There are many different definitions of globalisation, but most acknowledge
the greater movement of people, goods, capital and ideas due to increased economic
integration which in turn is propelled by increased trade and investment. It
is like moving towards living in a borderless world.
There has always been a sharing of goods, services, knowledge and cultures
between people and countries, but in recent years improved technologies and
a reduction of barriers means the speed of exchange is much faster. Globalisation
provides opportunities and challenges. Bigger markets can mean bigger profits
which leads to greater wealth for investing in development and reducing poverty
in many countries. Weak domestic policies, institutions and infrastructure and
trade barriers can restrict a country's ability to take advantages of the changes.
Each country makes decisions and policies that position them to maximise the
benefits and minimise the challenges presented by globalisation.
The issues and perceived effects of globalisation excite strong feelings, tempting
people to regard it in terms of black and white, when in fact globalisation
is an extremely complex web of many things. The following table presents ten
opposing points of view often expressed about globalisation.
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Benefits of globalisation
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Problems of globalisation
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1.
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Economies of countries
that engage well with the international economy have consistently grown
much faster than those countries that try to protect themselves. Well
managed open economies have grown at rates that are on average 2 ½
percentage points higher than the rate of growth in economies closed to
the forces of globalisation.
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There are social and economic costs to globalisation.
Trade liberalisation rewards competitive industries and penalises uncompetitive
ones, and it requires participating countries to undertake economic restructuring
and reform. While this will bring benefits in the long term, there are
dislocation costs to grapple with in the immediate term, and the social
costs for those affected are high.
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2.
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Countries which have had faster economic growth have
then been able to improve living standards and reduce poverty.
India has cut its poverty rate in half in the past two decades. China
has reduced the number of rural poor from 250 million in 1978 to 34 million
in 1999. Cheaper imports also make a wider range of products accessible
to more people and, through competition, can help promote efficiency and
productivity.
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Some countries have been unable to take advantage of
globalisation and their standards of living are dropping further
behind the richest countries. The gap in incomes between the 20% of the
richest and the poorest countries has grown from 30 to 1 in 1960 to 82
to 1 in 1995.
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3.
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Improved wealth through the economic gains of globlisation
has led to improved access to health care and clean water which has increased
life expectancy. More than 85 percent of the world's population can
expect to live for at least sixty years (that's twice as long as the average
life expectancy 100 years ago!)
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Increased trade and travel have facilitated the spread
of human, animal and plant diseases, like HIV/AIDS, SARS and bird
flu, across borders. The AIDS crisis has reduced life expectancy in some
parts of Africa to less than 33 years and delays in addressing the problems,
caused by economic pressures, have exacerbated the situation.
Globalisation has also enabled the introduction of cigarettes
and tobacco to developing countries, with major adverse health
and financial costs associated with that.
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4.
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Increased global income and reduced investment barriers
have led to an increase in foreign direct investment which has accelerated
growth in many countries. In 1975, total foreign direct investment amounted
to US$23 billion while in 2003 it totalled US$575 billion.
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The increasing interdependence of countries in a globalised
world makes them more vulnerable to economic problems like the
Asian financial crisis of the late 1990's.
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5.
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Improved environmental awareness and accountability has
contributed to positive environmental outcomes by encouraging the
use of more efficient, less-polluting technologies and facilitating economies'
imports of renewable substitutes for use in place of scarce domestic natural
resources.
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The environment has been harmed as agricultural,
forest, mining and fishing industries exploit inadequate environmental
codes and corrupt behaviour in developing countries. Agricultural seed
companies are destroying the biodiversity of the planet, and depriving
subsistence farmers of their livelihood.
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6.
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Increasing interdependence and global institutions like
WTO and World Bank, that manage the settlement of government-to-government
disputes, have enabled international political and economic tensions
to be resolved on a "rules based" approach, rather than
which country has the greatest economic or political power. Importantly
it has bolstered peace as countries are unlikely to enter conflict
with trading partners and poverty reduction helps reduce the breeding
ground for terrorism.
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The major economic powers have a major influence in the
institutions of globalisation, like the WTO, and this can work against
the interests of the developing world. The level of agricultural protection
by rich countries has also been estimated to be around five times what
they provide in aid to poor countries
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7.
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Improved technology
has dramatically reduced costs and prices changing the way
the world communicates, learns, does business and treats illnesses. Between
1990 and 1999, adult illiteracy rates in developing countries fell from
35 per cent to 29 per cent.
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Trade liberalisation and technological improvements
change the economy of a country, destroying traditional agricultural
communities and allowing cheap imports of manufactured goods. This
can lead to unemployment if not carefully managed, as work in the traditional
sectors of the economy becomes scarce and people may not have the appropriate
skills for the jobs which may be created.
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8.
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Modern communications
and the global spread of information have contributed to the toppling
of undemocratic regimes and a growth in liberal democracies around
the world.
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Modern communications
have spread an awareness of the differences between countries, and increased
the demand for migration to richer countries. Richer countries
have tightened the barriers against migrant workers, xenophobic fears
have increased and people smugglers have exploited vulnerable people.
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9.
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The voluntary adoption by global companies of workplace
standards for their internationalised production facilities in developing
countries has made an important contribution to respect for international
labour standards. Wages paid by multinationals in middle- and low-income
countries are on average 1.8 to 2.0 times the average wages in those countries.
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Globalised competition can force a 'race to the bottom'
in wage rates and labour standards. It can also foster a 'brain drain'
of skilled workers, where highly educated and qualified professionals,
such as doctors, engineers and IT specialists, migrate to developed countries
to benefit from the higher wages and greater career and lifestyle prospects.
This creates severe skilled labour shortages in developing countries.
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10.
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International migration has led to greater recognition
of diversity and respect for cultural identities which is improving
democracy and access to human rights.
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Indigenous and national culture and languages
can be eroded by the modern globalised culture.
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Source: AusAID, 2004, http://www.ausaid.gov.au/
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Source: The World Bank, 2004, http://www.worldbank.org/
United Nations Development Programme, 2004 http://www.undp.org/
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Globalisation has costs and benefits.
There have been examples of poorly managed globalisation (eg when countries
opened their economic borders before they had the capacity to respond well)
but there are also examples of well managed engagement with the international
community.
Like it or not, globalisation is a reality. Many countries have committed themselves
to reducing poverty through the Millennium Development Goals (MDGs) and are
cooperating together to work out smart ways to manage globalisation.