This set of global processes that are

This essay will be looking at
what is globalisation and the effects of it and the three competing
perspectives of globalisation. Globalisation is shaping the way we live our
everyday lives and has impacted the world massively in the last few centuries
due to the increase in trade between countries, new communication channels and
the increase in foreign direct investment all of which were helped by the
advancements in technology over the years. These three competing perspectives
of globalisation are neo-classical, socialist and structuralist. These
different perspectives all have different views on the advantages and
disadvantages of globalisation and the effects it can have on the world from both
an economical viewpoint looking at the how it affects the national economy and
the household income and also from an ethical viewpoint looking at the quality
of life and human rights. The aim of this essay is to evaluate each perspective
and discuss the strengths and limitations of each using examples from the business
world to put them into context. The structure of the essay will include detailed
definitions of globalisation from various academic sources, a thorough look at
the three different perspectives of globalisation, the ethics of globalisation and
a conclusion to summarise the findings.

The definition of globalisation
is hard to pinpoint as there are so many different definitions of globalisation
out there. (Wetherly & Otter, 2014) describe globalization as not only an
increase in economical flows of trade and investment but also the mixing of
culture influences and migration. Another definition is ‘globalization refers
to the interconnectedness and interdependencies between countries on a global
scale’ (Perrons, 2004:1). Alternatively, a definition of globalization could be
‘A set of global processes that are changing the nature of human interaction
across a wide range of social spheres including the economic, political,
cultural and environmental’ (Kelley, Collin, 2005:3). Although these
definitions of globalization vary all of them agree that it is breaking down
the barriers between countries allowing businesses to trade more freely and mix
cultures.

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Although globalization is
considered a new word, the history of globalisation spans over centuries to
when people first started to migrate to other countries and just started to
trade goods. The first phase of globalisation is considered to have started between
the years of 1500-1800, over this period new technology had been introduced to
help people travel long distances and countries had started to move away
protectionism and bring in liberal trade policies. Then the second phase of
globalisation was considered to be after world war two when the World Bank and
the International Monetary Fund where established which where the first steps
towards an increase in global free trade (Johnson, 2008). To where we are today
where with the development of computers and the invention of the internet it
has made global trade that much easier as now almost any company can be a
global company and sell their products abroad with ease leading to an increase
in trade. Another reason for the increase in globalisation is due to more
countries adopting free trade strategies and others reducing the income tariffs
making it more financially viable to trade between nations. A statistic to
represent this increase of globalisation and increase of trade is looking at
trade as the percentage of the world’s total GDP, in 1960 trade was 24.194% of
the world’s total GDP but in 2016 it increased to 56.35% (The World Bank, 2016).
          

The neo-classical perspective of
globalization is that globalization is a good thing and that all countries can
benefit of it. Neo-classical theorists believe that businesses can do best in
the free market without any government interference as consumers can behave how
they want (Wetherly & Otter, 2014). This perspective of globalization is
based on the theories of absolute and comparative advantage. Adam smith’s
theory of absolute advantage was that the narrowness of products produced in
one country should not affect their division of labour as they can produce that
product to the highest perfection (Smith, 1776, Cited in Schumacher, 2012). This
means that countries should specialise in creating what their best at making
and not try make things that other countries are better at or have better
resources to create, as they can trade for the products with other countries if
they produce something cheaper. Whereas David Ricardo’s theory of comparative advantage
says that if there are two countries producing two goods and one country is
better at producing both goods than the other, both countries can still benefit
from specialising in one product each. If there was a fair terms of trade
established Ricardo’s theory says that both countries would have more of both
goods than before the trade (Ricardo, 1817, Cited in Author unknown, 2012). However,
a problem with the theory of comparative advantage is that the country that is
better at producing both goods workers’ wages will be higher than in the other
country as they are more productive making those goods, because their wages are
higher it will lead to their standard of living being better compared to the
other country creating inequality. Another limitation of these two theories is
that they are both made on a lot of assumptions from both countries, making the
theories seem very unrealistic in the real world.

This leads on to the second
perspective that is the socialist view on globalisation. Socialists believe that
globalisation is a bad thing as they believe that it creates inequality and
enables businesses to exploit customers and employees (Wetherly & Otter,
2014). This is because they believe that the rich nations are the ones that are
gaining most out of globalisation as they are taking advantage of poorer countries
because of their cheap labour force and resources, making the richer nations
richer leading to inequality in the world. According to (Herriot and
Scott-Jackson, 2002) ‘the richest 20% of the world’s population control 86% of
world gross domestic product and 82% of world exports, while the poorest 20%
consume 1.3%.’ which shows the inequality between nations on the amount that
they export and import. A well-known critic of the ethics of globalization is
(Chomsky, 2017) Chomsky believes that globalization has always enhanced,
inequality and exploitation to horrendous extremes. For example, the industrial
revolution that relied on cotton from cotton farmers which involved the exploitation
of black slaves in the south of America, also in modern history in Eastern
Congo where millions have been killed over minerals used for the production of
goods for massive tech companies. These examples show the extremes of the
ethical dilemmas that come up in globalization that need to be considered when
operating on a global scale. Contrary to socialist views some less developed countries
have been able to develop over the years due to the help of globalisation. A
good example of this are the BRICS (Brazil, Russia, India, China and South
Africa) all of which are countries that where named as developing countries and
where tipped to be the next global powers. According to time magazine (Bremmer,
2017) states that ‘between 1990 to 2014, these
countries went from accounting for 11 percent of the world’s GDP to almost 30 percent’. India
and China have seen this growth from integrating themselves into the global
supply chain whereas Brazil, Russia and South Africa have grown by selling their
natural resources.

The
final perspective on globalisation is the structuralist view of globalisation.
The structuralists believe that globalisation can be beneficial for a country
however the success of it depends on the institutional framework and structure
of the country (Wetherly & Otter, 2014).
This means that they believe that it is mainly down to the government and how
they run the country and what legislation they introduce to try boost trade to
benefit from globalisation. (Howells, 2016:2) Believes that the ‘States have
the power to choose the economic winners and the economic losers through
taxation, spending, and regulations’ these policies are normally chosen
depending on the domestic interests of the country. The interests of the
country will be dependent on how developed they are as a country, as less
developed countries will have different infrastructure compared to a more
developed country meaning they will have different policies for globalization.
A structuralist theory on globalisation is dependency theory which predicted
that the worlds production will be left in the hands of a few multinational
companies making the world market an oligopoly (Sanford, 2001). An example of
structuralist and dependency theory being used in the past is in Latin America.
After trying a neo-classical approach to globalization in Latin America and
having no success helping its underlying problems of social exclusion and
poverty they tried a structuralist approach using dependency theory. Using dependency
theory, they produced a new international economic order and transitioned to
socialism to try preventing the underdevelopment of the countries (Kay and
Gwynne, 1999). This shows how different countries will respond to globalization
differently depending on the structure and the situation that their country is
in. However, a limitation of the structuralist approach such as the one used in
Latin America is the inequality, as the countries becomes dependant on the
large multinational firms and the smaller companies lose out.

In conclusion it is undeniable
that globalization has had a massive impact in the world we live in for better
or for worse, caused by the advancements of technology, the increase in
communication channels and changes in trade policy. These changes have
benefited some countries who have been able to use globalization to their
advantage by trading effectively with other countries such as the BRICS who
have been able to either get into the global supply chain or trade their
abundance of resources and it has also allowed for companies to access foreign
markets that they may have not previously been able to sell too in the process
creating more jobs. However, for other countries it has been less advantageous
as in some cases workers are being exploited and companies are breaking human
rights laws and in other cases it is creating inequality between the wealth of
nations and inequality between the income of the population. But none of the three
perspectives on globalization are perfect as they all have limitations to them however
in the future if the right regulations and policies are put in place globalisation
could be beneficial to more of the world.