Globalization: Winners, Losers, and World Trade Inequality

Introduction

Does world trade make the world smaller by bringing people closer together? Or does it divide the globe by creating winners and losers through greater inequality?

Globalization is a complex phenomenon that is often misunderstood. Part of this trend involves a movement toward more integrated economic and political systems. Yet today's societies face both an internal and external political environment and socio-economic factors marked by unprecedented levels of bipolarization and inequality that have arguably reached new heights relative to any other time in human history. It is important to note that globalization is not exactly a new phenomenon, but new developments in technology — more specifically in information technology (IT) — have allowed citizens of the world to communicate in real time and engage with virtually anyone else on the planet.

Globalization Overview

International organizations have leveraged these new developments, and much of globalization is driven by companies that operate internationally and have built supply chains that are sophisticated, complex, and capable of spanning the entire globe. While these developments have introduced many people to cultures they would not otherwise have known, globalization has also created significant negative consequences for certain populations — those who might be considered the "losers" of globalization. Therefore, while globalization has brought many people around the world closer together, it has simultaneously led to situations that disadvantage certain groups. This analysis examines the globalization trend from both of these perspectives.

International trade is not a new development. As soon as ships were able to traverse the oceans, the Dutch developed the first international trading organizations. The Dutch East India Company used its knowledge of the seas and shipping to establish trading routes with countries such as Egypt, Middle Eastern nations, Africa, and Asia. Many consumers benefited because they gained access to different types of products they had never been able to purchase before (Crump, 2006). Different players lead today's international market, however, and the trend is far more comprehensive. For example, it is not uncommon for a single good to be produced with raw materials from Africa, with logistics driven by technology companies based in India, fuel for transportation sourced from the Middle East, and final assembly completed in China — all before the product is warehoused and enters distribution channels in the United States or other developed countries. In the same way that the Dutch pioneered trade, companies today are innovating production processes that fully utilize the advantages globalization offers.

Each country in this process typically offers the international market some specialized contribution. Countries like India have become hubs for highly skilled software and computer work, while countries like China have become centers for high-tech manufacturing (Sarma, 2005). As a result of the popularity of globalization, cultures have meshed naturally. Many organizations have also tried to proactively create a level of homogenization and standardization across international markets, resources, and labor. For example, when a corporation enters a foreign market it brings investments, creates new jobs, and helps develop infrastructure — which can represent a major achievement in regions where one quarter of the world's population still lacks access to electricity (Gronewold, 2009).

Contributions to developing countries that lack electricity can therefore change many lives for the better and help communities modernize. Furthermore, since those currently without electricity rely on wood and charcoal to perform basic tasks such as cooking and heating, providing electricity could actually reduce greenhouse gas emissions, among a host of other benefits (Gronewold, 2009). The advantages can extend even further: in many cases, when foreign investment enters new parts of the world it stimulates the local economy and provides more opportunities for people within the developing country. Companies that enter these markets also gain access to much cheaper labor compared to rates found in developed nations, and for many routine tasks this can represent a win-win relationship. International development can help local economies by providing jobs to individuals who were unlikely to find employment before their region became integrated into the global economy.

Conclusion

Globalization has created a completely new way of life for billions of people in many different ways. It is often positive in its impact and has provided people with access to new opportunities and new technologies — from consumer goods to music, films, literature, and even language. Many companies have built supply chains so sophisticated and far-reaching that it can be difficult to determine where different products even originate. While there are many advantages associated with globalization, and it has helped lift many people out of poverty, it has also led to the exploitation of many vulnerable populations. The results of globalization are therefore largely mixed and depend heavily on the specific circumstances affecting different regions of the world. Accurately assessing its true impact requires examining those circumstances closely, rather than applying a single universal judgment.