Globalization: What It Means

Globalization is by no means a new phenomenon. It’s an old established pattern that is moving increasingly fast and disruptive in recent decades, for better and for worse. What is globalization? It basically involves the movement of people, goods, services, investments, jobs, technologies, and ideas from one part of the globe to another. Inevitably, it also includes the spread of garbage, wastes, and all other kinds of environmental pollution.

The first evidence of globalization dates back to millions of years ago when the earliest hunting tribes in North Africa began to migrate eastward to the Middle East. Then they spread out to the Indian subcontinent, Europe, Asia, Siberia, and across the Bering Strait to the Americas. A long time has elapsed before the world is populated like it is today, with the existence of different races and cultures that are unique to the territories where our early ancestors had chosen to settle and multiply.

What has caused globalization to explode in the modern age? Nothing claims greater influence than the advancement of technology, especially modern transportation, energy sources, computers, mobile phones, and the Internet. Where does the motivation come from? It originates from the human instinct to explore and exploit the surroundings for material and spiritual benefits. This natural impulse can never die, so globalization can never stop. Therefore, we must accept this as an increasing challenge on one hand, and potential opportunity on the other.

Due to the great resources at their disposal, big organizations are accelerating the pace of globalization everyday, intentionally or otherwise. These organizations include big corporations, governments and non-government organizations (NGOs). Their actions impact lots of people to varying degrees. The biggest impact of globalization is seen in the economic relations between the US and China.

In the developed world such as the US, globalization is an ugly word for ordinary citizens because many have lost their jobs due to corporate outsourcing to low-wage countries. They tend to blame other countries for “stealing” their jobs instead of their own corporations investing overseas. Globalization becomes even uglier when they hear about unsafe and toxic products imported from China, polluted clouds drifting eastward over the Pacific Ocean, invasion of foreign fish and plant species, and illegal immigrants from south and west.

On the other hand, one thing Americans take for granted is the low-price consumer goods supplied by China that has put a lid on inflation for the last two decades. Furthermore, in an effort to sustain the fast pace of exports, the Chinese government continues to buy a substantial amount of US treasury bonds so that US consumers enjoy low interest rates and continue to buy from China.

Although ordinary citizens in the US suffer from job loss, the business elites are laughing all the way to the bank. Even during the recent deep recession, US corporations made a bundle of money due to three factors: cheap labor as a result of outsourcing; market expansion as consumers become richer in low-cost countries due to job growth; and favorable tax conditions in the host countries that favor foreign investments.

It looks like US corporations will continue to invest overseas. Why shouldn’t they if more money can be made? So the jobs lost will not come back home as hoped. Why should those jobs come back in the first place? They were low-pay jobs that should be shed, and better ones to be created instead. China is also losing jobs to lower-cost countries such as Vietnam, too. The strategy is to create new jobs fast enough to replace the old ones going away. That means continuous innovation to create new technologies, better efficiency, and higher productivity.

In the emerging countries that receive outsourcing from big corporations, the workers view foreign investments with hope for a better future. They are willing to accept low wages, low-quality working conditions, and even more environmental pollution. Why? The reason is the existence of a large gap in living standard and quality of life between rich and poor countries.

In a way, globalization is a benign force that serves to even out the inequalities between different countries by bringing jobs to the poorer ones. This also means globalization contributes to a fairer income distribution on a worldwide scale. One glaring example is the growth of the middle class in China estimated at 500 millions, which is mainly a consequence of economic growth stimulated by globalization.

Whichever way we look at it, globalization is a complex force that brings good and bad consequences to different parts of the world. The fact is that we cannot avoid it unless we impose self-isolation like North Korea. We just have to learn how to deal with globalization and take advantage of its opportunities.

(January 2012)

This entry was posted in 21st Century, Business/Investment, Economics/Politics. Bookmark the permalink.

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