The Winners and Losers of Globalization

Globalization is everywhere and it has had manifold effects on nearly every area of our modern live. The world is growing together, distances are becoming less and less important and both money and goods are moving around our globe in vast sums and with an unbelievable speed. The process of globalization has been going on for many decades now and the question arises who actually profits from this development and who loses. As the influences of globalization are so vast, the essay at hand will try to (NARROW DOWN AND ) amplify this question with an economical focus.

Being one of the most common phenomena of globalization, the essay will focus on transnational companies and their effect on both the state and labour in our world and ask how they have developed in the context of global change. Eventually an attempt shall be made to label the three subjects either as winners or losers. Transnational companies or global players are one of the most prominent emergences of globalization.

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In the context of globalization thousands of companies have developed a transnational dimension of organisation, some of them with huge dimensions.

Transnational companies make use of a very simple basic principle which stretches through all global economy: In separating the manufacturing process of goods they exploit the availability of cheap labour and advantageous production conditions in some parts of our world. This saves production costs and raises profits when distributing the goods to sell on a global scale. Nike, the sportswear equipment supplier, which employs 75000 workers in Asia, is only one example.

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1 Some advertising firms, for instance, have several hundred offices in over 70 countries of our world.

Their growth in the last decades has been quite considerable: Yearly sales of business partners of transborder firms increased from nearly 2. 7$ trillion in the early eighties to more than $17. 6 trillion in 2003, which is equivalent to almost half of world GDP. 2 There are, of course, critics who play the role of global players down. It is often said that one cannot compare sales volumes of companies, which are gross values and a country's GDP, which is value added. If companies and countries are compared correctly, only two of the Top 50 economies were companies in 2000.

It was argued that 14 of the 50 largest economies were companies before this mistake was realized. 3 Yet, the power of those companies is so strong that they actually rival nation-states in their economic power and alter the operating principles of international economy. Trade flows, finance movements or the location of industries are all examples which are controlled and regulated more by global players and less by states nowadays. Consequently, their outreach has also started to stretch into politics and it is often said that they rival the states' influence or that the state is on the retreat. It is certainly true that the state has been forced to make a lot of concessions in the last decade and that there has been a great shift of power from the state to transnational companies. 5 It has become very difficult for governments to maintain control over currency, international transactions and foreign trade. 6 Westphalian absolute control or sovereignty, which was based on the facts that transactions occur at fixed locations on a certain territory, does not exist anymore.

The reasons for this are the speed and the quantity with which data transmissions, communications and global finance flows occur and the fact that the technology of surveillance and intervention measures has not kept pace with the global mobility. 7 It might be comprehensible that it is nowadays rather the market which is master of the state and not the other way round. Yet, the statement of several globalization critics that the state has lost its role as a meaningful unit in our global economy can be falsified. 89 Governments can still influence the effects globalization has in the respective country.

This can for example be achieved through monetary, consumer or labour policies. Good policy making and the right use of global finance and institutions has helped stronger states to rise to modern superpowers. The most prominent example for this are probably the United States. 10 In addition, the state can still exercise control over affairs like infrastructure, education and population movement. 11 It would therefore be wrong to say that the state has lost its meaning. It has rather in a progress of reshaping and turning towards a global constituency, as Scholte puts it.

Instead of protecting their domestic interests from foreign intrusions, they are now rather providing an "arena of collaboration and competition between a complex array of national and transnational players. "12 Examples for this are the state who serves both the interests of global capital and national capital or state policy which reacts to the needs of global production chains, financial markets and other supraterritorial events and processes.

Yet, states can also interfere with global trade through protectionism to ensure the continued existence of domestic industries; they do not always follow the demands of global developments. 3 The manner with which transnational companies work to guarantee the cheapness of their products has been criticized severely during the last decades. Opponents of globalization often cite workers as the main group of losers of the globalization process in our world. News about inhuman working conditions in sweatshops in developing countries and job relocations from developed countries into low-wage areas in the southern or eastern regions in our world support this claim. Another issue are the underperforming wages in industrialized countries.

The impacts of globalization in this area are more complicated, however. It is true, that the wealth distribution in the age of globalization cannot match the situation of, for example, the peak of the Fordism. Many employees work at minimum wage while a few enjoy the benefits of high-end salaries. 14 The phenomena of job relocations and the working conditions in low-wage areas have to be examined more closely, however. It is again true that both employment and wages in industrialized countries are not as high as they should be or used to be and that the job-creating effects of the globalization have underachieved.

Globalization is not the main cause for job losses and low wages, however. Jobs did mainly not go to south or east; they went to machines in the progress of increasing automation. 1516 Globalization has had a bad influence in terms of investment, however. The massive growth of finance capital has caused that many investors invest in financial instruments instead of supporting less promising labour-intensive real production.

17 This affects all areas of labour, be it in developed or undeveloped states. The globalization process can therefore not be blamed directly for the working situations in the developed world. 8 The working conditions in poorer regions are not unambiguous. Scholte states that workers in the south often face poor working conditions and transworld trade rules do not cover labour standards, yet. 19 Bhagwati however argues that transnational companies normally pay wages that are at least ten percent higher than the wages which are normally paid by local firms in the respective countries. Sometimes they even exceed the normal wages by 40 to 100 percent and consequently lead to economical growth.

0 He also mentions that the working conditions almost never violate the undemanding domestic laws in developing countries. 21 Sweatshops certainly exist but what has to be criticized then is not the working conditions but their enforcements in the respective countries. In short, production sites with poor working conditions certainly exist in developed countries but it is again not the process of globalization alone which causes these. In conclusion, it has been shown that it is sometimes hard to determine winners and losers in the process of globalization.

If we consider the massive amount of money and both economical and political power they can command nowadays, transnational companies might be counted as winners. States, although often labelled as losers, clearly had to abandon some of the old Westphalian powers they enacted. Through reshaping and a change of their task field they have maintained a considerable amount of power which disproves the assumption of the nineties and early years of the new millennium, however. It is not easy to say if the average workers in our modern world are winners or losers of the globalization.

Those of the industrialized work certainly suffered losses but the reasons for this lie not in globalization alone and it is questionable if the Fordist wealth and employment rate could have been maintained even in a world without globalization. Workers in developing countries could, under the aspects of this essay, be denoted as winners, although it is unclear how inhuman the working conditions actually are and their lives could certainly be improved further with appropriate global working regulations.

Updated: Feb 19, 2021
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The Winners and Losers of Globalization. (2020, Jun 02). Retrieved from

The Winners and Losers of Globalization essay
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