18.2 Globalization and the economy  (Page 3/12)

There are benefits and drawbacks to globalization. Some of the benefits include the exponentially accelerated progress of development, the creation of international awareness and empowerment, and the potential for increased wealth (Abedian 2002). However, experience has shown that countries can also be weakened by globalization. Some critics of globalization worry about the growing influence of enormous international financial and industrial corporations that benefit the most from free trade and unrestricted markets. They fear these corporations can use their vast wealth and resources to control governments to act in their interest rather than that of the local population (Bakan 2004). Indeed, when looking at the countries at the bottom of the list above, we are looking at places where the primary benefactors of mineral exploitation are major corporations and a few key political figures. Nigeria, for example, is a country that produces tens of billions of dollars in oil revenue, but the money does not go to the country’s people.

Other critics oppose globalization for what they see as negative impacts on the environment and local economies. Rapid industrialization, often a key component of globalization, can lead to widespread economic damage due to the lack of regulatory environment (Speth 2003). Further, as there are often no social institutions in place to protect workers in countries where jobs are scarce, some critics state that globalization leads to weak labor movements (Boswell and Stevis 1997). Finally, critics are concerned that wealthy countries can force economically weaker nations to open their markets while protecting their own local products from competition (Wallerstein 1974). This can be particularly true of agricultural products, which are often one of the main exports of poor and developing countries (Koroma 2007). In a 2007 article for the United Nations, Koroma discusses the difficulties faced by “least developed countries” (LDCs) that seek to participate in globalization efforts. These countries typically lack the infrastructure to be flexible and nimble in their production and trade, and therefore are vulnerable to everything from unfavorable weather conditions to international price volatility. In short, rather than offering them more opportunities, the increased competition and fast pace of a globalized market can make it more challenging than ever for LDCs to move forward (Koroma 2007).

The increasing use of outsourcing of manufacturing and service-industry jobs to developing countries has caused increased unemployment in some developed countries. Countries that do not develop new jobs to replace those that move, and train their labor force to do them, will find support for globalization weakening.

Summary

Globalization refers to the process of integrating governments, cultures, and financial markets through international trade into a single “world market.” There are benefits and drawbacks to globalization. Often the countries that fare the worst are those that depend on natural resource extraction for their wealth. Many critics fear globalization gives too much power to multinational corporations and that political decisions are influenced by these major financial players.

Short answer

Further research

The World Social Forum (WSF) was created in response to the creation of the World Economic Forum (WEF). The WSF is a coalition of organizations dedicated to the idea of a worldwide civil society and presents itself as an alternative to WEF, which it says is too focused on capitalism. To learn more about the WSF check out (External Link)

References

Abedian, Araj. 2002. “Economic Globalization: Some Pros and Cons.” Papers from the Sixth Conference of the International Environment Forum, World Summit on Sustainable Development. Johannesburg, South Africa. Retrieved January 24, 2012 ( (External Link) ).

Bakan, Joel. 2004. The Corporation: The Pathological Pursuit of Profit and Power . New York: Free Press.

Bhagwati, Jagdish. 2004. In Defense of Globalization . New York: Oxford University Press.

Boswell, Terry and Dimitris Stevis. 1997. “Globalization and International Labor Organization.” Work and Occupations 24:288–308.

Koroma, Suffyan. 2007. “Globalization, Agriculture, and the Least Developed Countries.” United Nations Ministerial Conference on the Least Developed Countries. Istanbul, Turkey.

Plahe, Jagjit. 2005. “The Global Commodity Chain Approach (GCC) Approach and the Organizational Transformation of Agriculture.” Monash University. Retrieved February 6, 2012 ( (External Link) ).

Parks, James. 2011. “Report: NAFTA Has Cost 683,000 Jobs and Counting,” AFL-CIO Blog, May 3. Retrieved February 6, 2012 ( (External Link) ).

Sassen, Saskia. 2001. The Global City: New York, London, Tokyo . Princeton, NJ: Princeton University Press.

Speth, James G., ed. 2003. Worlds Apart: Globalization and the Environment . Washington, DC: Island Press.

The United Nations: Department of Economic and Social Affairs. 1973. “Multinational Corporations in World Development.” New York: United Nations Publication.

Wallerstein, Immanuel. 1974. The Modern World System . New York: Academic Press.