Key Challenges for National Governments Posed by Globalization - Example

Running Head: GLOBALIZATION Globalization and It’s Impacts, costs and Benefits. Name Course Instructor Date Globalization Introduction Globalization is the intensified and accelerated process of integration and interaction among governments, companies and people from different nations that results to increased interdependency. According to the Ngaire (2000), it is the occurrence of dramatic changes in the world-wide market as a result of opened economies. It includes changes in defined actions such as consumption, distribution, production as well as increased flow of people, ideas, images, goods and services from one place to another. According to Yücel et al (2009), it is the process through which technologies, states and markets become more integrated transforming the world to a global village. This means people can interact freely and access information from all over the world within the shortest time and with limited interactions. It results to cheaper, deeper and faster movement of individuals and ideas around the world. Naidoo (2006) on the other hand defines globalization as the process through which social relations intensify at the world-wide level resulting to a linkage of diverse locality to a level that, what happens locally is influenced by happenings miles away and the reverse. In this regard, globalization is seen as the development of different cultures and societies into one unit with commonly agreed values and norms. The idea of globalization has influenced the view that the world is a single space and the populations there in are neighbors with whom one must relate or co-exist with (Naidoo, 2006). The process of globalization has been influenced by the movement of people from one place to another and technological advancement which has seen ideas being exchanged faster than ever before. Lastly, globalization represents the transfer of knowledge, values and lifestyles where distance does not count. Benefits of globalization A major benefit of globalization is the elimination of trade barriers enabling a free flow of capital, goods and services throughout the world. This resulted from regional economic integration which has transformed the worlds markets into a single market. Additionally, globalization has resulted in fallen production cost of goods and services since accessibility of materials and information has become very easy. This can be seen in the fall of computer processing cost by 30% every year over a period of 20 years (Brooks et al, 2011). The fall in prices has in turn accelerated globalization as companies adopt new technologies in production processes thereby reducing production cost through reduced labor requirements, reduced wastage of law materials, reduced overall production time and increased output (Brooks et al, 2011). Advancement in robotics and CAD have been major drivers in this process. Globalization has also fostered economic growth in the world as it has lead development of a financial system that functions in a better way and increased available credit for lending. Developed financial systems are more stable, deeper and more complete, a factor that contributed to enhancing financial regulation in the global and local markets. Similarly, global telecommunications have impacted on communication by allowing easier and high-speed transfer of information even to remote areas. Such information and that enabled by submarine fibre-optic and satellite cables are vital in conducting e-business. Technological developments in the field of communication has made it easier to order, track and deliver goods more efficiently (Yücel et al, 2009). As a result, loss of goods during transit has reduced. Increased speed of communication and its importance is evident even in rescue missions. For instance, the collapse of twin towers in Ney York City was witness within two seconds throughout the globe. This increases the chance of saving lives due to immediate response by both local and international communities. Employees have benefited from globalization in that it has resulted to increased wages. According to Dolla (2004), there has been remarkable increase in wages especially in the developing countries. This is indicated by the table below. (Dolla, 2004) Costs of globalization The integration of international markets for trade has plunged societies into a quagmire by pressuring them to change their traditional practices. To many participants at the economic national level in the already globalized nations, and to many economists, a cost of globalization is anything that makes them feel that their economy is being put in an awkward situation or a situation of discomfort such a suffering a loss in its share in the world capital at the mercy of the world market, with no global court or authority to intervene (Mrak, 2000). Thus, there is a feeling that the world’s capital benefits only the commercially strong countries. There is evidence alluding to the fact that trade and migration have diverse consequences in income distribution. The globalization process is also exposing disparities among groups that have the skills and mobility to prosper in Global Markets and those who don’t have it. The pressures for change are obviously been felt between the global market and the social stability. First, reduced barriers to matters of trade and investments accelerate the disparities between various economic groups that are in a position to cross international borders and those that cannot. The former are owners of capital while the latter are workers, mostly skilled workers and professionals seeking opportunities in the Global world. Globalization therefore transforms working relations bringing about various consequences into play (Mrak, 2000). For instance, workers now are forced to pay a larger share in a bid to bring about better working conditions. They also incur various forms of instabilities in terms of pay and working hours hence issues of volatile and insecure working situations and also erosion of their bargaining power. Though globalization has resulted to increased employment opportunities as international companies set in different countries, this is not without a cost. Capital and labor status quo has been destabilized. This is evident in that companies are in a position to acquire cheap labor in the countries they set in thereby prejudicing continuity of workers employment from the country of originality. For globalization to have taken place, technological advancement and outsourcing services at corporate level is necessary (Yücel et al, 2009). This ultimately means increased spending on imported labor as ground for transfer of knowledge are being formed. ICT (Information and communication technology) has been key in integration and globalization. This has increased infrastructural costs as governments, institutions and companies strive to attain international standards. The result of this is that a net-work based and service-dominated knowledge economy is quickly replacing the manufacture-based industrial economy. Globalization occurred at the expense of increased cost in maintaining the environment. This is evident in that the level of pollution has reached the critical point in some countries. As a result, populations are now more prone to conditions such as skin cancer now more than ever. In addition, globalization has resulted to well performing economies at the expense of displacement of human and wildlife populations, overpopulation and flooding agricultural land. A good example is Gorges Dam built in China to meet the rising need for energy to meet increased needs (Brooks et al, 2011). At the global level, carbon emissions have increased greatly and expected long term impacts are catastrophic if not addressed. Globalization is also costing local firms huge sums of money as they loss customers to international companies. For instance, McDonaldization has seen international brands gain popularity at the expensive of local brands. This is also experienced in the changing mode of dressing and communication which has resulted to a preference of western products (Brooks et al, 2011). As local companies loss their customers, they are likely to pull out of the market hence negatively impacting on economic status of local populations. Key challenges for national governments posed by globalization With new opportunities emerging with globalization, there is increasing worry for policy makers about the impacts that might result from globalization. Woods (2001) points out that the emergent global economy is an end result of three changes; liberalization, internationalization and technological evolution. Since 1980’s governments around the world over have been subject to liberalization as they adapt policies to integrate them closer to the world economy. Internationalization is an ongoing process whereby states have forged more links with each other with the intention of pursuing a common goal. Communication and technological revolution has fuelled change for companies, government organizations and market actors to operate internationally. The product of these three factors is a world economy in which governments and their stakeholders are unsure if they will manage and control effectively. Globalization has indeed created policy problems or challenges for governments. One compelling example is the international financial system. Since the beginning of the 1990’s, there has been a continuous wave of financial crisis across nations which were basically caused by vulnerabilities posed by the world economy. In 1997, for instance, there was a critical financial crisis in East Asia that had been sparked by devaluation of the Thai baht. This was soon followed by the financial disasters in Russian rouble and the fall of the Long Term Capital Management (LTCM) investment group of the United States. Each of these events called for attention for establishment of more effective international coordination and cooperation and triggered policymakers to create international discussions on ‘new international financial architecture’. As the financial crisis in the 1990’s pressed on, actors in the private sector including banks, security brokerages, investment houses, asset managers and hedge funds seized the opportunity to stir up more turmoil. These actors engaged in frenetic trading activities such as creation of profit centers out of derivatives, currency and market security trading departments that were rapidly emerging. The product of these activities is what many analyst’s terms as global whirlpool. They also became active political participants and lobbyists in a bid to participate in governance of global financial systems (Woods, 2000). Mrak (2000) asserts that the question of who should be involved in governance of the world economy presents yet another challenge for governments. The major concern was who should participate in debates for reforms and in what forums. In the wake of the financial turmoil’s, the United States treasury acted swiftly to invite 22 nations into the reforms debates; the so-called G-22 later changed to G-20. This initiative was highly opposed by other countries who felt that the US was too domineering. According to the French Minister of Finance, such discussions should be held in the IMF’s Interim Committee where at least all members of the IMF are adequately represented. According to Woods (2000), globalization has also proven challenging in the policy making process of governments with regard to institutional, decisional, structural and distributional aspects involved in the decision making process. The decisional aspect is affected in a way that governments have to adopt or absorb changes in the world economy irrespective relative benefits or costs on their different microeconomic sectoral, industrial and microeconomic policies. As with regard to institutional aspect of policy making, governments have to take into account the rapid growth of multilateral economic surveillance, global production networks and regulations hence introduce institutional reforms to improve their global competitiveness. Globalization has indeed influenced the distributional aspect of policy making. This is because government’s policy making processes are now influenced on global wage competition and division of labor across world economies. As a result, negotiations over benefits of skilled and unskilled labor force as well as negotiations over non-tradable and tradable sectors have become prime agendas of government business. Globalization has also brought about major structural changes in national economies as governments have to adapt to dynamic balances of power between the state and the global markets. The major concern for many governments is the way in which they are slowly losing control of their own economies as well as their policy choices as most of these decisions are now dictated by policies emanating from the global economy (Mrak, 2000). In seeking coordinated solutions that will provide relief, many of them are increasingly turning to international and regional institutions, a move that has been highly contested by critics. They argue that such actions will deprive the right people of their democratic rights to make decisions that affect them directly. Such institutions which include IMF, WTO and the World Bank have been accused of indirectly accelerating globalization in the interests of their own business. Noticeably, critical issues that affect nations are now being dealt with at international levels posing the question of the relevance of government institutions that represent a large population of the people they affect. Impact of globalization on University of Sydney University of Sydney has not been spared by the positive and negative impacts of globalization on societies and institutions. With its mission being the enhancement of learning and teaching to meet international standards, the University has sought to capitalize on every benefit of globalization. To begin with, Globalization has had positive impacts in the organization. to begin with, the institution has benefited from technological advancement which speeds up the process of globalization. This is evident in the increased ease in which students and employees in the institution can access information and communicate regardless of the distance involved. According to Brooks et al (2011), this enhances learning and reduces time wastage. One positive impact of this is the increased number of students that the university can recruit as they do not have to be in the institution physically. This means increased income without stressing available resources. In addition, students have now become more informed, a factor that has increased their capability to be more creative and innovative. However, globalization has also had negative impacts in the organization. to begin with, the interaction of people from different localities and the desire to ‘fit in the global culture’ has resulted to erosion of local culture and values. This happens as identify of those involved is created and recreated to fit in the wider society (Naidoo, 2006). The situation is worse for immigrant groups and international students who struggle with English as their second language. The value of their culture is undermined in that it is seen as the ‘other’ culture. Reacting from the fear of being discriminated on the basis of cultural background and racial difference, such populations struggle to assimilate the western culture there by resulting to erosion of their original cultural values and norms. Globalization has resulted to homogenization of cultures thereby resulting to a loss of cultural diversity. In the university for instance, students from all over the world are recruited. However, their way of life, dressing and expression changes over time. This see international students adopt some behaviors which are otherwise unacceptable in their local community. It has thus become hard to tell where students come from by their way of life in the University (Naidoo, 2007). Conclusion Though globalization has and many positive impacts, it has not been without a cost. This is at global, national, institutional and individual level. It is therefore important that some form of control be exercise to maximize on its benefits and reduce on the cost being incurred. The governments have a major role to play in ensuring that their countries reap maximum benefits of globalization. Experienced challenges can be controlled but this requires joint efforts from all stakeholders to transform the world to a better place. Effects such as environmental pollution through the release of carbon must be controlled as a matter of urgency even as societies adopt advanced technologies. If this is achieved, then the world will enjoy the benefits of globalization. At any rate, the bottom line is that we can only ignore the effects of globalization at our own peril. If it effect are not managed in time, it bound to cause further disparities. References Brooks, I., Weatherston, J and Wilkinson, G. (2011). The international business environment: challenges and changes. Harlow: Financial Times Prentice Hall. Dollar, D. (2004). Policy Research Working Paper WP3333 Globalization, Poverty, and Inequality Since 1980, World Bank, available from http://econ.worldbank.org/external/default/main?pagePK=64165259&thesitePK=469382 &piPK=64165421&menuPK=64166093&entityID=000112742_20040928096739. Mrak, M. (2000). Globalization: trends, challenges and opportunities for countries in transition. Vienna: United Nations Industrial Development Organization (UNIDO). Naidoo, L. (2006). Re-negotiating identity and reconciling cultural ambiguity in the Indian immigrant community in Sydney, Australia. The Anthropologist. (In press). Naidoo, L. (2007). Rupture or continuity? The impact of globalization on cultural identity and education in Indian immigrant families in Australia. Transnational Curriculum Inquiry 4 (1) http://nitinat.library.ubc.ca/ojs/index.php/tci Woods, N. (2000). Globalization and the challenge to international institutions. Basingstoke: Macmillan. Woods, N. (2001). Who should govern the world economy: the challenge of globalization and governance. Renewal, Vol. 9. No. 2/3, p. 73-82. Yücel, R. Elibol, H. & Dağdelen, O. (2009). Globalization and international marketing ethics problems. International research journal of finance and economics. Read More