I teach International Development as the option for A2 Sociology SCLY3 – I’m posting up most of my resources in order to encourage more people to teach it!
Economic Globalisation – The Optimist View
The main evidence for economic globalisation lies in the fact that there is now a single, fully integrated global economy. At one level, there is significant evidence that economic globalisation is bringing increasing prosperity.
1. The growth of world trade
Probably the most obvious evidence of economic globalisation is the increase in exports (and obviously imports) of goods and services, which accelerated rapidly from the 1950s. This has been accompanied by a corresponding increase in the GDP and GNPs of those countries that are part of the global trade network. Behind this growth of the global economy lies the spread of capitalism (the ‘free market’) around the world. Even nominally communist countries, such as China and Vietnam have moved away from state control of the economy and now allow capitalist business.
Those countries that are part of the global trade network tend to have higher GDPs – There is an obvious correlation with practically all of the countries that top the GDP league tables also topping the export tables. China, which has one of the fastest growth rates in the world, is set to account for 10% of all global exports this year.
2. The increasing role of transnational corporations (TNCs) in World Trade
Transnational Corporations are companies that operate in more than one country and have no clear national base – they will typically buy raw materials or produce goods in one or more countries in the developing world and then sell most of their products to consumers in the developing world. Examples include Walmart, Shell, Nike, Starbucks and Coke.
Today, 50 of the 100 largest economies in the world are run by TNCs rather than Nation States. They are responsible for three quarters of global trade. Walmart, the world’s largest company, is Bigger Than Norway. If the retailer’s $416 billion in revenue were gross domestic product, Walmart would be the 25th-largest national economy in the world.
Global Optimists argue that TNCs bring benefits to countries
- They bring in investment in terms of money, resources, technology and expertise, creating jobs often where local companies are unable to do so.
- TNCs need trained workers and this should raise the aspirations of local people and encourage improvements in education
- Jobs provide opportunities for women promoting gender equality.
- Encourage international trade which could increase economic growth, access to overseas markets
- All of the above means that wealth generated from TNC investment and production should eventually trickle down to the rest of the population.
3. The International Division of Labour
Many Sociologists argue that we should look at the world economic system as a whole, in which different countries perform different roles. There are different theories about what the nature of this economic system is – but at its simplest level there is the idea that different countries have particular ‘competitive advantages’ when it comes to providing certain goods and services.
One obvious example is that different countries have different natural resources and different climates and they can produce such things efficiently, so it makes more sense that they specialise in producing and exporting those things and import products that other countries are better at producing. To take an example – it obviously makes sense that Saudi Arabia exports oil and Botswana Diamonds, because they are blessed with these resources, and it also makes sense that Ethiopia exports coffee (which makes up 60% of the value of its exports) while New Zealand breed sheep.
To take the idea further, optimists argue that another resource developing countries have in abundance is cheap labour – so one way they can develop is by allowing Corporations in to set factories that employ people to make clothes, footballs and electronics, for example, which are then exported to the richer countries in the West. Bangladesh, India and China have all done this to great effect.
Finally, the role of the developed countries in this International Division of Labour is to provide ‘high skill’ and ‘high tech’ services – such as space technology, computer software and the development of pharmaceuticals. A crucial part of this is the role western countries play in education – Britain is well known as having some of the best universities in the world. This is shortly to end, however, because of reckless and unnecessary Tory cuts to the HE sector.
4. The World Trade Organisation
A final piece of evidence for economic globalisation, and one of the major institutions behind the process is the WTO. Set up in 1994, The World Trade Organisation establishes world trade rules, the stated goal being to promote fair and free trade across all nations. 153 nation states are WTO members, constituting over 90% of all world trade with a further 31 in the process of joining.
The WTO functions through a number of high-level ministerial conferences with each set of trade negotiations (involving multiple meetings of the various member states’ delegations) often referred to as a trade ‘round’.
Global Optimists argue that the WTO has enabled the global economy to expand massively over the past two decades. The conferences are attended by nearly 3000 delegates from all 153 countries. The WTO has also dealt with nearly 500 trade disputes since 1994, disputes which, without the WTO could end in global trade being restricted.
Economic Globalisation –The Pessimist View
1. The growth of world trade is also responsible for a range of global problems such as –
- Environmental decline – Every product produced and shipped requires energy – most of which comes through burning oil and coal. This leads to increased CO2 emissions, which in turn leads to global warming and increased climate problems such as pollution and flooding.
- Increasing global inequalities – Trade doesn’t benefit everyone equally. There are several people in the United Kingdom, the United States and more obviously in both China and India that are too poor to benefit from the increasing wealth that increasing trade has generated.
2. Transnational Corporations have too much power and exploit people in the developing world
Bakan (2004) argues that TNCs exercise power without responsibility. They are programmed to exploit and dehumanise for profit. Below are just a few examples of where TNCs have been accused of acting immorally in the pursuit of profit.
Transnational Corporations are one of the primary agents of Global Capitalism and many have been criticised because of the social and environmental harms they cause in the pursuit of profit.
There are numerous case studies of Corporations causing harm in the pursuit of profit – I like to divide these harms up into five categories (click on the links for previous relevant blog posts)
- Corporations exploiting workers
- Corporations damaging the environment
- Corporations profiting from the poor through the privatisation of public services
- Corporations working against democracy by co-operating with Oppressive regimes
- Corporations profiting from war
3. The New International Division of Labour – really benefits the West.
Since the 1970s many TNCs have moved their Industrial manufacturing from the developed west to developing countries. Theorists such as Wallerstein argue that these TNCs now exploit workers, especially women, in the developing world by paying them low wages in order to maximise profit. Goods produced in these semi-peripheral countries are then exported to the west to be consumed by wealthy consumers. Pessimists also argue that the establishment of free trade zones under the auspices of the WTO effectively means that the developing countries have less control over their economy as they compete in a ‘race to the bottom’.
4. The World Trade Organistaion really works in the interests of Western Governments and Transnational Corporations
The richest countries and corporations are more effective at getting their voices heard. They often set the agenda for debates and issues of the developing countries are not listened to. Many developing countries have walked out of trade talks at the WTO as they have not been listened to.
WTO rules often end up benefitting Western countries and corporations. Free trade often means that developing countries have to open up their boarders to western Transnational Corporations. This has had a detrimental effect on developing countries.
Basically, the WTO puts the rights of corporations to make a profit before the basic human rights of people in the developing world.
The WTO lacks transparency: Many negotiations take place behind closed doors. It has huge power but its members are not democratically elected by the wider population
The Traditionalist View of Economic Globalisation
Traditionalists point out that while some parts of the world are truly part of a global system, others left outside. Some examples of this include
- Most people in most of Sub-Saharan Africa are not tied into global networks of trade and consumption – many are substance farmers who produce and consume food they produce themselves.
- Most trade is not truly global – It is regional – 70% of UK trade is within Europe, the USA trades mainly with Canada, Mexico and South America and China trades mainly with other Asian countries.
- Increasing amounts of people in Western Europe prefer the ideal of ‘localised economics’ – consuming things that are produced as close to home as possible in order to reduce the environmental impacts of transporting goods long distances.