According to Laurence E. Rothernberg, the notion of globalization is the acceleration of the intensification of interaction and integration between people, companies and governments from different countries. The term globalization emerged in 1961. Globalization is a complex process with many layers and dimensions and means different things to different people.
It has both proponents and critics. Proponents of globalization believe that it is a powerful engine of growth. They argue that globalization has enabled developing countries to achieve rapid and sustained growth and to raise prosperity levels and that the fast-growing economies in the world in the era of globalization are developing countries that are aggressively integrating with the world economy. Critics argue that the expected benefits may not accrue and that the policies adopted to encourage globalization are likely to produce adverse results depending on the prevailing conditions. Also, towards the end of the twentieth century, environmentalists emerged as severe critics of globalization.
It is pursued more systematically in the economic domain and here it represents a process of integration of national economics with the aim of making the global economy develop the capacity to work as a unit. Globalization is different from internationalization, nations are divided from each other by clearly marked frontiers.
Globalisation and the developed world:
The new economic order that has emerged with globalization suggests that all members are equal but this is only the case theoretically. In practice, however as happens in international organizations, the rules are dictated by the rich countries. The United States enjoys a dominant place because of its high-tech economy and military capacity. It has largely co-opted other developed countries, which include Canada, members of the European Union, Australia and many other developed smaller countries, and it sets the rules. In the IMF the United States has a veto. In the World Bank too, rich countries run the show. Before joining the WTO (World trade organization) every country has to sign a bilateral trade agreement with the United States and its other major partners to the effect that it would liberalize trade and the flow of goods and capital , and would deregulate the labour market. Rich countries use the WTO as a tool and act under the pressure of powerful agribusiness, pharmaceutical and financial-services lobbies. Most rich countries impose quotas on the import of agricultural products and textiles which are precisely the products that developing countries can export.
Globalization has brought benefits in developed countries as well as negative effects. The positive effects include a number of factors which are education, trade, technology, competition, investments and capital flows, employment, culture and organization structure.
REPERCUSSIONS OF GLOBALISATION ON THE DEVELOPED WORLD:
- Plunder of knowledge:
The pharmaceutical companies in the developed countries complain that their research has been used by emerging countries like India and Brazil to produce and sell medicines at cheaper rates.
- Loss of jobs:
The economically advanced countries certain sections of population have been adversely affected by the loss of jobs from mass transfer of manufacturing units abroad and the shift of back-office work elsewhere. U.S. Companies shut down their factories in the home country and move abroad to the developing world. They have outsourced to developing countries like China and India. The famous case in this context is that of air- conditioners manufacturing company, Carriers, owned by United Technologies. In October 2003, U.S. decided to close its unit in the New York State which had been established in 1930, and shift to Singapore where the cost of manufacturing each unit was three times cheaper.
The company was criticized for not showing any sense of responsibility towards local workers.
- Exploitation of workers:
Globalization has led to exploitation of labor. Safety standards are ignored to produce cheap goods. The people in US have mostly shifted to jobs of truck drivers and security guards after losing out their jobs due to shift in manufacturing base to developing countries which has drastically reduced their wages and hence leading to a problematic lifestyle.
- Outsourcing of jobs:
Developed nations have outsourced manufacturing and white collar jobs. This leads to less job opportunities for the residents of the nation.
- Increase in income divide:
Poor wage of workers is increasing income- divide between the rich and the lower classes because the rich and highly educated people are able to take advantage of globalization and are becoming richer while people at the lower end of society are losing jobs.
- Fluctuation in prices:
Globalization has led to fluctuation in price. Due to increase in competition, developed countries are forced to lower down their prices for their products, this is because other countries like China produce goods at a lower cost that makes goods to be cheaper than the ones produced in developed countries. So, in order for the developed countries to maintain their customers they are forced to reduce prices of their goods. This is a disadvantage to them because it reduces the ability to sustain social welfare in their countries.
- A disadvantage of globalization is the increase in wages for workers, which can hurt corporate profitability. For example, if a rich country has a high comparative advantage in developing software, it may drive up the price of software engineers around the world, which makes it difficult for foreign companies to compete in the market.