Good and Bad of Globalization - Essay

Teenagers chat on the Internet, go on Facebook and My Space, etcetera to meet more new friends. These things are happening because of “Globalization”. Globalization is a trend of everything being internationalized, including technology, education, economy and culture. Globalization can bring positives such as cultural diffusion, improved living standards, and a boom in economy, but at the same time bring harm to the developing countries and the environment. I would like to explore the idea of Globalization in economy and see how the positive and negative impacts affecting the global community are concerned with good and bad incentives and moral responsibilities.

Let’s look at the positive effects:
First of all, Globalization brings innovation in both economy and education to developed and developing countries. People exchange knowledge with and learn from each other and allow more technological advancement to be made to improve our lives. For example, about 100 million people owned cell phones by the mid-1990s and the number rose to 3 billion in 2007. According to a report done by the London Business School in 2005, an increase of 10 cell phones per hundred people in emerging markets contributes to 0.6 percent growth in GDP (*data from International Union for Conservation of Nature).
Secondly, Globalization can improve living standards in developing countries. For the US, about 200 billion US dollars were devoted to foreign investment because it is the best chance for them to get out of poverty and improve their living standards. There will be more job opportunities therefore many people will benefit! More job opportunities mean a greater labor force. This leads to the third positive impact: lower cost of living and more stable national economy. It is easier to get inexpensive but high quality goods if there are more workers. For example, according to an article I read on “Forbes.com”, it says that as China built up its infrastructure, it created a Special Economic Zone that enabled foreign companies to build more factories and hire cheap labor, and go years without paying taxes while the government builds other infrastructure that they need. China’s export grew from 970 million USD to 974 billion USD in three decades. Per-person income increased from 16 dollars a year in 1978 to 2000 dollars in the present. Surely both China and foreign investors benefit from this economic growth.

After seeing three main positive impacts, we need to look at the unseen or unknown sides of Globalization. Although the economy has improved, one may also argue that the global economy is, in fact, becoming more imbalanced. As Joseph Stiglits stated in his book “Making Globalization Work”: “Globalization has compounded the problems arising from the misalignment of incentives in modern corporations.” Obviously, the main cause of many negative impacts is that foreign investors often lack incentives to protect the workers and the environment.
First impact is that, moral responsibility is weakened once multinational businesses are created because of the mind-set that a developed country may have on those developing countries. It is easy for technology-advanced countries to think that ‘because they (workers in third-world countries) are poor, they deserve less, or even are worthless. This is when competition in foreign investments are wrong; there are usually no strict laws to regulate powerful investors on what they can and cannot do and no strong laws to protect foreign workers and the environment. For example, the chemical plant for Union Carbide, an American company, exploded in 1984 in India. The court extradited the company, but it refused to cooperate and rejected the extradition request without explanation. As a result, India was forced to clean up the mess that the company made (*data from the book “Making Globalization Work”).
This ties to the second impact: when something happens in international business relationships, it is harder to find someone to be responsible for the consequence. We can see this problem in the Wal-Mart movie “The High Cost of Low Price”. A young female worker who works in a factory that produces products that will be sold in Wal-Mart said that she does the same chore for twelve hours a day. She is forced to live in a crowded, dirty room with other female workers and cannot go home to see her parents often. But she needs this job to earn money for her parents. I am sure there are much more similar cases like this young woman’s. The problem is, who is responsible for workers’ rights? The Wal-Mart Company in the US or the Chinese government? Third World Countries are usually the victims of these international businesses. Only developed countries gain the most profit.
Last but not least, Globalization and foreign investment will threaten the environment. The big environmental issues such as deforestation, severe drought and flooding, desertification, threatened biodiversity, and global warming are all caused by the huge demand on resources. In order to meet the global demand for goods, investors seek for more and more resources all around the world. For example, China’s investments alone in Africa in 2006 were estimated at 50 billion USD. In May 2007, TRAFFIC, a wildlife trade-monitoring network, released a report indicating that illegal logging in Tanzania has increased in an uncontrolled rate only to meet the demand from China. This is definitely a huge threat to the forests and ecological system in Tanzania (*resource also came from International Union for Conservation of Nature).
On the whole, having seen the positive and negative impacts of Globalization, it is necessary to educate foreign investors to have moral responsibility and good incentives. Investors should take shareholders, employees, and the community into account because everything in interconnected. It is like a chain reaction – once one part collapses, other parts are affected too. We definitely want innovation, more positive cultural exchange, and a healthy global economy. It is everyone’s responsibility to take care of their own actions so the whole world, both developed and developing countries can benefit from Globalization!