Impact of Globalization on Economy, Environment, and Society
Globalization: An Overview
There is talk of a global exchange of capital, referred to as financial globalization, and of goods and services. However, while capital is now globalized, trade in goods and services is not fully globalized.
The World Trade Organization is responsible for regulating global exchange, which tends to favor wealthier nations. What is even less globalized are workers, who cannot move freely. There is a movement called anti-globalization that opposes globalization as it currently stands. Alter-globalization proponents argue that another world is possible, one that does not cater solely to globalist interests.
We are often told that technological determinism inevitably leads to globalization. Globalization benefits approximately 20% of the population, primarily the wealthy, while it negatively impacts the remaining 80%. Among the wealthy, multinational corporations are the main beneficiaries. They account for 60% of global trade but employ only 3% of the world’s population.
These multinational corporations exercise power through several mechanisms:
- International Monetary Fund (IMF)
- World Bank
- World Trade Organization
The IMF, a UN body, was established to facilitate international trade and reduce holdings in the Third World. The World Bank offers reduced interest rates on loans. Both institutions emerged after World War I and established the US dollar as the world currency. The World Bank initially aimed to mitigate the ravages of war. However, they have primarily benefited those who contributed the most funds, notably the United States.
Globalization presents challenges similar to water pollution and CO2 emissions. The main issue is that everyone expects others to solve these problems.
Several countries met in Kyoto in 1997 to address waste emissions, committing to an 8% reduction (in Europe). Initially, this agreement only affected developed countries. Some, like the USA, did not ratify it, citing concerns about its impact on their industries. One proposed solution is to penalize those who pollute excessively.
Global warming is causing the Greenland ice sheet to melt, as well as ice in Norway, Finland, and Alaska. This could potentially benefit these regions by opening up shipping routes and allowing for oil exploitation.
A proposed change to the Kyoto agreement is to link a country’s right to pollute to its production levels. To address this, those who pollute excessively could be penalized, and countries could be required to pay taxes based on their electricity production. Another solution is technological development, such as hybrid cars that consume less fuel and therefore pollute less. Granting credits to tropical forests for reducing CO2 emissions could also be beneficial, providing financial incentives for countries to preserve these forests.
Globalization in Agriculture
There has been tremendous growth in agriculture, with larger farms leading to increased productivity and innovation. While there is now some focus on environmental care, subsistence farming still exists. Globalization in agriculture is often associated with the elimination of tariffs on products from other countries.
One effect is the improvement of the environment, replacing traditional practices with innovative ones. Globalization directly affects all farmers, pushing them to seek greater productivity while adhering to certain regulations.
Productivity is often enhanced through the use of chemicals, leading to more artificial food and the pollution of rivers and aquifers. Nitrogen fertilizers, which are widely used, are major pollutants. Seed modification and mechanized farming are also prevalent, but their prices are not yet regulated. In organic farming, animals must be raised organically. However, organic farming receives limited support, with subsidies often granted regardless of actual performance.
Biofuels, such as bioethanol and biodiesel, are another area of concern, as they can contribute to higher food prices. However, they also offer advantages, such as providing a secure market for agricultural products and reducing dependence on oil, which often comes from conflict-ridden countries.
Globalization and the Environment
Humanity must work towards a sustainable relationship with nature. We are responsible for environmental imbalances, including the depletion of the ozone layer and the loss of biodiversity. We must contribute to a healthy environment.
Forests, the ozone layer, and water resources are particularly affected. Substances like carbon dioxide contribute to global warming, leading to temperature increases and changes in weather patterns, as well as natural disasters. Garbage is another major problem, as it can spread diseases. One useful method for managing garbage is to compress and bury it, which can also generate energy.
Globalization and Multinationals
The rise of multinationals began during the Franco period in Spain when Spanish companies were nationalized. Wealthy nations gained control and established multinational corporations, which conduct business with over 50% of their production outside their home country.
Multinationals often try to convince consumers that their products are indispensable. They can be more powerful than some countries’ GDPs and can exert pressure on states by threatening to relocate. For wealthy countries, multinationals offer the advantage of cheaper production. However, they can harm poorer countries by driving up inflation.
Multinationals often pay low taxes due to their ability to negotiate favorable terms, which can weaken the financial capacity of states. The dominant policy of multinationals is often associated with neoliberalism.
Globalization and External Debt
External debt, often facilitated by the IMF and the World Bank, has hindered economic development in many countries. The debt crisis began in 1933 with the increase in oil prices and the dominance of the US dollar in oil trade. This has left many African countries heavily indebted to this day. Numerous platforms are calling for debt cancellation, and many NGOs have joined this cause.
Globalization and Economic Development
Economic development refers to a country’s ability to generate wealth and maintain the well-being of its inhabitants. Key factors include land, labor, capital, and overall economic growth.
Historically, economic systems have evolved from feudalism, where farm workers faced economic and other constraints, to the Industrial Revolution, which had significant sociological impacts, to the capitalist system, as described by Marx. Oil became a primary resource, largely controlled by the United States.
Outsourcing has also played a role, often involving women in the workforce.
Developmental Theories
- Modernization: This theory views modernization as a phased process, as proposed by Rostow.
- Unit: This approach combines Keynesian and neo-Marxist elements.
- World-Systems: In the early 1970s, Third World countries sought to improve their social terms and conditions.
- Globalization: This perspective emphasizes cultural and economic aspects.
Globalization and Health
Globalization impacts the quality of life, and neoliberal policies often exacerbate inequalities, making the rich richer and the poor poorer. The healthcare market is imperfect and requires state intervention.
Former US President Clinton noted that the privatization of healthcare in the US resulted in over 30 million people lacking access to healthcare. The health market is one of the largest in the world.
Advances in science have led to improvements in disease treatments. However, Africa and Asia have limited access to these advancements. Pharmaceutical companies are major players in the healthcare market, and mergers often lead to cost reductions and layoffs, resulting in fewer people producing more products.
The World Health Organization (WHO) and the UN are responsible for regulating the market and ensuring that developing countries have access to essential medicines. For example, malaria remains uncured in many regions because those affected often lack the financial resources to purchase treatment, making research into this disease less profitable for pharmaceutical companies. HIV drugs are available for those who can afford them, but generic versions are often too expensive for people in underdeveloped countries.