One of the major ongoing debates in the realm of international economics is that which involves globalization. A common definition of globalization is the economic, political and cultural systems of the globe. As implied by this definition, there are many different sides to the issue. So the question is: Is it a good thing or a bad thing? Should we embrace it or turn our back from it? When asking that question, a new one takes shape. If we tried to turn our back from it, would we be successful? In other words, is globalization ultimately inevitable? Those who support globalization talk of economic benefits for everybody and giving a leg up to the poorer countries of the world. Those who oppose globalization claim not everyone benefits from it and that “the rich” have rigged it decisively in their own favor. They also claim that integrating markets too hastily will destroy the “infant industries” of developing nations before they become profitable.
My side of the argument is on the pro-globalization side. I believe that, in general, globalization will lead to good for everyone. Indeed, it has already worked wonders for China and India. I also believe that as cultures engage in diffusion with one another at a faster pace, due to the internet and other forms of 21st-century technology, society can only benefit from the global dialogue. My position is not entirely without reservation. I am partly worried about the political conglomeration of potentially overbearing supranational entities such as the United Nations and the North American Union. However, I believe that, fortunately, the forces at work in the world will prevent any disaster from occurring. I therefore fully support the global spread of commerce.
Napoleon once said “let China sleep, for when she wakes, she will shake the world.” It seems that Napoleon’s prediction came true during the late 1970s. It was around this time that China’s market opened up after years of economic isolation. The past thirty years have been dramatic for China with Deng Xiaoping’s reforms taking it from an isolated hyper-ideological pariah under Mao to a modern economy today. Since 1978 China has been trading with the United States and the West. In contemporary times the Chinese acquired a failed steel mill from Germany and was able to use it to their advantage. A private dealer in China had bought it from Germany, where they did not have much use of it anymore, and was able to make goods with fewer resources because of his newly-acquired technology. Since succumbing to the overwhelming trends that make up globalization, China has become a relatively urbanized society in comparison to what it was before. On a grand scale, it has grown through constantly looking for cheaper and more efficient ways of doing things, which it continues to explore. There are many contemporary real life rags to riches stories that are happening all across modernized China. For instance, a man who was an ice cream dealer in the 1980s is now the owner of Wahaha, which as of 2005 makes soft drinks that are a competitor of Coca-Cola within China. China has also benefited from the prospect of “cheap labor” in other countries that is met with Chinese workers going there. Economists visiting Italy have found this to be an imminent presence. Indeed, the Chinese are said to have “the cheapest and most determined labor force in the world.” Globalization benefits anyone, but with such circumstances it can especially help the Chinese.
Some on either side of the globalization debate claim that globalized markets inevitably lead to fewer competitors in a particular market. However, Harvard University professor Pankaj Ghemawat points out that since the 1980s, several industries such as the auto industry have actually had their market share consolidated by more companies, not less. Worldwide standard competition obviously gives consumers more options to choose from. The large number of firms subsequently must stay competitive with one another by providing goods or services at lower prices and higher qualities. Therefore, this should lead to benefits for both those who dwell in rich nations and those who dwell in poor nations.
Cultural diffusion, or the spread of ideas from society to society, has brought several good things upon humanity in the past. Just as globalization is relevant to the spread of commerce and the spread of political forces, it is also relevant to the spread of ideas. Diffusion on a large scale has been around since over hundreds of years before Christ. The silk roads were early caravan trade routes that connected ancient societies in the Middle East, Central Asia and Modern China. Crops that reached outer Mesopotamia helped that society flourish. Spreading ideas across the world has a positive effect by allowing different areas to borrow the better ideas that other societies have and export their own. The Industrial Revolution, which began in Britain, was subsequently started up in the rest of the world over the next couple centuries (with some places still withstanding.)
Some claim that the global free market has harmed laborers in the developing nations of the world. The impact that free trade boosts such as NAFTA have had on labor has been debated extensively. Some argue for primarily positive effects and some say that the effects are mostly negative ones. When globalization occurs, everyone participates in some way. Labor unions begin organizing across continents making them more effective overall just like the corporations and the non-governmental organizations benefit. When the Industrial Revolution took off approximately 250 years ago some urban workers were confronted by poorer working conditions in the short run, which eventually improved. However, everyone in society-rich, poor, urban and rural, was gaining wealth in the process. Since the industrial process was much more efficient, the cost of producing goods went down tremendously. Because of this the cost of purchasing goods, in turn, went down tremendously. This was the case with the industrial revolution. This is also the case with globalization. Everyone benefits from it whether they realize it or not. Local jobs in several European companies went to places like China when exposed to the global marketplace. This inevitably led to some restructuring in the countries where the jobs came from. In the end those jobs “were returned in the form of cheap manufactured goods.” This makes everyone wealthier because, whether or not they have more cash, they obtain more purchasing power through being able to buy more with their money.
A commonly made argument against globalization is that it causes greater income disparities between the haves and the have-nots of the world. Is this true? Yes and no. The gap is currently much larger than it was before, at about a 40-1 ratio, as Princeton professor Gregory Clark points out. But is this a cause of globalization or merely an intermediate phase when globalization’s full effects have not yet taken place? The bulk of the developing nations of the world are in the continents of Africa and South America. Latin American nations, in particular have a tendency to turn to economic populism and dictatorial governments which can put strain on the global integration which might be able to help them rise out of the rut. Another problem is that of property rights protection. If one’s government will not enforce one’s right to one’s own property, what is the incentive to try to further oneself on a local scale, let alone a global one? The total value of unprotected property in places such as Africa, Latin America and India is estimated to be approximately $9 trillion. If protected, it goes without saying that it would have a significant impact.
I believe that globalization helps everyone who feels its effects in some manner. It allows for cheaper production and cheaper goods. It makes our money worth more and it lets us share the wealth through trade. I can see where those who argue for a downside come from but I prefer to look at the issue from the big picture.
