The future perspectives of the globalisation process

The process of globalization has been one of the most important modern trends characterizing the global scenario . Whether the effects of the process are benign or malignant are still being widely debated . However there is some degree of consensus to the extent that in case of any benefits resulting from globalization , they are for the most part limited to the large corporations . The process of globalization is creating new markets for the large corporations and as a result , any dent in profits that might have happened as a result of operating in the

br mature economies of the West is being avoided (cited in Baylis , 2006 For example , the process of globalization has enabled China to integrate into the global economy and the country has now become the manufacturing powerhouse of the world . Most large corporations are now shifting their operations to China in to not only take advantage of the huge market , but also to minimize costs of operations with access to low cost labor . The large size of the population in China means that there is a massive supply of labor which keeps wages and salaries down . As a result , businesses can minimize their costs of production and increase their level of profits by setting up plants in China

The phenomenal economic growth rate in China would appear to present a convincing argument for the process of globalization . However the effects may not have been so benign if the Chinese government had not strategically loosened controls in to slow the pace of integration . Sudden complete integration into the global economy would have meant disaster as foreign corporations would have taken over the market and left domestic businesses powerless to compete . This has been the case in many third world countries which , left open to the effects of globalization have found themselves unable to cope with the new world in which domestic businesses with fledgling operations are expected to compete with internationally successful large corporations on the same grounds . As a result , globalization in this respect has severely affected the domestic business environment in a negative way Therefore , when it comes to the process of globalization , governments in underdeveloped countries have to be alert to the dangers of globalizing the internal business environment too soon . The important thing to remember in this respect is that domestic businesses have to be supported by the government in the initial stages before they build up their operations to the extent that they are able to compete effectively with international businesses (cited in McConnell Brue , 2007

Proponents of globalization argue that it has facilitated the process of international business and thus has managed to raise standards of living worldwide . However , the gap between the rich and the poor has actually widened . This is because it is only the owners of large corporations who have managed to maximize their wealth as a result of the expansion of international business . As mentioned before , businesses in the west have moved en masse to China and India because of access to large markets and to cheap labor . As a result of this migration unemployment rates in the West are rising . This has widened the gap between the rich and the poor . If this trend continues , then the future of globalization is grim to say the least . More and more people will continue to lose their jobs as businesses continue to move their operations to low-cost regions . However proponents would argue that as a result of the expansion of international business , low-cost regions which are economically underdeveloped are being able to attract foreign businesses in to generate employment . There is some truth to this argument inasmuch as globalization has created the international legal system which serves as the underpinnings for businesses to expand their operations and thus create employment opportunities worldwide . However these employment opportunities come at the cost of environmental pollution . This is because globalization creates the basis for consumerism

Consumerism is the process by which businesses continue to upgrade their products in such a way as to influence the consumers even when they have no need for these products (cited in Dani , 2006 . Businesses continue to release newer versions of the product and it becomes obligatory for the consumers to buy these newer versions as ownership becomes synonymous with belongingness to a particular society . As a result , consumers are trapped into making repeated purchases of the same products and this only creates environmental pollution in the form of excessive production . Therefore the effects of globalization in this case are hardly benign . In this respect , the threat of environmental pollution comes from multinationals who are the main beneficiaries of the globalization process . Multinational companies set up their operations in those geographic regions where costs are low . As mentioned before , these geographical regions are frequently underdeveloped with an equally underdeveloped legal system particularly when it comes to laws pertaining to environmental preservation . Multinational companies are not too conscientious about these legal loopholes and they take advantage of these loopholes in the interests of profit maximization

Proponents of globalization would argue that economically less developed regions of the world benefit from the process because free trade creates the necessary framework for them to receive foreign direct investment provided they have a stable political system . Yet as mentioned before , governments in these regions , in their eagerness to attract foreign capital , frequently reach agreements with foreign businesses with little regard for the potential long-term consequences as far as environmental preservation is concerned . Therefore , the governments frequently look the other way as foreign businesses conduct their operations in a way which pollutes the local environment Therefore , any benefits arising out of globalization in the form of additional employment are cancelled out by the loss of environmental goodness . This is one example of where there is a considerable disagreement between those who argue for the process of globalization and those who argue against it . However , as far as environmental preservation is concerned , it is hard to see how globalization can have any positive effects whatsoever in this regard . Inasmuch as globalization enhances business interests through rampant spread of consumerism worldwide , the effects are mutually exclusive between globalization on the one hand and environmental preservation on the other

The process of globalization would not have been possible without rapid progress in information technology (cited in Muroyama Stever , 1998 For example , the Internet has been the primary engine of globalization Large corporations have been able to take advantage of sophisticated information technologies like Enterprise Resource Planning systems in to coordinate logistics worldwide (cited in Sullivan , 1998 Without these facilities created by advances in information technology the notion of globalizing business operations would have seemed far-fetched . However because geographical distances are irrelevant to operations that are conducted online , international businesses can diversify globally and still maintain their supply chain management in to ensure maximum effectiveness . In fact , the effectiveness of supply chain management has been multiplied with the introduction of information technology into business processes . This has only put more energy into the spread of globalization . To some extent therefore , rapid advances in information technology have contributed to massive volumes of foreign direct investments that have benefited not only the recipient countries but have also benefited multinational companies . The recipient countries have benefited in the form of greater employment opportunities and the multinational companies have benefited in terms of being able to widen their marketing and sales operations (cited in Sullivan , 1998 However rapid advances in information technology have also led to the spread of ideas that can have destabilizing influences in countries which are still trying to create a democratic system . This has happened because of the rapid spread of Internet technology

The communications infrastructure inherent in the Internet transcends national boundaries . Unless governments specifically impose controls on what sort of information are available to surfers in their countries all information generated by the Internet becomes instantly available to all the households around the world with access to the Internet . This creates the underpinnings for the spread of ideas that can hamper the development of democratic systems . For example , the people living in underdeveloped countries become aware of the higher standards of living that people living in the rich economies enjoy . Because all information on the Internet is freely available regardless of geographic distances involved , the people of one country in the modern environment are fully knowledgeable about the lifestyles of the people in another country This creates discontent among nationals in underdeveloped economies and they start to launch protests against the government which they consider to have failed in providing them with the same standards of living (cited in Stiglitz , 2005 . As a result , governmental efforts to smooth the transition to a democratic system are disrupted . In this respect the future of the process of globalization can be very harmful unless the process happens in a controlled manner . However it is impossible for any one single party to influence the process because the driving force behind the force is transnational . It is not limited to any one country or any one group of activists . Proponents of globalizations , led by the owners of large corporations , come from all levels of the social and political structure . Because the focus of globalization is entirely on expanding the boundaries of international business , the social and political structure of countries which are experiencing the effects of globalization for the first time is being undermined in terms of its ability to maintain stability

As mentioned above , loss of political stability is one of the harmful consequences of globalization . The way it happens is that the people in underdeveloped regions experience a heightened motivation to be upwardly mobile socially . However more often than not , the political structure is not developed enough to support that kind of mobility . As a result , an environment of discontent is created and the government can do nothing to alleviate the situation . The result is therefore political instability as the people demand change even though the politically machinery is not there to support change (cited in Stiglitz , 2005 . In fact , this may be one of the reasons why in some countries the democratic system is not working and has been overrun by corruption Once again globalization hurts the future potential of the economy by destabilizing the socio-economic structure . However that is not to say that the spread of ideas that takes place on the basis of globalization through the Internet is bad thing . In fact , when the issue of is one of tyrannical rule , the Internet can be a source of positive change by motivating the people to rise up against it . However when the government of an economically developing region is trying to create the foundation by degrees for transformation to democracy and the free market system then the process of planned implementation may be impaired by globalization with the Internet spreading ideas that demand premature migration (cited in Stiglitz , 2005 . In this respect , the future perspectives of globalization are to too benign

The internationalization of the financial system is another area where the future of globalization is hanging in the balance . Inasmuch as globalization breaks down national barriers and facilitates the flow of cross-b goods and services , businesses benefit by being able to lower the costs of production . As a result of globalization , they have easier access to the required raw materials . In other words , asset management has been internationalized . This has created the international financial market in which investors in one country can invest in the assets of businesses in another country . Once again globalization would appear to be benign in its effects as the mechanism it has created for international asset management paves the way for increased foreign direct investment . Under the surface , the potential for harm is illustrated in the South Asian financial crisis that erupted in 1997 . In this case , investors rushed headlong with their assets to the three countries of Thailand , Indonesia and South Korea because the economic fundamentals characterizing the three countries prior to the crisis seemed to be right out of a utopian world . Therefore international investors , unfettered by any rules and regulations restricting international flow of capital , began to invest heavily into the businesses of these countries . The international financial system also allowed the governments to buy large reserves of the American Dollar in to control the exchange rate . The stability of the local currencies thus engineered engendered additional confidence in the minds of the international investor . However the trouble started in Thailand when investors overnight got the idea that the Thai currency was overvalued . This created mass panic and when the government refused to intervene , the panic spread to South Korea and Indonesia and overnight the currencies in the three countries devalued to the extent that the governments found themselves unable to service the massive pile of foreign debt . This example illustrates the harmful consequences of globalization . Because capital can flow from one country to another solely dependent on the finicky judgment of the international investor the possibility of asset bubbles being created is multiplied . If globalization continues unfettered , then the loss of the welfare state is another consequence to be expected in the future . As mentioned before , when foreign businesses begin to enter the market of less developed regions , local businesses inevitably lose market share to the point that they are no longer able to continue operating . As a result the government has to step in with subsidies in to finance the operations of these businesses until they are able to develop a competitive edge against foreign businesses . Thus resources which would formerly have been directed to the enhancement of public services are now shifted to the private sector . As a result , the government is no longer able to support the poor and the needy in the same way as before This is the reason why globalization can take the process of privatization to the extent that government begins to worry about protecting the private sector against foreign competition rather than about protecting its societal interests . The result is therefore loss of the welfare state . It may be argued that subsidies to the private sector indirectly help the society by sustaining sources of income and employment . However private interests will not sanction public expenditures which do not have the ability to generate profits Therefore , an important future perspective of globalization is its ability to privatize government resources to the point that the public sector becomes impoverished

References

Baylis , John , et al (2006 . Globalization of World Politics . Prentice Hall

Blanchard , Olivier (2005 . Macroeconomics . McGraw Hill /Irwin . 2005

McConnell , Campbell R , and Stanley L Brue (2007 . Macroeconomics South western

college pub

Muroyama , Janet H , and H . Guyford Stever (1998 . Globalization of Technology . National

Academies Press http /books .google .com /books ?id dUikykM_TL4C printsec frontcover dq glo balization perspectives sig SBhUZdQTiarqnRUD2fOLH8EhMb4 PPR5 ,M1

Rodrik , Dani (2006 . One Economics , Many Recipes : Globalization Institutions , and

Economic Growth . McGraw Hill /Irwin

Stiglitz , Joseph E (2005 . Globalization and Its Discontents . McGraw Hill /Irwin

Sullivan , Jeremiah J (1998 . The Future of Corporate Globalization . Inc NetLibrary , ebrary , inc http /books .google .com /books ?id N048ci8yc8AC printsec frontcover dq glo balization future sig ng9imdb03mCufAu9JDpOAPvxE04 PPP1 ,M1 PAGE

PAGE 8 ...