Negative and positive impact of globalisation

Critical Literature Review

Introduction

Redding (1999) defines that globalisation as the increasing integration between the markets
for goods, services and capital and at the same time the breakdown of borders.

Other researcher found that the process of globalisation not only includes opening up of
world trade, development of advanced technologies such as communication,
internationalisation of financial markets, growing importance of multi-national corporations
(MNCs), population migrations and generally increased mobility of persons, goods, capital,
data and ideas but also critical problems such as infections, diseases and pollution (Braibant,
2002).

Thus, from many point of views, globalisation is seen to be the borders between countries,
governments, the economy and communities, increasing liberalization and openness of
markets, particularly through the elimination of barriers to trade in goods and services and the
development of integrated international financial market. PRUS (2001) simplified the term of
globalisation as a process of increasing connectivity, where ideas, capital, goods, services and
people are transferred across country borders.

Labour and employment

Positive Impact

However, the process of globalisation can bring more jobs opportunities in host country when
MNCs move their production operation into developing countries. According to Rama
(2003), job creation only will occur in export-processing zones where large amount of work
forces are required in order to keep the production running.

A good example of jobs creation would be Coca-Cola decided to invest in Malaysia with a
new bottling plant, consist of $301 million investment. They stated that this investment will
able to create 600 to 800 jobs at the plant with 8,000 jobs connect with local suppliers
(Agence France-Presse, 2010).

Negative Impact

Woods (2000) stated that the government of developing countries start to compete with each
other by deregulate their policy to attract foreign direct investment (FDI) and multi-national
corporations (MNCs). Hence with lower the wages and taxes rates enable the investors to
avoid the risk of losing their capital invested in developing country.
Research done by The Economist (2001) and Woods (2000) and found that when the
government of developing countries increasing minimum wage and labour safety standards in
order to protect local workers' rights, this might could cause MNCs relocate their operation to
another developing countries, where that particular country's labours, who were probably
willing to accept low wages by any standards, lack of union representative and legal
protections such as child labour and other gross labour that abuses by global companies.

Technology transfer

Positive Impact

Transfers of technology depend on resource available by MNCs with the ability to achieve
the level of technology development in order to make them competitively in global market.
Usually developing countries unable to do research and development on their own as the
technologies that required implementing the competition strategy are most likely to come
from other countries through technology transfer (Stewartet al., 2003). Hipkin and Bennett
(2003) stated that the extent of developing countries, participation in global economy depend
on their ability to respect where the importance of technological transfer cannot be
overemphasized.

There are ten modes of technology transfer which has been identified by Peter Buckley
(1985, citied in Transnational Corporations and Technology Transfer to Developing Country)
but the most conventional form will be whole-owned subsidiaries. This form is also known as
FDI where MNCs can lower their transaction cost (Cantwell and Dunning, 1994).

Hence technology transfer to subsidiary in other country allow developing country to learn
the operation of new technology. Sometime subsidiary didn't allow local firms to learn but
they somehow find their way to obtain the technology such as hiring operator from that
particular subsidiary (Mansfield and Romeo, 1980).

Negative Impact

However globalisation can also bring negative impact to developing country. Certain MNCs
transfer their technology to developing country as those technologies might cause health
problem to employees as well as local citizens.

Good example would be Bhopal disaster caused by America MNCs' subsidiary, Union
Carbide India Limited that produces pesticides. Sophisticate technology bought into India but
the leakages of chemical caused more than 500,000 people suffer from the disaster
(Eckerman, 2005).

Social impact

Positive impact
Globalisation can bring good and bad effect to developing countries. Developing able to
reduce the amount of population that live below poverty level with the help of globalisation
as the effect of job creation has been achieved (Lee and Vivarelli, 2006). Local citizens are
able to get a job and ensure the survival of their family and improve their living standard.

Negative Impact

In this era of globalisation, social aspect is tightly related to the effect of the waves of
globalisation such as living standard, career, families and their communities. In this case,
globalisation are claimed that it is a method to organise someone's life which consist of
assimilation, communication among people, organisation, and the government as well in
other part of the world.

Hence, it was also called the method that used driven by global trade and investment aided by
information technology. Besides, this issue is also directly inter-related with some other
issues such as unemployment, disparity and scarcity, and environment as the chain effect of
the waves of globalisation (Globalisation 101, 2002).

The inter-relationship between the technology and economic is very critical and it succeeded
in consisting the rise of the theoretical approaches where the centrality of changes in
technology have been accepted and the dynamic force of the term innovation in the elements
of economical changes (Freeman, 1998; von Tunzelmann, 1995). According to Nussbaum
and Sen (1993), investment in technology appears to have an optimistic link to wider
philosophy in developing economic interests which include social choices and freedom
capability in longevity and education.

Globalisation on impact of the countries' economy

Positive Impact

According to Baghwati (2004) globalisation is playing the significant role of enhancing

economic affluence by offering new hope to developing countries. Gangopadhyay and
Chatterji (2005) saying that globalisation has been characterised as a reduction in trade
barriers such as free flow of goods, services and labour from one country to another.

Richardson (2000) contends with these views as, the effect of this is increasing the trade
which turn into increased income for developing countries and serves as an opportunity to
stabilise their economies by taking the advantages of trade. This statement is true and has
been proving by (Richardson, 2000; Dierks, 2001) that globalisation has greatly reduced the
trade barriers between countries through adjustment of tariffs and import duties.

Negative Impact
The rise in globalisation has increased capital flow into developing countries' economies.
Foreign Direct Investment injects capital into developing countries in terms of stabilizing the
countries' economic. This is also a benefit that increased the countries' financing through
loans and grants from developed countries (Aurifeille, 2006). However, there will be net
capital inflow that could lead to negative effects on trade.

Chan and Scarritt (2001) noted that the large capital inflows were caused by the appreciation
of exchange rates and inflationary pressures that impact on the country's current account. This
means that globalisation in improving the countries' economy could actually stop the progress
of the economy unless the host countries' balance of payment focuses on the foreign plant
where the export is more than import.

The adjustment in trade barriers has lead to the promotion of specialisation to developing
countries because they are able to concentrate on the production of commodities which can
be produced at the least cost (Aurifeille, 2006). Developing countries fully use the advantage
of globalisation to enhance their income through trading goods which they can produce most
effectively.

Such development is giving developing countries an opportunity to obtain goods that prove
expensive to produce in their own countries. Corsi (2009) saying that, competition is always
an effective way of enhancing innovation to produce better quality goods. Thus, globalisation
had enhanced competition as the flow of goods and services between countries has becomes
easier.

Globalisation impacts on economic and environment

Negative Impact

Economic and environmental problems show few signs of improvement for a large share of
the world's people but when comes to external debt levels, weak export and real income
growth, it often enter a mutually destructive relationship with environmental and resource
degradation which linked to the agriculture and urban activity. The important connection
between economic and environmental problems can be clearly seen in the widespread social
and economic impacts towards soil erosion, deforestation, urban congestion, unmanaged
chemical such as heavy metals, air pollutants, solid and liquid industrial and residential waste
(Long, 1990).

According to Huber (1982) and Simonis (1989), ecological modernisation was one of the
primary modes of sustainable development which comprised both a theory and a policy or
political programme based on the view that comprehensive political and economic change
could be implemented to achieve a less material and energy-intensive economy through the
application of integrated and preventive resource and pollution-reduction strategies.
This technologically-intensive mode of production would not be a viable option for lower
income nations because the intensive technological basis of ecological modernization
suggests that its effective operation and flow-on benefits are probably beyond the reach of
poorer nations. Indeed, rapid global technological progress has often resulted in the
Intensification of uneven development rather than enhanced opportunities for the poor
(Freeman, 1987). The post-materialist solution for technologically advanced economies
would

Conclusion

Although globalisation can help developing countries to grow and become developed
countries through different kind of benefits enjoyed by them but at the same time
globalisation can bring disaster to developing countries, even can bring the whole country
collapse in few months times.

Research done by scholars indicated that globalisation can be a benefit to developing country
but at the same time it's also a threat to developing country. However the net benefits enjoyed
by developing countries is greater than net cost paid as shown in this literature view can say
that globalisation can actually bring benefits to developing countries.

Globalization generates resources and encourages the transfer of ideas that can be utilized for
both individual and community improvement. Among many other things, globalization makes
rural economic diversification and agricultural productivity gains more achievable.
Globalization also makes environmental stewardship, improved conditions of living, and food
security more attainable. Due to globalization, the marginal can now get the opportunity to
exhibit themselves in the world market (Bauman 1998, pg.121). Globalization encourages the
industrialized nations to provide significant market places for exports of poor individuals
within poor countries.

Weaknesses of globalization

Globalization has influenced emergency and spread of various infectious diseases. This is
because people are allowed to cross the international frontiers and get into foreign countries.
The free movement of people, vectors, commodities, food, decision-making power, and
capital, alongside global demographic trends, has brought about the incidence infectious
diseases in the place of destination. The unprecedented speed and volume of human mobility
are the most blatant manifestation in today's era of globalization. The global population is
seen to grow at an increased rate such that the social and economic disparities between the
poor and rich countries become intense.

This has brought about increased number of migrants as they search for employment
opportunities to better the quality of their lives. Many demographers and political scientists
have observed the twenty-first century as characterized by migrations. Migrant populations
comprise the most susceptible group to emerging and remerging communicable diseases and
have been seen as the major causal factor in the worldwide spread of such infectious diseases
such as the multidrug-resistant tuberculosis. The modern modes of transportation that enable
more products and people to get to different place in the world at faster speed have also
opened airways for the movement of disease vectors from one continent to another. For
instance, mosquitoes can possibly cross the seas and oceans by riding in the wheel wells of an
airplane. Therefore due to social and economic interaction, incidences of many diseases have
been caused (Giddens 1990, pg.67).

This exposure to foreign cultural products encourages changes in local traditions, cultures,
and values. No consensus on the effects of globalization upon national cultures, a number of
people feel that people's contact with the foreign culture can weaken their local cultural
identity (Friedman 1994, pg.123).

The increase in the international trade enhances the continuance of globalization. If there
were no international trade, then apparently nations would not get access to the variety of
goods and services produced in different nations of the world. Just like many other issues,
globalization has got its own strengths and weakness to the global world. It has been seen that
globalization has got its strengths on the advancement of world economies.