The Phenomenon of Globalisation Explained

 

What is globalisation? 

  Globalisation (also spelt globalization) is a dynamic and growing process that reflects the interconnection between the countries and peoples of the world. Put differently, it is a process that is composed of the integration of the economies, politics, and cultures of the world, and where national borders have less relevance.   

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Broad historical context of globalisation 

  The term globalisation is not an invention of the twenty-first century. According to Encyclopaedia Britannica, Theodore Levitt (1925 - 2006), the German-born economist, ‘has been credited with having coined the term globalization in an article titled “The Globalization of Markets” in 1983.’    However, in terms of trade and commerce, the roots of globalisation can be traced back to ancient trade routes. For example:  

• The Silk Route, which linked the ancient civilisations of China and the Roman Empire. This most famous trade route started in the first century BCE to transport silk from China to the Roman Empire, in exchange for gold, silver and wool. 
• The Roman Via Salaria (Salt Route) ran from Ostia (once the port of ancient Rome) across Italy to the Adriatic coast. (The Adriatic Sea separates the Italian Peninsula from the Balkan Peninsula.) 
• Arabian merchants used the Incense Route to transport myrrh and frankincense with their camels from the southern end of the Arabian Peninsula to the Mediterranean region, which was an important trade hub. 

  It is widely considered that the phenomenon of globalisation started in the 19th century after the advent of the Industrial Revolution, when numerous advances in transportation and communication, such as the building of steamships, railroads, and telegraphs, started to improve trade across the borders of countries and regions.    Furthermore, economic cooperation between countries has increased, and governments in countries have started to adopt liberal trade policies between countries.     However, according to some researchers, globalisation reached a standstill after World War I, the Great Depression and World War II  (WWII) when nations applied protectionism to protect their industries.    During the last year of WWII and after WWII, the United States of America played a key role in the awakening of globalisation. According to the Washington International Trade Association (WITA), ‘the United States build a global economic order governed by mutually accepted rules and overseen by multilateral institutions. The idea was to create a better world with countries seeking cooperation to promote prosperity and peace.’ (Accentuations in the quotation by the article writer.) Examples of multilateral institutions are the World Bank and the International Monetary Fund (IMF).   

Key features of globalisation 

  As an expanding phenomenon, globalisation has experienced a series of changes during the 21st century. Some of its key features are, amongst others: 

• Globalisation initiates and establishes economic growth, interconnectivity, and interdependence of various sectors across countries and nations. 
• It facilitates global trade and commerce expansion and cross-cultural diversification. 
• Globalisation causes lower tariffs and taxes on international business trades. 
• It creates a free trade environment, allowing countries to impose policies which are favourable to free trade. 
• Globalisation is supported by large international institutions such as the IMF and the World Bank. 
• It allows the free flow of merchandise, capital, investments, financial products, goods, services, technology, and workforce across national borders and cultures. 
• Globalisation has escalated exponentially with the use of technology. 
• Furthermore, globalisation is associated with trends such as international supply chains, outsourcing, international trade agreements, and legal treaties between countries. 

   

Types of globalisation 

  Globalisation is primarily categorised into three main categories, namely economic globalisation, political globalisation, and cultural globalisation. Although some analysts expand the phenomenon of globalisation, describing five additional categories: technological globalisation, business globalisation, food globalisation, information globalisation, and market globalisation.    The different categories - especially the three main categories - influence one another and operate in interdependence with each other. For instance, favourable national trade policies boost economic globalisation. Political policies of governments also have an impact on cultural globalisation, allowing people to travel and communicate around the world more freely.    In addition, economic globalisation facilitates cultural globalisation when people are exposed to other cultures through the import of services and goods.     Economic globalisation    In economic globalisation, countries focus on integrating international financial markets and coordinating monetary exchange between the different countries.    Examples of economic globalisation include: 

• The key role of multinational companies and corporations, which operate in more than one country, is to increase trade and capital flows between the countries. 
• National governments impose essential regulations to enhance trade with other countries. 
• Trade agreements between different countries. For instance: 
• the North American Free Trade Agreement (NAFTA) between the USA, Canada, and Mexico, and  
• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between Canada and ten other countries in the Indo-Pacific region, namely, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. 

  Political globalisation   Political globalisation refers to the process by which the policies of a nation aim to bring the country closer (economically and politically) to other nations.    Put differently, the political globalisation process strengthens the bond between nations and each other. In this process, organisations like the United Nations (UN) and the Southern African Development Community (SADC), amongst other organisations, play an important role. The SADC consists of sixteen African countries, aiming to enhance ‘regional socio-economic cooperation and integration as well as political and security cooperation,’ according to Wikipedia.       Cultural globalisation    Cultural globalisation enables nations to share, inter alia, their traditions, customs, languages, music, art, and food.    The entertainment industry, technological development in communications, social media, and improved transportation are key factors in the process of cultural globalisation.    Technological globalisation   This type of globalisation occurs when different nations collaborate to develop technology, making use of each other’s technological innovations and research.     The emergence of the internet allows globalisation to reach new levels in the field of technology.      Business globalisation    Business globalisation refers to the process by which businesses from various countries trade in other countries to increase their productivity and profits.    Foreign direct investments (FDIs) enable investors and companies from one country to invest in a foreign company or project.     Furthermore, the World Trade Organisation (WTO) allows international trade agreements on tariffs, making it easier for domestic businesses to get a foothold in international markets.    Food globalisation    Food globalisation refers to the impact of globalisation due to the interaction of different cultures regarding cuisines, flavours, and food traditions. Global food chains provide food of different countries.    Also, the sharing of farming techniques and practices, and biotechnology among different nations, enables nations to cultivate non-indigenous crops.     Information globalisation  This type of globalisation happens when the media has overcome geographical and language boundaries, using advanced technology and digital platforms to reach all parts of the world.    For example, a person watching a live broadcast of an event in the country in another country.     Market globalisation    Classic examples of market globalisation are stock markets and the foreign exchange (forex) market, made possible by technological developments and the worldwide internet.   

Pros of globalisation 

  Proponents of globalisation assert that globalisation has numerous advantages, improving the state of nations and the lives of people. For instance: 

• Globalisation boosts economic development and solves economic problems. For example, poorer countries gain access to foreign capital. Foreign investment can provide less privileged nations with the funds they need for development, improving the standard of living of their residents. Contrarily, rich countries get access to lower-cost resources and labour. 
• It promotes free trade because it persuades governments and authorities to reduce tariffs and subsidies and to remove other barriers that restrain free trade. This consequently advances the growth of economies, the creation of more jobs, and the competitiveness of companies, allowing lower prices for customers.    
• Cross-border operations have allowed the internationalisation of various cultures around the globe, as each country has provided aspects of its art, language, literature, and food culture to other nations. This is an important aspect of globalisation that can promote cooperation between nations and contribute to peace. 
• Globalisation has improved social justice on an international scale by directing attention to human rights globally that might have otherwise been considerably neglected.  
• It contributes to a growing environmental awareness, helping nations and people to understand the impact of humans and production on the environment.   
• Proponents of globalisation reckon that it enables developing countries to catch up to developed countries through increased manufacturing and diversification. 
• Globalisation has contributed significantly to information and communication technologies (ICT), enabling people to communicate via text, video, or voice instantaneously, wherever, whenever, and to whomever they want. Internet development has an enormous influence on people regarding the availability of information.   

 

Cons of globalisation 

  Although globalisation has many proponents, numerous critics express unfavourable opinions about the phenomenon of globalisation. Some of the cons of globalisation mentioned are: 

• Uneven distribution of power and wealth, which is concentrated in developed countries.  
• Poorer countries can be left behind and exploited for their labour as well as their natural and intellectual resources. 
• Globalisation damages the environment because of the movement of people and goods between nations. 
• Excessive influence of foreign companies on the politics of a country requires a government to apply strong economic measures to protect the national economic system. 
• It accelerates global recessions. For example, the 2007 - 2008 financial crisis, also referred to as the Global Financial Crisis (GFC), or the subprime mortgage crisis, started in the USA because of the collapse of the country’s housing market. In other words, the interconnection between the economies of countries may mean that the downfall in the economy of one country affects the functioning of the economies of other countries. 
• Globalisation increases the risk of pandemics. The COVID-19 pandemic, which originated in China, is a classic example of such a scenario. 

  It is worthwhile to take note of the following comment by Robert Calderisi (a former director of the World Bank) in his book, The Trouble with Africa, where he criticises the political correctness of the West regarding the corruption in Africa: ‘A fourth variety of political correctness is expressed by those who question globalization. Many wonder how international trade can help poor, defenceless countries; they doubt the claim of economy theorists that a “rising tide will lift all boats.” They see little evidence that prosperity is spreading in the world and are more concerned by the still-wide income differences between countries.’    Calderisi continues, saying: ‘Others go further and portray the global economy as a moral battleground, where corporate profits are “blood money,’ the World Trade Organisation is a “war machine,” and rich countries are waging a “world war against the poor,”’ when quoting Jean Ziegler, a Swiss and former professor of sociology. (Accentuations in the comment by Calderisi are by the article writer.)    

Conclusion

  Globalisation is an integral part of the global economy and has had a huge impact on nations, societies, and people. It has affected almost every aspect of an individual’s life. For instance, it has led to considerable migrations from rural areas to urban areas, causing huge problems of urbanisation, such as crime, poverty, and violence, to name a few.  Contrarily, globalisation has led to an increase in incomes and a higher standard of living in general for millions of people.  As indicated in this article, the phenomenon of globalisation has advantages as well as disadvantages.  When contemplating and discussing globalisation, proponents and critics of this dynamic and growing process are required to consider both sides of the phenomenon of globalisation. 

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