A critical review on a perspective of globalization - Essay Example

?A critical review on a perspective on globalisation 0. Introduction There are actually many definitions of globalisation as there are many ideologies on globalisation (Beerkens 2006; Steger 2005). However, one important definition is by the International Monetary Fund or IMF (2008, p. 2) which defined globalisation as “the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders.” An article attributed to Chew Nox analysed the issue of whether globalisation is good or bad and concluded that the good outweighs the bad in globalisation. Nox made at least three key points in the article. Firstly, Nox argued that the booming economies of India and China lifted millions of people from poverty and enumerated data on how economic boom improved the lives of many. Secondly, Nox refuted the view that rich countries have employed protectionism as they destroy the trade barriers of the developing countries. Thirdly, the author pointed out that with the globalisation, multinational corporations “spread wealth, work, technologies that raised living standards.” Nox also raised several other points but they do not seem directly relevant to the central question of whether globalisation is good or bad for a country. As a concluding statement, Nox argued that “if globalisation has not adequately worked, it is because there has not been enough of it or countries resisted it.” Let us assess Nox’s article. 2.0. Critique The main strength of the Nox article is that it stood on the correct foot with regard to globalisation. However, Nox’s article has several weaknesses. Some of the weaknesses arose because the Nox article is too short to elaborate on many of the specifics of globalisation. Nevertheless, the fundamental shortcoming of Nox’s work is that it failed to objectively assess based on theory the overall impact of globalisation on the economy and society. At the outset, however, let us categorically identify a very fundamental weakness of the Nox’s article: the work of Nox is a plagiarised work. At least three sentences of the Chew Nox article are word-for-word copies of sentences in two other articles, each of which was written by authors other than Nox. The sentence, “World poverty and income inequality fell over the past two decades, for the first time in more than a century and a half, thanks to globalisation- the rising density of economic integration across national borders,” for instance, can be found in Wade (2004). Two sentences were lifted word-for-word from the online article of Meredith and Suzanne (2007): “The booming economies of India and China - the Elephant and the Dragon - have lifted 200 million people out of abject poverty in the 1990s as globalisation took off. Tens of millions have catapulted themselves far ahead into the middle class.” It is highly likely that other portions of the Nox article were also plagiarised. However, the three sentences quoted earlier already provide adequate evidence of plagiarism. Thus, we need not find out if the other sentences of the Nox article were also plagiarised. The data provided suffice to make us conclude that the Nox article is a plagiarised work. Going into the content, we find several other weaknesses of the Nox article. Firstly, Nox concluded that globalisation has its bad and good sides but Nox did not really identify the bad or negatives sides of globalisation. Some of the bad or negative sides of globalisation actually pertain to the employment effects of globalisation. It is a fundamental view in business economics that, assuming there is no intervention from government, trade moves societies into an economic structure in which production and trade become founded on the country’s comparative advantage. In other words, there will be sectors in society that will human and non-human resources in society that will become unemployed as domestic production and international trade are restructured along society’s comparative advantage (Krugman and Obstfeld 2009, p. 27). Unavoidably, there will be a phase in which labour has to move into sectors in which society has comparative advantage. It also a phase wherein labour has to move away from sectors in which society has no comparative advantage. These imply that there will a radical restructuring of businesses. Businesses located in sectors in which the country has no comparative advantage will die or will diminish while businesses in which the country has comparative advantage will flourish. The work of Badia et al. (2008) emphasised on the notion of productivity. Badia et al. (2008, p. 3) emphasise that with globalisation, “the least productive firms may be forced into bankruptcy while the most productive ones will take advantage of new business opportunities in foreign markets.” In other words, globalisation will not be a bed of roses: there will be business that will die with the globalisation process. Another point emphasised by conventional economic theory is that trade liberalisation associated with globalisation will lead societies into a world in which there will relative and absolute factor price equalization based on the Heckscher-Ohlin theory (Salvatore 2001, p. 136). This will mean that the real wage gap between developed and developing countries will diminish or fade away. Thus, it seems logical that globalisation will lead into a situation in which the real wage of developed countries will decrease while the real wage of developing countries will increase. Secondly, several scholars have identified negative non-economic effects of globalisation. Based on an empirical-statistical study, for example, Dagdemicr and Acaroglu (2010, p. 37) concluded that globalisation would increase child labour in developing countries (the long-term relationship is actually complicated but the specifics were omitted for brevity). Thirdly, many of the assertions of Nox are not supported by academic literature. Lastly or fourthly, there are several concerns that Nox failed to elaborate indicating several benefits from the globalisation process. Using a cross-sectional regression on more than 30 countries, for instance, Neutel and Heshmati (2006, Abstract Section and pp. 28-32), concluded that globalisation leads to poverty reduction and significant reduction of inequality. The Neutel and Heshmati (2006) findings confirmed a similar finding of Heshmati (2004, p. 17) based on a sample of 62 countries and panel data on the countries during the period 1995-2000. Although Goldberg and Pavcnik (2007, p. 77) reached an opposite conclusion on the relationship between globalisation and equality, Goldberg and Pavcnik reached the conclusion based only on a review of the literature. Perhaps, a very important anticipated impact of globalization is the integration of production and markets on a worldwide scale (UNCTAD 2008, p. 90). Koren (2003, p. 3) argued however that specialization of countries will be incomplete and, thus, the situation will inhibit international trade to a certain extent. Worst, Vinig and Kluijver (2007, p.2) econometric regression on more than 30 countries indicated a negative correlation between globalisation and entrepreneurship but the study of Sonia (2009, p. 135) indicated the contrary in the case of India. In other words, the outcome of globalisation is more positive than that indicated by Nox. 3.0. Conclusion The fundamental assessment of this work on the Nox article is that the article is not only plagiarised but it is also inadequate on its discussion of globalisation. More important, the Nox article missed several important points on globalization that are highly relevant for business and economics. Globalisation has risks; it will pose difficulties for businesses that are not consistent with a country’s comparative advantage but, overall, businesses will prosper because efficiency is promoted and as savings resulting from efficiency are reinvested into businesses and economic growth. Elaborating on this point, however, will require a longer work. References Badia, M., Slootmaekers, V., and Beveren, I., 2008. Globalization drives strategic product switching. IMF Working Paper 08/246. Washington: International Monetary Fund. Beerkens E., 2006. Globalisation: Definitions and perspectives. Available from: http://www.beerkens.info/files/globalisation.pdf [Accessed 12 April 2012]. Dagdemir, O. and Acaroglu, H., 2010. The effects of globalisation on child labour in developing countries. Business and Economic Horizons, 2 (2), 37-47. Goldberg, P. and Pavcnik, N., 2007. Distributional effects of globalization in developing countries. Journal of Economic Literature, XLV (March), 39-82. Heshmati, A., 2004. The relationship between income inequality, poverty and globalisation. IZA Discussion Paper No. 1277. Bonn: Institute for the Study of Labour. IMF, 2008. Globalisation: A brief overview. Issues Brief, 02/08 (May). Washington: International Monetary Fund. Koren, M., 2003. Financial globalization, portfolio diversification, and the pattern of international trade. IMF Working Paper 03/33. Washington: International Monetary Fund. Krugman, P. and Obstfeld, M., 2009. International economics: Theory and policy. 8th ed. London: Addison-Wesley. Meredith, R. and Hoppough, S., 2007. Why globalisation is good. Forbes.com. Available from http://www.forbes.com/forbes/2007/0416/064.html [Accessed 12 April 2012]. Neutel, M. and Heshmati, A., 2006. Globalisation, inequality and poverty relationships: A cross-country evidence. IZA Discussion Paper No. 2223. Bonn: Institute for the Study of Labour. Salvatore, D., 2001. International economics. 7th ed. New York: John Wiley & Sons. Sonia, 2009. Globalization and its impact on small scale industries for India. PCMA Journal of Busines, 1 (2), 135-136. Steger, M., 2005. Ideologies of globalization. Journal of Political Ideologies, 10 (1), 11-30. UNCTAD, 2008. Globalization for development: The international trade perspective. New York and Geneva: United Nations. Wade, R., 2004. Is globalisation reducing poverty and inequality? World Development. Available from http://www.sciencedirect.com/science/article/pii/S0305750X04000075 [Accessed 12 April 2012]. Read More