Globalization's impact on social responsibility and economic development

Globalization expands and accelerates the exchange of ideas and commodities over vast distances…[and] often appears to be a force of nature, a phenomenon without bounds or alternatives. But peoples' movements have shown that it is neither unalterable or inevitable."

-- Global Policy, 2009

The old cliche "It's a small world…" has never been more true than today. Because of the technology (Internet and digital technology) revolution, live instant satellite broadcasts from anywhere in the world, international cell phone service and global markets opening up to all who care to access them, the world is, relatively speaking, a smaller place. With that shrinkage of time and space, and the immediacy of communication, new realities and a new world order are part of today's business and government agenda. This paper delves into several components of the new globalization dynamics, not all of which are ideal for every nation involved in globalization -- and this paper also reviews the scholarship and investigations in the literature.

The Literature

The morality attached to globalization: Dr. Ahmet Mentes writes in the Journal of American Academy of Business, Cambridge, that globalization has "broadened the meaning and the scope of social responsibility for companies" (Mentes, 2010, p. 130). He emphasizes that the European Union Commission defines social responsibility as including the "social and environmental expectations of the society in their economic activities" (p. 130). Mentes asserts that there are "classical and modern approaches" to economic / social responsibility. In the classical approach, managers and executives of companies answer only to the interests of their shareholders. The author alludes to the late and well-known economist Milton Friedman who believed in the classical approach; that is, a company has "only one social responsibility…the profit maximization" (p. 130).

However, the modern social responsibility approach in a global economy argues that "the economic system functions best when companies take responsibility to solve the problems of the society" (p. 131). In fact Mentes goes farther in his assessment of the need for social responsibility -- insisting (p. 131) that "Companies' survival depends on their harmony with the society that they operate within." Indeed, "price and quality are loosing their power as elements of competitive advantage" in the global environment companies operate in. What is taking the place of "price and quality" is a company's ability to create a "effective, strong and long-term image via social responsibility" (p. 131).

If a German company, for example, is desirous of creating a good image in Thailand, German business executives won't have to search very far for the principles that embrace human rights, labor standards, environment and anti-corruption. It is in the United Nations Global Compact (p. 132). There are ten Human Rights principles in the Global Compact, and for the purpose of this paper, they will be shortened.

ONE, internationally proclaimed human rights should be respected and supported; TWO, companies should not be "complicit" in abuses of human rights; THREE, freedom of association should be upheld and the right to organize (unions) should be respected; FOUR, forced and compulsory labor are prohibited; FIVE, child labor must be abolished; SIX, discrimination in terms of employment and occupation must be eliminated; SEVEN, environmental challenges must be met with "a precautionary approach"; EIGHT, initiatives to promote "greater environmental responsibility" are urged; NINE, technologies that are "environmentally friendly" should be developed and encouraged; and TEN, businesses should fight corruption (extortion and bribery especially) (Mentes, p. 132).

While it is impressive that as of June 2009, 5,415 companies doing business internationally have signed onto the Global Compact, Mentes bemoans the fact that 30% of those companies "are either in non-communicating or inactive participant status" (p. 134).

The pure economics attached to globalization: Meanwhile the debate centered on the relationship between government size and economic development is one of the issues reviewed in an article in the journal Public Choice (Bergh, et al., 2010). The reason this debate is important is because a large country with a big government "can use economic openness and sound economic policies to mitigate negative effects of big government" (Bergh, p. 195). In other words, China -- with one of the largest economies in the world -- as a trade partner for African countries (relationships that China has developed aggressively over the past few years) could be open, honest, and socially responsible to negate the negative implications of its colossal clout.

However, other points in this article include: a) that there is a "negative effect" in terms of economic growth on a global scale when a government taxes its citizens heavily; b) the freedom to trade internationally is strengthened (according to the "Economic Freedom Index") by robust government growth. And so the point of these statements about taxes and government growth in this article are there because businesses can "use economic freedom and globalization to compensate for the growth-impeding effects of big government" (Bergh, p. 197). What the authors want readers to understand vis-a-vis the previous sentence is this: while "increased labor and capital mobility" cause problems for big welfare states (countries) those states can enhance their compatibility in the global market by lowering taxes and lowering welfare benefits.

Puerto Rico's culture altered by globalization: Not every aspect of globalization is culturally appropriate, as is represented in the situation in Ponce, Puerto Rico, described by Benjamin Tillman in the journal Southeastern Geographer. In fact Tillman explains over the years scholars studying Latin American dynamics have considered the Spanish American Plaza "and its surrounding architecture" to be the very "epitome of the Latin American cultural landscape" (p. 341). In Latin American the plaza is usually the central cultural portion of a town. Tillman quotes from anthropologist Setha Low: "Plazas are spatial representations of Latin American society"; and he quotes from Latin scholar Joseph Scarpaci: plazas are "mirrors of Latin American culture" that can be interpreted "for insights…[into] cultural identity" (Tillman, p. 341).

That having been said, it is no secret that plazas in the great Latin American cities are gathering places for numerous cultural celebrations and activities. And in Puerto Rico, the Latin American Plaza does not look so Latin anymore, due to globalization. In fact between 1907 and the year 2000, big changes took place, changes that are not culturally appropriate. In 1907 there was "one international business located adjacent to the plaza" but by the year 2000 "seven of the thirty two lots facing the plaza were occupied by international chain stores." Add to that the fact that another nine lots had locally own businesses but used "English names."

The larger picture here is that "changes may eventually occur in plazas throughout Latin America" as historically "distinct places" become part of the globalization movement toward similarity and sameness (Tillman, p. 340). Tourists who visited Honduras' Teguicgalpa (the central plaza) fifteen years ago would perhaps be shocked today to see Little Caesars' pizza restaurant right in the plaza. In Guatemala City's main plaza there is a Wendy's hamburger restaurant -- and in Mexico City's historic central plaza (which once was the site of the Aztec capital Tenochtitlan) there are those ubiquitous golden arches of McDonald's (p. 341).

And so globalization, in Tillman's words, is more than "the process by which nations interact with each other politically, economically, militarily and culturally"; globalization is in fact having a "homogenizing affect on the cultural landscape, as distinct places become increasingly similar in their outward appearance" (p. 341). In the case of Ponce, Puerto Rico, the plaza originally took shape in the late 1700s; residents used one end of it to "hold cattle." In 1929 a cathedral was build there and in 1962 a "Centro Historico" was created to preserve the plaza's 19th Century architecture. But obviously today it looks like places from China to Chicago, with fast food and pop culture shops more prevalent than even the cathedral.

Globalization's affect on children's mental health: It seems there is no end to the influence on countries and cultures due to the spread of change through globalization. To wit, an article in the International Journal of Mental Health points to the fact that globalization has influenced traditional cultural ideas and values with reference to children's mental health issues. "Child psychiatry has unwittingly contributed to reifying children's mental health," the author explains, and this situation is creating "mental distress" (Timimi, 2009, p. 5). An example of the changes in society due to "aggressive free market global economic systems" is a 14-year-old girl in London who has been behaving in a bizarre way, the author explains. She is from the Indian culture and her parents have arrived in England from the Indian subcontinent. The girl laughs at times that don't seem appropriate and she has not been interacting with her peers; she seems preoccupied so "an urgent psychiatric assessment is arranged" (Timimi, p. 6).

The psychiatrist who studies her concludes that she is suffering from a psychotic illness and he recommends she be sent to a psychiatric unit for treatment including "antipsychotic medications." However, her parents believe that their daughter is not sick at all but "suffering the manifestations of a spiritual problem"; in short they believe she is "possessed by evil spirits" (Timimi, p. 6). She doesn't need drugs, her parents insist, but what she needs is consultation with a local priest. Timimi asks if either side in this conundrum provide "objective evidence to support its case?" And do situations like this offer new opportunities for professionals to learn "new ways of working with…communities considered culturally inferior?" (p. 6). There are no easy answers to these questions but the truth is that when distinctive cultures move to other parts of the world and interact with cultures that are completely different in terms of the beliefs of the initial culture -- a product of globalization -- there are inevitably going to be conflicts.

Timimi argues that these are ethical issues related to globalization and there is "much to be concerned about with regard to children's mental health" (p. 8). The bottom line is that members of any culture have their own "working definition of childhood, its nature, limitations and duration" -- and the values, beliefs of one culture are bound to come into some kind of conflict when those values are transplanted into another culture as part of globalization. Timimi does not offer solutions but by focusing on this emerging global problem needs to be understood as the world becomes smaller and cultures interact.

Globalization as spoiler: Christopher Kelen writes in the journal Critical Arts about how globalization is ruining the peaceful tranquility of a once-remote East Asian city called Macao, formerly a Portuguese territory now claimed by China. Kelen lives on an island in Macao called Taipa and once it had "everything: beach and mountain, town and bush, road, railway, port and airport." And nearby it was a dense jungle." But today due to globalization just crossing the road one risks life and limb; and moreover where once there were long stretches of quiet pastoral landscape there are now "a lot of bricks and mortar" and 40-story buildings build on "reclaimed land" (Kelen, p. 285). The crux of the problems for Kelen is that globalization has brought "civilization" to his island home, and with it traffic, congestion, and visitors who have no understanding of the local culture. If this dynamic is ruining the ambience of other pristine places around the world then local political and cultural leaders must resist those unwelcome changes.

Conclusion

The International Monetary Fund's take on globalization: The International Monetary Fund (IMF) asserts that "substantial evidence" indicates that as countries participate in globalization "their citizens benefit" (www.imf.org). Citizens benefit because they have access to a greater variety of goods and services, "lower prices," "improved health," higher paying jobs and "higher overall living standards," according to the IMF. That said, the IMF goes on to admit that while poverty fell in East and South Asia it "actually rose in sub-Saharan Africa." Glossy reviews of globalization notwithstanding, it is up to each individual nation and its people to protect their culture and their way of life. It may be true that there are many advantages to globalization, but it is also true that some companies do not all have enlightened social policies. The trend is certainly global, but alert citizens and governments can choose what to accept and what to reject about globalization.