The Evils of Globalization

Research
Paper Due

Diego Chamaca Flores
dchamaca@fen.uchile.cl

Business I
Professor: Manfred Bruchle
Universidad de Chile Facultad de Economa y Negocios
The Evils of Globalization

A wide sight
10 Noviembre 2015


International Business

Tabla de contenido
Introduction ............................................................................................................................................................................................................. 3
The goods of Globalization ................................................................................................................................................................................ 4
Why Globalization is bad? ................................................................................................................................................................................. 6
Another sights of the Problem ......................................................................................................................................................................... 8
Deeper analysis ................................................................................................................................................................................................... 10
Conclusion .............................................................................................................................................................................................................. 16
Bibliography ......................................................................................................................................................................................................... 17


Introduction

Globalization is a term that came into popular usage in the 1980's to describe the increased
movement of people, knowledge and ideas, and goods and money across national borders that has led
to increased interconnectedness among the world's populations, economically, politically, socially and
culturally. Although globalization is often thought of in economic terms1, this process has many social
and political implications as well. Many in local communities associate globalization with
modernization2. At the global level, globalization is thought of in terms of the challenges it poses to the
role of governments in international affairs and the global economy.

There are heated debates about globalization and its positive and negative effects. While globalization
is thought of by many as having the potential to make societies richer through trade and to bring
knowledge and information to people around the world, there are many others who perceive
globalization as contributing to the exploitation of the poor by the rich, and as a threat to traditional
cultures as the process of modernization changes societies. There are some who link the negative
aspects of globalization to terrorism. To put a complicated discussion in simple terms, they argue that
exploitative or declining conditions contribute to the lure of informal "extremist" networks that
commit criminal or terrorist acts internationally. And thanks to today's technology and integrated
societies, these networks span throughout the world. It is in this sense that terrorism, too, is
"globalized.".

In this essay we are going to talk about the evils of globalization and how these evils affect to the
world. In specific, we will notice some points that are some of the mistakes that Globalization cannot
deal with. But first, we are going to see some important points that some Globalization defenders say
about globalization.

1
2
For instance "the global marketplace"

For example the transformation of "traditional" societies into "Western" industrialized ones.


The goods of Globalization

Now, we are going to see briefly the good edges of the Globalization and some factors that affect to the
increase of this in the world:

According to Daniel3 there are 7 factors that factors that have contributed to the growing globalization
in recent decades:

1. The increase and expansion of technology.
2. The liberalization of cross-border trade and the movement of resources.
3. The development of services that facilitate international business.
4. The growing pressures from consumers.
5. The increasing global competition.
6. The changing political situations.
7. The increased cooperation between countries.

The increase and expansion of technology:

Technology of the Information (IT) is a determinant factor in the process of globalization. The
improvements in the decade of 1990 in hardware, software and telecommunications have provoked
improvements generalized in the access to the information and the economic potential. These
advances have facilitated earnings of efficiency in all the sectors of the economy. It IT offers the
network of communication that facilitates the expansion of the products, ideas and resources between
the nations and between the persons with independence of his geographical location. Creation of
efficient and effective channels for the exchange of information, IT has been the catalyst for the global
integration4.

The liberalization of cross-border trade and the movement of resources

To protect domestic industries, each country restricts cross-border movements, only goods and
services but also of resources such as labor and capital, which they needed to produce them. These
restrictions, of course, set boundaries for action international business and, since regulations may
change in any time, also contribute to a climate of uncertainty. But nevertheless, with the passage of
time, most governments have reduced restrictions international movements of goods and services.
Why? Mainly for three reasons:

3
4
See Chapter II
https://www.globalenvision.org/library/7/97


5
a. Its citizens want a greater variety of goods and services at prices more low.
b. The competition spurs domestic producers to be more efficient.
c. They hope to induce other countries to reduce, in turn, their barriers around it.

The development of services that facilitate international business

The need for producers and consumers to interact for a service to be rendered influences how
international transactions in services are conducted. If a service producer in one economy has the
desired capabilities, then a consumer resident in another country must somehow interact with the
producer to acquire those services.
The growing pressures from consumers

Because of innovations in transportation and communications technology, consumers are wellinformed about and often able to access foreign products. Thus competitors the world over have been
forced to respond to consumers demand for increasingly higher quality, more cost-competitive
offerings.

The increasing global competition

The pressures of increased foreign competition often persuade firms to expand internationally in
order to gain access to foreign opportunities and to improve their overall operational flexibility and
competitiveness.

The changing political situations

The transformation of the political and economic policies of the former Soviet Union and the Peoples
Republic of China has led to vast increases in trade between those countries and the rest of the world.
In addition, the improvements in national infrastructure and the provision of trade-related services by
governments the world over have further led to substantial increases in foreign trade and investment
levels.

The increased cooperation between countries

Governments have increasingly entered into cross-national treaties and agreements in order to gain
reciprocal advantages for their own firms, to attack problems jointly that one country cannot solve
alone, and to deal with areas of concern that lie outside the territory of all countries. Often, such
cooperation occurs within the framework of international organizations such as the United Nations,


6
the International Monetary Fund, the World Trade Organization, and the International Bank for
Reconstruction and Development (World Bank).

Why Globalization is bad?

We already have seen the positive points that made Globazalition worldwide. Now, we are going to
talk about the reason some studious people say Globalization is bad for the world.

Globalization seems to be looked on as an unmitigated good by economists. Unfortunately,
economists seem to be guided by their badly flawed models; they miss real-world problems. In
particular, they miss the point that the world is finite. We dont have infinite resources, or unlimited
ability to handle excess pollution. So we are setting up a solution that is at best temporary.

Economists also tend to look at results too narrowlyfrom the point of view of a business that can
expand, or a worker who has plenty of money, even though these users are not typical. In real life, the
businesses are facing increased competition, and the worker may be laid off because of greater
competition.

According to Nick Gibson5 there are tre points of the negative impact of Globalization. Economist
neither tell you about these edges of globalization:

Competition: Someone Has To Lose

Unfortunately, while competition is generally thought to be a good thing, it does not come without a
sour side. If someone says, Some companies wont survive because of globalization, then other the
other side might say, Then they dont deserve to survive; thats the beauty of it; the companies worth
sticking around usually do.

We won't deny the truth in that, but what about the borderline monopolies that the largest companies
in the world have created for themselves? Apple, Exxon, Google, etc. Whereas they were once
innovators, they are now so big that politics and strategy are more important than innovation. The
result of this is that smaller companies with innovative ideas have an incredibly difficult competing.
And how can they? If theyre lucky, theyll be bought out and walk away with a pay check; if not, theyll
just be crushed, often purposefully, by a competitor that is literally a billion times bigger than them.

5
From www.blog.udemy.com


7
For tips on navigating international relations, invest in this International Relations 101 course that
approaches the subject from a strategic economic perspective.

When The Home Team Loses

Suppose someone who was raised in what was once the Apple Capital of the World: Winchester, VA.
Over the last two or three decades, this title has (inevitably) been stripped from us; first it was by
Pennsylvania, but then Pennsylvania had it stolen by China.

So now China is the Apple Capital of the World. They produce the cheapest apples, which account for
roughly half the worlds supply of apples. A lot of people up and down the East Coast lost their jobs,
but heres the kicker: China isnt allowed to export apples to the U.S. This might change soon, but for
the time being, China is able to put a lot of people on the East Coast out of business without even
selling apples in the same country.

The lesson of the story is that another country can do what you do better and put you out of business
without even looking you in the eye. Thats globalization. But to be fair, the damage weve done to
China and the benefits we took advantage of (cheap labor) are vastly more significant.

Environmental Devastation

It is difficult to say but we are going to add a thought or two. Globalization has created a global-sized
need for energy and industry, and this need has been abused and ignored to the extent that the future
of life as we know it has been brought into question. You may or may not believe in global warming,
but you cannot deny the existence of the conversation. Does the fact that this conversation is
happening not say something in itself?

Have we bulldozed our planet into trouble? Obviously, yes. The argument against this fact is that we
could not possibly have caused so much destruction to our enormous planet. The facts say otherwise:
weve logged over half of the worlds tropical forests. And as far as how difficult it would be to change
the composition of the atmosphere? The atmosphere ends a mere 60 miles above the surface of the
Earth. Its just not that voluminous. Its not limitless. Its actually small, and when we work together
globally, even the negative side effects of all the amazing things we accomplish are, in a word,
globalized.



Lakes and the sea have

been often points of
environmental
devastation, afetando
many ecosystems and
killing many animals
and these same
habitats of course.
Another sights of the Problem

To illustrate even more this problem, now we are going to examine what Daniels says in his book
International Business: Environments and Operations.

According to the author, critcs of Globalization reffers to three important points that they argue
against Globalization. The critics of globalization assert that:

a. Countries lose sovereignty.
b. The resulting growth harms the environment.
c. Some people lose both in absolute terms and in relative terms.

Now, let's look at each of these points as follows.

Threats to National Sovereignty

This is one of the aspects of globalisation on which critics focus is the impact of global forces on the
sovereignty of the state. The sovereignty of the state is claimed to be threatened by two developments
associated with globalisation. The first is the emergence of global crime. The second refers to the
changing character of international law and instruments such as treaties and the increasing
importance of non-government and multi-state organisations in scrutinising the domestic policies of
national governments.



Globalization and Political Sovereignty :
Globalization has led to a decline in the power of national governments to direct and influence their
economies (especially with regard to macroeconomic management); and to determine their political
structures. There is a strong indication that the impact of globalization is most felt through the extent
to which politics everywhere are now essentially market-driven. It is not that governments are now
unable to run their states, but to survive in office; they must increasingly "manage" national politics in
such a way as to adapt them to the pressures of trans-national market forces.

Globalization and Economic Sovereignty
The interrelationships of markets, finance, goods and services, and the networks created by
transnational corporations are the most important manifestations of economic globalization. Though
the capitalist world-system has been international in essence for centuries, the extent and degree of
trade and investment globalization has increased greatly in recent decades. Economic globalization
has been accelerated by what information technology has done to the movement of money. It is
commonly claimed that the markets ability to shift money from one part of the globe to another by
the push of a button has changed the rules of policy-making, putting economic decisions much more at
the mercy of market forces than before.

Globalization and Cultural Sovereignty
Whereas the modern world-system has always been, and is still, multicultural, the growing influence
and acceptance of Western values of rationality, individualism, equality, and efficiency is an important
trend of the twentieth century; a trend which has heightened both in speed and nature. Time and
space compression by new information technologies is simply an extension and acceleration of the
very long-term trend towards acculturalisation.

Globalization and the Right to Development
In a globalized world, international developments affect developing countries ability to formulate and
implement the policies for realizing the right to development. Globalization in principle expands the
opportunities to enjoy goods and services beyond what a country can produce itself, just as
participating in an expanding market does for an individual, thus potentially enhancing the
capabilities for enjoying the right to development.



10
Economic Growth and Environmental Stress

A large majority of anti-globalization criticism revolves around the aspects of economic growth.
According to one argument, as globalization produces growth, you are consuming ever more nonrenewable natural resources and increases the damage to the environment, as the devastation caused
by runoff of toxic substances and pesticides in rivers and oceans, air pollution caused by factories and
vehicle emissions and deforestation, which affects the climate (Daniels, 2009).

Growing Inwquality in Income Distribution

By measuring economic welfare, it is necessary to consider not only the absolute situation but also the
level compared to the economic welfare of others. In general, we do not think our financial position is
satisfactory, unless we do better and we the same level as others. For example, when a US company
moves its computer operations to India, scheduling is possible for programmers count in the United
States have to accept jobs with lower pay.

The process of moving the production to a foreign country is called offshoring (or outsourcing
International), and when costs workers (in this case, U.S. developers) a well-paid job, they lose in
absolute terms. In addition, the moving of the manufacture of the company abroad produces savings
in costs that can be used, in part, to pay bonuses to executives who devised the savings in costs. This
further increases the inequality in income within the company and results in lower level jobs that play
losing more in relation to their bosses (Daniels, 2009).

Deeper analysis

Now we are going to deepen in the previous analysis and also we will pay attetion to others evils of
the Globalization. Fisrt, we are going to talk about deeply about the invironmetal issues of the
globalization and what is really happenning with this edge. Then to make zoom in the global
inequiality of the income, and then other sights of the problem called Globalization.

Economic Growth and the environment
Will the world be able to sustain economic growth indefinitely without running into resource
constraints or despoiling the environment beyond repair?

For some social and physical scientists, growing economic activity (production and consumption)
requires larger inputs of energy and material, and generates larger quantities of waste by-products.


11
Increased extraction of natural resources, accumulation of waste and concentration of pollutants6 will
therefore overpower the carrying capacity of the biosphere and result in the degradation of
environmental quality and a decline in human welfare, despite rising incomes. Furthermore, it is
argued that degradation of the resource base will eventually put economic activity itself at risk. To
save the environment and even economic activity from itself, economic growth must cease and the
world must make a transition to a steady-state economy.

At the other extreme, are those who argue that the fastest road to environmental improvement is
along the path of economic growth: with higher incomes comes increased demand for goods and
services that are less material intensive, as well as demand for improved environmental quality that
leads to the adoption of environmental protection measures.

Others have said that the relationship between economic growth and environmental quality, whether
positive or negative, is not fixed along a countrys development path; indeed it may change sign from
positive to negative as a country reaches a level of income at which people demand and afford more
efficient infrastructure and a cleaner environment (as we can see in the next chart).

Chart: In the last stage of the economic development, we can see that at higher levels of development, structural change towards information-based
industries and services, more efficient technologies, and increased demand for environmental quality result in levelling-off and a steady decline of
environmental degradation.

A substance or condition that contaminates air, water, or soil. Pollutants can be artificial substances, such as pesticides and PCBs, or naturally occurring
substances, such as oil or carbon dioxide, that occur in harmful concentrations in a given environment.
6


12
To further investigate these points, we will then see an analysis of Geoff Riley, an economist who tells
us the following:

Environmental concerns

Fast growth can create negative externalities e.g. noise pollution and lower air quality arising
from air pollution and road congestion
Increased consumption of de-merit goods which damage social welfare
The huge increase in household and industrial waste. These externalities reduce social welfare
and can lead to market failure.

Growth that leads to environmental damage may lower the sustainable rate of growth. Examples
include the destruction of rain forests through deforestation, the over-exploitation of fish stocks and
loss of natural habitat and bio-diversity from the construction of new roads, hotels, malls and
industrial estates.

Growth and the Environment: The Sustainability of Economic Growth

Growth may lead to a rapid destruction of rain forests, the over-exploitation of fish stocks and loss of
natural habitat created through the construction of new roads, hotels, retail malls and industrial
estates. Some of the main environmental threats include:

The depletion of the global resource base and the impact of global warming. There are plenty of
examples of the tragedy of the commons; the permanent loss of what should be renewable
resources from over-extraction of some of our environmental resources.

A huge expansion of waste and pollution arising from both production and consumption

Over-population (particularly in urban areas) putting increased pressure on scarce land and
other resources. More than half of the world's population lives in cities in 2009, most of them
in developing countries according to the United Nations Population Fund.

Species extinction leading to a loss of bio-diversity - Scientists predict that at least a third and
as much as two-thirds of the world's species could be on their way to extinction by the end of
this century, mostly because people are destroying tropical forests and other habitats, overfishing the oceans and changing the global climate.



13
Globalization and Inequality

According to the The World Economic Forum where they published an article7 about the income
distribution, they said that the half of the worlds wealth is now owned by the top 1%.

The WEF told at their web page that the escalation of the levels of inequality in the world in recent
years have led to the top wealth holders percentile since they possess the 50.4% of the wealth of
households, according to a new report by Credit Suisse. In January of this year, Oxfam warned against
inequality in spiral, predicting that 1% of the world's population would be richer than the remaining
99% by 2016. The threshold has been crossed.

The most affected countries that are hit by the Globalization are the poorest countries.

An articule from The Economist8 that explains why globalisation may not reduce inequality in poor
countries and specify and says that the prone countries inequality due to the increase of globalization
are the poorest countries and the third world.

7
8
To watch the article go to: https://goo.gl/42jz64

http://www.economist.com/blogs/economist-explains/2014/09/economist-explains-0


14
There are a lot of theories that explain this inequality in the poorest countries, but the most important
according to the articule is the one who emphasises outsourcing 9 . Contrary to popular belief,
multinationals in poor countries often employ skilled workers and pay high wages. One study showed
that workers in foreign-owned and subcontracting clothing and footwear factories in Vietnam rank in
the top 20% of the country's population by household expenditure. A report from the OECD found that
average wages paid by foreign multinationals are 40% higher than wages paid by local firms. What is
more, those skilled workers often get to work with managers from rich countries, or might have to
meet the deadlines of an efficient rich-world company. That may boost their productivity. Higher
productivity means they can demand even higher wages. By contrast, unskilled workers, or poor ones
in rural areas, tend not to have such opportunities. Their productivity does not rise. For these reasons
globalisation can boost the wages of skilled workers, while crimping those of the unskilled. The result
is that inequality rises.

Economic Growth and Income and Wealth Inequality

Not all of the benefits of growth are evenly distributed. A rise in real GDP can often be accompanied by
widening income and wealth inequality in society that is reflected in an increase in relative poverty.

The Gini coefficient10 is one way to measure the inequalities in the distribution of income and wealth
in different countries. The higher the value for the Gini co-efficient (the maximum value is 1), then
greater the inequality. Countries such as Japan, Denmark and Sweden typically have low values for the
Gini coefficients whereas African and South American countries have an enormous gulf between the
incomes of the richest and the poorest elements of the population.

Globalization and Terrorism

Terrorism is connected to the principles of globalization and the principles of anti-globalization.
Coming to hand with what those connections are and what they mean is crucial for people on both
sides of the globalization debate.

If there were rival great powers with different cultural and ideological leanings, globalization's
darkest problem of all terrorism would also likely look quite different. The pundits are partly right:
Today's international terrorism owes something to globalization. Al Qaeda uses the Internet to
transmit messages, it uses credit cards and modern hanking to move money, and it uses cell phones

According to Daniels, the definition of Outsourcing is: When a company hires another to perform certain functions, including administrative operations
and manufacturing. It can take place in or near the country of origin of the company (nearshoring), or in another country (offshoring).
10 According to Daniels, the definition of the Gini Coefficient is: Much more uniform distribution of income in a country, the lower will be the Gini
coefficient (for example, Finland has an index of the 26.9). The more uneven is the distribution of income in a country, the greater the Gini coefficient (for
example, Brazil has a rate of 56.7).

9


15
and laptops to plot attacks. But it's not globalization that turned Osama bin Laden from a small-time
Saudi dissident into the symbolic head of a radical global movement. What created Osama bin Eaden
was the predominance of American power.

A tipical example:
The September 11
attacks were a series of
four coordinated
terrorist attacks by the
Islamic terrorist group
al-Qaeda on the United
States on the morning
of Tuesday, September
11, 2001. The attacks
consisted of suicide
attacks used to target
symbolic U.S.
landmarks.
A terrorist organization needs a story to attract resources andrecruits. Oftentimes, mere frustration
over political, economic, or religious conditions is not enough. Al Qaeda understands that, and, for that
reason, it weaves a narrative of global jihad against a "modernization," "Westernization,11" and a
"Judeo-Christian" threat. There is really just one country that both spearheads and represents that
threat: the United States.
Globalization as process was facilitated by the liberalization of cross-border transactions by the
sovereignty of dilution. Globalization is essentially a measure of the ease with which the work, ideas,
capital, technology and the benefits can move across borders with minimal government interference.
This measure of liberalization is also a substitute measure for safety.

The great feeling of insecurity that terrorism now inspired by the US economy and the Government,
the two most important forces behind globalization, has resulted in a reaffirmation of sovereignty by
the United States and other Nations. The fear that liberal standards are facilitating terrorism is
causing around the world and more developed countries for the control of cross-border transactions.

11
Westernization refers to the influence with ideas, customs, practices, etc., characteristic of the Occident or of the western U.S.


16
Conclusion

In conclusion, Globalization brings to the world serious issues that affects many nations. Researchers
should analyze these impacts carefully so as to prevent the negative impacts. It is essential to note that
the force behind Globalization that are environmentally and socially sustainable. These forms should
be more beneficial to all humanity and reduce costs. Indirect impacts of Globalization on health (by
environmental issues) operate through the national economy, for example, effects of trade
liberalization, and the financial flows on resources for health expenditures.

One of the biggest issues that the Globalization have brought to the world is the Terrorism. It is ironic
to mention that global terrorism, the phenomenon of terrorists operating in and against several
nations simultaneously, was facilitated by globalization and now it has become the biggest challenge
to globalization. Global terrorism depends on the success of globalization. In fact one may very
conceive of global terrorism as a facet of the global culture resulting from globalization.

However, we can not denied all the benefits of globalization. Globalization have made the world more
efficient in economic, health, development and a lot of importants terms that at the same time have
given to the society a better life. But, this evils of Globalization have done that sometimes the dream
of Globalization be forgotten.



17
Bibliography

Daniels, J. (2009). Globalizacin y negocios internacionales. In L. H. John D. Daniels,

International Business: Environments and Operations (p. 59). Mxico: Pearson Educacin.
http://www2.dsu.nodak.edu/users/rbutz/International%20Business/PDF/Int_Bus_Ch1_Globa
lization.pdf

https://blog.udemy.com/impact-of-globalization/
http://ourfiniteworld.com/2013/02/22/twelve-reasons-why-globalization-is-a-hugeproblem/
http://www.multiculturalaustralia.edu.au/doc/parllib_globalisation.pdf
http://www.hks.harvard.edu/content/download/69258/1249842/version/1/file/056.pdf
http://www.unece.org/fileadmin/DAM/ead/pub/032/032_c2.pdf
http://www.tutor2u.net/economics/reference/economic-growth-disadvantages
https://www.imf.org/external/pubs/ft/weo/2007/02/pdf/c4.pdf
http://www.economist.com/blogs/economist-explains/2014/09/economist-explains-0
http://thesaturdaysyndicate.com/2011/08/10/the-connection-between-globalisation-andterrorism/

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