Globalisation Pros and Cons

|[pic] |UNIVERSITY OF SOUTH AUSTRALIA | | |Assignment Cover Sheet – External | [pic] An Assignment cover sheet needs to be included with each assignment. Please complete all details clearly. Please check your Course Information Booklet or contact your School Office for assignment submission locations. ADDRESS DETAILS: Full name: |Stephen Andruchowycz | |Address: |25 Northumberland Street Tusmore | | | |Postcode: |5065 | If you are submitting the assignment on paper, please staple this sheet to the front of each assignment. If you are submitting the assignment online, please ensure this cover sheet is included at the start of your document. (This is preferable to a separate attachment. ) Student ID | |Course code and title: BUSS 5300 – Global Business Environment | |School: International Graduate School of Business |Program Code: DGMK | |Course Coordinator: You-il Lee |Tutor: You-il Lee | |Assignment number: 2 |Due date: 10 / 5 / 10 | |Assignment topic as stated in Course Information Booklet:Assessment 2: Individual Report | Further Information: (e. g. state if extension was granted and attach evidence of approval, Revised Submission Date) |  | I declare that the work contained in this assignment is my own, except where acknowledgement of sources is made.
I authorise the University to test any work submitted by me, using text comparison software, for instances of plagiarism. I understand this will involve the University or its contractor copying my work and storing it on a database to be used in future to test work submitted by others. I understand that I can obtain further information on this matter at http://www. unisa. edu. au/ltu/students/study/integrity. asp Note: The attachment of this statement on any electronically submitted assignments will be deemed to have the same authority as a signed statement. |Signed: Stephen Andruchowycz |Date:9/5/10 | Date received from student |Assessment/grade |Assessed by: | | | | | | | | | |Recorded: |Dispatched (if applicable): | Globalisation is a force which brings an array of benefits and costs on a global scale, with developing countries generally bearing the majority of these costs. This essay will argue that while many of the benefits of lobalisation are felt around the globe, they are more beneficial to developed countries than third world countries. Likewise the negative consequences of globalisation are felt more heavily in third world countries than in developed countries. These benefits and cost are incurred on economic, political and socio-cultural levels. Many see globalisation as a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth of international trade, investment, and capital flows. (Kirdar, 1992, p. 6) However, one can also point to a rapid increase in cross-border social, cultural, and technological exchange as part of the phenomenon of globalisation.
Whether people fear globalisation or not, they cannot escape it. It is driven, above all, by the extraordinary changes in technology in recent years – especially computer and communications technology. For a society to achieve, it must use this technology to its advantage. To be able to do that, it must be globally engaged. As Alexander Downer said in his speech on harnessing globalisation power, “globalisation is an irreversible trend, it is not something that should be viewed as a juggernaut bearing down on the lives of ordinary Australians. ” (Downer, 1998) The effects of such a phenomenon are widespread and felt in different ways by developed and developing countries

There are many economic effects that result from globalisation that affect all nations on a global scale. Free trade is a phenomenon closely tied with globalisation. Countries remove their trade barriers, such as tariffs, so that all countries can begin to specialise in their most efficient production areas, resulting in maximum profit through global trade. Among the major industrial economies, sometimes referred to as the Organization of Economic Cooperation and Development, 65 percent of the total economic production, or GDP, is associated with international trade. Economists project that, in the U. S. , more than 50 percent of the new jobs created in this decade will be directly linked to the global economy. (Hopkins, 2002, p. 56).
Certainly these figures show that globalisation is a major benefit to developed countries, but in many third world countries, it is argued that though jobs are being created, agricultural, subsistence jobs are being wiped out and replaced with ‘dollar per day’ multinational corporations, and further, that such corporations are merely widening the gap between the rich and poor. Critics of globalisation argue that despite the supposed benefits associated with free trade and investment, over the past hundred years or so the gap between the rich and poor nations of the world has gotten wider. In 1870, the average income per capita in the world’s 17 richest nations was 2. 4 times that of all other countries. In 1990, the same group was 4. 5 times as rich as the rest. Hill, 2010, p. 31) By the late 1990’s the fifth of the world’s people living in the highest income countries had 86% of world GDP, 82% of world export markets, 68% of foreign direct investment, and 74% of world telephone lines. The bottom fifth of the world’s people earned 1% for the first three categories and 1. 5% respectively. (Waters, 2002, pp. 3-4) Of course we must be wary that there are exceptions to this trend. China’s opening to world trade has bought it growth in income from $1460 a head in 1980 to almost $4500 in 2005, and in 1980, American’s earned 12. 5 times as much as the Chinese per capita, by 1999, they were only earning 7. times as much. (Evans, 2001, p. 80). Nonetheless there appear to be strong forces for stagnation among the world’s poorest nations as a result of globalisation. A quarter of the countries with GDP per capita of less than $1,000 in 1960 had growth rates of less than zero from 1960 to 1995, and a third have growth rates of less than 0. 05 percent. (Hill, 2009, p. 31) Market failure is another major issue that is common in western economies, and impacts on other countries rather than themselves. Market failure is when those who are producing or consuming goods or services do not have to bear the full costs of their actions, such as the cost of pollution.
Free trade encourages firms from advanced nations to move manufacturing facilities to less developed countries that lack adequate regulations to protect labour and the environment from abuse by the unscrupulous. (Dowling, Hill and Lieche, 2009, p. 31) This effectively means that transnational corporations are able to pollute third world nations and destroy their environment with minimal or no cost. Attempts to stem global pollution have been implemented such as the Kyoto Protocol, which sets binding emission targets for developed countries (Horton and Patapan, 2004, p. 86) but nonetheless, the majority of developed countries impact on developing countries in this way to some extent. In this regard it can again be seen that the benefits of globalisation on an economic level are skewed in favour of developed countries.
However, this does not mean under-developed countries do not benefit at all. Another issue that arises for developing countries is that falling trade barriers allow firms to move manufacturing activities to countries where the wage rates are much lower. For example, Harwood Industries, a US clothing manufacturer closed its US Operations which paid wages of $9 per hour and shifted manufacturing to Honduras where textile workers received 48 cents per hour (Hill, 2009, p. 27) The majority of developing countries continue to experience falling levels of average income. Globally, from the late 1970s to the late 1990s, the average income of the lowest-income families fell by over 6 percent.
By contrast, the average real income of the highest-income fifth of families increased by over 30 percent. (Hill, 2009, p. 28) However, it has been argued that while people in developed countries may regard this situation as exploitation, for many people in the developing world, working in a factory is a far better option than staying down on the farm and growing rice. (Stiglitz, 2002, p. 4) Nonetheless, it is a clear case of where the benefits of globalisation for developed countries far outweigh those that arise for developing countries. In fact the only clear indicator that suggests developing countries are benefitting from globalisation more-so than developed countries is in regards to their quality of life.
There is evidence which shows that a number of developing countries have benefited from globalisation, and this is supported by quality of life statistics. Through globalisation, many people in the world now live longer than before and the standard of living is far better. Further, per capita GDP growth in the post-1980 globalisers accelerated from 1. 4 percent a year in the 1960s and 2. 9 percent a year in the 1970s to 3. 5 percent in the 1980s and 5. 0 percent in the 1990s. (Dollar and Kraay, 2001, p. 1) The non-globalising developing countries have done much worse than this, with annual growth rates falling from highs of 3. 3 percent during the 1970s to only 1. 4 percent during the 1990s.
Indeed, throughout the 1990’s till today, eighteen of the twenty-four globalising developing countries have experienced growth, many of them, quite substantially. (NA, 2004, p. 236) However, the growth most have experienced is minimal in comparison the growth being experienced by developed countries. Certainly there are ways in which globalisation does bring benefits to developing countries on an economic level. However, overall it is clear that the benefits are felt more heavily in developed countries and the costs are felt more heavily in developing countries. This is much the same case when regarding the social and cultural effects of globalisation.
Globalisation opens people’s lives to culture and to all its creativity – and the flow of ideas and knowledge. Although the spread of ideas and images enriches the world, there is a risk of reducing cultural concerns to protecting what can be bought and sold, neglecting community, custom and tradition. (Hirst & Thompson, 1996, p. 256) it is widely asserted, and indeed frequently taken for granted, that we live in a ‘global’ village where national cultures and boundaries are dissolving, we consume ‘global’ brands, corporations have to be competitive in a ‘global’ market place and governments have to be responsive to the needs of the ‘global’ economy.
In any case, globalisation produces a tension between sameness and difference, between the universal and the particular, and between cultural homogenisation and cultural heterogenisation (Subhabrata & Linstead, 2001, p. 684) Americanisation is a major example of such cultural homogenisation, acting in many ways which destroy global culture. Globalisation has increased transmission of popular culture easily and inexpensively from the developed countries of the North throughout the world. Consequently, despite efforts of nationally-based media to develop local television, movie, and video programs, many media markets in countries of Africa, Asia, and Latin America are saturated with productions from the U. S. Europe and a few countries in Asia. (Tomlinson, 1999, p. 98). Local critics of this trend lament not only the resulting silencing of domestic cultural expression, but also the hegemonic reach of Western culture and the potential global homogenisation of values and cultural taste. (NA, 2005, p. 1) A report by the UN Educational, Scientific and cultural Organisation showed that the world trade in goods with cultural content almost tripled between 1980 and 1991: from 67 billion dollars to 200 billion dollars. (Akulenko, 2008, p. 1) At the core of the entertainment industry – film, music and television – there is a growing dominance of US products.
The World Trade Organisation rules do not allow countries to block imports on cultural grounds, which means there is nothing standing in the way of Western culture overtaking and eradicating the cultures of developing countries. It is argued that this could mean the end of cultural diversity, and the triumph of a uni-polar culture serving the needs of transnational corporations (Tomlinson, 1999, p. 134). Clearly globalisation is benefitting developed countries by allowing them to spread their culture and influence on a global scale. However, for developing countries, their culture is in many ways being eroded and replaced with the typical Western culture.
However, supporters of globalisation argue that it does not make sense to talk of a world of 6 billion people becoming a monoculture. The spread of globalisation will undoubtedly bring changes to the countries it reaches, but change is an essential part of life. It must also be noted that globalisation is not all one-way traffic. Global products are absorbed into and change western life – including such phenomena as Latinisation and Japanisation. (Hopper, 2007, p. 82) Similarly many of the arts and foods from developing cultures have become ingrained into Western society, presenting opportunities for developing countries to increase their cultural exporting.
For example, curry, an Indian cuisine has become a global food eaten world-wide. However, Americanisation is a far greater cultural force which brings many benefits to Western countries. The impact of developing countries cultures is far smaller and there is the risk that Westernisation could lead to the destruction of the cultures of a number of developing countries. Another effect of globalisation is a global improvement in communications and technology. On the one hand, the electronic revolution has promoted the diversification of information as people in nearly every country are able to communicate their opinions and perspectives on issues, local and global, that impact their lives. (NA, 2005, p. ) Political groups from Chiapas to Pakistan have effectively used information technology to promote their perspectives and movements. On the other hand, this expansion of information technology has been highly uneven, creating an international “digital divide” in such things as differences in access to and skills to use the internet. (NA, 2005, p. 1) Often, access to information technology and to telephone lines in many developing countries is controlled by the state or is available only to a small minority who can afford them. (Hoogvelt A, 1997, p. 46) Thus, it can be seen that the technological benefits of globalisation are also being felt much more by developed countries than developing countries.
This is the same case when regarding the effects of globalisation on a political level One of the biggest political issues surrounding globalisation, which particularly impacts on developing countries, is that many sovereign countries have lost control of their economies and that such control has shifted to more powerful countries, multinational firms, and international financial institutions. The logic of this concern suggests that national sovereignty has progressively and systematically been undermined by globalisation, leading to growing cynicism among political elites and their citizenries, especially among poor developing countries. (Pere, 2010, p. ) Critics argue that today’s increasingly interdependent global economy shifts economic power away from national governments and toward supranational organisations such as the WTO, the EU and the UN. Unelected bureaucrats now impose policies of the democratically elected governments of nation-states, thereby undermining the sovereignty of those states and limiting the nation’s ability to control its own destiny. (Hill, 2009, p. 30). Globalisation has seen state power decline as transnational processes grow in scale and number. The power of TNC’s, with annual budgets greater than that of many states, and is the most visible sign of this change. As economic and political life becomes more complex, many traditional functions of state are transferred to global and regional international organisations. (Gupta, 1997, p. 6) In this environment, developing countries are losing their influence on a national and global scale towards organisations largely controlled by developed countries. In this way, it is again clear that developed countries benefit from globalisation more so than developing countries. However, if these supranational organisations turn their focus more towards aiding developing countries, a number of benefits could result. At the international level, supranational organisations such as the World Bank and IMF must pay more attention to the reality that globalisation has generated extremes of inequality of assets and income across the spectrum of developing countries. (Gupta, 1997, p. 06) International lending and grants could be more explicitly focused on cutting subsidies that benefit the rich, on encouraging and financing market-related land reform, and most importantly providing investment and policy advice for effective public education. There is also a need for developed countries of the OECD to thoroughly review their neo-mercantilist trade policies. (Pere, 2010, p. 1) There is enough empirical evidence to show that protection of agriculture and textiles discriminate against the poor of developing countries. The poor and vulnerable in developing countries could also benefit from international financing of countercyclical safety net programmes, subject to certain conditions.
These would include a solid record of sound fiscal policy; the political capacity to undertake such programmes free of corruption; and a long-term fiscal capacity to service any debt that might be incurred. (Pere, 2010, p. 1) If these policies were instated, developing countries would benefit from globalisation in ways that match or exceed the political benefits that developed countries receive as a result of globalisation. Clearly globalisation is a force which brings an array of benefits and costs on a global scale. However, it is also clear that developing countries are, in many cases, bearing the majority of these costs while developed countries are feeling the majority of the benefits.
While there are a number of economic, socio-cultural and political actions which could be taken to ensure developing countries benefit from globalisation to a similar extent to developed countries, as it stands, there can be no denying that globalisation is a force which favours developed countries over developing countries. Bibliography: Akulenko. E, 2008, Cultural Aspects of Globalization, Accessed 5 May 2010, < http://emiliaakulenko. wordpress. com/2008/10/22/cultural-aspects-of-globalization/> Dollar. D and Kraay. A, 2001, Trade Growth and Poverty, Accessed 5 May 2010, http://www. imf. org/external/pubs/ft/fandd/2001/09/dollar. htm Dowling. P, Hill. C and Liesch. D, 2009, International Business, Mc-Graw Hill, New York Downer. A, 1998, Annual Trade Lecture by the Minister for Foreign Affairs: Harnessing Globalisation’s Power, Accessed 5 May 2010, Evans T, 2001, The politics of human rights: a global perspective, Pluto Press, London Gupta.
S, 1997, The Political Economy of Globalization, Kluwer Academic Publishers, Massachusetts Hill. C, 2009, International Business: Competing in the Global Marketplace, Mc-Graw Hill International, New York Hoogvelt At, 1997, Globalisation and the Postcolonial World: The New Political Economy of Development, Macmillan Press Ltd, London Hopkins A. G. , 2002, Globalization in World History, Pimlico, London Hopper. P, 2007, Understanding Cultural Globalization, Polity Press, Cambridge Horton. K and Patapan. H, 2004, Globalisation and Equality, Routledge, London Kirdar U, 1992, Change: Threat or Opportunity: Economic Change, United Nations Publications, New York.
Linstead S & Subhabrata B, 2001, Globalization, Multiculturalism and other Fictions: Colonialism for the new Millennium, RMIT University, Melbourne N. A, 2004, The Globalisation Debate, The Spinney Press, Thirroul NSW 2515, Australia N. A, 2005, Introduction to Globalization – After September 11, Social Science Research Council, Accessed 5 May 2010, Pere. G, 2010, The Positive and Negative Consequences of Globalisation, Institute for Global Dialogue, Midrand. Stiglitz, J, 2002, Globalization and its Discontents, Routledge, Allen Lane, London Tomlinson. J, 1999, Globalization and Culture, University of Chicago Press, Chicago Waters M, 2002, Globalization, 2nd Edition, Routledge, Fetter Lane, London

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