Saturday 28 April 2007

Globalization is a trend which hurts the poor and benefits the rich.

The mention of ‘globalization’ evokes thoughts of a centralized world communication system that facilitates almost instantaneous transactions or negotiations in trade, goods and or services across national borders with just the push of a button on a computer keyboard. The details of such transactions or negotiations are manifest, for example, in the establishment of beverage, clothes, and foods shop chains among others worldwide. These subsidiaries would have originated from a mother company which was thought and set up in one country and subsequently expanded to other host countries. The rationale is usually the pursuit of varying markets identified in terms of (a cheap) work force, (high spending) consumers or demand, (abundant and cheap) raw material, favorable tax regimes (to lessen production/operation cost etc), or just to satisfy an entity’s whims of being described a ‘global’ brand whether or not that is cost effective.

Increasingly, the growth of this phenomenon is a catalyst in the modern world’s evolution into a global village, where the scenarios painted above are a more common feature. This is especially so as, for obvious beneficial reasons, the developed world and her transnational corporations continue to invest heavily in the development and upgrade of required technical support systems to drive and meet new challenges to globalization. The phenomenon is not restricted to just trade and commerce, or directly related sectors. As noted by Mauro F. Gullen in the Annual Review of Sociology (Vol.27, 2001), the term is also linked to cross-border advocacy networks and organizations defending human rights, the environment, women’s rights or world peace. It also extends, and very importantly, to governance, where the Western world is persuading its partners, the developing world and especially recipient countries of donor aid and grants to accept democratic forms of governance. The argument is that democracy ensures freedoms that allow the development of people and their nations, endears citizens to work to develop themselves and the nation state and generally promotes individual human rights and economic growth. The democratic system of governance is steadily gaining root and becoming the acceptable global system being subscribed to by many governments.

Globalization, while not without benefits, is generally making the world a more miserable place. This is evidenced in the destabilizing of local economies, the exploitation of workers and the undermining of developing country governments.

This blog discusses the growing disparity between the poor and the rich due to globalization. The poor will be defined in two categories; first, impoverished developing countries and; second, the impoverished majority in developed countries.

Globalization has been defined and refined by many scholars. Scholte (2001:338) defines globalization as the processes by which social relations acquire reasonably distance-less and borderless qualities, so that human lives are all the time more played out in the world as a single place. Tiplady argues similarly with a perspective on globalization by quoting a definition coined by Roland Robertson(1992) as a “concept that refers to both the compression of the world and intensification of consciousness of the world as a whole… both concrete global interdependence and consciousness of the global whole” from where Tiplady asserts that globalization is a way of “increasing global interconnectedness, increasing global consciousness [with the environment making it] one interconnected world” (Tiplady:2003:pp.2-5). Sociologist Anthony Giddens (1990:64; 1991:21) proposes to regard globalization as a decoupling or “distanciation” between space and time, while geographer David Harvey (1989) and political scientist James Mittelman (1996) observe that globalization entails a “compression” of space and time, a shrinking of the world.

Another scholarly view worth considering is Frank Webster’s who says globalization signals the growing interdependence and interpenetration of human relations alongside the increasing integration of the world’s socio-economic life (Webster 2002:68). According to him, there is a tendency to conceive of globalization as primarily an economic affair, manifest in the tying together of markets, currencies and corporate organizations. He asserts that indeed that will be the manifestation of globalization however it is simultaneously a social, cultural and political condition evident in, for example, an explosive growth of migration, of tourist activity, hybrid musical forms and heightened concern for global political strategies to meet threats and challenges to survival.

To many, globalization is positive. Many cities in Africa boast of Japanese, American, German, British or French manufactured vehicles. These ply streets constructed with Chinese or other expertise and American earth moving equipment. Local medium-to-large scale businesses will not operate without American or some other expatriate investment; additionally most computers in offices are imported from the US, Asia or UK and foreign nationals from around a country’s sub-region and or Europe, America or Asia (depending on the required expertise or skills set) dominate large sectors of the lucrative service industry.

The definitions proffered by the scholars highlight a common feature of globalization-the international integration of goods, technology, labour and capital. Although globalization promotes interdependence among different states, a school of thought argues that poorer countries/third world nations caught up in the phenomenon as well as the poor in developed countries are always at a disadvantage. But significantly, Artz (2003) notes, ‘globalization has redistributed resources within nations to domestic elites and internationally to transnational corporations (TNC’s)’(p.8)(La Pastina (2003:37). Burbach (cited in Artz, 2003:8) further argues that globalization increases poverty and marginalization within the first world, ‘while the third world has a large number of nouveau riche who are able to buy and sell in the global economy’. In the developed rich economies, globalization harms the interests of individual workers, especially unskilled workers, either directly through immigration or indirectly through trade and capital mobility. Changes in technology have led to a massive shift toward more-skilled workers to the disadvantage of less skilled ones. Indeed the beneficiaries of globalization in advanced economies have been nation states as there is evidence that free trade and the mobility of labour and capital tend to improve national and big business welfare more than individual well being.

Scores of workers in the developed economies lose their jobs over increasing demands for highly skilled labour resulting in a remuneration wedge between both labour categories. Castells refers to the unskilled either in rich or poor nations as the ‘fourth world’ who have no part to play in the globalized world because they lack resources of capital and/or skills that might make them appeal to globalized capitalism (Webster 2002: pp.112-113). He writes about the urban poor in the United States, those mired in the underclass living cheek by jowl alongside the informational labour that is so central to the new world system, and often working in unenviable circumstances as waiters, nannies, janitors and servants of this new class. Webster acknowledges Castells’ view of a fear that generic labour may, in the longer term, sink into this underclass if its members cannot come to terms with the flexible demands of the new economy.

La Pastina (2003:37-38) argues for example that globalization in Brazil is associated mainly with sophisticated images seen in the media…seen by a small percentage of the elite local population which has can afford cable and satellite television, consuming shows that are hits in the United States along with global elites around the world. The majority of the population however remains glued to the open access channels that are still dominated by Globo Network (a family held conglomerate with wide associations with US media industries), which has maintained hegemony over the Brazilian television market for almost four decades (Amaral and Guimaraes, 1994; Straubhaar and La Pastina 2003). The argument is further made that globalization refers to the idea that people know more about George W. Bush than they would know about local and regional politics. Therefore the concept for many becomes a sign of displacement and isolation, a condition of peripheral existence.

In contrast to previous scholars whose views draw on the benefits of the merger of time and distance to capitalism (Robertson 1992, Mittelman 1996, Artz 2003), La Pastina reaches a more cogent conclusion after reviewing the effect of globalization in the South American state, ‘Globalization for the majority of Brazil is certainly not a state of participation in global processes but rather a passive stance of observing the world passing by (La Pastina, 2003).

As a typical example of a poor country disadvantaged by globalization, the government of Ghana, a developing West African state, since 1983, implemented economic reforms. This was aimed at reducing government’s role in the economy, liberalizing the economy and integrating it more fully into the global economy. Policies pursued included fiscal and monetary restraint, exchange rate adjustment/devaluation, and divestiture of state owned enterprises and private sector promotion . Exports grew from about $450 million in 1983 to about $2,090 million in 1998, while imports increased from about $500 million in 1983 to about $2, 900 in 1998. However, Ghana failed to generate projected volumes of foreign investment regardless of vigorous efforts to promote the country as an attractive location for investment. In terms of the reforms’ impact on increased integration into the world economy, figures of the Ghana Statistical Service show that employment rose steadily over three years (from 280,000 in 1982 to 464,000 in 1985) and then began to drop to 186, 000 in 1991- in both public and private sectors. It is difficult to track subsequent statistics because figures on recorded employment of the Ghana Statistical Service terminate in 1991 .

Analysts explain that the initial increase in recorded employment was largely due to the greater availability of imported raw materials brought about by the easing of foreign exchange constraints, and the lifting of restrictions on imports. A major factor that then led to the subsequent decline in employment was the increased competition from imported goods, and the inability of some manufacturers to compete against the huge cheap influx. Electrical equipment, textiles, clothing and leather goods were particularly hard hit by the very strong competition from imports.

It is important to note that real wages have declined since 1991. A survey of manufacturing firms over 1992-94 under a Regional Programme on Enterprise Development showed that real wages declined by 9 per cent over the survey period. It also revealed a widening gap between low-paid and higher paid jobs. For example, while real wages of management personnel (mostly expatriate) had increased by 30 percent and the real wages of sales personnel had increased by 46 per cent, the real wages of production workers and apprentices had declined by 13 per cent and 56 per cent respectively. As reiterated by Anyemedu (2000) in Ghana Trade Union’s responses to globalization the widening in the wage differential is a result of policy to integrate into the globalized economy, (as well as demand and supply factors).

As surmised by Anyemedu (2000), globalization has altered the balance of power between capital and labour decisively to the disadvantage of labour. The free movement of capital across national boundaries and the intense competition between countries for foreign investment mean that investors’/shareholders’ interest are given priority over workers’ interests. Supporters of free capital mobility argue that increased inflow of capital produces productivity gains that generate competitive jobs and higher wages. In sub-Saharan Africa, efforts to attract foreign investment have not achieved much success due, in part, to non-economic factors. This lack of success compels some countries to try even harder at such policies as wage restraint, further trade liberalization, labour retrenchment, etc. These for the time being appear to keep the developing continent’s majority who belong to the impoverished unskilled working class at a great disadvantage.

On the other hand the transnational corporations (TNC’s), all originating from developed countries, are benefiting from globalization as evidenced in Webster (2003:69). When the wealth of nations and corporations is measured TNC’s account for half of the largest one hundred units. In financial terms only a couple of dozen countries are bigger than the largest TNC. Notably, General Motors (2000 revenues $185 billion), IBM ($88 billion), Shell ($190 billion) and General Electric ($130 billion) are ‘the dominant forces in the world economy’ (Dicken1992: 42) and TNC’s account for as much as 25 per cent of the total world production and the vast majority of world trade (Held et al. 1999: 82). Furthermore, Dicken (1992) identifies a ‘billion dollar club’ of just six hundred TNC’s which supply over 20 per cent of total industrial and agricultural production in the world’s market economies, yet within these giants ‘a mere seventy-four TNC’s accounted for fifty per cent of the total sales’.

In asserting that globalization is neither good nor bad, Stiglitz (2002:20) concedes that in much of the world it has not brought comparable benefits except for countries of East Asia. Their success story, according to Stiglitz, is because they embraced globalization under their own terms, at their own pace. For many though, globalization seems closer to an unmitigated disaster.

It is true globalization provides jobs for locals; however local labour is being exploited through wages best described as cut throat rates. In 2005, the world damned two internationally successful brands Nike and Gap over cases of child labour and poor working conditions in Cambodia. They may have pulled out or quit the practice in order to satisfy world conventions on labour but how many more unknowns, whether or not under-aged, of the world’s poor are voluntarily laboring just to feed, clothe and/or educate themselves while the transnational corporations enjoy the fruit of their labour?

In as far the phenomenon of globalization is largely driven by the elite few of the world’s economy and the rest of the world and its peoples (through no decision of theirs) remain passive consumers/partakers of the phenomenon, it is only too clear that the growing gap between the poor and the rich will increase as the world’s majority continue to live with less than a dollar a day.






REFERENCES
Anyemedu K. 2000. Trade Union Responses to Globalization: Case Study on Ghana. International Institute for Labour Studies Geneva

Artz L. 2003. ‘Globalization, Media, Hegemony and Social Class’ in L. Artz and Y. Kamalipour (eds) Globalization of Corporate Media Hegemony, pp. 3-31. Albany, NY: SUNY Press

Giddens A. 1990. The Consequences of Modernity. Standford, CA: Stanford University Press

Guillen F. Mauro 2001. Is Globalization Civilizing, Destructive or Feeble? A Critique of Five Key Debates in the Social-Science Literature. Annual Review of Sociology, Vol 27. June 2000 Version.

Harvey D. 1989. The Condition of Post Modernity. Oxford: Blackwell

La Pastina A. 2003. Up the Amazon without a paddle: developing nations and globalization. Global Media and Communications 2005; 1;36

Mittelman JH, ed 1996. Globalization: Critical Reflections. Boulder: Lynne Rienner Publishers

Slaughter M and Swagel P. 1997. Does globalization lower wages and export jobs?

Stiglitz J 2002. Globalization and its discontents. Allen Lane, the Penguin Press

Tiplady, R. 2003. ‘World of Difference: Global Mission at the pic’ n’ mix counter’ pp. 2-5.

Webster, F. ed 2002 ‘Theories of the Information Society. London: Routledge

2 comments:

Anonymous said...

This is great info to know.

Anonymous said...

http://ignoramus101.blogspot.com

http://midgiechic.blogspot.com

this is opk