Globalisation Challenge for National Governments - Coursework Example

Running Head: Globalization and its Impacts Name Course Institution Instructor Date Table of Contents 1.0 Introduction 3 2.0 Definition of Globalization 4 3.0 Benefits of Globalization 5 4.0 Costs of Globalization 7 5.0 Challenge for National Governments 9 6.0 Impact on an Organization 10 7.0 Conclusion 11 7.0 References 13 1.0 Introduction Globalization has been the subject of academic discussion for many writers today as they try to understand the term itself and its effects. The term has been discussed in a wide range of perspectives such as sociological, economical, cultural and technological (Ray, 2007, P. 1). It can therefore be considered to be shaping various sectors including organizations, structures of government and individuals. Despite the efforts put in trying to understand the term and its effects, it has remained debatable whether Globalization is beneficial or disastrous (Akram et al., 2011, P. 291). Many scholars have defined globalization differently. Lack of a precise definition has been argued to be the main factor spurring debates on the effects of globalization. In the same way, there has been no clear origin of globalization. Despite this, many scholars argue that globalization has been there since time immemorial. The fact that it was not used does not imply that in never existed. Evidence has shown that the term ‘Globalization’ was first used in 1944 (Hamilton, 2008, P. 8). However, historians have a different argument to this. They do believe that globalization has been there since ancient times only that it has undergone transformation. According to economic historians, modern era globalization is dated back to around 1870 (Asefa, 2010, P. 6). They also believe that the 21st century globalization is the third stage of historical globalization. The effects of Globalization will be the subject of this discussion with regards to functionalities of national governments and organizations. The effects can either be positive or negative. Indeed, it is quite undeniable that the positive effects of globalization outweigh the negative effects. 2.0 Definition of Globalization As earlier stated, there is lack of precise definition of globalization. It has been defined differently by various writers. Perhaps, the best way to begin this discussion is by giving the term a simple definition. Nobody can deny the fact that states are becoming closer than before. Commodities manufactured in one country can be found in any other country in the world. Also, financial instability of one state of the world will affect many states. In the same way, political instability of one state in the world will also affect many sectors of other countries. For example, political instability of many countries such as the Iraq war of 2008 affected the world fuel prices. Political instability of one country will therefore affect the economies of other nations. The main reason for this is dependency among nations. Currently, unlike the past countries are more dependent on each other and closer than before. Globalization can therefore be defined from this perspective. It can be simply defined as the process in which more and more people become connected in more different ways across larger distances (Lechner, 2009, P. 15). Many writers have defined the term globalization but using different wordings. Despite the fact that they are using different wordings, they all have the same idea on this term. According to Robertson, (1992, P. 8) ‘Globalization as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole’. In the same way Hamilton, (2008, P. 10) defines this term as the global integration of economic, technological, political, cultural and social characteristics between nations. Similarly, Giddens, (1990, P. 64) defines globalization as strengthening of global social relations linking nations which are far away from each other, such that the events of one country shapes the happenings of another country. Other scholars who have contributed in defining globalization are Rothernberg (2003) and Keohane & Joseph, (2000). Their definitions are centered towards the idea of strengthening relations in terms of economic, technological, political, cultural and social aspects. It is therefore a multifaceted term affecting diverse sectors of a country’s economy either directly or ramblingly. The term Globalization cannot be termed as a new concept owing to the fact it existed long before the time it came into academic focus. For example, the ancient steppe or silk roads played a key role in the exchange of ideas and information. This was a perfect example of globalization in existence. The concept was given recognition in the 1960’s (Waters, 2001, P. 2). However, much focus was given to it in the 1980’s. It is for this reason that Waters, (2001: 2) highlights the fact that it staggered into academic disciplines. It did not move to academic discipline directly. Currently the term has been given much focus to an extent that it has become a diversified. Research studies are now focusing on the effects of globalization on various aspects such as culture, economic development and effects on the residents. The rapid economic development of Dubai is due to globalization. Most literature works on globalization use Dubai as an epitome of globalization and its effects. Dubai has been the subject of discussion in terms of development of commerce and tourism. The quest for globalized economy has pushed Dubai towards creating business friendlier policies. Globalization cannot be visualized but its effects can be felt. 3.0 Benefits of Globalization Many nations of the world are moving towards developing globalized economies with lots of benefits. Despite the fact that globalization has negative impacts, the positive impacts far outweigh the negative impacts. Perhaps the best way to discuss on the effects is by use of an example. Nations such as UAE have benefited much from globalization. Globalization has positively impacted on Dubai’s economy. Dubai’s and the entire UAE’s economy has tremendously increased since the discovery of oil. It has enhanced cross-border trade, free flow of capital and flow of information. Dubai FDI (2013) indicates gross Domestic Product of Dubai to be increasing tremendously since 2009 up to 2012. By 2011, Dubai’s GDP had grown by 3.4 and it was being expected to reach 4.6% by the end of 2012 (FDI, 2013). The growth was as a result of diversification from oil dependency. Being a global center of commerce, Dubai has been able to generate revenue for economic building. Similarly, globalization has created more jobs in Dubai. Currently Dubai is rated the best in job creation worldwide. In the year 2011, the overall unemployment rate for Dubai was 4.3 percent (Kawach, 2011). Dubai has remained at the top as the leading in terms of employment since 2006 and the rate of employment has been increasing ever since. Employment of persons will have a direct impact on the economy of a country. Since 1985, Dubai Municipality data indicates a tremendous growth in employment up to 2005 as shown below. Dubai’s population and active labor Force (Dubai Municipality, 2005) It is for this reason that a large number of persons in Dubai are outsiders. Foreigners move to Dubai in search for employment. Globalization has also encouraged free trade which encourages increased foreign direct investments. Dubai and United Arab Emirates provide a good ground for trading to foreigners. According to United Arab Emirates (2007, P. 76), a survey conducted in the year 2005 indicated foreign direct investment hitting a record high of US$ 10 billion. There are so many reasons for this upsurge in foreign direct investment such as zero rating the taxes on business persons. Policies in Dubai city are business-friendly and foreigners are moving in for new opportunities (Mun, 2010, P. 161).Increase in foreign direct investment will have an impact on capital stock of a country. Human and financial capital resources will be brought in and a result, more infrastructures will be built to facilitate production of goods. As a result, economic growth occurs. On the other hand globalization has led to domestic investments through the good relationship with other countries. Foreign direct investment has also introduced competition into else protected markets (Weinstein, 2005, P. 6). Competition is crucial for the improvement of quality of goods produced thus affecting the living standards of people. Generally, globalization has helped both poor and rich nations develop. It has enhanced the flow of capital, resources and technology from one country to another. As such, poverty has reduced to a great extent. Countries experiencing immense economic growth Such as UAE as a result of globalization provide job opportunities for foreigners from poor nations. Statistics have shown that poor countries have grown at a faster rate than rich countries since 1980 (Weinstein, 2005, P. 10). 4.0 Costs of Globalization Globalization also has negative impacts. As a result of globalization, states are changing their policies to enhance development of new opportunities. The first negative impact is the destruction of activities that existed behind protective walls (Tanzi, 2004, P. 4). In many cases it has been a costly affair due to loss of jobs created by those jobs behind the walls. Generally, it has intensified the rates of job insecurity. Influx of foreigners will result to loss of jobs by local residents. Similarly, competition from foreign companies being established due to globalization has resulted to closure of domestic companies. This has mainly affected the agricultural sector in developing countries. Most of the industries being developed do not require a large number of personnel to function. Multinational companies that have been developed employ workers temporarily and they do not receive some benefits such as insurance. Equity of distribution of the gains from globalization is another major problem arising from globalization (Gangopadhyay & Chatterji, 2005, P. 71). Rich nations benefit most from globalization due to their ability to run multinational companies. Conflicts are arising between poor and rich nations. Despite the fact that many have argued that globalization converges incomes, grounded on the idea that poor nations are growing rapidly, the reality is that a few nations especially in the eastern part of Asia are experiencing this. Contrary to this, nations in the African continent, other parts of Asia, Southern and Central America are experiencing a sluggish growth. The idea is that these nations are becoming more marginalized from rich nations (Gangopadhyay & Chatterji, 2005, P. 71). In fact foreign companies are dominating in these nations. This has been experienced especially in India. Globalization in itself has also enhanced globalization of terrorism in many states of the world such as United States. These countries are now paying the price of open borders created by globalization. Many scholars have always connected the 9/11 terrorist attacks to negative impacts of globalization (Bertho, Crawford & Fogarty, 2008, P. 232). Terrorists’ networks have intensified in the recent past. In as much as it helps in unifying the world, it has also contributed in dividing some nations of the world. Interdependence by countries also has devastating effects on the nations depending on each other. A good example of this is when there is a political instability in oil producing nations, the price of fuel rises worldwide. Economic fluctuations in one country will result to global or regional impact (Gangopadhyay & Chatterji, 2005, P. 71). On many occasions, the exchange rates are affected by political instabilities. This indicates vulnerability of economies that are interconnected. The great depression of 1930’s is an epitome of the effects of globalization. Global crisis may demand for stoppage of these interdependencies. Conflicts leading to either military or economic warfare arise as a result of these misunderstandings. In addition to this, there are many other indirect negative impacts of globalization such environment pollution (2010, P. 160). Industries are emerging as a result of globalization. 5.0 Challenge for National Governments Globalization has come along with various challenges to national governments. Globalization has created room for free trade. There are some countries which benefit from globalization while others are big losers. The fact that there are losers of globalization indicates that there is variance in the way various countries cope with challenges of globalization (Mrak, 2000, P. 9). One of the common challenges posed by globalization to national governments is the inability to control national borders as a result of free entry (Pfaller & Lerch, 2005, P. 1). It is quite difficult for the government to control external forces. The problems they come along with require global solutions. These problems include; human trafficking, illegal drugs, terrorism and weapons (Pfaller & Lerch, 2005, P. 5). Human trafficking for example cannot be solved by a single country. This has called for the need to ‘globalize’ political structures and control mechanisms (Pfaller & Lerch, 2005, P. 1). Poor nations rely on the rich states to solve problems resulting from globalization. Social welfare is another challenge that a globalized state is likely to face. Globalization has intensified cross-border competition. Multinational companies being established in the poor states benefit from economies of scale. As a result, domestic companies are closing down and dismissing local workers. Due to desperation, some workers lower their demands for pay and working conditions, while others settle for less paying jobs. The government is required to intervene at this stage. Pfaller & Lerch (2005, P. 5) highlights the fact that political intervention and regulation are imperative for the provision of social safety of the globalization losers who are the workers. It is quite challenging for the government to establish a social balance between the interests of investors and workers. The costs of social security, labor protection and environmental protection have also proven challenging to the national government. Most countries are not able to protect its citizens from injustices and the environment from degradation. The main reason for this is that they are caused by foreigners. This will have an implication that democracy is being taken away from the national government. The government will be under the control of other nations which depend on each other. 6.0 Impact on an Organization Globalization has impacted on various organizations positively. Globalization has positively impacted on Coca Cola Company in many ways. Currently, the company’s products are found worldwide and it operates in over two hundred countries of the world. The company was established in 1880’s in the United States. One of the major strategies of the company since inception was to globalize. It started to globalize at the beginning of 1900’s (Saylor Foundation, 2012). Coca Cola Company has had a rough time in its globalization. Many nations banned the use of beverages from the company on grounds of public health. In addition, competition from other beverage companies such as PEPSI has proved to be a threat to this company. The first bottling plants were found in Cuba and Panama and since then, it has spread to other parts of United States and the world. The need to reduce shipping expenses and increase in demand pushed the company establish other bottling plants in other parts of the world. Globalization has created a business friendly environment for foreign companies. This has enabled companies such as Coca Cola to capitalize on foreign grounds. Establishment of production plants was pushed by the need to lower production costs. This has affected the management system of this multinational company. Each branch is managed individually. 7.0 Conclusion In conclusion, despite the fact that globalization has both positive and negative impacts on the economy of a country, it has been accompanied by several challenges facing various national governments. The benefits of globalization outweigh the negative impacts. It is for this reason that the economy of a country such as Dubai has been constantly rising. Globalization has created new jobs for world nations both poor and rich. Foreigners move to developed nations to look for employment opportunities as a result of this. Flow of information has been exceptionally helpful to poor nations. They are able to borrow new ideas from developed nations. In addition, foreign direct investment is important in developing good infrastructure to poor nations. Generally, globalization has been particularly crucial in economic development. Therefore, nations should embrace a move towards a globalized economy in order to meet the current demands of citizens such employment opportunities. Costs of Globalization should not be overlooked. There is need for nations to come together and contribute in solving problems resulting from globalization. Human trafficking pandemic is prevalent in nations such UAE gleaning heavily from globalization. Each state should develop policies to combat this heinous act. Environmental pollution is also another crucial factor that needs to be looked into. Failures to do so, world nations are likely to suffer most from negative impacts of globalization. It will reach a point where such problems become uncontainable and will cost the world nations. Human trafficking is becoming more complicated than before owing to the fact that borders are becoming more permeable. These are some of the future consequences that nations will face as a result of Globalization. 7.0 References Akram, C. M., Faheem, A. M., Dost, M. K. & Abdullah, I. (2011). Globalization and its Impacts on the World Economic Development. International Journal of Business and Social Science, 2(23): 291-297. Asefa, S. (2010). Globalization and International Development: Critical Issues of the 21st Century. W.E. Upjohn Institute. Bertho, M., Crawford, B. & Fogarty, E. A. (2008). The Impact of Globalization on the United States: Culture and society, Vol 1. New York: Greenwood Publishing Group. Dubai FDI. An Agency of the Department of Economic Development. Retrieved from [8 March 2013] Dubai Municipality Statistics. Retrieved from Gangopadhyay, P. & Chatterji, M. (2005). Economic Issues of Globalisation. New York: Ashgate Publishing, Ltd. Giddens, A. (1990). The Consequences of Modernity (ed 6). California: Stanford University Press. Hamilton, S. M. (2008). Globalization. Edina, Minnesota: ABDO. Kawach, N. (2011, June 07). National Jobless Rate Tops 19%. Dubai Media Inc. Read More