International Relations Globalization Has Become essay
- Length: 8 pages
- Sources: 8
- Subject: Economics
- Type: essay
- Paper: #77576504
Excerpt from essay :
The framework for globalization is set by the stronger nations and their corporations. Even when weaker nations benefit from globalization, they may not be seeing as much benefit as they would have had they had equal bargaining power.
It has also been argued that while it is nation-states that implement globalization, they merely do so at the behest of their corporations. It is the corporations, then, that truly drive the globalization agenda. This occurs to the point where, ultimately, a truly globalized world will be one market, with the relevance of the nation-state greatly reduced (Baker, 2007).
While it is governments that promote globalization, it is corporations that must execute it. They trade the goods, move the money and hire the people. Ultimately, it is corporate interests that reap the benefits of globalization first. From there, the wealth needs to trickle down through the economy, in the form of wages, benefits and dividends, to improve the lives of the people in nations engaged in trade.
Corporate-led globalization, therefore, assumes that globalization will improve the conditions for the world's citizens. The assumption derives from the idea that wealth is distributed relatively evenly. This illustrates the imperialism that underlies the ways in which globalization has thus far been conducted. Wealthy, powerful nations tend to have low wealth distribution scores, as judged by the distribution of GINI Index scores (CIA World Factbook, 2009). Thus, an improvement in the GDP of a wealthy nation is likely to have such a trickle down effect. The rich may see their wealth increase at a faster rate than the poor, but the poor will see their wealth increase, either through greater availability of better jobs, increased public spending on health care and education, or through the social safety net.
In developing nations, where GINI scores tend to be substantially higher, the assumption that broad economic development will largely have positive consequences for the populace does not hold. With limited public spending on health and education, with few good jobs and with no social safety net or strong labor protections, the benefits of globalization may be enjoyed by a relatively small proportion of the populace or even by foreign multinationals who simply repatriate the bulk of the benefit.
The use of GDP and other broad-based measures is appropriate for the globalization process as currently constituted. These measures reflect the broad goals that the current institutions of globalization work towards. Increasing economic activity is also congruent with the theory of comparative advantage in its simplest form. However, what that theory fails to take into account is that the activity in Country A has comparative advantage is significantly less lucrative than that of Country B. Selling bananas is not equivalent to selling cars. The inequities of resource endowment, the differences in social norms, the relatively level of corruption in the public and private sectors of many nations all contribute to the inequities that flow from modern globalization.
Even those who oppose globalization would be unreasonable were they not to grudgingly accept that it raises the level of economic activity. When this is coupled with strong government, high levels of public investment, and low levels of corruption, the benefits are tangible, as has been seen in many Southeast Asian and Eastern European countries. Without those antecedents, however, globalization fails to deliver any meaningful results. Natural resources can be exploited and the citizens of that land not see improvement in their lives. Globalization does not run people down so much as it fails to pick them up.
Thus despite the potential for globalization to succeed in its aims, it is currently oriented towards broad-based and one-size-fits-all solutions. For those not seeing the benefit of globalization, it is reasonable that they may reject the idea. Prolonged and bitter conflicts may occur with greater frequency. Groups frustrated by their lack of bargaining power or by the willingness of globalization's institutions to support their corrupt leaders can be expected to use violence and protest in order to improve their bargaining power. Other groups may simply choose to step the sidelines altogether, as we have seen in nations such as North Korea or, in a more sane example, Bhutan. If globalization is to take hold, its advocates must ease the pace of implementation. As with all economic models, Ricardo's basic comparative advantage model works best over the long run and as with Ricardo's model it requires mutual consent and equal bargaining power.
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