Introduction
Globalization is a process through which regional economies and cultures integrate into a global network of trade. Nations integrate into the international market in terms of technology, trade, capital flows or investments. Economic globalization refers to the increase in national interdependence in economies through an increase in international trade.
This is the process of promoting economic integration between economies of different countries with the aim of establishing a global market. Through economic integration, nations get a wider access to the world economy and their dependence on local resources is reduced. Economic integration makes international trade easier through the removal of trade barriers and tariffs; through protection of investors in order to promote their capital investments.
With economic integration, the factors of production find their way in the country where they are put into maximum use. This results in economic growth and development.
Increase in the mobility of factors of production faces some negative challenges especially because of the economic pressures in the global market. Today, the global economy has increased to significant levels and all this have been facilitated by trade agreements. Several factors influence globalization, they include: socio cultural, technological, economic, and political factors.
This paper looks into the history of globalization since the 19th century, international trade, some of the trading organizations that have been established to enhance international trade and the relationship between labor and globalization. It also looks at some of the inequalities that have resulted from globalization, how globalization has benefited nations, and concludes by giving its disadvantages to some nations.
Modern Globalization
Modern globalization started early the 19th century. There was industrial revolution which utilized economies of scale to produce low priced household goods. Population grew rapidly and the cost of living became low. With the start of the world war one, modern globalization began to break and some economies believed that the financial forces that were as a result of globalization had led to the emergence of the war.
In early 1930s, there was a great depression which affected the economies of many countries especially the ones which had embraced globalization. In early 20th century multinational corporations were established in Europe and United States which led to an expansion of the global market.
Many scientific inventions were discovered which facilitated developments in products, technology, and science. In the middle 2000s, most of the industrialized nations went through a recession, which affected globalization[1]. Recent statistics show that the world is going through a period of deglobalization and about 45 percent of wealth has been shattered by financial crises. China is the largest global exporter followed by German (Stiglitz 4).
After the Second World War, politicians engaged themselves in vigorous planning that were aimed at breaking trade hindrances and to promote interdependence which in turn reduces the possibility of future wars. They established the Bretton Woods Conference for laying down international commerce framework.
They also established other international institution with the responsibility of supervising the globalization process. Some of these institutions were the World Bank and international monetary fund (IMF). Technology and industrialization have played a crucial role in facilitating globalization.
Trade negotiations and cost have significantly reduced since the establishment of General Agreement on Tariffs and Trade (GATT). Another international trade organization, known as World Trade Organization (WTO), was also established to work together with GATT for the promotion of free trade. Free trade promotion includes: reduction of tariffs, transportation costs, capital controls, subsidies, and appreciation of intellectual property (Jason 6)[2].
International Trade and Integration
A key element in globalization is growth in the international trade sometimes referred to as world trade. This is facilitated by the elimination of barriers to trade such as tariffs. International trade is the exchange of goods, services or capital between different countries.
It has been in existence many years ago although much of its significance has been recognized recently. It has developed economically, politically, and socially with many countries becoming traders. International trade plays a very important role in ensuring continuity to globalization. It has benefited nations with variety of options to choose from which they would not have accessed without it.
Barriers exist which put restriction to international trade. These trade barriers are governmental policies or regulations. The government may impose some restriction which bars the importation or exportation of goods or services from certain countries. On the other hand, there are trade regulations defined in different nations which restrict trade with specific goods and services.
Trade barriers take many forms including but not limited to import licenses, quotas, subsidies, tariffs and non tariffs barriers, and embargoes. Most of the trade barriers use the same principle; they impose some cost on trade so as to raise the prices of the goods in question (Jason 31). Barriers to trade reduce the economic importance among countries and should therefore be abolished. Free trade agreement removes most of these trade barriers except the ones they deem necessary for the nation’s security.
Examples of such agreements are North American Free Trade Agreement (NAFTA), European Union (EU), South Asia Free Trade Agreement (SAFTA), Union of South American Nations and European Free Trade Association (Langmore 20). NAFTA is the world’s largest trading bloc covering Mexico, United States, and Canada. It was launched in 1993 for the purpose of enhancing North America’s competitive advantage in international trade in terms of reduced trading costs and increased investment.
European Union is a political and an economic union located in Europe with a membership of 27 states. It is one of the oldest trading blocs and can be compared to NAFTA in terms of performance. It is ruled by 7 institutions[3]. It was established in 1993 by the treaty of Maastricht after the foundations of the European communities. EU was formed for the purpose of regional integration
Labor and Globalization
According to Elliott and Freedman (3), globalization and labor are complement to each other in raising the living standards in the whole world. None of them can work effectively without the other. Improvement in working standards can only occur in the presence of expanding global markets[4]. They observed that it is the work of the international labor organization (ILO) and world trade organization (WTO) to address the issues related to labor in the context of globalization.
Citizens from countries which have formed trade agreement are free to travel to any member country, choose where to work and or where to reside without encountering any problems. There are various immigration programs within the member countries such as programs of foreign work, acquiring of citizenship, and how citizenship can be inherited. Most of these programs can help one to obtain citizenship while others are just short term programs for the purpose of tourism or employment (Nelson 20)[5].
Inequalities
As par the press release issued UNCTAD, the world economy has been witnessing high integration from 1980 (Shniad 2). UNCTAD documented that the world economy has been experiencing a decrease in the growth rates and on the other hand the levels of inequalities are becoming visible. Inequalities are threats to integration and can lead to backward economic movements.
Although women put much effort in their education as compared to their male counter parts, they always face discrimination in terms of employment. They are assumed to be incapable of performing the same duties as men. Even with the same type of employment, they are discriminated against in terms of salaries and the wage disparities continue to rise (Linda 60). On the other hand, there are still large and visible gaps between the rich and the poor[6].
The rich continue to accumulate wealth while there are people in the same republic who continue to suffer in terms of food and medical care[7]. According to UNCTAD, economic integration is not directly related to growth and development and at the same time it does not mean that inequality can be reduced by growth and development (Shniad 4).
Benefits of Globalization
There is some evidence from both small and large countries to the benefit of globalization. As nations come together, people benefit in the access to a wide variety of goods and services, increased employment opportunities, and improvements in health and standards of living. In a period of about twenty years a big number of countries have entered into global economies leading to a reduction in the number of people living in poverty (Wolf 157).
International trade has become easy and countries can trade from any nation of their choice. Many trade unions have been set up, for example, the European Union which accrues a lot of benefits to its members. Citizens from member countries can travel to any country of their choice provided that it’s a member of the union. They get the chance of securing job places in any member country and can choose where to reside in. On the other hand, nations benefit from free trade and financial assistance[8].
Globalization has brought about economic integration, which has promoted corporation among nations. Nations can seek help or assistance from other international countries in times of difficulties. Nations which were not able to venture into the international market because of trade restrictions have been able to do so with free trade.
International trade has also helped nations in realization of its potential which they tend to specialize in the global markets. Some nations are well known for the production of petroleum products while others are popular for the production of agricultural products such as coffee and tea. With globalization, information can be shared and dispersed easily among nations.
Innovators get a platform for borrowing ideas to assist them in their inventions. This can be from previous records where they are able to analyze them and extract the useful ones. With the increase in economic integration, low-income countries have managed to venture into the global market more so on division of labor thereby putting a lot of competitive pressures on the countries relying on the tradition production.
Negative Consequences
Although globalization has had many benefits, it has not been able to encompass all sectors. Many nations continue to experience regional disparities. Poverty rates are still high in sub-Sahara Africa although there has been a fall in its rates in South and East Asia. It is believed that this has been as a result of too little globalization. If globalization is increased, some of these problems can be eliminated.
The benefits of globalization come along with some risks associated with it. These are a result of capital movements among nations. IMF employs policies from time to time that help nations manage some of these risks. It offers technical assistance in some of the macroeconomic policies, the exchange rate, and financial sector (Jason 20).
Today, almost all nations depend on the global economy. Governments are finding it difficult to respond to their domestic issues as they used to do. There have been many trade agreements that influence the performance of member countries and which put restrictions on the use of their monetary policies. These governments have to rely on the international monetary fund for regulations.
Poor nations are becoming poorer day in day out because of the low comparative advantage they have in the international trade. They have to rely on the World Bank for aids and grants for their development. To curb this, the Doha Development Agenda was launched but it is yet to be accepted. Unless it is accepted, the poor nations will continue to suffer at the expense of the rich nations (which have developed economies and comparative advantage in terms of trade).
Globalization has resulted in loss of national pride and culture. It is the responsibility of both the parents and the society to conserve the national pride, tradition, and culture. This does not mean living old fashioned lives but it simply means preventing our identity from being influenced by external forces, and extending the same to the children.
This cannot happen if culture is not stimulated and managed properly, just as plants have to be watered and given manure for them to grow. Many people are adopting culture and traditions from other nations due to the influence they get while surfing the internet and through international trade. The old and valuable tradition has been neglected and people tend to imitate other cultures
Conclusion
As economies expand and trade with each other coupled with the improved technology, the world is becoming a global village. The enhanced transport and communication networks are the foundations of globalization. All over the world, economies are joining hands to develop an economic political or social block as they prepare to play a role in the global environment.
International trade is one of the ways in which economies from many nations exchange their social and economic benefits. Globalization has many benefits accrued to the trading countries. These benefits include: the access to a wide variety of goods and services, increased employment opportunities and improvements in health and standards of living.
In a period of about twenty years, a big number of countries have entered into global economies leading to a reduction in the number of people living in poverty. However, globalization has also resulted in some negative consequences which include but not limited to increased poverty levels in some nations, loss of national pride, and overdependence on international trade.
Works Cited
Elliott, A. Kimberly and Freeman B. Richard. “Can Labor Standards Improve Under Globalization?” Bookstore, 2003. Web.
Jason, L. Saving. “Integration and Globalization.” The European Bellwether Federal Reserve Bank of Dallas Vol. 1, No. 5, 2006.
Langmore, Joseph. “Managing the global economy: will countries be so eager to compete in the global market that they will cut their investments in social services?” CBS Interactive, 1998. Web.
Linda, Lynda. The Globalization Debate: Issues and Challenges. Geneva: International Labor Organization, 2001.
Nelson A. Carl. Import/Export: How to Get Started In International Trade. Ebrary collection. New York: McGraw-Hill Professional, 2000.
Shniad, Sid. “UNCTAD sounds warning on globalization United Nations Conference on Trade and Development.” Geneva, press release, 1997. Web.
Stiglitz, E. Joseph. Globalization and Its Discontents. New York: W.W. Norton & Company, 2003.
Wolf, Martin. Why Globalization Works. New Haven and London: Yale University Press, 2005.
Footnotes
- Stiglitz, E. Joseph. Globalization and Its Discontents. New York: W.W. Norton & Company, 2003.
- Jason, L. Saving. Integration and Globalization: The European Bellwether Federal Reserve Bank of Dallas Vol. 1, No. 5, 2006.
- Langmore, Joseph. “Managing the global economy: will countries be so eager to compete in the global market that they will cut their investments in social services?” CBS Interactive, 1998. Web.
- Elliott, A. Kimberly and Freeman B. Richard. “Can Labor Standards Improve Under Globalization?” Bookstore, 2003. Web.
- Nelson A. Carl. Import/Export: How to Get Started In International Trade. Ebrary collection. McGraw-Hill Professional, 2000.
- Linda, Lynda. The Globalization Debate: Issues and Challenges. Geneva: International Labor Organization, 2001.
- Shniad, Sid. “UNCTAD sounds warning on globalization United Nations Conference on Trade and Development.” Geneva, press release, 1997. Web.
- Wolf, Martin. Why Globalization Works. New Haven and London: Yale University Press, 2005.