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Table of Contents

GEODATE

Volume 35, Issue 2, 2022

GEODATE

Volume 35, Issue 2, 2022

Globalisation friend or foe

Anne Holland, Editor, Geodate

The increasing interdependence of the world’s economies, cultures, and populations is known as globalisation. It is a dynamic process being influenced by factors that affect the importance of geographical distance in the movement of people, goods and information. Globalisation can bring both positive and negative impacts to economies, societies and the environment, and being a dynamic process the nature of these impacts can vary over time; as such, globalisation may be considered either as a friend or a foe.

Figure 1: Globalisation

Factors influencing globalisation

The process of globalisation is generally considered to have started in the 19th Century when improvements in transport reduced the time and cost of travel between places. This time-space compression caused an effective shrinking of the world, enabling people and goods to move more easily across the world. With technological developments in manufacturing also allowing the mass production of goods, industries could expand their sphere of influence and serve a global market (subject to political barriers to movement and trade). Further developments in transport, including the introduction of shipping containers in the 1970s, continued to ease the global movement of people and goods and with the General Agreement on Tariffs and trade (GATT) in 1947, and the formation of the World Trade Organisation (WTO) in 1995, political barriers to global trade began to be addressed on a large scale.

Figure 2: Shipping containers

As technological developments in telecommunications occurred, industries in high-income countries could locate their production processes further from their headquarters to take advantage of cheaper wage rates in lower-income countries. This offshoring process began in the mid-twentieth century when labour-intensive manufacturing processes were shifted to countries in Southeast Asia. This has subsequently been followed by the offshoring of knowledge-based and administrative jobs. Offshoring has benefitted these Transnational Corporations (TNCs) by reducing their operating costs and giving them access to overseas markets. Still, they have also benefitted from financial incentives offered by the governments of lower-income countries, which saw such foreign investment as a step towards economic development.

With the development of the Internet, global movements of data, information, capital and social connections are occurring on a scale. This has heralded a new era of digital globalisation that allows individuals and smaller enterprises to involve themselves in the global economy. One such example is Ecosandals, a small business operating from the shantytown of Korogocho in Nairobi, Kenya, that makes sandals from recycled tyres and sells them internationally through their Website. 

The positive and negative impacts of globalisation.

Globalisation has brought economic, social, cultural, political and environmental impacts that have been both positive and negative. The impacts of globalisation around the globe may also vary over time, depending on a range of factors, including economic development in lower-income countries, concerns about environmental sustainability and disruption of global supply chains due to the Covid-19 pandemic and political conflict.

Economic Impacts

In the early stages of globalisation, the economies of high-income countries benefitted from moving manufacturing processes offshore to take advantage of lower wage rates in lower-income countries. The subsequent growth in international trade gave wealthier nations greater access to a wide variety of cheap goods and services, that many people in lower-income countries were too poor to access. In these countries with low-wage rates, workers have often been exploited; indeed, governments of lower-income countries have sometimes chosen to keep wage rates low, restrict the development of trade unions, and operate lax health and safety, and environmental regulations in order to attract the foreign investment that would encourage economic growth. Although this foreign investment provided infrastructure and training of labour, economic development could be hindered as the skilled workers were more easily able to migrate to countries that offered higher wage rates, and TNCs found ways to evade paying tax.

Over time, as economic development occurred in lower-income countries, globalisation has helped to reduce global inequalities in wealth; however, not all lower-income countries have found it easy to enter the global economy. This is particularly so where the country has poor infrastructure, a low level of education amongst the workforce or where political conflict is not conducive to a stable business environment.  In addition, as cheap mass-produced goods enter markets in these lower-income countries they may hinder economic growth by disrupting the market for local industries. For example, following the liberalisation of trade in Kenya in the 1980s, cheap clothing from charity shops located overseas entered the local Kenyan markets, and employment in the Kenyan textile industry declined by 96% to 20 000 in 2015.

Figure 3: Kenyan clothing market

Many lower-income countries that have experienced economic growth as a result of globalisation are now experiencing rising wage rates and establishing their own TNCs. However, this is of benefit to the future economic development of these newly industrialised countries, the benefits that TNCs from high-income countries gained from globalisation are now being eroded as they are faced with rising labour costs and international competition. These changes encourage TNCs from high-income countries to relocate their manufacturing processes (particularly those that can be automated or digitised) closer to their main markets in wealthier countries. This movement, known as re-shoring, has been described as a reversal of globalisation, particularly when governments of high-income countries choose to protect their industries from the overseas competition by applying a policy of protectionism; this is because protectionism is likely to result in rising prices, geopolitical tensions, and trade wars that affect global supply chains and wider international trade. 

The globalisation of trade has resulted in complex global supply chains that many countries have become increasingly reliant on for goods and services. Disruptions to these complex supply chains due to factors such as political conflict, trade wars, global financial crises or the Covid-19 pandemic can, however, have serious consequences for the economy of a country; some countries now believe they have become too dependent on globalisation and are keen to encourage the growth of domestic industry, especially of essential products. For example, in December 2021, a global shortage of urea, a key component of fertiliser and AdBlue (a diesel exhaust fluid) resulted in China banning exports of this chemical compound to Australia. With domestic supplies of urea limited, diesel prices in Australia rose 10c per litre with fears that food prices would also rise as shortages of urea affected the agriculture and transport industries. Although the Australian government was able, in the short term, to increase domestic production of the chemical at the urea production plant in Brisbane, this plant is earmarked for closure in December 2022 due to rising costs.  

Digital globalisation has played a major part in providing access to the global economy for a greater number of countries, as well as to individuals, and smaller enterprises; however, the digital economy is increasingly under threat from cyber attacks that can disrupt organisations, hold businesses to ransom and be a financial risk to individuals.

Social, cultural and political impacts

Globalisation can also have social, cultural and political impacts. The movement of people through international tourism, overseas education and migration has encouraged the development of a multicultural society, if not also the transmission of infectious diseases, such as Covid-19. These global interactions may improve quality of life by allowing people to experience new foods, music, and festivals. Meeting people from different cultural backgrounds can help reduce prejudice and racism and promote international awareness. For some, however, the globalisation of culture, such as through films, pop music, fashion and the international nature of corporations like McDonald’s, Disney and Coca-Cola, may be viewed as ‘cultural imperialism’. This standardisation of culture can threaten traditional cultural values and lead to the introduction of unhealthy lifestyle choices, such as the use of alcohol and drugs, or considered culturally offensive. In a poll of French citizens in 1999, 60% thought globalisation represented the greatest threat to the French way of life, particularly as decisions taken in the European Union impacted their life.

Global digitalisation has aided the transmission of information, views and values through the media, particularly the Internet. However, such an exchange of ideas is not always welcome politically and may be subject to government control. Social media is less susceptible to government control. The ability to exchange ideas through this medium has contributed to action and protests on social issues or political movements; this was evident in 2010-11 during the Arab Spring in North Africa and the Middle East. However, social media can also be a platform through which fake news and extremist views are spread that can then result in conflict. 

Cyberwarfare and cyberterrorism are also issues arising from global digitalisation. Cyberwarfare and cyberterrorism are aimed at attacking a nation’s security. They include attacks on government computer networks and networks running essential services and critical infrastructures such as power supplies and financial markets.

Environmental Impacts

Whilst international travel and the media have resulted in greater awareness of environmental issues, and the Internet has led to greater coordination of environmental action across the globe, the process of globalisation has also had negative impacts on the environment. With the globalisation of trade, the demand for natural resources has increased, and goods are transported further worldwide. The transport of goods, particularly by sea, has increased air and water pollution, with the increased emission of greenhouse gases resulting in global warming and ocean acidification. To serve a global market, the exploitation of resources has also resulted in environmental damage such as deforestation, soil erosion, overfishing, and oil spills. The destruction of terrestrial and aquatic habitats has contributed to a loss of biodiversity globally. 

Conclusion

Globalisation is a result of technological developments that have, over time, reduced the importance of geographical distance in the movement of people, goods and information around the world. Globalisation has brought both benefits and challenges to economies and societies, but the extent to which a country is affected by this process is in part dependent on how able or willing a country is to integrate on a global scale; for example, some political regimes favour isolationism and an inward-looking culture, whilst the formation of trading blocs can hinder the process of global economic integration. Globalisation is a dynamic process that continues to evolve, as does the nature of the impacts, causing some countries to reflect on (and reconsider) whether globalisation is indeed a friend or a foe.

Student activities

1. Using your own words, summarise the factors that have resulted in globalisation.

2.     a. Define the term ‘time-space compression’.

        b. Use the Internet to research specific examples of technological developments that have reduced the time and cost of travel for people                and goods.

3. Explain the advantages that TNCs gain from offshoring their manufacturing processes.

4. Outline the benefits that lower-income countries gain from TNCs investing in their country.

5. Assess the impact of digital globalisation.

6. Create a table to show the positive and negative social, cultural and political impacts of globalisation.

7. Define the term ‘reversal of globalisation’.

8. Suggest reasons why some countries are rebelling against globalisation.

9. Explain why some countries are not able or willing to participate in globalisation

10 .To what extent do you consider globalisation to be a friend or foe?

Bibliography

Hannam, P. (2021, December 10). What is urea and AdBlue, and why does a worldwide shortage threaten Australia’s supply chain? Retrieved February 28, 2022, from The Guardian: What is urea and AdBlue, and why does a worldwide shortage threaten Australia’s supply chain?

Kubania, J. (2015, July 6). How second-hand clothing donations are creating a dilemma for Kenya. Retrieved March 1, 2022, from The Guardian: https://www.theguardian.com/world/2015/jul/06/second-hand-clothing-donations-kenya 

Lubbers, R. (1998). The dynamic of globalization. Retrieved March 1, 2022, from https://koorevaa.home.xs4all.nl/html/dynamic.html#:~:text=For%20most%20authors%2C%20globalization%20is,but%20as%20a%20dialectal%20dynamic.

Nissanke, M., & Thorbecke, E. (2007). Globalization, Growth, and Poverty in Africa. Retrieved March 1, 2022, from United Nations University: https://www.wider.unu.edu/publication/globalization-growth-and-poverty-africa

Stobierski, T. (2021, April 15). 4 Effects of globalization on the environment. Retrieved March 1, 2022, from Harvard Business School online: https://online.hbs.edu/blog/post/globalization-effects-on-environment

Watson, J. L. (2022). Cultural Globalization. Retrieved March 2, 2022, from Britannica: https://www.britannica.com/science/cultural-globalization/Entertainment 

Vanham, P. (2019, January 17). A brief history of globalization. Retrieved February 28, 2022, from World Economic Forum: https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/

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