Side Effects of Globalization

By: Leroy A. Binns Ph.D.

Globalization is frequently defined as universal liberalization of economic and employment opportunities for the uplifting of mankind. Such concept takes into consideration cultural, historical, political and geographical differences and moreover accommodates the varying social status of its subjects worldwide. However is it an exercise in semantics or a rare phenomenon capable of world transformation?

With the insurgence of the internet and advanced telecommunication intelligence promoting greater informational exchange and cultural understanding the process entails diminishing federal borders, integrating national markets, the fall of protectionist barriers and ultimately the free movement of capital and companies with the expectation of improving services and living standards.

Consumers and avowed capitalists alike pay homage to productivity and efficiency demonstrated through the creation of vast infrastructure and millions of jobs attributed to globalization. Since the mid 1980’s there has been 10% annual expansion of trade of the developing countries with the industrialized states and a 12% increase between developing nations. In addition international investments to the Third World countries rose to the level of $1 trillion in the 1990’s allowing notable economic gains in East Asia which experiences a rapid expansion of output and employment in labor intensive industries geared towards exports. China in particular now doubles its standards of living every 10 years. In contrast nonetheless controversy is at the center of an ongoing discourse on inequality surrounding globalization.

According to Emily McMillan, a graduate student of the environmental studies department at Dalhousie University in Halifax, Nova Scotia, “The real agents of globalization are friends of the multinational corporations – the super companies. Globalization is nothing more than the product of the multinational corporations’ search for profit. Globalization is driven by corporation seeking to maximize profits with dismal wages.” This sentiment has also been shared by scores of protesters of diverse backgrounds at street demonstrations and rallies at recent international summits in Seatle, Washington, Prague, Washington DC and Windsor, Ontario.

The opposing argument is buttressed with empiricism in relation to differential impacts within countries, the international division of labor, the role of multinational corporations and the importance of technology and market processes. Unfortunately an absence of positive outcomes resulting from the aforementioned determinants underscores the fact that global income of the poorest people in the world has dropped from 2.3% to 1.4% in the last decade. Hence an economic decline in Sub-Saharan Africa is due largely to incompetence in integrating the region into the world economy.

Over the past 15 years unlike other domains the region previously mentioned along with portions of Eastern Europe, Central Asia and Latin America failed to receive direct foreign investment necessary for increased overall productivity and competitiveness. As a result published reports by the World Bank estimate the number of destitute in Eastern Europe and Central Asia grew from 2.2 million in 1987 to 14.5 million or 3.5% of the population in 1993. Latin America too has fallen prey to a comparable fate made visible in part by an uncontrollable wave of migrants to overpopulated slums and urban centers. Moreover trans-nationals with lobbying influence at national levels are protecting the interests of shareholders at the expense of communities in some instances disregarding environmental degradation for excess revenue. In the West employees’ security is threatened as companies benefit from tax shelters, a union-free climate (that permits cheap labor and an unethical work environment) and other incentives overseas.

In light of contradictions the following recommendations should be forthcoming in pursuit of individual economic freedom:

An effective framework must be introduced on the grounds of equity to address oversight, regulation and compensation when necessary.

Debt reduction must be given serious consideration for countries immersed in arrears as a stimulant for active participation in globalization.

Fiscal stability must be advanced through private investments which in turn will provide basic social services such as health care, education and employment pertinent to the development of human and physical capital and incorporation into the globalization process.

The strengthening of economic alliances (e.g., the European Union, the Association of South East Asian Nations, North American Free Trade Association, Organization of African Unity and the Caribbean Community) is crucial to the provision of information, goods and services on advantageous terms. Such will enhance growth while protecting member states from vulnerability.

Exports must be competitive in price, nature and quantity at the marketplace in order to inflate returns and instill continuous development.

A strong correlation between imports and the export market must be realized. In essence commercial intake must in return yield dividends in the form of exports for the global outlet.

With new social obstacles and rising expenditures jeopardizing national budgets, the challenges facing political leaders are enormous. However collective bargaining and a commitment to justice could reverse the polemics and tumultuous tide in favor of financial prosperity worldwide.