As one of the most publicized buzzwords of the Information Age, the term globalization seems to lurk its way towards all aspects of our lives. Hogging the economic, social, technological, cultural, and political arena, globalization catalyzed important changes in various sectors and it had pressured everyone to ride the waves of globalization as it allegedly empowered people because of the concept of “interconnectedness”. Anthony Giddens claimed that globalization can sometimes be referred to as “Americanization” because it is a set of complex processes by which goods, services, capital, ideas, and culture are exchanged on the international level. As a concept, McGrew (1992) captured the complexity of the current view of globalization in a concise and balanced way. He defined globalization as:
The multiplicity of linkages and interconnections between the states and societies make up the modern world system. It describes the process by which events, decisions, and activities in one part of the world can come to have significant consequences for individuals and communities in quite distant parts of the globe (p. 23).
In the recent World Economic Forum (WEF) in January 2008, globalization has been a widely discussed topic, as former British Prime Minister and WEF Board Member Tony Blair remarked that everyone needs to “collaborate” to instigate necessary changes around the world. Blair closed his statement by saying, “If we are interconnected and the world is interconnected, the only way for the world to work is to have a set of common values. We have no option but to work together” (Adams, 27 January 2008).
However, Jubasz (2004) revealed that the most reliable data available demonstrated how economic globalization has caused the most dramatic increase in global inequality and poverty in modern history. Globalization of trade had only benefited the countries with bigger economies to dominate over economically challenged countries. Furthermore, as Trade Representative Zoellick argued in the Washington Post that economic globalization allows “fragile democracies” to “overcome poverty and create opportunity”, policies seem to do more harm than good to Third World countries. If such policies are pursued, the world could find itself in even worse circumstances in the future than those we find ourselves in today. Globalization seems to be capitalism in sheep’s clothing.
Indeed, the policies of economic globalization such as free trade, financial liberalization, deregulation, reduced government spending, and privatization had concentrated wealth at the top. It had tried to removed from Third World governments and communities the very tools needed to ensure equity and to protect workers, social services, the environment, and sustainable livelihoods. In this way, economic globalization and its institutions—including the International Monetary Fund (IMF), the World Bank, the World Trade Organization (WTO, and the North American Free Trade Agreement (NAFTA), have created the most dramatic increase in global inequality—both within and between nations—in modern history and have increased global poverty.
For example, the income gap between the fifth of the world’s people living in the richest countries and the fifth in the poorest doubled from 1960 to 1990, from thirty to one to sixty to one. By 1998 it had jumped again, with the gap widening to an astonishing seventy-eight to one. Poverty trends have worsened as well; there are 100 million more poor people in developing countries today than a decade ago. The assets of the three richest people on earth are greater than the combined Gross National Product of the forty-eight least developed countries. Even in the United States, where median earnings of workers more than doubled from 1947 to 1973, the past two decades have seen median earnings fall by almost 15 percent, with the earnings for the poorest 20 percent of households falling the furthest behind. The only segment of the U.S. population that has experienced large wealth gains since 1983 is the richest 20 percent of households. The net worth of the top 1 percent of U.S. households now exceeds that of the bottom 90 percent (Jubasz, 2004). In this effect, the richer nations will be the wolves who will feast on the meat, while Third World nations will just have the scraps of the benefits of globalization.
A flagrant example of the two sides of globalization can be seen in the case of the North American Free Trade Agreement (NAFTA). Indeed, it is undeniable that NAFTA has brought about the sharp expansion of regional trade and investment in the region. From 1993 through 2004, “US merchandise exports to and imports from Mexico have increased by 166 and 290 percent, respectively” (Hufbauer 2005, p. xxxvii). As Mexico is burdened with gargantuan debt, they regarded this trade agreement with the United States as an essential step in achieving economic development. The United States desired to maintain stability in Mexico and saw abundant and inexpensive Mexican labor as beneficial to U.S. companies that were anxious to gain a competitive advantage over the Japanese and Europeans. Canada, wanting to retain its favorable trading relationship with the United States, viewed economic integration in North America as a way of countering U.S. dominance of the Americas (Vega-Canovas 1999, p. 230).
More specifically, NAFTA has been accused to have caused environmental degradation in Mexico. Gallagher (2007) observed that “rises in income have been small and environmental degradation has been large” in Mexico since NAFTA was established. Costly environmental degradation is slowly eating away the natural resources because the proper mechanisms were not put in place to help Mexico manage its economic growth in an environmentally sustainable manner. To keep at pace with NAFTA, Mexico doubled spending on environmental protection and started a much-needed industrial environmental inspection program. However, shortly after NAFTA was signed and fiscal and financial woes set in, attention to the environment is ignored.
Moreover, labor issues had rocked NAFTA in the 1990s. It had been an issue during Ross Perot’s presidential bid against Clinton and the famous claim of an impending “giant sucking sound” helped frame the political debate, but also alluded to important economic trends that affected them all. The fact is that Mexicans complain of the devastating impact it has had on small farmers in Mexico after being integrated into NAFTA. Dugger (2003) reported that the Carnegie Endowment for International Peace, a research institute in Washington, D.C. filed a report concluding that NAFTA failed to generate substantial job growth in Mexico, hurt hundreds of thousands of subsistence farmers there, and had minuscule net effects on jobs in the United States. Income inequality is greater and illegal immigration continues unabated (p. A9). The World Bank, on the other hand, found that NAFTA brought significant economic and social benefits to Mexico and argued that Mexico would have been worse off without the agreement (Dugger 2003, p. A9).
Yes, globalization can promote growth. However, the claim that growth benefits all are exposed as false when we ask the crucial questions: Growth for whom and growth at what cost? Indeed, the present productive systems themselves have become increasingly multinational and automated. Post-industrial production systems are highly technologized, require little labor, and involve numerous steps, components, and processes that are scattered across a transnational web of technological specialization. Much of the shift represented the enormous growth of transportation and communication facilities. This development characterizes the process of the globalization of production. Whether a mature industry moves to a Third World country or becomes mechanized or automated, the results are the same: a loss of jobs in that industry. This has become evident in developed countries for over a decade. In the meantime, there have emerged new kinds of industries (chemicals, pharmaceuticals, electronics, computers, etc.), which are characterized by the following features: they are knowledge-based, highly technologized, multinational, and require only a small labor force
The fact is that there are still underdeveloped economies dividing the world into rich and poor countries. Images of starving children in Africa coincide with lives in relative luxury. Globalization might yet to fulfill its promise of transforming backward economies, but then again there is no clear-cut indication that these countries would take a straight route towards the liberal democratic model of Europe and the Americas. Through time maybe, in the distant future democracy would be as worldwide as McDonald’s and Coke but then again, the homogeneity might result in the basic classification of countries. Third World countries will always be dominated by richer countries through globalization. If there will be no win-win policies that would be drafted to counteract the inequities of globalization, then it will remain to have negative impacts against Third World nations.
Works Cited
Adams, Mark. World Economic Forum Annual Meeting Closes with Call for a New Kind of Collaborative Leadership, 28 January 2008. In World Economic Forum [Web]. Web.
Dugger, Celia W. Report Finds Few Benefits for Mexico in NAFTA, New York Times, 2003, A9.
Gallagher, Kevin P. In Mexico, Free Trade Has Led to Large-Scale Environmental Degradation. In Miller, D. (Ed). Current Controversies: Globalization. Detroit: Greenhaven Press, 2007.
Jubasz, Antonia. “Globalization Is Making World Poverty Worse.” In Balkin, K. (ed.), Poverty. San Diego: Greenhaven Press, 2004.
Lobeda, Cyntia Moe. Globalization Is Harmful to Society. In L.I. Gerdes (ed.), Globalization. San Diego: Greenhaven Press, 2006.
McGrew, A.G. Conceptualizing Global Politics. In A.G. McGrew, and P.G. Lewis (eds), Global Politics: Globalization and the Nation-State. Cambridge: Polity Press, 1992. p. 1-28.
Seddon, Mark. Kapital Gain. The Guardian, 2005.
Vega-Canovas, Gustavo. “NAFTA and the EU: Toward Convergence?” in Yeung et al. (Eds.). Regional Trading Blocks in the Global Economy, Cheltenham, UK: Edward Elgar, 1999.