Globalisation is a controversial issue. It has generated large protests around the world, by people who feel that it benefits only the rich. Yet there are others who claim that it offers real solutions to global poverty. There are arguments for both sides. In practice, globalisation has the potential to do both good and harm.
The World Bank defines it as „the growing integration of economies and societis around the world“. It sounds simple but processes of globalisation involve changes to many different aspects of society: from communications, to travel, to economics, to government.
Globalisation represents a particular economic theory based on the belief that a liberalised, free market is desirable. Supporters of a free market economy believe that this approach promotes healthy competition. Countries can specialise in producing the goods they make most efficiently and export therese goods to other countries without restrictions. Only those who produce goods efficiently and at a competitive price will survive.
Globalisation impacts virtually very aspect of life including religion, culture, diet and family life. One of the most striking impacts of globalisation is the increasing connection of economies and cultures, making the world seem smaller. A decision made in Japan can employ thousands in another country, or render them jobless. A flu virus in Asia can affect tourism and business worldwide.
Economic and technological change are the major forces driving globalisation. Worldwide, trade is increasing as global markets become more closely linked through improved communication technologies like the internet. These same technologies are bringing distant communities together, and making it easier for corporations to move their operations to areas where costs are low. Cheaper air travel because of technological improvements means more people are travelling for business or pleasure, making workers more mobile.
The integration of global economies provides enormous potential for all economies to expand into different parts of the world – to both sell and buy new products and services. While it can be difficult to enter new global markets, globalisation is giving poor countries some chance of gaining the benefits of world trade. If poor countries could get access to just one percent more of the value of world trade, it would lift well over 100 Million people out of the poverty through the economic growth and jobs created. As multi-national corporations move production to benefit from cheaper labour costs in poorer countries, they are creating jobs for people who previously had few oppurtunities.
Technological advancements mean quick and affordable worldwide travel is now available, particularly to people from wealthier nations. This is helping to boost tourism in many developing countries. The internet and other improved telecommunication facilities enable information to be sent from one corner of the planet to antoher seconds. This has brought together people from vastly different backgrounds and cultures. Ideas are shared, business is conducted internationally and those affected by a disaster can call for, and get, help faster than ever before.
One concern is the effects of constant pressure from large corporations to lower prices and shorten production times for goods. Although jobs are created, poor labour standards and cost cutting processes in developing countries mean wages can be low, conditions are often dangerous and workers rights are violated.
Critics of free-market economics note that industries in developed countries did not develop in these open conditions. Instead, they were protected locally (often with subsidies) and their markets were closed to outside competition until new industries became established. Yet poor countries are now expected to perform and survive in new global markets without first starting from an established base and without adequate support or concern for local interests. This makes it difficult for developing nations to benefit from the increased trade oppurtunities offered by globalisation.
Rich countries primarily produce manufactured goods for the world market, which hold their value and command good prices. Developing countries generally produce commodities – raw materials like cotton, coffee, cocoa, metals and minerals – cheaply and efficiently, but do not have the current capacity to produce manufactured products. Unlike manufactured products. Unlike manufactured goods, commodities are extremely vulnerable to wide price swings whenever there is a shortage or oversupply. Countries which depend on only a few vital commodities for income may struggle if the global price suddenly plummets.