Globalisation is good or bad ?
Globalisation causes prosperity or impoverishment?
This is once again asking if globalisation does more harm than good. And I’m making it clear now that I believe globalisation does not increase poverty. Looking at two of the fastest growing economies in the emerging market, China and India it is evident that prosperity is the case. In the late 70’s these two countries opened up to trading, before this they isolated themselves by barriers of trade. The GDP of India rose from 19 to 30 % and the GDP of China rose from 23 to 46% between 1980 and 2000. Pranab Bardhan in his article states that ‘free trader economists believe that gains from the rising tide of internationalisation has the potential of lifting all boats in the long run while others argue that the possibility of many poor people to adjust, retool or relocate with the change in market makes the success of globalisation uneven’ (Bardhan, 2004). Using the poverty line of one dollar a day to compare poverty between these two countries, it appears that the poverty line in China drops from 79 to 27 % and in India from 55 to 11%. Through the form of exporting light manufacturing goods and employing millions of people, there is no debating that globalisation impacted poverty in China (Bardhan, 2004). From extensive research conducted it is clear to me that poverty strives in countries that resist globalisation. This is usually through political instability, for example Kenyan farmers are poor not because they are not hard working but because of land reform and the governments unwillingness to give them ownership of the land (unlike in Taiwan, who are now 20 times richer)(Norberg, 2006). Anti globalist may argue that in sub-Saharan Africa poverty is in fact increasing however they fail to recognise that this has very little to do with globalisation and a lot to do with corruption, civil wars and unstable political regimes (Bardhan, 2004).
Jobs and incomes; everybody knows at this stage that trade barriers such as tariffs are used to keep goods out of the host country. However removing these trade barriers allows firms to operate the manufacturing process off shore at a cheaper price. An example of these benefits can be seen in the company’s swans and Boeing 777. Another great example can be seen in the Bartlette and Steele research. Harwood industry was a clothing manufacturer in the U.S. who moved to the Honduras when the production cost became too high in America. They went from paying $9 in the States to 48c in Honduras. Anti-globalist would deem this as unethical, however I believe it is justifiable. According to Davis Ricardo each country should only specialise in goods and services which they can produce most efficiently and import the goods it cannot produce efficiently i.e. free trade theory (Goldsmith, Mander 2003). Although this would lead to loss in jobs for Americans it would benefit the economy in the long run, if Harwood can produce goods cheaply then it can import it into America and sold at a cheaper price thus leaving consumers with more to spend on other goods which in turn protects and keeps others in employment.
Labour policies ; those in developing countries integrate into the world economy by a shift of highly skilled workers into tradable sectors while the more unskilled workers into the non tradable sectors such as construction and transport. This can result in temporary unemployment but it will increase the demand for labour and income will rise (Khan, 1998). Anti globalist claim that these foreign companies will leave if labour costs increase in these cheap markets. However if labour cost increase this means that the firm has played its part in helping the economy raise the wage rate (Norberg, 2006).
In conclusion, I am now a fully converted pro-globalist. I believe globalisation does more good than harm, even for those in poorer areas. Looking at the poor farmers in Uganda even they profited from globalisation, the increase demand of organic goods globally yield an additional income for these farmers which they could use on school fees or even investing in a better home (kidd et al, 2001). I understand that globalisation can have a negative effect on local companies, however from Norberg’s study; local factories improve and grow when multinationals enter the market. Anti globalist argue that the entrance of multinationals does not have benefits but I beg to differ. In Vietnam in the last 15 years the economy has doubled and the level of unemployment has halved so I find it almost impossible to reason with the idea that globalisation does not benefit all (Norberg, 2006). The problem is not globalisation, the problem is the tariffs and barriers that those in the developed countries use to stop others from becoming successful in the same way we did. The united nation has conducted a research that proves that is we removed barriers to trade the developing countries could benefit by up to 450 billion pounds a year from export (Norberg, 2006). Anti globalist are only making matters worse by demanding an increase in barriers. Finally the question I think we should ask is not if globalisation benefits all but if it benefits those that don’t participate. The answer is that although globalisation might have some adverse effect, the good outweighs the bad and the alternative of not globalising would have a worse effect on an economy. (Khan, 1998)
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