Geo Factsheet

www.curriculum-press.co.uk Number 172

The Challenge of Globalisation

Globalisation is a buzz word of the moment. It is probably one of the most talked about yet least understood concepts of this new millennium.

Environmentalists, human rights advocates, trade unionists, dispossessed third world farmers and citizens groups decry it and sometimes violently
protest at summits of the world’s most powerful leaders, whether at Seattle, Washington, or Cancun. At the same time economists, business leaders and
transnational companies and global institutions such as the World Bank, praise globalisation as a historical inevitability. The box below summarises some
of these conflicting views and shows how divided global opinions are.

• ‘Globalisation is irreversible and irresistible’ (Tony Blair, UK Prime Minister)

• ‘Globalisation, which centralises power, destroys livelihoods, and creates displacement of people and environmental destruction’ (V Shriva,
Indian environmentalist)
• ‘Globalisation is not a policy choice, it's an economic and social-cultural fact’ (Bill Clinton, ex US President)
• ‘Globalisation is generating great wealth, which could be used to massively reduce poverty world wide and global inequality’ (Director of Nike)
• ‘Globalisation is destroying millions of livelihoods. We must fight back for our survival’ (Sarath Fennando, Movement for Land & Agricultural
Reform, Sri Lanka)
• ‘Far from being the cause of poverty and other misery, globalisation is the solution’ (Singapore Prime Minister)

Review
Sort them into for, against and neutral and explain why each has their
opinion.

The purpose of this Factsheet is therefore to peel back the layers to find out what exactly globalisation is, and to assess its benefits and costs. Whilst
globalisation is traditionally seen as a primarily economic concept, ‘the functional integration of the World’s economies’, over time this has
broadened (see Fig 2).

Fig 2

Economic Globalisation
Environmental Globalisation Results from the growth of MNC-led integrated global
As the world integrates, global problems occur (eg production systems, global markets and global finance
global warming, ozone hole) which require global aided by free flows of capital and trade. International
solutions – hence the development of global monitoring organisations such as IMF, World Bank and WTO all
systems. contribute to globalisation of economies. States too
encourage FDI thus internationalising investment flows.
This integration has been facilitated by technological
changes responsible for the shrinking world – in
information technology, communications and transport.

Cultural Globalisation
Made possible by communication technologies
which circulate globalised news/media/events.
TNCs market world products, hence the concern
of over-Americanisation, Big Macs/Coke. Global
migration encourages multi-cultural hybridisation.
These movements produce diaspora, ie the
dispersal across geographical and political Political Globalisation
boundaries of those sharing a common culture. As financial systems interlock and trade blocks such as the
Some fear the spread of American culture, fuelled EU evolve into full unions many people argue that the power
by the universal spread of the English language can of the Nation state has declined, with losses of power over
submerge local cultures and lead to xenophobia and scale and form of service provision, tax and welfare regimes
racism. and even the shape of the political system itself.
Globalisation is heavily linked to capitalist free-market
economies.

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The Development of Globalisation

Fig 3a shows how globalisation has evolved over time. As can be seen, there are a number of factors which have promoted its development.
Fig 3a. Development of globalisation

Development of Emergence of the telegraph

global markets eg Phase 1 Incipient Globalisation (1850s)
1876 London 1850 – 1950
Metal exchange Development of telephone as a
for copper, tin, • Improved communications technology for a few MEDCs. first international link 1890s
zinc, lead 1930s standard

• Emergence of early TNCs such as Siemens (1852) Development of wireless

Global market for technology (BBC World
packaged goods Service 1921)
Heinz, Coca-Cola, • Emergence of international organisations
(early 20th century), • League of Nations (1923) Development of air travel
Gillette razors, Bayer • Interpol
Start of global tourism -
aspirin, Ford model T • International Red Cross (1863)
Thomas Cook package bus
car • International Wildlife Conservation initiatives

• Development of global events

• World Fare 1851
• Olympic Games 1896

Development of electronic
Phase 2 Onset of full scale globalisation communications (direct dial,
Emergence of global 1950 – 2000 fibre optic cables, satellites, rise
markets for many
of mobile phones).
goods and services eg • Communications revolution.
flowers. • Power of media to generate one world viewing, global village Development of Internet in
events (moon landing, Gulf War, World Cups). 1980.
Emergence of • Rise of MNEs to dominate world trade (1/3 of all products).
thousands of TNCs Rise of round the clock operations. Global media.
and many MNEs - • Freeing of global economy in terms of currency regulations.
more powerful than • Development of trade blocs (NAFTA etc) to promote Further transport developments
many states. further free trade. VLCCs, jumbo jets etc.
• Increasing movement of people to seek work, pleasure.
State moves to attract • Growing awareness of global environmental, social and Pleasure periphery effects of
FDI eg export economic issues. Rise of Trans National NGOs eg WWF, world trade.
processing zones. Greenpeace.
• Strong development of International Organisations, such as Growing power of Internet to
TNC-generated labour UN. Administrative bodies eg IUCN World Summits generate protests.
migrations (Kyoto, Jo’burg).
Power of images from
international media.

Review
The Effects of Globalisation may be described as: Identify 5 main factors which have led to the development of globalisation
• extending activities across the globe, networking across frontiers and explain their contribution.
• increasing intensity of interactions and flows between nations and
societies
• increasing the speed of these flows and interactions
• magnifying the impacts of these flows and links between places and
societies.

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As can be seen from Fig 3b globalisation is in the balance with either a move to advanced globalisation, or the overthrow of its key features by an ever
increasing anti-globalisation lobby.

Fig 3b In the balance

Advanced Globalisation 2000 ! Strengthening of Global Civil Society of

• Towards a global system with the disappearance antiglobalists
of the nation state. • Popular fears about the power of big
• Full global inter-dependence with economic business ruining small businesses (as in
Accelerating synchronisation across globe. agriculture). Growing
links • TNCs dominate industrial production including • Concern over increasing gap between rich opposition
manufacturing and services. and poor both states and people.
• Total global communication systems. • Concern of trade unionists about jobs
• Global language of English/American, loss of filtering down to low paid workers.
national identities. • Concern from environmentalists who fear
• Strengthened global financial institutions eg global TNC exploitation.
bank. • Fear of erosion of national sovereignty and
• Growth of new world groups eg terrorist groups culture (ie political concerns).
operating globally. • Cultural concern over might and dominance
• Development of a single global market eg for of America and Americanisation.
tourism. • Concern over unfairness of global
organisations such as World Trade
Organisation (WTO) or World Bank, and
institutions such as Banks/TNCs.

To help you to form your views as to which way globalisation should go, look at these two case studies on economic globalisation and its impacts.

1. Globalisation is Good – Industrialisation in Vietnam

One favourable aspect of economic globalisation cited is that it raises Binh Duong province some 20 miles north of Ho-Chi Minh City leading to
living standards in many poor countries such as Vietnam. a marked disparity of wealth between this area, and Hanoi (the political
power base) and even more so other Northern rural provinces such as
In the words of Lee Kuan Yew (father figure prime minister of Singapore) Thai Binh or Ha Giang.
Vietnam has the necessary attributes to benefit from globalisation and
achieve Newly Industrialised Country-style rapid growth (average 1992- From being a country very dependent on rice and other agricultural
2000) of 8-10% per year. These attributes include a resilient, increasingly exports the leading exports by value in 2002 were textiles and garments
broad-based economy, a comparatively well educated yet low cost (19%), petroleum (13%), footwear (11%) with rice only taking number 4
workforce, and good access to world markets (in 2001 a Vietnam-US position of just over 10%.
trade agreement was finally confirmed). Furthermore, the governing
socialist party has recognised the significance of Economic Reform, and Case study of Vietnam Singapore Industrial Park
the need to develop a market economy based on public-private partnership, Vietnam Singapore Industrial Park (VSIP joint venture) was established
although some difficulties continue to occur. Until recently foreign investors with foreign investment from the two governments and other major
have been put off by the lack of legal, banking and accounting systems and investors. Work started in February 1996. The progress can be seen
the archaic infrastructure compared to Malaysia, Thailand or Philippines. from the tables below. It represents just one of about 30 such new industrial
Much of the industrialisation has taken place in the South, especially in and business parks, largely found in the favourable environment of Ho
Chi Minh City.

1996 1997 1998 1999 2000 2001 2002 2003 2004

Cumulative number of projects 0 4 11 19 29 40 59 86 135
Investment capital annual (US $ mill) 55 144 45 47 97 30 75 119 58
People employed 0 63 967 2,111 4,860 9,952 18,023 25,697 27,000+
Local sales US $ mill 0 6.88 18.6 23.5 51.5 88.4 180.2 n/a 2.9+
Exports US $ mill 0 0 1.3 4.4 11.22 36.8 128.3 189.8 38+
The success is dependent on the quality of the infrastructure and customer services established by VSIP.
Conclusion
Investors in VSIP • Globalisation is clearly raising living standards in Vietnam with a
6. 1. six-fold rise in GDP in six years.
1. Japan 27 projects
2. Singapore 25 projects • Globalisation initially accelerated disparities, but gradually
5. industrial developments have spread to lower cost locations in
3. Taiwan 25 projects 2.
4. US & Europe 21 projects Hanoi, Hue, Danang and Haiphong.
4. • Globalisation has given Vietnam a NIC style profile but 25% of
5. Vietnam 9 projects 3.
6. Other Asian countries 28 projects people remain below a Vietnamese poverty line.
• If prices rise in Vietnam – its off to Lao Republic and Cambodia!

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2. Globalisation is bad – Unfair World Trade?

Trade is one of the most powerful forces linking our lives, and a source of In their rhetoric, governments of rich countries constantly stress their
unprecedented wealth. Yet millions of the world’s poorest people are being commitment to poverty reduction. Yet in practice rigged rules and double
left behind. Increased prosperity has gone hand in hand with mass poverty. standards lock poor people out of the benefits of trade, closing the door
Already obscene inequalities between rich and poor are widening. to an escape route from poverty. For example:
World trade could be a powerful motor to reduce poverty, and support Rich countries spend $1bn every day on agricultural subsidies. The
economic growth, but that potential is being lost. The problem is not that resulting surpluses are dumped on world markets, undermining the
international trade in inherently opposed to the needs and interests of the livelihoods of millions of smallholder farmers in poor countries.
poor, but that the rules that govern it are rigged in favour of the rich.
When developing countries export to rich-country markets, they face
If Africa, East Asia, South Asia, and Latin America were each to increase tariff barriers that are four times higher than those encountered by rich
their share of world exports by one percent, the resulting gains in income countries. Those barriers cost them $100bn a year – twice as much as
could lift 128 million people out of poverty. In Africa alone, this would they receive in aid.
generate $70bn – approximately five times what the continent receives in aid.

• While rich countries keep their market closed, poor countries • Powerful transnational companies (TNCs) have been left free
have been pressurised by the International Monetary Fund to engage in investment and employment practices which
and the World Bank to open their markets at breakneck speed, contribute to poverty and insecurity, constrained only by weak
often with damaging consequences for poor communities. voluntary guidelines. In many countries, export-led success
is built on the exploitation of women and girls.
• The international community has failed to address the problem
of low and unstable commodity prices, which consign millions • Many of the rules of the World Trade Organisation (WTO)
of people to poverty. Coffee prices, for example, have fallen by on intellectual property, investment, and services protect the
70 percent since 1997, costing exporters in developing countries rich.
$8bn in lost foreign-exchange earnings.

Reform of world trade is only one of the requirements for ending social injustices that pervade globalisation. Action is also needed to reduce
inequalities in health, education, and the distribution of income and opportunity, including those inequalities that exist between women and men.
However, world trade rules are a key part of the poverty problem; fundamental reforms are needed to make them part of the solution.
Ultimately, there is a clear choice to be made. We can choose to allow unfair trade rules to continue causing poverty and distress, and face the
consequences, or we can change them. We can allow globalisation to continue working for the few, rather than the many, or we can forge a new model
of inclusive globalisation, based on shared values and principles of social justice. The choice is ours. And the time to choose is now.
Source – Make trade fair campaign.

Fig 4 - Globalisation – the balance sheet

Pros Cons
Environment • Diffusion of good values of environmental • Many global economic activities are exploitative and degrade
conservation and human rights. and pollute the environment.
• Global consciousness has led to greater ecological • Global competition → overuse of environmental resources.
awareness. • Development → global ecological changes which lead to
• International co-operation in the management of the biodiversity loss and have led to fear and uncertainty about the
environment eg CITES. future.
• Improved technologies for monitoring.
Improving • Global capitalisation has led to many countries having • Many LDCs have just got poorer and face economic
quality of life rapid economic growth (NICs, RICs, some LEDCs) restructuring in order to solve their debt crises. This has
but bypasses LDCs. hampered efforts to alleviate poverty of their citizens.
• Greater extremes of inequality and also internal
disparities.
Economy and • TNCs and globalised industries have generated • Relocation of branch plants has brought job losses and fear for
employment millions of new jobs in NICs and LDCs. job security.
• Global capitalism is generally less labour intensive.
Culture • Global links have increased opportunities for self • Globalisation has led to loss of some traditional cultures/
development in global travel and tourism. religions.
• Global technologies have reinvigorated some declining • Globalisation has become cultural Americanisation (hamburgers
cultures. and cokes).
• The speeding up of social life with greater insecurity and fear of
the future.
Political • Greater global co-operation to deal with problems in a • Decline of the nation state.
structured way. e.g UN and wars in Africa

Fig 4 shows the globalisation balance sheet. As can be seen from the case studies, there can be both good and bad effects. Indeed a good effect for some
people may be bad for others. Also public opinion can change. Currently in an era of single Super Power supremacy there is much anti- American feeling,
and this leads to associated protest about cultural globalisation as it is seen as McDonaldisation, or there is strong anti EU feeling throughout Europe,
perhaps especially in the UK.
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Fig 5. The impact of globalisation

Economic Under the auspices of WTO world trade has expanded rapidly, especially between MEDCs and MECs and NICs.
Most LDCs feel excluded from benefits

Socio-cultural Western culture has diffused around the globe – for example global brands of drinks, shoes and clothes, global sports stars
have emerged. Yet other cultures such as Islam have become global too. Cultural diffusion is a multiway process and leads
to genuine fusion (cooking etc.)

Linguistic English (American is now dominant as a world language at the expense of many native languages in the global village)

Political The power of nation states has diminished at the expense of trade blocs. Many nation states have smaller economics than
TNCs. New institutions such as EU, and a reinvigorated UN develop

Demographic Global migrations are increasing leading to more and more multicultural communities. Economic migration underpins
globalisation

Financial A global network of world cities has evolved. Sophisticated mechanisms allow for global movement of capital / technology.
Global terrorism can be financed from money laundering.

Environmental Many environmental problems such as global warming or ozone depletion are truly global. Some international action is
possible but slow to work e.g. kyoto

Media Global village prevails with many sporting and cultural events genuinely global e.g. 2004 Athens Olympics, World Cup etc.

As can be seen for each negative impact a positive on can be found too.

Measuring Globalisation Exam Hint – Use this factsheet and the further research suggestions
Whilst globalisation and its impacts would seem to be increasing a to formulate your views for and against globalisation to make sure
number of countries are excluded because they attract so little foreign you always achieve a balanced argument, well-supported with case
direct investment or TNC interest. These are largely LDCs where most studies. Also make sure which type of globalisation you are
of the worlds poorest people live. discussing.

The degree of globalisation can be measured within a country by the

following criteria
Further Research
Texts
• Use of global technology
Rethinking Globalisation ed B Bigelow Rethinking Schools Resources
e.g. numbers of internet users, internet hosts and secure servers or the
quality of international telephone linkages Globalisation Gary Donnellan Independence

• Political engagement The Challenge of Globalisation Oxfam

Number of memberships of international organisations or number of Globalisation What’s it all About Tide/Birmingham Development Centre
foreign embassies hosted.
No Nonsense Guide to Globalisation Ellwood Verso Books
• Personal contacts
Development, Globalisation and Sustainability John Morgan Nelson Thornes
Number of passport holders as a percentage of total population, or
volume of international tourism, or cross border activity, or volume of
Globalisation P Guinness Hodder Access series
international telephone calls.
Websites
• Economic integration
these websites will be a good starter to adopt a balanced view:
Amount of FDI attracted. Number of HQ of MNEs. Volume of trade
www.tidec.org
flows visible and invisible size of finacial markets
www.dea.org.uk
www.hodderheadline.co.uk (new website for VI formers)
• Cultural integration
www.iied.org
Degree of multi cultural of people. Attitudes to immigration, refuges
www.oxfam.org.uk
etc. Number of world events hosted.

Highly globalised countries could include Switerland, Singapore and the

Netherlands as well as Ireland (Number 1) Acknowledgements; This Factsheet was researched and written by Sue Warn
inspired by a recent visit to Vietnam. Curriculum Press, Bank House, 105
King Street, Wellington, Shropshire, TF1 1NU. Geopress Factsheets may be
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