Dividends of inclusive globalisation

Globalisation is the development of an increasingly integrated global economy marked especially by free trade, free flow of capital and tapping of cheaper foreign labour markets. Even though globalisation has existed for hundreds, if not thousands of years, it has increased significantly since the mid-1980s. Now, both advanced countries and developing countries are in the bandwagon of globalisation. In the 20th century, the introduction of airplanes and road transports made transportation easier and cheaper. Until then, international trade meant only trade and exchange of goods but not services. By the early part of the 21st century, a significant percentage of people all over the world have been connected by mobile phones and the internet. The advent of electronic communications has made it possible to not only trade physical items but also services. However, globalisation has not benefited everybody equally and may have made some people worse off, leading to resentment towards globalisation.

China started its economic reforms in 1978 that led to trade liberalisation and opening up to foreign direct investment (FDI). At the same time, it improved its human capital and created a better investment climate for the private sector. The result was impressive so that it became the largest recipient of FDI in the 1990s. This led to rapid industrialisation in China and the country started producing many different types of products. From clothing to computers, everything is now manufactured in that country. An observation of the products that are available on the shelves of stores in any country will reveal that a significant percentage of products is made in China.

For the last 30 years, the country has experienced high growth that has regularly exceeded 10 per cent annual GDP (gross domestic product) growth. This impressive growth, which was a result of China embracing globalisation and free trade, allowed the country to become the second-largest economy in the world. Also, the country has built an impressive foreign exchange reserve of $3.4 trillion and pulled 680 million of its citizens out of poverty in the 1981-2010 period. However, it has not been all rosy as the country is faced with environmental degradation. The rapid industrialisation has polluted water and air and has made cities like Shanghai and Beijing some of the most polluted cities in the world. This has led to increased sickness among people and there are allegations that life expectancy may have decreased due to the endemic pollution. Even though China benefited from globalisation by substantially increasing per capita income, some of its citizens are paying a price in terms of health costs.

Thomas Friedman in his book, The World is Flat, mentions the interconnectedness of the modern world and, the way electronic communication, both mobile phone and internet, has changed the way business is done. India is a country which has significantly benefited from the development of electronic communication. There are call centres in India that cater to the needs of western clients. When a person in North America calls the Help Line to discuss troubleshooting of his computer, chances are that he will be speaking to somebody in India. Again, there are services for medical transcription, software development that is done in India for western countries. This has immensely benefited the Indian economy and has employed thousands of people while generating billions of dollars of revenues. The outsourcing business has definitely helped India to become the third largest economy in Asia and be a member of the BRICS. The country has immensely benefited from globalisation.

Bangladesh is a developing country that has also benefited from globalisation. The country’s per capita income now stands at US$923 and its economy is integrating in the world economy every day. It has used its abundant supply of labour to establish itself as the second largest garment exporter in the world. Also, it exports items like footwear, seafood and pharmaceuticals. Again, it has entered into the information technology outsourcing industry where Bangladeshi companies are making software for their western clients. The country is a member of the ‘Next 11′. However, industrialisation of the country has also come with environmental degradation and higher levels of pollution. This has led to illness among certain segments of the population. Also, not everybody has benefited from globalisation which sometimes manifests itself in terms of social conflict in the country. Overall, Bangladesh has benefited from globalisation and is expected to continue its upward trend of development.

Globalisation in advanced countries: Now, let us have a look at the advanced countries. Globalisation has shaped and changed the advanced countries as well. The United Kingdom is one of the foremost advanced countries in the world. Its capital, London, is one of the financial capitals of the world. The economy of the country is strongly integrated in the global economy. Many companies have invested in emerging countries and have reaped rich dividends. The companies and their owners and shareholders have prospered and have benefited from globalisation. However, not everybody in the UK gained from globalisation. The blue-collar workers with little education may have been left behind in its race. Many manufacturing companies may have moved from the UK to the developing countries where they had access to cheaper labour. This made many of the factory workers in the UK unemployed.

Also, their limited education may have been a barrier to successfully transitioning into alternative professions. The economic crisis made things more difficult for the vulnerable people. As many companies were closed down due to the crisis, the unemployment rate increased. It can be stated that globalisation has had a mixed impact on the UK. Some companies and individuals immensely benefited due to globalisation. On the other hand, workers with limited education face a grim reality where their jobs have been outsourced and they have to depend on government handouts to survive.

A look at the largest economy in the world shows similar concerns. In the last few decades, many American companies have invested in the emerging economies, especially in China. Many manufacturing companies shut down their factories in the US and were relocated in developing countries where manufacturing costs are lower. This process has made numerous factory workers unemployed. Again, the outsourcing of call centre jobs and technical support positions have made many people unemployed. Many of these jobs paid minimum or near-minimum wages; but they did employ a significant number of people. Moreover, the economic crisis had a serious impact on the US economy and employment. Even though the US economy is recovering, the unemployment rate is still quite high and millions of people are still unemployed. The United States has benefited from globalisation; however, many of its workers and citizens have been left behind and have not enjoyed the fruits of globalisation. The recent filing of bankruptcy by the city of Detroit is a classic example of how globalisation may have worked against a particular city. Even though there were other issues that led to its bankruptcy, competition from overseas manufacturers played a role in the city’s decline.

Advanced countries have been allowing free inflow of products and services from developing ones. However, a situation where manufacturing companies are closing down and workers are becoming unemployed would be unpopular in those countries. Now, governments in many developed countries are faced with a situation of rising debt, income inequality and high level of unemployment. This situation is undesirable for these countries both politically and economically. Moreover, the middle class in the developed countries are being economically challenged which exacerbates the situation.

It seems that in both developed and developing countries, certain segments of the population have been left behind by globalisation. Some people are suffering due to environmental degradation brought about by industrialisation. Globalisation has to be more inclusive so that it considers environmental sustainability and the plight of blue-collar workers in developed countries. The developing countries can develop by having access to the developed countries’ markets; they can export goods and services to the developed countries when citizens of these countries are employed and financially well-off. Therefore, globalisation has to be more inclusive so that the middle class in the developed countries are economically comfortable; it has to be more inclusive so that the blue-collar workers in the developed countries are retrained and gainfully employed. Only then, globalisation will be popular among the masses and, among the people of both developed and developing countries. Globalisation that is more inclusive will be beneficial and sustainable in the long run.

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