Globalisation: Concept, Causes and Consequences

Globalisation: Concept, Causes and Consequences

Meaning

Globalisation postulates a structure of interaction among countries leading to an integrated world economy. This interaction is manifested in a variety of expressions ranging from social to political and cultural to economic and technological by means of improvising the means of communication, infrastructure and transportation. International trade and cross-border investments are acknowledged to be the vital factors in creating an integrated world economy. The idea of integration requires further examination given the inherent complexity. Theoretically, it consists of two subsets namely negative integration and positive integration. The former talks of the policy of free trade, which talks of removing trade barriers or protective barriers such as tariffs and quotas whereas the latter focusses on standardizing international economic laws and policies.

At any given layer of the term Globalisation in its truest sense refers to an emanating system of an international network on economic and social lines. One of the earliest applications of the term ‘Globalisation’ can be traced back to a 1930 publication titled ‘Towards New Education’ which sought to imply an overview of the human experience in education. In 1897, another term “corporate giants”, coined by Charles Russell Tazel, found its place in the economic literature that meant the big trusts and large enterprises. These two terms began to be used interchangeably between 1960 and 1980 by scholars within the realm of economics and other social sciences.

World Bank defines Globalisation as “the growing integration of economies and societies around the world”. The transformation of the term ‘Globalisation’ to a conceptual framework triggered a new array of thinking providing new interpretations and discourses on the global economic narrative. With the end of the Cold War, the concept made its way to be representing a world that is progressively interdependent in its economic and informational dimension. Acting as a paradigm of spatial-temporal processes of change, Globalisation unpacks a template of fundamental metamorphosis which rescripts the international economic patterns.

According to World Health Organisation (WHO), “Globalisation, or the increased interconnectedness and interdependence of people and countries, is generally understood to include two interrelated elements: the opening of borders to increasingly fast flows of goods, services, finance, people and ideas across international borders; and the changes in institutional and policy regimes at the international and national levels that facilitate or promote such flows. It is recognized that Globalisation has both positive and negative impacts development”. It is clear that WHo provides a holistic approach in defining the notion of Globalisation by embracing socio-economic and politico-technological paradigms.

Globalisation as a key element in the theory and practice of business posits a construct of connectivity across various spectra. The International Monetary Fund’s (IMF) identification of the four basic tenets of Globalisation in 2002 subsided the ambiguities concerning the term to a large extent. They are as follows: trade and transactions, capital movements and investment, migration and movement of people and the spreading of knowledge.

Vectors of Globalisation

Globalisation as a process exhibits an array of patterns at various levels.

Economic Dimension

Basing free trade in its axis, there is no room for dubiety that this is the highest manifestation of Globalisation. It is evident that the process of economic Globalisation has in the recent past has been dominated by a group of developed countries like the US, Japan, China etc. Multinational corporations (MNCs) such as Google, Microsoft, Apple, McDonalds etc. and international Organisations like IMF and World Bank are at the forefront as the global market determinants. According to Bottery, economic Globalisation can be aptly expressed as the convergence of three different factors. They are as follows: 1) Increasing movement of capital around the world through information and technology. 2) The prevalence of supranational bodies such as the World Trade Organisation (WTO), the World Bank, and the IMF. 3) Increased influence of Transnational Companies (TNCs).

Cultural Dimension

Globalisation acts as an agent of transmission of ideas and cultures across the world. It is more often used in synonymous with the term “modernity”. Mostly, the patterns of this process was geared toward creating a “homogenous” standards of practices, and inculcation of ideas and values, short of a single world culture. Arguably, the inception of this vector could be traced back to the nascence of global trade. Every commodity is an expression of one’s culture. For instance, the Indian fashion industry embraced the “denim” clothing since the advent of western textile MNCs into the domestic market. Moreover, thanks to the growing domains of communication, particularly in the form of social media platforms such Facebook, Twitter and so forth, which bring peoples hailing from different regions and cultural affiliations together, making this exchange a cakewalk. These new synthetic and virtual interaction which replaced the physical interaction across various quarters, help rewrite the new order of global subcultures. Globalisation, in this sense, unlike some critics claim, is not amounting to westernization or Americanization. In cultural terms, it represents a template of mutual reciprocity. Hence, it’s not just about how non-western societies adapt the cultural aspects of the west, but also the cases wherein the western system imbibe foreign values, both tangibly and intangibly.

Political Dimension

With the end of the Second World War in 1945, the hitherto-dominated control of the state apparatuses over the welfare of citizens were slowly eroding. The period, since then, was characterized by the emergence of non-state actors like Non-Government Organisations (NGOs) and supranational Organisations as important players in the domain of human affairs. The trends went one to experience the rising membership of nation-states in multilateral bodies such as the UN, European Union (EU) and so forth. Furthermore, the dissemination of liberal-democratic ideas, collapse of communist systems like USSR, and galloping number regional Organisations also add up to the political undercurrents of Globalisation. Ideologically, Globalisation fosters a cosmopolitan character over nationalistic sentiments. Though a single world government may be impractical, in realist terms, a considerable amount of cooperation has been able to be achieved among the comity of nations. Critics opine that with the increasing role of non-state actors, the state systems are facing the erosion of sovereignty as they are losing the hitherto-enjoyed control over economic activities.

Merits of Globalisation

a) The world has become more interdependent economically, socially, culturally, and politically.

b) The concept of free trade ensure job growth; increases competition; movement of labour; economic prosperity; minimal interference of state in economic activities.

c) It seeks to bring economic balance to poor regions by injecting technology and foreign capital.

d) It helps alleviate poverty and promotes economic prosperity.

e) It promotes inter-cultural communication and cosmopolitanism.

Demerits of Globalisation

a) The most important accusation ever raised against globalisation is that the “rich becomes richer and poor becomes poorer”.

b) Risks of the theft of intellectual property are high.

c) Inequitable distribution of resources.

d) States become subservient to corporate interests.

In the book ‘The Race to the Top: The Real Story of Globalisation’, Thomas Larsson argues that Globalisation “is the process of the shrinking of the world, the shortening of distances, and the closeness of things. It allows the increased interaction of any person on one part of the world to someone found on the other side of the world, in order to benefit”.

The UNDP reports that “during the most recent period of rapid growth in global trade and investment, 1960 to 1998, inequality worsened both internationally and within countries. The richest 20 percent of the world’s population consume 86 percent of the world’s resources while the poorest 80 percent consume just 14 percent”.

Activity

Make a copy of diagram. Complete it by adding two or three examples under each area.

Inter dependence and Globalisation