TO WHAT EXTENT SHOULD WE EMBRACE GLOBALISATION?
26th December 2015
To what extent should we embrace globalization?
Altvater (2007) describes globalization as acceleration in the processes of production, transport and communication as well as consumption, across markets worldwide. Globalization has facilitated vast improvements to human productivity thanks to rapid industrialization, and the use of fossil fuels. Distances have got shorter, and communication has been faster thanks to globalization (Altvater, 2007).
However, global capital has pressured the sectors of production to provide ever-larger rates of growth, while cutting costs such as labor (Altman, 2007). Globalization is largely viewed from two perspectives. There are those who view it as an inevitable path for humanity, while there are those who argue against its Imperialist nature (Lane, 2004). However, this discourse takes a different path. It looks at globalization as a tool for development, while also a threat to human existence. The essay posits that we should limit adoption of globalization where it hinders domestic public governance in matters such as environmental policy.
Background on Globalization
The concept of globalization has dominated politics, economics and social-research since the 1960s. Its adoption in international policies has been matched by a dramatic surge in global exchanges for goods and information. International policies have favored elimination of trade barriers through establishment of common rules by organizations such as the WTO (Robertson, 2009).
Globalization is best viewed through multinational enterprises (MNEs), and their operations across international markets. MNEs have provided growth by expanding to new markets via foreign direct investments (FDIs). The extent of globalization is well demonstrated by flows of foreign direct investments. These flows of capital grew from $160 billion in 1991 to over $1122 billion in 2010, representing the increasingly integrated nature of global markets (UNCTAD, 2011). This growth rate is also reflected in global trade increases, as manufacturing has spread around the world. Multinational enterprises have spread their operations to new markets, in the quest for labor, raw materials and consumers. This has brought about numerous advantages to nations that have embraced globalization (Lane, 2004).
The benefits of globalization
Harrison (2004) argues that embracing globalization is a critical element for successful economic development. From a micro-perspective, Globalization offers a mix of advantages that largely benefit local populations in a variety of ways. These benefits include: employment opportunities, infrastructure development and improved amenities (Harrison, 2004).
On a macro-perspective, Globalization has led to a surge in international trade. Harrison (2004) argues that underdeveloped nations have been able to participate in international exchanges by adopting globalization. It has enabled these countries to industrialize and enjoy resultant wealth. For instance, policies favoring international trade have enabled previously impoverished nations in Asia to grow their economies at rates unthinkable under protectionist policies (RoyChowdhury, 2005). These benefits are best demonstrated by the wealth that has been generated in Asian export-based economies thanks to globalization.
The economic benefits of globalization transcend to all aspects of life in these nations. People there are able to find meaningful employment, leading to improved quality of life (Lane, 2004). Similarly, globalization promotes competition in local economies. Industries that have been opened up for international competition are likely to produce goods more efficiently, resulting in less expensive and better quality items for consumers.
Limits to globalization
Despite its benefits, globalization advances numerous disadvantages. This is especially seen in the realm of governance, where poor administration is accentuated by the very implementation of globalist policies that harm developing nations. This is highlighted by the environmental and labor policies adopted by some states, in response to globalist demands. Bhardwaj (2014) furthers this discussion via his review of the global shipping industry.
In their discourse, Linden and Kanyama (2007) present globalization as a threat to the environment. Prior to the industrial revolution, renewable sources satisfied most energy demand. However, fossil fuels garnered popularity with the advent of global capitalism. Rising energy demands have encouraged MNEs such as Shell, BP and Exxon to drill for fossil fuels in poorly governed regions (Altvater, 2007). These companies tend to affect policy implementation in oil rich countries, hence contributing to poor domestic governance (Robertson, 2009). These policies often favour MNEs at the expense of the local communities, as is the case in Canada’s tar sands (Skogstad, n.d.). Altvater (2007) explains that in other cases, the affected countries are in no state to contest these policies, as they are heavily dependent on tax revenues provided by these companies.
The Niger Delta’s ecological disasters highlight what occurs once globalization mixes with poor governance. The Niger Delta is among Africa’s largest oil producing regions (Igwe, 2013). The delta boasts of four different and bio-diverse ecological zones. Numerous oil spills have been reported in the area due to irresponsible corporate behavior. This has resulted the loss of the mangrove forests and aquatic life. People in the region have also experienced disruptions to their agrarian economic activities (Igwe, 2013). Similarly, the activities of MNEs in the region have created fresh healthcare issues for the communities there. Igwe (2013) explains that these environmental policies can be largely attributed to a weak regulatory environment, which has been advanced by irresponsible multinationals such as Shell.
Globalization has also undermined public policy in developed nations (Skogstad, n.d.). An instance is Canada’s destructive environmental policy in its quest to develop the Alberta tar sands. Operations by companies in the region have displaced local communities and their economic activities. Labohm (2013) highlights that these extraction activities have affected water sources and resident wildlife. Such operations actively undermine the country’s prescribed environmental protection policies (Skogstad, n.d.).
Globalization has also been noted to undermine labour policies in various countries. Altman (2007) argues that labour has continually lost its collective bargaining power in the age of globalization. Linden and Kanyama (2007) explain that globalization is focused on rapid and cheaper production of goods and services. As such, multinationals have shifted their low-tech manufacturing to cheaper destinations around the world. However, such destinations usually feature poorly enforced labour and environmental policies (Linden and Kanyama, 2007). This has often resulted in poor working conditions for workers operating at factories owned by multinationals or their suppliers. Bangladesh presents a useful case on the effects of multinationals’ operations in weakly regulated regions. Disasters such as the Rana Plaza fire highlight the complicity of multinationals and globalization’s destructive effects.
Lane (2004) also highlights the proliferation of terrorism as an outcome of irresponsible globalization. Insurgencies have been noted to rise where poor administration and irresponsible corporate governance have mixed. Igwe (2013) discusses the Niger Delta insurgencies at length. His discourse demonstrates how globalization has affected governance in that area, and the role of multinationals in these events. The same has also been observed in the Congo’s rare earths industry, where irresponsible corporate sourcing has cropped up insurgencies aimed at controlling the lucrative extraction activities.
Globalization is both beneficial and disadvantageous. Its advantages include economic development and increased international trade. It has also been noted that questionable corporate governance practices have undermined public policy in weakly regulated jurisdictions. This situation has promoted corruption, environmental pollution, and poor labour practices, harming local communities in the process. This essay proposes limits to the adoption of globalization where it hinders domestic public governance and environmental policy. This may be actualized through cooperation between regulators and multinationals, and strongly enforced corporate governance practices across the world.
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