of 1129 employees during the collapse of the Rana Plaza garment factory in Bangladesh in 2013 due to structural failings

Chinese companies in particular are alleged to have very low standards of corporate social responsibility and exploit workers in the developing world — Human Rights Watch has accused Chinese mining farms in Africa of countenancing appalling human rights abuses

Cambodian attempts to break into the global export market have led the Cambodian government to systematically ignore labour rights and working conditions in order to maximise profitability


globalisation has entrenched poverty: A RACE TO THE BOTTOM

too much power in the hands of TNCs

globalisation gives too much power to TNCs, which are undemocratic and unaccountable

it also undermines the ability of the state to protect its own citizens from exploitation

in this way, globalisation takes real power from the people and gives it to TNC directors, who often exert power over governments, especially in the developing world

economic globalisation may even be seen as a form of violence against the poor — through exploiting cheap labour, TNCs weaken the industrial and democratic rights that have been built up over generations to protect poor people


globalisation increases inequality: the Gini coefficient

the Gini coefficient measures the extent of inequality within a state — the higher the level of income inequality, the higher the Gini coefficient

the proceeds of economic globalisation have been shared unequally

major players in globalisation, such as China and the USA, have remarkably high scores on the Gini coefficient

the World Bank regards a coefficient above 0.40 as representing severe income inequality and it estimated China’s score as 0.42 in 2012 and the USA’s at 0.41 in 2013

such inequality creates resentment, which has a damaging impact on social cohesion and this may lead to a rise in crime, class antagonism and an increase in populist movements

the business academic C K Prahalad argues that the gap between the top and the bottom of the ‘economic pyramid’ has dramatically increased as a result of globalisation


how is globalisation a force for good?

economic globalisation is based upon the principle that the reduction of trade barriers and import tariffs encourages greater global trade and stimulates foreign investment — this provides nationstates throughout the world with the opportunity to use their advantages in a global free market, giving them access to any market in the world

developing countries in particular have benefited from new export opportunities, leading to greater convergence between the economies of the global south and the global north

the expansion of global trade provides consumers with a wider variety of goods at lower prices since TNCs constantly seek out the cheapest and most cost efficient place in which to manufacture


how is globalisation a force for good?


there seems to be a close connection between freetrade and peace — liberals like William Gladstone viewed free trade not only as an economic good but as a moral code, according to the principle that “if goods do not cross borders, armies will”

Thomas Friedman, in his Dell Theory of Conflict Resolution, argued that not only does economic globalisation encourage greater global prosperity, it also greatly reduces the risk of conflict between nation states

this is because such a complex web of economic interconnectedness is established between states, meaning that it would be irrational for any state to go to war with another in the same supply chain

for example, the USA and China are reliant on each other for both trade and foreign investment, this symbiotic relationship means that it would be self-defeating for them to go to war with each other


how is globalisation a force for bad?

enables powerful TNCs to open factories wherever they like in the world and they will seek out the least regulated economy and the cheapest workforce, thereby leading to race to the bottom — since TNCs lack any commitment to the workforce they employ, workers’ rights and job security are undermined

due to globalisation, poorer countries are swamped with cheaply made foreign imports so that they remain in a peripheral stage of development, mainly producing raw materials and allowing foreign investors to exploit their workforces

exacerbates greater inequality, both between and within countries, creating destabilising social tensions

Marx and Engels warned that the capitalist system is based upon institutionalised exploitation and so cannot meaningfully benefit the working class, so economic globalisation is a form of violence against the poor


how is globalisation a force for bad?


economic globalisation gives too much power to IGOs, such as the IMF, World Bank and WTO, which are severely lacking in democratic accountability

too often, the free market reforms these agencies encourage damage the interests of the poorest and yet there are no democratic means of opposing them

it could also be argued that the same is true of regional bodies such as the EU

for example, the way in which the EU negotiates treaties on behalf of its member states, such as the proposed Transatlantic Trade and Investment Partnership (TTIP) demonstrates how far removed the public is from decision-making

even though the TTIP has been accused of lowering European standards of protection for workers, consumers and the environment in return for tariff reductions, there is no democratic mechanism by which to oppose the deal


how is globalisation a force for bad?


TNCs reduce labour costs and prices, which can lead to the destruction of traditional local industries such as rice in Ghana, groundnuts in Sierra Leone or small-scale peasant agriculture in Jamaica

opening up local markets to global competition can have an appalling social cost — sudden global challenges to small-scale industry and agriculture can lead to family breakdown, crime and prostitution

the materialism that globalisation encourages also causes the disintegration of communities — for example, the spread of factories throughout the developing world breaks up families as young people head for big cities in search of work

some have criticised TNCs for abusing the environment and showing little responsibility towards indigenous cultures — for example, Shell has faced scrutiny for its degradation of the Niger Delta

in 2010, the UN estimated that TNCs had caused $2.2 billion of damage to the environment annually


how is globalisation a force for bad?


global capitalism seeks the cheapest workforce, which undermines the long-term job security of workers around the world as TNCs withdraw their factories from countries in which labour costs have risen

for example, Chinese firms are increasingly moving operations to lower cost Africa and Vietnam

in the 2016 US presidential election, Bernie Sanders and Donald Trump generated massive support among blue-collar workers who felt that they were losing their future to cheaper factories in China and Mexico

during the campaign, Trump argued that the impact of globalisation had been to leave “millions of our workers with nothing but poverty and heartache”

this job insecurity has led to anti-globalisation resentment, which is likely to have encouraged some of the extreme nationalistic attitudes deployed towards the EU during the 2016 referendum

especially among the working class, there was the conviction that Brexit would stop the free flow of goods, capital and labour that threatened job security


how is globalisation a force for bad?


left-wing globalisation sceptics, such as Immanuel Wallerstein in his world systems theory, argues that globalisation can lock developing states into permanent dependency status

this is because if they open their borders to trade too early, the ‘dumping’ of cheap manufactured products on them means they become dependent on cheap foreign imports and so never develop their own industries

can be seen as neocolonialism since developing countries are condemned to a peripheral status in global trade

developing states therefore end up providing markets and a workforce for TNCs without developing their own business interests

according to the Prebisch-Singer hypothesis, exporting the primary products that fuel economic globalisation means that developing countries face declining terms of trade in the long run, which then traps them into permanently low levels of development

the economist Ha-Joon Chang argues that developing industries will not be able to withstand foreign competition until they are protected by subsidies and tariffs, which will allow them to develop sufficiently


how is globalisation a force for bad?


realists have criticised the Dell Theory of Conflict Resolution, pointing out that states are primarily power maximisers as well as risktakers and do not always act according to rational principles

in 1910, Norman Angell published The Great Illusion, which argued that war between Germany and the UK was inconceivable because it would be economic suicide for both sides

after all, in 1913 there was a greater volume of trade between the two countries that ever before

however, the following year WW1 broke out as a result of these great powers struggling for strategic influence, which suggests that we shouldn’t to be too confident about the extent to which free trade really does make war unthinkable

globalisation has even encouraged conflict and caused considerable backlash — for example, it has contributed to a rise in militant Islam as it has been perceived as a form of cultural imperialism


how is globalisation a force for bad?

CASE STUDY: developing countries cutting corners to attract investment from TNCs

in 2013, the Rana Plaza factory in Bangladesh collapsed, killing 1129 employees and injuring 2500 due to structural failings in the construction of the factory

employers had discovered cracks in the building but employees were ordered to carry on working as usual and the building collapsed during the morning rush hour