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Globalization: Its Deserves and Demerits

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Globalization: Its Deserves and Demerits

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“It may well be better that those who have grown fond of globalization get over it, accept its passing, and begin to adjust to a new reality.”

          Excerpt from “The Levelling: What’s Next After Globalization” by Michael O’Sullivan

The burning question ‘What is Globalisation’ was answered by Roland Robertson, a sociologist and theorist of globalization in 1992 as “the compression of the world and the intensification of the consciousness of the world as a whole” and while this is credited as one of the very first definitions of Globalisation, the word is still constantly evolving, traveling and adapting to the needs of the world. Early staunch believers of globalization now think that it has overstayed its welcome and it might be time to adjust to a new world order of multipolarity. Out of all the overarching achievements of this phenomenon what everyone can agree upon is the unequal distribution of wealth and the uneven impact of this global term. One can argue that since its birth, globalization has been considered an unstoppable force. It raised the living standards for many developing countries considering how easily they welcomed the “western” idea of quality living standards (It has always been about imitating what the west will do next). It is interesting to note that the economy was truly globalized in the early 20th century when the European countries colonized Asia and Sub-Saharan Africa. They began to turn their colonies into suppliers of raw materials for European manufacturers. Let’s not forget that it was a private company called East India Company, the original corporate raiders who looted India under the garb of making it “more civilized”. But that ended eventually and so did the golden years of Globalisation, as asserted by Harvard professor Jeffry Frieden in his standard account, Global Capitalism: Its Fall and Rise in the 20th Century, “The opening years of the 20th century were the closest thing the world had ever seen to a free world market for goods, capital and labour”  

A BRIEF HISTORY

Last year, at the Annual Meeting of the World Economic Forum(meeting brings together some 3,000 business leaders, international political leaders, economists, celebrities, and journalists for up to five days to discuss global issues, across 500 public and private sessions) the discussion witnessed a backlash to globalization. The main focus of the meeting was on ‘Globalisation 4.0‘ and its future impact on global corporations. The fact is, We have entered a digital age and your traditional trade measures don’t reflect the real supply chain. If you buy shoes from the company Nike, chances are the product was procured, manufactured, and produced in different countries each and that changes the game. Before we move towards the future of the economy in the digital realm, let’s go over the past to get a better understanding of the matter. People have exchanged goods from the beginning of civilization but International trade truly owes its birth to Silk Road in the 1st century BC. Trade ceased to be a regional phenomenon when goods from china could be availed at Rome, another side of the world.

The First wave of Globalisation (late nineteenth and early twentieth century)

The Industrial Revolution was accompanied by the invention of the steam engine and the emergence of Great Britain as a powerful and dominant player in the global trade and economy. That growth rate propelled exports from a share of 6% of global GDP in the early 19th century, to 14% on the eve of World War I. From the building of railways in India to managing mines in Africa, Britain benefitted the most from the advent of globalization getting access to cheap labor, transportation, and relaxation on trade barriers. The downside was the exploitation of colonies like India and Africa who couldn’t cope with the global economic pace for lack of capital, freedom, and technology.

In the years between the world wars, the situation was worsened and quite reversed as borders were closed, migration was limited, political structure was threatened. What followed was the killing of millions of soldiers and the downfall of nation-states. The final push was The Great Depression in the US and widespread poverty in the East. By the end of the Second World War, trade as a percentage of world GDP had fallen to 5% – a level not seen in more than a hundred years.

Second and Third-wave of Globalisation  

It wasn’t all over for Globalisation, the USA emerged as the sole hegemony after the fall of the Soviet Union which meant a new world order. Institutions like European Union (EU) and the World Trade Organisation (WTO) boosted the global economy and encouraged states to practice free trade and enter into agreements and the response was positive including the addition of China to the mix. The invention of the internet made trade and communication ever more direct and you could have doorstep deliveries within a span of a day or two.  Internet was ruling the world and giving access to abundant data. The third world countries were exposed to new technology and developing their own. There were Socio-Cultural implications and the beginning of the modern world. Everybody participated in the global economy and gained something out of it, some more than others. But it was an explosion of Multinational corporations and technological advancement. 

 

INDIA AND GLOBALISATION: A BACKDROP

India after gaining independence went on a road to nation-building and self-reliance. We took measures to boost our economy and use our own resources and labor to help build the economy. The first Five-year Plan was about a complete focus on agriculture as we are majorly an agrarian society. But the road to self-reliance was not easy, as India saw failed economic planning and low output and growth. Our Economy was dying by the 1990’s and we were in deep crisis. With concerns from IMF over debt payment and lack of fiscal adjustments from the beginning of the 1980’s, it was time to take action. The New Economic Policy (NEP) was formulated in 1991 and it went to the International agencies for aid and reforms in the economic structure of the country. It was rather out of necessity that we were made to introduce Liberalisation, Privatisation, and Globalisation into our reforms. We were asked to open the restrictions on trade and encourage foreign trade with other countries to help build healthy competition amongst domestic industries but most importantly it was about immediately diminishing the debt burden on the country.

Now Globalisation may have given temporary relief to India during the economic crisis of 1991 but in the long run, it has only caused us damage and will prove to be dangerous to our local industries. The concentration of wealth in the hands of the few elites in India and the growing gap between the rich and the poor is a clear indication of catastrophe ahead.

 

INTERNATIONAL LAW AND GLOBALIZATION

During the era of globalisation the scope and authority of International law has also dramatically expanded. Only a vast network of international law and dozens of international organizations make globalization possible. Treaties and other types of agreements are signed among countries to set rules for international trade and finance. The United Nations facilitates international diplomacy; the World Health Organization coordinates international public health and protection, and the International Labor Organization monitors and fosters workers’ rights around the world.  

Questions of the authority of a country within its own borders—that is, its state sovereignty—the role of the individual in the international community of nation-states, and the authority of international organizations, have all evolved in light of the forces of globalization.

 

World Economic Forum

The World Economic Forum (WEF), based in Cologny, Geneva Canton, Switzerland, is an international NGO, founded in 1971. The WEF’s mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas”.

The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does.

The World Economic Forum and particularly its annual meeting in Davos are among others criticised regarding the public cost of security, the formation of a wealthy global elite without attachment points to the broader societies, undemocratic decision processes, gender issues and a lack of financial transparency.

 

MERITS OF GLOBALISATION: WHAT LIES AHEAD

RAPID GROWTH

 Due to rapid growth in developing countries (especially in China and India), the number of people living on less than a dollar a day decreased by 200 million since the 1980s. Even when excluding China, the data shows that developing countries that embraced globalization grew faster than developed countries in the 1990s, specifically 3.5 percent versus 2 percent. Globalization helped developing nations to open their economies and challenge themselves. There is ample evidence to conclude that free-market policies backed up with sound and proper domestic laws are the road to development. Other indicators of well-being include life expectancy rate and infant mortality rate improved drastically during the second wave of globalization.

BOOM OF SERVICE SECTOR

Globalization was aided with the invention of technology and the development of telecommunication, ports, airports, and subsequently created jobs in the service sector. In the case of India, there has been increased migration from rural to urban areas with the creation of “smart cities”. People now have better life opportunities and aspirations with the growth of cities. Notwithstanding that the jobs are only concentrated in the service sector and developing nations like India are still struggling with poverty and lack of education.

CULTURAL INTEGRATION

Access to Information is the greatest merit of Globalisation as now with a click you can learn any foreign language and get exposed to completely different cultures of music, film, and arts. It also helps in the expansion and promotion of one’s own rich and distinct culture. During the Cold War, the ideological war was fought with cultural influence and America still will be considered the most dominant global culture. Most social media and internet firms are American, MNC’s like Mcdonalds is worldwide recognized and consumed.

 

DE-MERITS OF GLOBALISATION

 

ENVIRONMENT DEGRADATION

Can climate change and globalization co-exist? Are we to ignore the environmental consequences of the Industrial Revolution and the illegal mining and exploitation of nature by the giant corporations? The dumping of responsibility on the developing nation as part of taking accountability by the major powers of the world like the USA is quite ironic. But now even countries like India, thanks to globalization contribute to environmental degradation and violation of international norms. The sustainability of the environment is the last thing on the profit-orientated monsters of the corporate world.

POLITICAL CONSEQUENCES

There is a general mistrust in the minds of the people for the state. It is because of the capitalist approach of the state. The rich are becoming richer, there is only little happening for the sake of development. The poor section of the society is facing the heat and impact of globalization. There are no jobs for the non-service sector in countries like India. The issue of Unemployment has risen as the jobs are taken by migrants. The state has abandoned the role of a “social welfare state” and people are still obsessed with the idea of globalization which in fact is permanently damaging the developing countries’ growth.

ECONOMIC INEQUALITY

It is also argued that the movement of globalized goods has fuelled inequality, environmental degradation, and only deepened economic inequalities.

Globalisation has been linked to rising inequalities in income and wealth. Evidence for this is the growing rural–urban divide in countries such as China, India and Brazil. Many of the world’s poorest people do not have access to basic technologies and public goods. They are excluded from the benefits. Who is benefitting from globalization is the focal point. There is also a concern over higher levels of structural unemployment. Growing Standardisation is another demerit for developing countries as they experience a loss of economic and cultural diversity. The giant firms and global multinational brands dominate domestic markets in many countries now.

CONCLUSION

Some scholars say that globalization is dead and non-functional now. They call for what is known as the “path to multipolarity”. There is a new world order evolving and countries like the USA, CHINA, and INDIA will play a major role in it. Globalization has no central body or authority to shape globalization laws except the World Economic Forum. Anti-Globalists are against the idea of free trade as it promotes exploitation and inequality. It is a threat to the regional development of a nation. With recent developments like Britain voting to leave the biggest trading bloc in the world to Trump withdrawing major trade deals and calling for “Americanism” not globalism as the new creed chances are that globalization will lose its charm if it hasn’t already. With more and more states adopting protectionist policies, we are looking at a new world perhaps.

 BIBLIOGRAPHY (2003). Globalisation: A Blessing or a Curse. IMF SURVEY.

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Eswar Prasad, K. R.-J. (2003). Effects of Financial Globalisation on Developing Countries: Some Empirical Evidence. Economic and Political Weeky .

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