From the sixteenth century AD onwards, European nations engaged in farflung trade around the world. Portugal, Spain, England, France, Holland and Germany established colonies in Africa, Asia, South America and Pacifica as trade outposts to support their trading economies.
The nineteenth century is sometimes referred to as the first era of globalization, for it was a period of rapid growth in international trade and investment between the European imperial powers, their colonies, and the United States. This worldwide trading structure began to break down at the time of the First World War, and later collapsed during the gold standard crisis and worldwide depression of the late 1920s and 1930s.
Since World War II economists, business interests and politicians have worked together to create important international institutions to promote trade and growth and manage adverse consequences. These institutions are the World Bank, the International Monetary Fund, and the World Trade Organization. Barriers to international trade have been lowered through international agreements, such as GATT (General Agreement on Tariffs and Trade).
These institutions have created an international structure that promotes free trade by reducing or eliminating tariffs; reducing transportation costs, especially by developing containerization for ocean shipping; reducing or eliminating controls on the free movement of capital; reducing subsidies for local businesses; harmonizing intellectual property laws across nations; and recognizing patents worldwide.
This structure has fostered the emergence of worldwide production markets and allowed consumers and corporations broader access to a range of foreign products. It has stimulated the emergence of worldwide financial markets and created easier access to external financing for corporate and governmental borrowers.
Globalization has greatly increased the free exchange of goods and services around the world. Because of the United States’ strong economy, it has enjoyed a position of power and influence, and has been very successful in utilizing the global marketplace. The rapid rise of China’s economy, the growth of India’s economy, and the success of the European Union means that some of this power is likely to be reallocated in coming years.
As a result of greatly increased trade, the exchange of ideas, information, and cultural consciousness has been accelerated. American music, products and corporations are now ubiquitous around the world. Likewise, Chinese goods, cars built in Europe and Asia, musical genres from around the world, and products manufactured literally everywhere are available to almost everyone in the world.
Income inequality around the world is diminishing. Life expectancy in the developing world has doubled since World War II while infant mortality has decreased in every developing region. Democracy has become more widespread over the last century: in 1900 almost no nations in the world had universal suffrage, while 62.5% of all nations had it in 2000. Feminism as made advances as well, through providing women with jobs and economic safety.
While critics of globalization complain of Westernization, a United Nations report shows that China in 2002 was the third largest exporter of cultural goods, after the UK and United States. Between 1994 and 2002 both North America’s and the European Union’s percentage of cultural exports declined, while Asia’s cultural exports grew to surpass North America.
While we all want to enjoy our inexpensive, high-quality DVD players and TVs assembled in Maylasia, or run to Walmart to buy unbelievably cheap household goods manufactured in China, or download the latest Euro sounds for our ipods, there are significant downsides to globalization.
The tremendous rise in international trade and the untrammeled flow of capital to seize upon the latest opportunity to lower manufacturing costs means that multinational corporations may exercise immense power over the lives of people to whom they are not accountable. Corporate actions may damage the democratic rights of citizens in the countries where they do business, overriding the sovereignty of the host nation in the name of free trade.
Environmental degradation is a particularly severe and troubling effect of globalization, because the upfront cost to produce the product can easily become the primary consideration for making manufacturing and production decisions. If it is cheaper to manufacture a product in China (and it almost always is), then production is moved there – despite China’s poor record in human rights, and despite the horrific pollution its largely unregulated factories and power plants are dumping into the atmosphere, the water and the land.
The downstream costs of dealing with environmental degradation, the loss of irreplaceable natural resources, increased health problems due to air and water pollution, and the cost of disposing or recycling the product after its useful life are simply not calculated in the rush to get the product made and shipped to Walmart as quickly and cheaply as possible. These downstream costs pass on to the consumer and his government, which means that quite often they simply are not paid.
Healthcare costs are spiraling upwards, and the landfills are proliferating and filling up. Deforestation and desertification processes are degrading the environment; air and water pollution is fouling the planet; and global warming is looming over us all, with unknown consequences. These hidden costs are being deferred and overlooked in the rush to use the global economic infrastructure to make fast profits.
Globalization is accelerating the movement of populations from the countryside to the megacities that are developing around the world. These cities, particularly in the developing world, are sprawling shantytowns with poor housing, sanitation and high levels of air and water pollution.
This population movement is undermining and uprooting traditional cultures around the world, as village life and extended family living is exchanged for anonymous city-dwelling, often with families separated from breadwinners who must go to where the jobs are available. Over half the world’s spoken languages are in danger of disappearing within one generation’s time as traditional and indigenous cultures are vanishing from the planet.
Globalization has dramatically altered the economic realities of almost every person in the world, with consequences for where they live and what kind of families they can have. Perhaps most of all, it has accelerated the environmental crisis that we are facing. It seems likely, however, that with will and determination people around the world can work together to utilize the strengths of this global economic system to make meaningful changes.
The benefits and the disadvantages of globalization are strongly and cogently argued in the books recommended in the section on Globalization. Several books describe the inner workings of global trade and the global economy with interesting examples we can all relate to – where was that T shirt made? What are all these rusty steel containers with foreign words on them we see being pulled on the highway by big trucks in a hurry? Economists and finance and trade experts clarify this complex global trade system that touches all our lives.
David Yarian, Ph.D.
|
