INTRODUCTION
“What is globalization?” and “what are its negative effects” are the questions which we should begin with. There are numerous definitions pertaining to globalization; Merriam Webster’s dictionary defines globalization as “the act or process of globalizing: the state of being globalized; especially: the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets.”(Merriam Webster) .The Oxford dictionary defines it as, “The process by which businesses or other organizations develop international influence or start operating on an international scale.”
According to Magstadt (2003), globalization is “the process by which values, attitudes, preferences and products associated with the most technologically advanced democracies are being spread around the globe via mass media and trade.” Globalization has led to what is almost a boundary-less world and is speeded-up mostly by institutions such as international organizations- NGO’s, Bretton Woods institutions and Multinational Corporations. The components of globalization include GDP, industrialization and the Human Development Index (HDI). The GDP is the market value of all finished goods and services produced within a country's borders in a year, and serves as a measure of a country's overall economic output. Industrialization is a process which, driven by technological innovation brings about social change and economic development by transforming a country into a modernized and developed nation. The Human Development Index comprises three components: a country's population's life expectancy, knowledge and education measured by the adult literacy, and income. Most observers have a reasonably clear idea about the difference between “poverty” and “inequality.” As these terms are normally defined, poverty is about absolute levels of living—how many people cannot attain certain pre-determined consumption needs. …show more content…
Inequality is about the disparities in levels of living—for example, how much more is held by rich people than poor people. Measures of poverty and inequality are typically based on household consumption expenditure or income normalized for differences in household size and the cost-of-living.
For the purpose of this paper I will look into how economic globalization has contributed to global poverty and inequality among the people of the world. Globalization promises to give everyone access to markets, capital and technology, and to foster good governance but these have not been fully realized. HOW MNCs HAVE CONTRIBUTED TO GLOBAL POVERTY AND INEQUALITY. Multinational Corporations are organizations that own and control production or service facilities in more than one country. They have foreign subsidiaries which extend the production and marketing of the firm beyond the boundaries of one country. Examples of MNCs include Walmart, Exxon Mobil, Chevron, Hewlett- Packard , General Electric, Unilever, Apple, Toyota, and Google. By having liberalized markets in developing nations, Multinational Corporations gain access to cheap labour and can have foreign assets. For example, General Electronic, a US based company that produces appliances and locomotives has foreign assets of over $500 billion amounting to over 70% of their net worth. This therefore means that they rely heavily on international trade to make such amounts of revenue. (TheEconomist.com) In a country like Japan during the Asian economic crisis of 1997-1998, General Electric took advantage of this economic uncertainty and spent $15 billion in Japan to acquire …show more content…
Globalization of finance has also undermined the capacity of states to determine their own future. In addition, MNCs in these states operate outside the legal control of national governments, thus posing a challenge to a state’s sovereignty.
Over the least few decades, the spread of free-market policy regimes have given rise to an apparent increase in inequality. While labour markets become more competitive and skill premiums have fetched higher returns, governments have been withdrawing their protection they once had for their citizens to sheltering them from the harsher effects of market economies.
Dictatorships in Southern Europe allowed workers to leave so as to reduce domestic unemployment, as these economies were growing really slowly as compared to member states of the European Common Market. These migrant workers sent part of their wages as remittances that were used by states facing persistent trade deficits to import oil and goods. However, global developments in the 1970s like the 1974 OPEC oil embargo created problems for those states that relied on migration for their political legitimacy and economic development. What followed was the recession in Western Europe that forced states in this region to expel migrant
“What is globalization?” and “what are its negative effects” are the questions which we should begin with. There are numerous definitions pertaining to globalization; Merriam Webster’s dictionary defines globalization as “the act or process of globalizing: the state of being globalized; especially: the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets.”(Merriam Webster) .The Oxford dictionary defines it as, “The process by which businesses or other organizations develop international influence or start operating on an international scale.”
According to Magstadt (2003), globalization is “the process by which values, attitudes, preferences and products associated with the most technologically advanced democracies are being spread around the globe via mass media and trade.” Globalization has led to what is almost a boundary-less world and is speeded-up mostly by institutions such as international organizations- NGO’s, Bretton Woods institutions and Multinational Corporations. The components of globalization include GDP, industrialization and the Human Development Index (HDI). The GDP is the market value of all finished goods and services produced within a country's borders in a year, and serves as a measure of a country's overall economic output. Industrialization is a process which, driven by technological innovation brings about social change and economic development by transforming a country into a modernized and developed nation. The Human Development Index comprises three components: a country's population's life expectancy, knowledge and education measured by the adult literacy, and income. Most observers have a reasonably clear idea about the difference between “poverty” and “inequality.” As these terms are normally defined, poverty is about absolute levels of living—how many people cannot attain certain pre-determined consumption needs. …show more content…
Inequality is about the disparities in levels of living—for example, how much more is held by rich people than poor people. Measures of poverty and inequality are typically based on household consumption expenditure or income normalized for differences in household size and the cost-of-living.
For the purpose of this paper I will look into how economic globalization has contributed to global poverty and inequality among the people of the world. Globalization promises to give everyone access to markets, capital and technology, and to foster good governance but these have not been fully realized. HOW MNCs HAVE CONTRIBUTED TO GLOBAL POVERTY AND INEQUALITY. Multinational Corporations are organizations that own and control production or service facilities in more than one country. They have foreign subsidiaries which extend the production and marketing of the firm beyond the boundaries of one country. Examples of MNCs include Walmart, Exxon Mobil, Chevron, Hewlett- Packard , General Electric, Unilever, Apple, Toyota, and Google. By having liberalized markets in developing nations, Multinational Corporations gain access to cheap labour and can have foreign assets. For example, General Electronic, a US based company that produces appliances and locomotives has foreign assets of over $500 billion amounting to over 70% of their net worth. This therefore means that they rely heavily on international trade to make such amounts of revenue. (TheEconomist.com) In a country like Japan during the Asian economic crisis of 1997-1998, General Electric took advantage of this economic uncertainty and spent $15 billion in Japan to acquire …show more content…
Globalization of finance has also undermined the capacity of states to determine their own future. In addition, MNCs in these states operate outside the legal control of national governments, thus posing a challenge to a state’s sovereignty.
Over the least few decades, the spread of free-market policy regimes have given rise to an apparent increase in inequality. While labour markets become more competitive and skill premiums have fetched higher returns, governments have been withdrawing their protection they once had for their citizens to sheltering them from the harsher effects of market economies.
Dictatorships in Southern Europe allowed workers to leave so as to reduce domestic unemployment, as these economies were growing really slowly as compared to member states of the European Common Market. These migrant workers sent part of their wages as remittances that were used by states facing persistent trade deficits to import oil and goods. However, global developments in the 1970s like the 1974 OPEC oil embargo created problems for those states that relied on migration for their political legitimacy and economic development. What followed was the recession in Western Europe that forced states in this region to expel migrant