Globalization as the Concept of Moving Towards Single-World Society - Essay Example

1. Globalization is the concept of moving towards single-world society. In this effort there has been rising share of economic activity in the world.The aim was to open the world market to everybody and was thought to be a solution to social and economic disorder prevailing in the world. Globalization is integration through international trade of goods and services with the help of certain measures and regulations. The traditional international trade theories were concerned with the flow of goods between countries in terms of comparative advantage. Comparative advantage can arise out of differences in opportunity costs of production or cross-country differences on other grounds. The implication was that a country would export one set of industries and export another. In the traditional theory the location decisions are influenced by local inputs and demand as well as transferred inputs and outside demand. Thus this theory supports globalization as it focuses on resource endowments. The traditional theory further suggests rural areas are not very well endowed with human and physical capital and hence opportunities for them are less (Leichenko & Silva, n.d.). Since they have high skilled labor ratio, they are able to compete in manufacturing industries where economies of scale are met. In doing so, the aim of exchange of goods promotes share of economic activity and opens the world market to everybody. It also provides a platform for the developing nations to market their products in regions beyond borders and which could ultimately alleviate them from poverty. These principles are what gave rise to the concept of globalization. 2. The major drivers of globalization include social-demographic (regional, cultural), technological, which includes telecommunications, internet and transportation, economic factors like foreign direct investment, profit motives and market share, ecological and environmental factors like pollution and green laws, and political-legal factors like falling trade barriers, political stability and intellectual property. There is a connection between poverty and globalization and it is generally believed that without globalization inequality would have increased. Free trade would make the world prosperous and assist the poorer nations in coming up. Technological upgradation takes place in developing nations but evidence also suggests that technological change increases inequality between highly skilled workers and the unskilled workers (Singer). Trade and politics should be independent of each other. Governments may trade with other countries even while disapproving of their regimes. The US has attacked China for its human rights record while it expanded its trade with China. Foreign direct investment flows into the developing nations which allow the multinationals to compete in the global market place. The global financial system should channel global savings to the poorest countries so that they can use it to invest it and grow. Globalization theory suggests leveraging advantages of location but this does not imply to compromise on issues of pollution. A corporation that pollutes a river into which it discharges wastes will be made to clean it up and to compensate those who have been harmed. Thus, the cost of keeping the environment clean becomes a part of the production cost. 3. Globalization was expected to streamline the underlying problems of poverty environmental degradation, inequity in income distribution and declining wages. This has only resulted in discord and disputes while making the rich nations richer. Multinationals are supposed to play a major role in globalization but Singer insists that corporate giants are not the sole beneficiaries. Concurrent with globalization there has been a remarkable growth in small and mid-size companies that participate in the international economy. USA and Europe preach free trade but they subsidize agriculture which ruins the chances of farmers in the developing countries from attaining self-sufficiency in food. According to Singer no one’s welfare can be improved without reducing the welfare of at least one other person. Unconstrained globalization is likely to lead to economic efficiencies. According to Herman Daly (n.d.) when world production shifts to countries that do the poorest jobs, it reduces the efficiency of global production. The fear is that rich countries would use high standards to keep goods out of the poor countries. Africa was not allowed to manufacture the drugs for AIDS indigenously but when antibiotic for anthrax was required, the US Administration asked Bayer to slash the prices or they would be forced to buy a cheaper generic version. The developed nations were embarrassed with this show of double standards. The US claims to be absorbing imports while on the other hand they do not allow developing nations to manufacture cheaper substitution. Free trade between US, Canada and Mexico led to shift in thousands of jobs from US to Mexico. This increased the salaries in Mexico but adversely affected US. 4. For each country or region to protect its own interest in international trade, regional trade arrangements take place. These areas require deeper economic integration and they turn to the regional trading blocs for protection. These regional trade groups provide some political and economic benefits (ILO, n.d.). Some of the major trading blocs include NAFTA (North American Free Trade Association), FTAA (Free Trade Area of the Americas), European Union, SAPTA (South Asian Association for Regional Cooperation Preferential Trading Arrangement), AFTA (Association of South East Asian Nations (ASEAN) Free Trade Area), and CEFTA (Central European Free Trade Agreement), ASEAN (Association of Southeast Asian Nations), and SAARC (South Asian Association for Regional Cooperation). FTAA is the world’s largest free-trade area, with 750 million people from 34 member countries. It is President Bush’s vision for free trade in the Western hemisphere to foster economic growth and opportunity, promote regional integration and strengthen democracies (USTR, 2003). The FTAA would benefit the US consumers and a family of four would see an income gain through higher purchasing power and higher income. NAFTA has allowed trade and investment flows in North America to expand. According to the figures of International Monetary Fund, trade among the three NAFTA countries (United States, Canada and Mexico) has more than doubles between 1993 and 2002 (USTR, 2003a). outward-looking countries should learn from the example of NAFTA to increase wealth and improve competitiveness and derive benefit from multi-trade liberalization. References: Daly, H E (n.d.), Globalization’s Major Inconsistencies, 18 July 2007 ILO (n.d.)< Globalization, 18 July 2007 Leichenko, R., & Silva, J., (n.d.), International trade, employment, and earnings: Evidence from U.S. rural counties, 18 July 2007 Singer, Peter One world : The ethics of globalization, 2nd edition. New Haven : Yale University Press, 2004. USTR (2003), Trade Facts, 18 July 2007 USTR (2003a), North American FTA, 18 July 2007 Read More