Introduction
Globalisation has brought a radical change in the business enterprises across the world as well as multiplied the expectations of the entrepreneurs. This term is taken from the word ‘globalise’ meaning the emergence of international networks of economic policies. Although many scholars have used the term ‘globalisation’ in the different time spans from 1944 to 1981 and in the 1990s, yet the credit for coining this term goes to Economist Theodore Levitt who, by the article, ‘Globalisation of Markets’ published in 1983 May-June issue in Harvard Business Review, widely popularised the term by bringing it into the mainstream business audience in the latter half of the 1980s. Since its emergence, the idea of globalisation has motivated challenging denotations and interpretations, with precursors dating back to the activities of colonial and imperial trade and commerce across Asia and the Indian Ocean from the latter half of fifteenth century onwards. Because of the complication of the idea, research projects, articles and discussions often concentrated on the single idea of globalisation.
In 1992, Roland Robertson, professor of sociology at University of Aberdeen, an early writer in the field, defined globalisation as: the compression of the world and the intensification of the consciousness of the world as a whole.
According to economist Takis Fotopoulos, ‘economic globalisation’ is the opening and deregulation of commodity, capital and labour markets leading towards present neoliberal globalisation; ‘political globalisation’ refers to the emergence of transnational nobility and a gradual reduction of the nation state; whereas ‘Cultural globalisation’ means homologising culture across the world. ‘Ideological globalisation’, ‘technological globalisation’ and ‘social globalisation’ are some other terms that he used.
The Global Cities Institute at RMIT University identifies four main practical spheres of globalisation: Economic, political, cultural and ecological, with avoidance of the fifth sphere, ideological from the other four. According to Steger, ideological sphere is filled with a range of rules, claims, viewpoints and narratives about the phenomenon itself.
How Globalisation Emerged?
The rapid use of the term, ‘globalisation’ has begun from the mid-1980s and especially since the mid-1990s. In 2000, the International Monetary Fund (IMF) recognised four fundamental aspects of globalisation: Trade and transactions, capital and investment movements, migration and movement of people and the promulgation of knowledge. Moreover, some environmental conditions such as climate change, cross-border air and water pollution and over-fishing of the ocean are also considered as parts of globalisation. These proceedings of globalisation affect economics, firms, economic and socio-cultural resources and the natural environment and are affected by business and work environment.
After the Second World War was over, proceedings of the politicians led to the Bretton Woods conference where an agreement by the powerful governments was signed aiming at laying down the framework for international monetary policy, commerce and finance, and setting up several international institutions with the intention of facilitating economic growth and development, various rounds of trade opening simplified and lowered trade restrictions. In the beginning, the General Agreement on Tariffs and Trade (GATT) resulted in a series of agreements to simplify trade barriers. The World Trade Organisation (WTO) succeeded GATT and set up a framework for negotiating and formalising trade agreements and a process for the resolution of disputes. Exports rose to 16.2 per cent in 2001 from 8.5 per cent of total gross world product in 1970. When the perspective of manoeuvring global agreements to advance trade foundered in the Doha round of trade negotiation, many countries shifted to bilateral or smaller multilateral agreements like the 2011 South Korea- United States Free Trade Agreement.
Open skies policies and low-cost carriers have brought competition in the international aviation market. As a result, aviation has now become very affordable to middle classes in developed countries since the 1970s. By the 1990s, the development of low-cost transport and communication networks reduced the cost of communication between countries. Nowadays, manpower is easy to cut down as works like accounting, engineering design and machine development can be done by using a computer from anywhere in the world.
The interrelatedness of the world’s economies and cultures which developed rapidly in the late nineteenth and early twentieth century declined from the 1910s owing to the consecutive World Wars and Cold War; but once again it grew quickly in the 1980s and 1990s. A considerable evolution of global interconnection came off across the world following the revolutions of 1989 and the succeeding liberalisation in different parts of the world. Migration and flux of people can also be considered as the predominant characteristic of the process of globalisation. In comparison with the past decades, almost double labour force migrated from 1965 to 1990, and this movement of people happened between the developing and the underdeveloped countries. The inclusion of market-oriented economic policies that stimulate private property rights, free enterprise and competition has helped the economy of Asia to grow rapidly. According to Human Development Report of UNDP 2003, especially in the East Asian developing countries, the rate of GDP grew to 5.9 per cent per capita from 1975 to 2001. In relation to this, Martin Wolf, the British economic journalist said that the earnings of the poor developing countries, which have more than half of the world’s population, grew considerably faster than the richest countries remaining comparatively steady in their growth, leading to the minimised international inequality and the prevalence of poverty.
Growth of globalisation too has never been easy and smooth. One of the stiff barriers that came in course of the growth of globalisation was the recession of the late 2000s which was related to lower growth like cross-boundary phone calls and the use of Skype, or short-term negative growth (like trade) of global interconnectedness. The four major cross-boundary flows—trade of goods and services, information, nationals (migrants, tourists and students) and capitals—have been in the study of the DHL Global Connectedness Index which declares that after 2008, the depth of global integration decreased by nearly one-tenth, but it surpassed the pre-fall peak by 2013.
Effect of Globalisation
Societies which are globalised provide a complex series of forces and factors that draw nationals, cultures, markets, faiths and practices into progressively vaster propinquity to one another, and growing international trade and commerce with stiff hurdles to enter corporate consortium.
Active economic liberalisation and international integration brought about certain demographic changes in the developing world that has resulted in increasing social security and, in contrary, decreasing inequality. Martin Wolf asserted that in the developing world, in general, life expectancy increased by four months every year after 1970 and infant mortality rate decreased to 58 per thousand in 2000 from 107 in 1970 because of the developments in the standard of living and healthcare conditions; adult literacy too in developing countries increased to 74 per cent in 1998 from 53 per cent in 1970 and with the passage of time, the illiteracy rate among the young assures to decrease to the lowest rate. Moreover, in the developing world, in general, the fertility rates decreased to 2.8 per woman in 2000 from 4.1 in 1980, which points out the growth of education standard of women on fertility, and control of minimum number of children with more parental care, attention and investment. As a result, a large number of rich and educated parents have come up with fewer children with a view to giving their children opportunities of education by taking them away from labour force—improving the issue of child labour. Consequentially, in spite of the apparent unequal distribution of income within these developing countries, their economic growth and prosperity have largely resulted in the progressive standards of living and welfare for the population.
The ASEAN Free Trade Area is a trade union agreement by the Association of South-east Asian Nations that supports local manufacturing in all ASEAN countries. Only the six countries of South Asian Nations—Singapore, Brunei, Indonesia, Malaysia, Philippines and Thailand signed the AFTA agreement on 28 January 1992 in Singapore, then Vietnam (in 1995), Laos and Myanmar (in 1997) and Cambodia (in 1999) signed it, respectively.
An international foundation of legal agreements, institutions, and both formal and informal economic players get together, within the early twenty-first century, with the objective of promoting international fluxes of financial capital for the causes of investment and trade financing. This global financial system appeared during the first modern movement of economic globalisation, marked by the foundation of central banks, multilateral treaties and intergovernmental organisations in order to develop the clarity, regulation and efficacy of international markets. The world economy became progressively integrated financially throughout the twentieth century when nations liberalised capital accounts and deregulated financial zones. A number of financial demands in Europe, Asia and Latin America left infectious effects on other countries, when globalisation was exposed to fraught capital flows. Financial organisations had grown larger with a more advanced and interconnected range of investment proceedings and by the early twenty-first century quickly spread among other nations during the financial crisis suffered by the USA known as the worldwide financial crisis and is considered as the creator of the Great Recession across the world.
Comments on Globalisation
Regarding such activities in the world and the human costs as well, critiques of globalisation were naturally led to discussion and indicate a ‘multitude of interconnected vital consequences—social disintegration, a decline of democracy, more quick and extensive degradation of the environment, the outbreak of new diseases, increasing poverty and separation’ which they asserted to be the unexpected outcome of globalisation. Others asserted that, as the forces of globalisation have resulted in the spread of western-style democracy, this has been accompanied by a rise in interethnic tension and violence as free market economic policies amalgamate democratic methods of universal franchise as well as an increase in militarisation to necessitate democratic doctrines as a measure to disagreement resolution.
It is known that with globalisation we have come close to ‘the end of geography’, but it may not have brought us to ‘the end of history’. Since about 1980, the Third Industrial Revolution charged the stiff pressure of time and space which has transformed the mode of our interactions with the international environment. Globalisation, for many, has escalated cross-boundary exchange of capital, goods, services, ideas, information, technology, legal systems and nationals desirably and irrevocably, having guaranteed a rising standard of living throughout the world. Others retreat from globalisation because they find it to be the soft underbelly of corporate colonialism that despoils and benefits behind unrestrained consumerism.
Overseas development assistance from the rich to poor countries has amounted to $50–80 billion per year in the last two decades, and simultaneously about $500–800 billion funds have been brought illegally from the poor to rich countries i.e. for every one dollar of legal fund, the West get in return $10 illegal funds and, for welfare steps, lectures the rest on corruption.
The benefits and costs of linking and delinking have an unequal distribution. Industrially developed countries have mutual interdependence; developing countries, on the whole, have independence in economic relations with one another; and developing countries, to a great extent, have dependence on industrially developed countries. But Brazil, China and India have started to change this equation.
The income levels between countries and peoples have increasingly diverged with expanding inequality among and within nations. Assets and incomes are more focused. Wage shares have declined. Profit shares have swelled. Capital flexibility side-by-side labour rigidity has cut down the bargaining power of labour organisation.
The growing poverty and inequality has left great effect on social and political stability among and within the states—growth for a few countries and people while marginalisation and elision for the bulk. The global markets are growing faster while social and economic organisations are failing to ensure a parallel, balanced, comprehensive and sustainable development. Labour rights have been nonchalantly protected whereas capital and property rights sedulously, and trade and finance rules of the world are discriminatory. This has lopsided effects on rich and poor countries.
The concern of many developing countries, even before the global financial crisis (GFC), was the adverse infringement of globalisation in their economic dominance, cultural integrity and social stability. ‘Interdependence’ among unequals changed into the dependence of some in international markets functioning under the supremacy of others. The GFC confirmed that the unrestrained transnational forces can inundate absent effective regulatory organisations, markets, states and civil society.
One of the worst sides of globalisation is human trafficking—turning humans into commodities bought and sold in the international marketplace, and women and children are the most exposed ones. In all continents, NGOs endeavour to cope with this dastardly activity and report on those engaged in it.
South Africa has experienced the growth of intricate transnational crime organisations. The illegal trafficking in narcotics, mineral resources, ivory, counterfeit products and stolen property is flourishing. International crime consortiums exploit government weaknesses to profiteer large sums of money. Illegal migration and money laundering snatch the state’s valuable human and material resources, in a region that urgently requires them.
Insurgencies flourishing as a consequence of the disproportions created by globalisation have caused a distinct challenge in the world. The ‘development dichotomy’ explains the substantial national-level progress in India gone concurrently with an ever wider gap between the prosperity of urban, middle-class Indians and the downtrodden who still are in many of its 600,000 villages—the abode of most Indians. The deracinated aboriginal populations (Adivasis) failing to adapt to the demands of modern economy often see rebellious redemption as the only way out of their plight.
On the other hand, Sri Lanka’s Tamil Tigers are notably one of the most globalised terrorist movements anywhere in the world. Although it was transitory, yet it was overwhelmingly success mainly because of their effectual reliance on the Sri Lankan Tamil community to gain resources as well as to master strong political support for their inducement.
Jihadists, in South-east Asia, Afghanistan and in Central America, are proficiently using modern IT and telecom technology to boost their cause and encourage their objectives, by building link between the drug trade and terrorism introduced by the CIA. Jihadists, by adopting the ancient methods duplicate the obsolete way Osama bin Laden, remaining head, collected his information through pieces of paper brought by hand by his loyal messengers, transfer funds across the world perfectly and in a definitely untraceable way. Undoubtedly, the negative impact of globalisation will soon be resolved, but it is a matter of fact whether the GFC terminates globalisation, widely known for three decades.
Conclusion
Globalisation is considered as the advantageous expansion of liberty and capitalism. Jagdish Bhagwati, a former adviser to the United Nations on globalisation, declares that ‘Although there are obvious problems with overly rapid development, globalisation is a very positive force that lifts countries out of poverty by causing a virtuous economic cycle associated with faster economic growth’. Paul Krugman, an economist, a hard-core advocate of globalisation and free trade declares—by disagreeing greatly with many critics of globalisation—that many of them are lacking the fundamental understanding of comparative benefit and its necessity in present world.
The flux of migrants to countries economically advanced has been demanded to introduce a system for gathering global wages. An IMF evaluation pointed out a prospective for skills which are to be transferred back to developing countries as wages with the objective of fostering growth in those countries. Last but not the least, the promulgation of knowledge has proved to be an essential facet of globalisation. With a view to favouring most the developing and least developing countries (LDCs), technological innovation or technological transfer is speculated, for instance, the adoption of mobile phones.
In the late twentieth and early twenty-first centuries, globalisation has resulted in the re-emergence of the concept—growing economic interdependence fosters peace, while in the late nineteenth and early twentieth centuries, globalisation had led this concept to be very persuasive and a predominant principle of classical liberals of that period like the young, John Maynard Keynes.