Globalization: Case Studies

“Globalization is about worldwide economic activity – about open markets, competition and the free flow of goods, services, capital and knowledge” [Definition according to International Chamber of Commerce] The ICC recognizes that globalization can be beneficial economically, but fails to realize the atrocities in the Global South that make these economical gains possible. When asked to what extent should Globalization be promoted in today’s society, the following questions must be answered: are the peoples of the Global South exploited? Are cultures being disregarded? What are some economical advantages?

Answering these questions give one an idea of where one stands on the Globalization spectrum. One who promotes Globalization to a great extent says it enriches people’s lives by helping those in the Global South find employment. They also say it promotes the spreading of cultures through the sharing of ideas and trading. Free trade includes low or no tariffs, which increases national welfare. GDP per capita of a nation is usually inversely proportional to low tariffs, and vice versa, so low tariffs should be promoted. On the other hand, there are those who oppose Globalization. These “anti-globalists” say that multinational companies exploit the peoples of the Global South.

They also say jobs are taken from those in the Global North, because the corporations would rather have the products manufactured elsewhere for lower cost. They are not in favor of free trade and would like to see higher tariffs on imports. They would rather be independent and try to sustain themselves, and trade when only absolutely necessary. Upon analysis, the issue remains complex; however, I believe globalization promoted to a minimal extent would be optimal for world prosperity because free trade and

Globalization has helped kick start many developing nations economies when multinational companies employ people of the Global South. In a 2002 World Bank Policy Research Report, the nations of China, Indian, Uganda and Vietnam had a substantial improvement in poverty reduction. Vietnam has had a large increase in per capita income since integrating itself with the rest of the world. There have been 40% less people below the poverty since Uganda integrated itself. In another World Bank study, between the years of 1990 and 1998, when China freed its economy, embraced international trade and foreign investment, and opened up to the world, the number of Chinese living

on less than a dollar a day fell by 150 million. That is the fastest fall in poverty the world has ever seen. And while specific figures weren’t disclosed, it was said that now that they’re exports have shifted to manufactured products, they are now competing with the markets in other, richer countries.

Free trade directly benefits the economy of nations involved. In 1993, Canada, Mexico and the United States signed an agreement that removed most trade and investment barriers, and phased the remaining ones out over the several years. Under the North American Free Trade Agreement, otherwise NAFTA, Mexico was able to triple its exports to the United States, turning the $1.6 billion trade deficit of 1993 into a $37.1 billion surplus in 2002.

The agreement also increased American exports to Canada and Mexico by $7.2 billion each year, compared to the yearly average before the initiation of NAFTA. Two way agricultural trade between the United States and Canada increased by more than 50% in the first 6 years of the policy, reaching $16.3 billion in 2000. Two way trade also increased between Mexico and the United States by 55%, reaching $11.3 billion in 2000. Increased exports and the elimination of the trade deficit are directly benefit the economies of all nations involved in international free trade.

Globalization can exploit developing nations, which can cause the inhabitants of the country to suffer. ChevronTexaco, a petroleum company, is a California based company that imports most of its raw materials from Nigeria. In order to cut costs, Chevron has engaged in flaring unused gases into the atmosphere. Flaring causes acid rain, and also causes blindness, asthma, and skin disease to those inhabiting the area.

The range of these fumes has been traced to 35+ km, and because of its harmful nature, it has been banned throughout North America and Europe. Another example of Chevrons atrocities is Nigeria’s contaminated water. The water there is undrinkable to both humans and animals because of the levels of crude oil in it. Also, the corrosiveness of the gas emitted from nearby Chevron refineries has been burning the roofs off of village homes.

Tired of all this, a group of Nigerian Villagers decided to protest against Chevron in their village. Chevron decided to fly in 100 soldiers to infiltrate the village. These soldiers massacred the village, setting it on fire, killing livestock, destroying shrines, and killing villagers. Chevron claims this was an act of self-defense, which is preposterous. Globalization can lead to exploitation of poorer nations, which can have devastating results.

Lack of international trade can be disparaging to a nations economy and standard of life. In 1919, the Treaty of Versailles forced Germany into economic isolationism by imposing higher tariffs on German goods in allied nations. Under the war guilt clause of the treaty, Germany was to pay reparations to the allied nations for being solely responsible for the outbreak of the war. By 1922, Germany was unable to keep up with payments on the reparations because the higher tariffs destroyed the market for German goods.

The banks in Germany printed extra banknotes to combat inflation, but they did so without increasing the gold in their reserves. The value of the German currency dropped drastically, about 420 million times in value by 1923, and that led to hyperinflation within the country. To put that into context, in 1923 1 quart of milk would cost approximately 250 000 German marks. The hyperinflation also affected the unemployment rate, which rocketed to 25-40% nationwide, drastically reducing the standard of life in Germany. Germany is an example of how a lack of trade and economic cooperation between nations can be detrimental to a nations economy.

Globalization can lead to the exploitation of workers in the global south. Clothing companies often have factories manufacturing their products in the global south, because labour is much cheaper and the factories can exploit workers to increase productivity while reducing cost. Sean John, a hip-hop clothing company with rap magnate Sean Combs as CEO, was recently found to have factories in Morocco with practices compared to slavery.

Workers receive 15¢ for sewing a shirt that sells for 40$ in the United States. Workers were also forced to work 12 hours shifts, and unpaid overtime was mandatory. Pregnancy tests were also conducted on the female employees; if the test were positive the worker would be fired, in lieu of paying maternity leave.

Contaminated drinking water was also served to the workers as supervisors shouted filthy names at them to make them work faster. Lydda Gonzalez, a factory worker from Morocco was fired after trying to organize a union, which would have cost the company money to improve working conditions. The disparaging work conditions in the factory show how companies can exploit workers in the name of greater profit.