Costs and Benefits of Globalisation for Australia and Other Countries - Essay Example

Globalisation and its Impact Between Countries There are so many contradictory views about globalisation, particularly its differing impact among and between countries. To help decipher some puzzling problems that this issue presents, it will be of value to look into the the discourses of analysts who are expert in this endeavor. Prospects for globalisation, where derive To better understand the concept of globalisation, it is said one must confront issues of definition and interpretation immediately (Sombart 1930; Dobb 1946), and that exploring this term requires the systematic interrogation of each issue surrounding this subject (Stillwell, 1990). Globalisation is generally regarded as too broad a topic to be given a meaning for convenience. It is thus assumed that in order to identify the impact that globalisation bears among countries, important distinctions between its different aspects must be threshed out in the light of the many contradictory arguments about globalisation. It also helps to focus on the economic aspect globalisation, such as the business activities and the processes that involve international trade in goods and services, international investments, or international finance. It is commonly argued that we are living at a time when our lives are being radically changed by the integration of economic activities on a global scale. Experts said that with globalisation, territorial barriers limiting the opportunities and threats that confront us are being broken. Hence, it was stressed that globalisation has one common consequence: the nation’s ability to conduct business without reference to any but its own interests is limited. When that limitation cuts deeply to have lasting effects on a nation-state’s culture, language, social values, tastes, and market behaviour, among others, we have globalisation (Gurtov 1999). As a term, the intention of globalisation is to describe the integrating and homogenizing effects that happen when national boundaries are penetrated by powerful forces active above the state level. Usually economic, these forces are driven by the transnational companies and multilateral lending institutions such as the International Monetary Fund (IMF) that seeks to regularise and stabilise world finance and trade in their own interests (Gurtov 1999). It is also argued that globalisation may be defined based on ‘network metaphor’, or that it should be thought of in terms of identifiable networks (Nye & Donahue 2000). As a network, the natural tendency is the creation or expansion of an identifiable network connecting points and people around the globe on some specified dimension or medium. When defined in terms of specific global networks, the understanding will be clearer because when globalisation is assimilated with interdependence, only part of the story is captured. Most often, countries and actors in different countries are interconnected on specific dimensions, and by virtue of this connectedness have reciprocal impacts on one another, but rarely are the effects of such interactions equal. However, there are some very skewed notion about globalization and its role in changing our lives and society. To some, it is a place or condition where only the affluent nations who are capable of competing network with one another to intimidate the poor and weak nation-states, but it may mean or imply otherwise (Stiglitz 1999). Globalization may be a healthy and balanced interplay of countries in a big field like one big team or family. Out of this definition, we may also agree on the definition that that globalisation is neutral (Gurtov 1999). As such, it can then promote social justice and cooperation within and between countries, such as in terms of public-private and international alliances on education, job retraining, unionization, energy conservation, and technology sharing. Through this perspective, globalisation can primarily be the global shopping mall, offering opportunities for the more affluent nation-states and corporations to market the world at the expense of the poor economies. Social groups, the state, and whole cultures. This economic model may appear to be the righteous force capable of propelling societies into modernity. The deep, complex interactions between forces external to nation states and forces nurtured within them will be a good starting point to study globalisation. Thus, the aim is nothing short of digging into the hidden meanings of the economic forces to understand the factors that help reshape our society today through globalisation. With this goal in mind, it will also help answer who gains and who loses at this economic issue, particularly in the light of its impact, for example, on the changing national and international distribution of jobs, among others. As is happening globally today, most large transnational companies, who are seeking to take advantage of differential labour costs to maximize rates of profit, have often opted on relocating or outsourcing parts of their routine production activities to Third World countries. Under the pressures of globalisation for companies and bank to cut costs, raise profits, boost earnings for investors, and take advantage of a looser regulatory environment, strategic alliances and megamergers are the name of the game (Reich 1998). In view of this, there is heightened pressure for wage reduction among employees of transnational companies in more affluent nations in its bid to try to keep the local manufacturing businesses’ competitive. Unemployment is not remote if these companies go under. However, depending on the regional patterns of jobs in other sectors, such as the service industries, which may be expanding, it is worth noting whether these workers are losers in the longer term unless there are alternative employment opportunities. Meanwhile, there are also accounts that globalisation produce winners and losers among people in the more economically peripheral nations. As an example of this, there is marked and significant numbers of Third World workers who have gained industrial employment previously unavailable to them. It is also interesting to note that while usually-better-paying than the traditional employments in those countries, jobs such as these are frequently associated with particular health or environmental risks. Even the close linking of national economies can create problems if political or economic instability develops in a country. From interdependence comes integration: the East Asian Experience Deepening the regional integration between and among East-Asia countries was helmed and advances more as a response to the inevitable impact of globalization in order to address and avoid the recurrence of yet another economic crisis in Asia. Such integration can help strengthen and reinforce policy actions for trade, economic surveillance, balance of payments support and the financial sectors. It is argued that freeing several economic barriers within countries and nations will be best complemented by integration among and between nations. As a result, the flow of goods, services, people and capital will freely move because the interruptions or distractions brought about by complex barriers at each nation’s territorial domains and other non-tariffs barriers (Stubbs & Underhill 2000). Patterned after Europe’s experience, the Asian regional economic integration hopes to create an economic and monetary union and adopt a single currency market that will spur growth and achieve the same European vision of consolidation unified single financial market. It will be remembered that regionalism became an increasing interest with the end of the Cold War and the breakdown of the Cold War structure, compelling nation-states to re-evaluate its place in the international system. As a result, nation-states individually sought out new relations with the emerging major powers with their own immediate neighbours. Many states quickly appreciated how much their own welfare was dependent on the stability and well-being of the region in which they were located. Some goals and visions developed intends to expedite the development of systems for policy coordination that will compel compliance to macroeconomic policies and structural reforms in the markets for goods, labor and financial products. Stubbs and Underhill (2000) noted that regional integration highlights the need to deal with the new non-state sources of global capital, the pressures of production, and the influence of intergovernmental organizations such as the IMF and the GATT/WTO. The remarkable feature of this regionalism then is it shied away from stressing regional self-sufficiency and independence completely from global economy since the emphasis is on positioning a region to strengthen its participation in the global economy with regard to capital flows and international trade. While any move for institutional integration is deemed costly, demanding and lastly, obligatory, Europe’s move stemmed from pressures to catch up with the United States and Asia’s is to also catch up with both Europe and US. The moves are all deemed the requirement to address the impact of globalisation. Europe’s transformation into a regional economic behemoth is undeniably strong for allaying the pressures and tiresome challenges of adopting or risking its own economies. Moreover, regional integration in Asia is beset with lack of clear direction. Among most pressing issues that it need to address involved the following – 1) determining whether interdependence will lead towards freeing much trade barriers in the region; 2) lobbying to promote and support national interests (i.e., Europe? or the United States?) and, 3) allaying fears of domination by China and India, two powerful Asian nation is now seeing bigger prospects for growth. However as this is happening, globalisation is yet to be experienced by these nation-states to understand if regional integration can fully materialize as uniquely compatible with the requirements of its region, in the same manner that such happened in Europe. Globalisation, China and the Global Imbalance When the cause of the 1997 Asian Financial Crisis is being discussed, the focus often lies on regulatory failure in the mortgage and finance industry. The bigger issue of global imbalance between the US and the Asian economy which some experts said is fueled by globalisation, particularly that of China’s economy, is rarely discussed back then. However, not until China experienced in the mid-2000s huge current-account surplus that its connection with that of the US’s current-account deficit was explored, thus leading some to inspect the role of the economy of this state in the global imbalance. Criticisms hurled against China by commentarists from Western publications state that the country plays a critical role in causing the current global crisis, deriding the country’s ‘protectionist’ exchange rate policies, then implying that it can choose to allow its currency to appreciate and significantly reduce its surpluses. For quite a long time, China has been accused of trying to keep the Yuan undervalued to boost its exports, which in effect would make its exports cheaper and boost its trade surplus. But if these were all correct, McKinley argued that the US, the world’s economically dominant, reserve-currency country, would then become blameless for all these. By all account, the great majority of Chinese are still relatively poor by developed-country standards even though it followed its export-oriented development strategy and it has a high savings rate. But it is said it would be unfair to accuse China of adopting mercantilist policies, Machiavellian nor malign, but rather it should be looked at as a development success. For its part, China claimed that the global imbalance was the result of US’s decision to pursue low interest rates and of its lax standards in lending criteria. But it was explained that the reason the US can impose a low long-term interest rates is because there was great demand for savings in the US, encouraging US banks to offer increasingly sophisticated forms of investment. But China defended itself, saying it is their right to pursue their own exchange rate policy. Impact of Globalisation on Australia Australia is said to be one of the countries greatly impacted by globalisation because it helps improve the continent’s domestic efficiency since the time it gets involved in the revolution of this global economic fundamental model. The growth of Australia’s economy over the years is driven largely by the increasing international convergence, which in effect spurs growth and development of the quality of life, trade, investment, distribution of income, financial markets and increased efficiency in government’s economic policies. Since globalisation encourages openness, Australia greatly benefited economically when it opened itself to foreigners. With international convergence, other nations become reliant on Australia to provide goods and services to be traded with another country. Today, many nations’ economic performance are converging as a result of globalisation. When the Asian financial crises hit Asia in the late 1990s, Australia was spared due to the very strong international convergence that had taken place linking Australia to that of Asia’s. Furthermore, globalisation has also impacted media and telecommunications in Australia as it has every other country and industry, by contributing further to the power of multinational business. Such concentrated control of communication channels and information means power: the retention, for sale or manipulation, of market data; the definition of news, ideas, and images; the molding of political and social choices; and the export of homogenized Western cultural values (Sanger 1997). Conclusion Economists and global market players are in constant argument and debate on the varied impact of globalisation among and between countries. The impact of globalisation may never be easy to identify, but to understand the issue at hand, it bears noting that different economic occurrences such as regionalism of European and Asian countries, the unprecedented rise of the economy of China and its alleged role in the global imbalance, and the the growth of Australian economy amidst the weakening economic powers, and many other impacts may have to be studied to learn about the ironies and seemingly contradicting impact of globalisation. To date, globalisation may be said to be evolving and while this is so, determining the winners and losers of globalisation may be premature. Given all these realities, the best approach in determining globalisation’s impact between all economic players, from the United States to China will be best studied and addressed when finding a more sustainable global growth pathway not just for affluent nations but also in threshing out the such sustainable recovery plan for weaker and poor nation-states References Cova, P., Pisani, M., and Rebucci, A., 2009. “Global Imbalances: The Role of Emerging Asia,” IMF Working Paper, International Monetary Fund. Cyn-Young, P., 2005. “Coping with Global Imbalances and Asian Currencies,” Asian Development Bank, 37, May 2005 Eichengreen, B., 2006. “Global Imbalances: The New Economy, the Dark Matter, the Savvy Investor, and the Standard Analysis,” Berkeley: University of California. Gurtov, M., 1999. Global Politics in the Human Interest, 4th ed., United Kingdom: Lynne Rienner Publisher. Hurrell, A. & Woods, N., 1995. Millennium: Journal of International Studies. Globalisation and inequality, (24) 3, pp. 447-470. Malik, Mohan, 2005. The East Asia Summit: More Discord than Accord. YaleGlobal, [e-book] 20 December 2005. Available at: Library Digital Library/e-books http://yaleglobal.yale.edu/display.article?id=6645 Nye, J. S. & Donahue, J. D., 2000. Governance in a globalizing world. Washington D.C.: Brookings Institution Press Robison, R., 1996. Pathways to Asia: the Politics of Engagement. St. Leonards, N.S.W.: Allen & Unwin, pp. 108-128 Soesastro, H., 2003. Regional integration initiatives in the Asia pacific: Trade and finance dimensions. [e-book] 20 September 2003. Available at: Library Digital Library/e-books http://www.pecc.org/PECC2003Brunei/papers/trade-workshop/session-2/soesastro.pdf Stubbs, R. & Underhill, G., 2000. Political Economy and the Changing Global Order. Toronto: Oxford University Press Read More