Challenges of Globalization

Abstract  While there are many benefits to globalization, there is no question that globalization can present some real challenges for organizations, management, and workers.  In this article, the author explores some of the common challenges of globalization, including the strategies that people can use to deal with those challenges.  Because globalization is only likely to impact more and more businesses and continue to impact global economic situations, it is important to acknowledge those challenges and make plans for how to deal with them.

  Introduction Before discussing globalization it is important to understand exactly what globalization means.  There are actually multiple different definitions of globalization and the definition used is often heavily dependent upon context.   Generally, globalization refers to the fact that the world’s economies are becoming interdependent. However, the term does not normally stop with economies, because, as economic systems become interdependent, so do cultures and populations.

 Globalization is driven by “cross-border trade in goods and services, technology, and flows of investment, people, and information” (Kolb, 2019).  Globalization is based on the concept of economic partnerships, not only between companies, but also between countries.   There are some very distinct benefits of globalization.  There is no question that globalization has some economic benefits, not only for companies, but also for many different groups of people.

 First, globalization has led to an increase in the standard of living for many people in developing countries.  This is due to the fact that globalization has allowed a shift that means that people in these developing nations can be laborers and create goods for countries that have a demand, and the disposable income, to purchase those goods.  This has led to an overall reduction in both the extreme poverty and overall poverty rates.   Second, globalization has really helped spread technological advances around the globe.

 Before globalization, there were dramatic differences in the types of technology available in developed and undeveloped nations, and even in developed nations inside and outside of the Western world.  Much of this depended on infrastructure, and undeveloped nations did not have the resources to develop the type of infrastructure necessary to create technological advances.  Newer technology does not rely on infrastructure in the same way and is also not as expensive to maintain.  This had really narrowed the technological gap that once existed between countries.

  Globalization has also led to an increase in innovation.  The fact that creators from different spaces can come together to collaborate in virtual environments removes many of the traditional barriers to collaboration and innovation.  In addition, globalization increases competition, and competition has always been a driver for creativity and innovation, as different companies struggle to obtain and maintain market share.  Increased competition also leads to lowered prices for goods and services.  This is due to multiple reasons including lowered costs for labor and overhead.

  An additional benefit of globalization is that it has led to an unprecedented exposure to other cultures and other people.  This exposure to different cultures has meant global demand for local foods, pop culture, and art.  It has also led to a greater understanding of other religions.  This has increased tolerance and understanding, but is not only a benefit.  While there are plenty of benefits for globalization, there are also some challenges that are very specific to globalization.

 Globalization benefits society, at large, but that does not mean that it is beneficial to everyone impacted by it.  First, while globalization has meant income increases in some areas, it has come with a decline in standard of living for some groups.  This is often due to the outsourcing of jobs.  Another challenge of globalization is that it threatens local cultural identity.  While this may not seem like a serious problem, there have been some frightening repercussions from this threat to cultural identity.

 These three challenges can make it difficult for businesses and individuals to deal with the impact of globalization.  Finally, because globalization has been driven by the economically dominant Western culture, Western culture dominates much of the worldwide conversation about globalization and industry.   Body One of the most significant challenges of globalization is that it is not a universal positive.

 While it has helped lift many people around the globe out of poverty, and has had a dramatic impact on extreme poverty, there are winners and losers when a company takes a global approach.  Globalization has meant a shift in jobs from countries, like the United States, to developing nations.  This has meant that lower-skilled workers in developed countries have found themselves at risk of job loss.

 In addition, because new manufacturing is shifting out of those developed nations, when a lower-skilled worker loses a job, it is difficult for them to find a replacement job, because there are no other similar low-skilled jobs available.   While it may seem like suggesting that lower skilled workers should just get additional training in order to get more employment, this solution is not simple or straightforward.  When jobs evaporate, it has a ripple impact on the local economy.

 This can lead to entire towns becoming economically vulnerable, requiring young people to move away from their home towns if they want economic security and good jobs.  This also means that the local governments no longer have a reliable tax base.  When this tax base disappears, so does the ability to provide the type of help and resources that any community, especially an economically vulnerable community, needs.

  This can happen on a small scale in towns, or in a larger scale, for example the city of Detroit has experienced a tremendous negative impact because of the movement of manufacturing jobs out of the Detroit area.  The movement of these jobs out of Detroit led to a number of negative repercussions, which impacted life for everyone in Detroit, whether or not they were dependent upon having jobs in the auto manufacturing industry.

 For example, the public schools in Detroit lost much of their funding, resulting in deplorable conditions that made it virtually impossible for students in many of these schools to learn.  Most people are very aware of the lead in the water in nearby Flint, Michigan, which has not been remediated, not only because of a lack of financial support for the process, but also because the people in Flint have been marginalized.  In addition, these negative impacts are not limited to public services.

 In Detroit, it led to a lack of supermarkets in the inner city, creating a food desert scenario that made it difficult for people (Taylor and Ard, 2015).   Clearly, these negative impacts are very real, and they not only have a financial impact, but also a cultural impact.  For example, with the rise of the neo-Nazi and other white supremacist groups around the globe, it is clear that some groups of Europeans and European Americans feel threatened by these other cultures.

 While these fears may be based in economic insecurity, they are leading to decisions that have consequences that are not just economic.  They have helped contribute to Great Britain’s decision to leave the European Union, to the election of Donald Trump and the erosion of some of the principals of democracy in the United States, and to overtly anti-Muslim laws and regulations in France.

  Another challenge of globalization, which is related to, but distinct from, the threat of economic vulnerability, is the threat of loss of cultural identity.  For many people and for many years, globalization was seen as being dependent upon taking a melting pot approach.  This has meant that members of minority cultures were expected to assimilate into larger cultures.  For many people, this led to loss of an underlying cultural identity.

 This has not only impacted diversity, but also left many people with no real historical and cultural roots.  While it may seem like minority groups fact the greatest dangers when discussing the loss of cultural identity, that may not be the case.  In the United States, people from many distinct Western cultures moved to the country to pursue economic opportunities.  While they came from distinct cultures, there was a tremendous pressure to assimilate, but without the creation of a distinct American culture.

 On the contrary, what people consider American culture varies tremendously from region to region and even from person to person.  This amalgamated approach to cultures has also led to the adoption, by some, of a generic “American” identity, which is often a generic white, heterosexual, Christian identity.

 Because this identification is based on factors that are not really related to culture, it may be related to some hostility towards people from other cultures, especially cultures that are easily identified as “other.”  This may have helped increase backlash against people from other cultures and communities.  Finally, while globalization may seem like a new process, there are certainly precedents to globalization that one can see when examining global economic development.  The Western world has been outsourcing labor to lower-paid laborers for centuries.

 This has been done in a variety of ways, from Western importing of goods and services produced in other parts of the world to the mid-Atlantic slave trade, which shipped laborers as slaves from Africa to the Western world.    Therefore, it may be fair to suggest that, at least in terms of relatively modern economic systems, there has been consistent Western dominance.  This process has been referred to by a number of different terms, though colonialism and imperialism are probably the most familiar.

  Globalization continues the trend of Western dominance on international relations and economics.  The West continues to drive the flow of capital around the world, though there are two major non-Western economic players that have had an impact on the global economy: Russia and China.  Even though these two emerging superpowers have an influence on some aspects of the global economy, the Western world still controls huge organizations like the World Bank.