ESSAY GLOBALIZATION VS ANTI GLOBALIZATION

8/9/2019 ESSAY GLOBALIZATION VS ANTI GLOBALIZATION

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Indian Institute of Foreign Trade Page 1

ESSAY GLOBALIZATION

VSANTI GLOBALIZATION


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Kofi Annan, the seventh Secretary-General of the United Nations, addressed the force of globalizationin his quote, It has been said that arguing against globalization is like arguing against the laws of gravity.

R OLL N O : 32

C OURSE : EPGDIM

N AME : S URYA P RAKASH S RIVASTAVA


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ContentsIntroduction .................................................................................................................................................. 4

Globalization of world Economy ................................................................................................................... 4

Impact of Globalization ................................................................................................................................. 7

Positive Impacts ............................................................................................................................................ 9

Benefit to Market System-Adam Smith ............................................................................................ 9

Commercial gains .............................................................................................................................. 9

Emerging Economies ....................................................................................................................... 10

World Health Organization ............................................................................................................. 10

Governance ..................................................................................................................................... 10

Languages........................................................................................................................................ 10

Competition .................................................................................................................................... 10

Global Sharing of Environmental Resouces .................................................................................... 10

World Culture .................................................................................................................................. 11

Technology Innovation, Emerging Economies ........................................................................................ 11

Negative Effects .......................................................................................................................................... 12

Export Poverty ........................................................................................................................................ 12

Negative effects of economic liberalization ........................................................................................... 13

Brain drain ............................................................................................................................................... 13

Environmental degradation .................................................................................................................... 13

Food security ........................................................................................................................................... 14

Disease .................................................................................................................................................... 14

Drug and illicit goods trade ..................................................................................................................... 15

International Inequality .......................................................................................................................... 15

Trade verses Aid ...................................................................................................................................... 16

Culture Clash ........................................................................................................................................... 18

Trade Liberalization ................................................................................................................................ 21

Conclusion ................................................................................................................................................... 22


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IntroductionThe benefits and drawbacks of globalization continue to be hotly debated. And there is no doubt thatcompany operating across borders face complex challenges as they strive to conduct business in waysthat are ethical and meet increasingly high standards imposed by all constituencies.

Globalization, the integration of the world technologically, economically and politically, is the mostimportant development of our time. Global production and global markets offer business organizationsextraordinary opportunities for growth and profits. Globalization is credited with stimulating innovationand technological progress. However, it is also blamed for increasing the gap between rich and poor,accelerating the destruction of the environment, and threatening human rights. The intensity of feelingsin the globalization debate is astonishing. In the last three years, the anti-globalization movement hasstaged protests at meetings of the World Trade Organization, the European Union, the World Bank, theInternational Monetary Fund, the World Economic Forum, and the G-8.

Globalization the ongoing process of greater interdependence among countries and their citizens iscomplex and multifaceted. Many of the problems that the critics of globalization point to are real. Someof them relate to economics. Others relate to non-economic, but no less important, aspects of life. Andwhile some of the problems do stem from the process of global integration, others do not.

Globalization is a powerful real aspect of the new world system, and it represents one of the mostinfluential forces in determining the future course of the planet. It has many dimensions: economic,political, social, cultural, environmental, security, and others. The focus here will be on the concept of "globalization" as applied to the world economy. This concept is one that has different interpretations todifferent people. Partly as a result of these different interpretations, there are very different reactionsto "globalization," with some seeing it as a serious danger to the world economic system while otherssee it as advancing the world economy.

I will be covering two aspects of globalization in this essay. First, it will clarify the notion of "globalization" as applied to the world economy. Second, it will evaluate both the potential benefits andthe potential costs stemming from globalization.

The view taken here, representing the thesis of this paper, is that there are both positive and negativeaspects to globalization, that some of its positive features stem from the effects of competition that itentails, and that some of the negative aspects that could potentially lead to conflicts could be offset byinternational or global cooperation through agreements on policy or through the development of newinternational institutions. Thus, while globalization can cause international conflicts, it can alsocontribute to their containment through the beneficial effects of competition and the potential of globalcooperation to treat economic and other threats facing the planet.

Globalization of world EconomyEconomic globalization, the ongoing process of greater economic interdependence among countries, isreflected in the increasing amount of cross-border trade in goods and services, the increasing volume of international financial flows, and increasing flows of labor. "Globalization" will be understood here tomean major increases in worldwide trade and exchanges in an increasingly open, integrated, andborderless international economy. There has been remarkable growth in such trade and exchanges, notonly in traditional international trade in goods and services, but also in exchanges of currencies, in


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capital movements, in technology transfer, in people moving through international travel and migration,and in international flows of information and ideas.

Globalization has involved greater openness in the international economy, an integration of markets ona worldwide basis, and a movement toward a borderless world, all of which have led to increases inglobal flows. There are several sources of globalization over the last several decades. One such sourcehas been technological advances that have significantly lowered the costs of transportation andcommunication and dramatically lowered the costs of data processing and information storage andretrieval. The latter stems from developments over the last few decades in electronics, especially themicrochip revolution. Electronic mail, the Internet, and the World Wide Web are some of themanifestations of this new technology.

A second source of globalization has been trade liberalization and other forms of economic liberalizationthat have led to reduced trade protection and to a more liberal world trading system. This processstarted in the last century, but the two World Wars and the Great Depression interrupted it. It resumedafter World War II through the most-favored-nation approach to trade liberalization, as embodied in the1946 General Agreement on Tariffs and Trade (GATT) and now in the World Trade Organization (WTO).

As a result, there have been significant reductions in tariffs and other barriers to trade in goods andservices. Other aspects of liberalization have led to increases in the movement of capital and otherfactors of production. Some have suggested that globalization is little more than a return to the worldeconomy of the late nineteenth century and early twentieth century, when borders were relativelyopen, when there were substantial international capital flows and migrations of people, and when themajor nations of Europe depended critically on international trade. This is particularly the view of someBritish scholars, looking back to the period of British imperial dominance of the world economy. Whilethere are some similarities in terms of trade and capital movements, the period of a century ago did nothave some of the major technological innovations that have led to a globalized world economy todaythat is qualitatively different from the international economy of the last century.

A third source of globalization has been changes in institutions, where organizations have a wider reach,due, in part, to technological changes and to the more wide-ranging horizons of their managers, whohave been empowered by advances in communications. Thus, corporations that had been mainlyfocused on a local market have extended their range in terms of markets and production facilities to anational, multinational, international, or even global reach. These changes in industrial structure haveled to increases in the power, profits, and productivity of those firms that can choose among manynations for their sources of materials, production facilities, and markets, quickly adjusting to changingmarket conditions. Virtually every major national or international enterprise has such a structure orrelies on subsidiaries or strategic alliances to obtain a comparable degree of influence and flexibility. Asone measure of their scale, almost a third of total international trade now occurs solely within thesemultinational enterprises. With the advent of such global firms, international conflict has, to someextent, moved from nations to these firms, with the battle no longer among nations over territory butrather among firms over their share of world markets. These global firms are seen by some as a threat tothe scope and autonomy of the state, but, while these firms are powerful, the nation state still retainsits traditional and dominant role in the world economic and political system.

Non-government organizations, the NGO's, have also taken a much broader perspective that, as in the case of the global firms, is often multinational or global. Even international organizations, such as the United Nations,the International Monetary Fund and World Bank, and the new World Trade Organization have new global


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roles. Overall, multinational enterprises and other such organizations, both private and public, have becomethe central agents of the new international globalized economy.

A fourth reason for globalization has been the global agreement on ideology, with a convergence of beliefs in the value of a market economy and a free trade system. This process started with the political andeconomic changes that started in the 1978 reforms in China and then involved a falling dominoes series of

revolutions in Eastern and Central Europe starting in 1989 that ended with the dissolution of the Soviet Unionin December 1991. This process led to a convergence of ideology, with the former division between marketeconomies in the West and socialist economies in the East having been replaced by a near-universal relianceon the market system. This convergence of beliefs in the value of a market economy has led to a world that isno longer divided into market-oriented and socialist economies. A major aspect of this convergence of beliefsis the attempt of the former socialist states to make a transition to a market economy. These attemptedtransitions, especially those in the former Soviet Union and in Eastern and Central Europe have, however,been only partially successful. The nations involved and their supporters in international organizations andadvanced western market economies have tended to focus on a three-part agenda for transition, involving: 1)stabilization of the macroeconomy, 2) liberalization of prices, and 3) privatization of state-owned enterprise.Unfortunately, this SLP agenda fails to appreciate the importance of building market institutions, of establishing competition, and of providing for an appropriate role for the government in a modern mixedeconomy.

A fifth reason for globalization has been cultural developments, with a move to a globalized andhomogenized media, the arts, and popular culture and with the widespread use of the English language for

global communication. Partly as a result of these cultural developments, some, especially the French andother continental Europeans, see globalization as an attempt at U.S. cultural as well as economic and politicalhegemony. In effect, they see globalization as a new form of imperialism or as a new stage of capitalism in theage of electronics. Some have even interpreted globalization as a new form of colonialism, with the U.S. as thenew metropole power and with most of the rest of the world as its colonies, supplying it not only with rawmaterials, as in earlier forms of European colonialization, but also with technology; production facilities; labor,capital, and other inputs to the production process; and markets on a global basis.

Whether one sees globalization as a negative or as a positive development, it must be understood that it hasclearly changed the world system and that it poses both opportunities and challenges. It is also clear that the

above technological, policy, institutional, ideological, and cultural developments that have led to globalizationare still very active. Thus, barring a radical move in a different direction, these trends toward greaterglobalization will likely continue or even accelerate in the future. One important aspect of these trends will bethe growth in international trade in services that has already increased substantially but promises evengreater growth in the future, especially in such areas as telecommunications and financial services. The resultwill be continued moves toward a more open and a more integrated world as it moves closer and closer to aplanet without borders and to a more integrated, open, and interdependent world economy. The result will


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be even greater worldwide flows of goods, services, money, capital, technology, people, information, andideas.

Impact of GlobalizationGlobalization has had significant impacts on all economies of the world, with manifold effects. It affects theirproduction of goods and services. It also affects the employment of labor and other inputs into the productionprocess. In addition, it affects investment, both in physical capital and in human capital. It affects technologyand results in the diffusion of technology from initiating nations to other nations. It also has major effects onefficiency, productivity, and competitiveness.

Several impacts of globalization on national economies deserve particular mention. One is the growth of foreign direct investment (FDI) at a prodigious rate, one that is much greater than the growth in world trade.Such investment plays a key role in technology transfer, in industrial restructuring, and in the formation of global enterprises, all of which have major impacts at the national level. A second is the impact of

globalization on technological innovation. New technologies, as already noted, have been a factor inglobalization, but globalization and the spur of competition have also stimulated further advances intechnology and speeded up its diffusion within nations through foreign direct investment. A third is thegrowth of trade in services, including financial, legal, managerial, and information services and intangibles of all types that have become mainstays of international commerce. In 1970, less than a third of foreign directinvestment related to the export of services, but today that has risen to half and it is expected to rise evenfurther, making intellectual capital the most important commodity on world markets. As a result of the growthof services both nationally and internationally, some have called this "the age of competence," underscoringthe importance of lifelong education and training and the investment in human capital in every nationaleconomy.

Globalization, an important characteristic within the contemporary economic environment, has resultedin significant changes to individual nations in terms of economic development strategies undertaken bynational governments. The term globalization refers to the integration of local and internationaleconomies into a globally unified political economic and cultural order, and is not a singularphenomenon, but a term to describe the forces that transform an economy into one characterized bythe embracement of the free movement of trade, investment, labor and capital. The drive forglobalization has resulted in greater economic growth globally, through the opening up of barriers tointernational trade, yet this increase in world output is often associated with detrimental effects inrelation to the stability of a national economy, being susceptible to the ups and downs of theinternational business cycle and also both positive and negative effects on the standards of living orquality of life with in a nation.

It is often difficult to categories an economy as being globalized, yet there are several key indicator thatsuggest economic management decisions undertaken by the govt have come as a result of globalization.The main evidence to suggest the globalization of nations has been the growth in global markets,changes in global consumption patterns, the establishment of intergovernmental agreements as well asthe rise of transnational corporations. Globalization has been essentially driven by the breaking down of economic barriers between nations over recent decades that have resulted in greater worldwideeconomic growth. This economic liberalization has been spurred on by the global trend towards the


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deregulation of national economies as well as reforms to encourage greater competitiveness with in theglobal markets. As a result of the microeconomic reforms, globally there has been a general reduction of restrictions on trade, capital flows and foreign investments. In addition to this, technologicaladvancements over the last half century have contributed to this economic liberalization where as aresult of this technology growth, transport costs have reduced dramatically, making trade more costefficient. Communication costs have also reduced through advancements in telecommunications and e-commerce resulting in escalated movements in international finance. Through these increases in tradeand financial flows, countries have experienced increased level of economic growth over time that hascontributed to the world standards of living. The global population now has greater access to the widervarieties of consumer goods and services, aided by the development of international markets and theease of transactions permitted by technological advancements.

It is estimated that global economy grew, on average, by 2.5% per annum during the late 1990s. Thiswas fuelled by a growth in trade of over 7% per annum, and growth in foreign investment levels of over23%. It is clear that globalization has brought about greater rates of economic growth in most nations,as proven by the highly successful NICs in Asia, known as the Asian Tiger economi es, however, whilethe global economy has grown in total the benefits have varied significantly between economies. Where

high income and newly industrialized countries have achieved growth rates of around 3% and 7%respectively, low income countries achieved growth of only 2%. Economic activity in transitionaleconomies fell during the 1990s by an average of 2.7% per annum, showing that globalization has notresulted in more equal standards of living.

However, the standard of living, or quality of life Is not simply a measure of the level of economicgrowth or change in real GDP, but it is a measure that takes into account the literary levels, education,health care, technological change and mortality rates. An example of a quality of life indicator is theHuman Development Index (HDI) which measures changes in those factors as a result of globalization.Over the last few decades, the HDI of the worlds richest countries have increased as a result of globalization, where growth and development has been attributed to these economies through

willingness to embrace market liberalization. However, the HDI of the poorer nations have grown at aslower rate to the richer nations which, as some economists put it, shows that globalization is anotherword for the continual plundering of the poorer and weaker nations by the rich and powerfuleconomies. It has been strongly argued that the benefits of competition go only to those who cancompete, and poor countries have to negotiate on unequal terms. In addition, the forces of globalizationtake no account for social injustices, with Asian sweat shops being a prime example.

Trade growth has contributed significantly to changes in living standards and economic growth of globaleconomies, but its impacts have differed between different economies. While the increases in globalimports and exports have come as a result of falling protectionist policies, it has advantaged mainlyproducers of manufactured goods, while producers of primary goods still face international barriers totrade. The consequence of this is the increase in trade between nations that produce different types of manufactured goods, and as a result much of the benefits of this increase trade go towards high incomeand NIC nations. Developing nations, while experiencing growth, have not reached the same levels ashigh income nations, there for widening the income divide globally. Similarly, 70% of the financial glowincreases are to industrialized nations, increasing their access to capital and living standards, leavinglower income nations on slower growth rates.

The quest for economic growth and improved quality of life has resulted in greater focus on nationsexternal stability. The ability of a country to manage its exchange rate, balance of payments and foreign


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liabilities impacts on the perceptions of traders on world markets. Volatility of foreign exchange marketscan contribute to external instability, and globalization has resulted in increased trade, requiringincreased currency movements, there for market currencies are more prone to sudden appreciationsand depreciations, altering a nations competitiveness, and debts levels. The improved access tointernational finance has detrimentally affected the external balance of many nations, in particulardeveloping nations, as rising interest on massive loans can heavily outweigh the revenue eared,resulting in debt trap scenarios.

Additionally, the global movement toward free trade has resulted in many high income manufacturingnations increasing in there terms of trade through comparative advantage, and increasing there rates of economic growth. However, developing nations terms of trade tend to fall over time as prices forprimary exports fall. This result in long term trade deficits and a worsening CAD that results in adeteriorating external balance, which generally maintains the income divide between the rich and poornations with in the global economy.

While globalization has resulted in aggregate increases in trade, output and investment growth over thepast few decades, it is clear that the benefits from this growth have been distributed unequally between

different economies. While developing nations are now focusing on manufacturing productions, highincome economies are establishing new production patterns and many poor nations are not adaptingsignificantly. Consequently, this has resulted in lagging economic growth rates with in less developedcountries, while nations such as the fast growing Tiger economies have experienced phenomenalgrowth rates of close to 9%. The income divide globally, as a result would tend to widen, as richernations become richer at a faster rate than poor nations. However, a limiting factor towards continuingaccelerated growth with in high income nations continue s to be the maintenance of an economysexternal stability, in particular preventing the blow outs of net foreign debt and equity over the businesscycle, which might affect the international confidence in the management of the particular economy.There for globalization on the whole has come as a benefit throughout the world, yet these benefits arestill heavily weighed towards the already rich nations, while the developing economies struggle to

maintain growth on par with the higher income nations, resulting in the evident contrast in quality of lifebetween there classes of nations in the global economy.

Positive Impacts

G lobalization has various aspects which affect the world in several different ways such as:

Benefit to Market System-Adam Smith - emergence of worldwide productionmarkets and broader access to a range of foreign products for consumers and companies.Particularly movement of material and goods between and within national boundaries.

International trade in manufactured goods increased more than 100 times (from $95 billion to$12 trillion) in the 50 years since 1955. China's trade with Africa rose sevenfold during 2000-07alone.

Commercial gains - emergence of worldwide financial markets and better access toexternal financing for borrowers. By the early part of the 21st century more than $1.5 trillion innational currencies were traded daily to support the expanded levels of trade and investment.As these worldwide structures grew more quickly than any transnational regulatory regime, the
http://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_trade


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instability of the global financial infrastructure dramatically increased, as evidenced by theFinancial crisis of 2007 2010

Emerging Economies - realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however, meant thatan economic collapse in any one given country could not be contained

World Health Organization - On the global scale, health becomes a commodity. Indeveloping nations under the demands of Structural Adjustment Programs, health systems arefragmented and privatized. Global health policy makers have shifted during the 1990s fromUnited Nations players to financial institutions. The result of this power transition is an increasein privatization in the health sector. This privatization fragments health policy by crowding itwith many players with many private interests. These fragmented policy players emphasizepartnerships and specific interventions to combat specific problems (as opposed tocomprehensive health strategies). Influenced by global trade and global economy, health policyis directed by technological advances and innovative medical trade. Global priorities, in thissituation, are sometimes at odds with national priorities where increased health infrastructureand basic primary care are of more value to the public than privatized care for the wealthy.

Governance

- some use "globalization" to mean the creation of a world government whichregulates the relationships among governments and guarantees the rights arising from socialand economic globalization . Politically, the United States has enjoyed a position of power amongthe world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of The United States own economy, the People's Republic of China has experienced some tremendous growth within the past decade. If China continues togrow at the rate projected by the trends, then it is very likely that in the next twenty years,there will be a major reallocation of power among the world leaders. China will have enoughwealth, industry, and technology to rival the United States for the position of leading worldpower .development of the system of non-governmental organisations as main agents of globalpublic policy, including humanitarian aid and developmental efforts.

Languages - increase in information flows between geographically remote locations.Arguably this is a technological change with the advent of fibre optic communications, satellites,and increased availability of telephone and Internet.

o Language - the most popular first language is Mandarin (845 million speakers) followedby Spanish (329 million speakers) and English (328 million speakers). However the mostpopular second language is undoubtedly English, the "lingua franca" of globalization:

o About 35% of the world's mail, telexes, and cables are in English.o Approximately 40% of the world's radio programs are in English.o About 50% of all Internet traffic uses English.

Competition - Survival in the new global business market calls for improved productivity andincreased competition. Due to the market becoming worldwide, companies in various industrieshave to upgrade their products and use technology skillfully in order to face increased

competition. Global Sharing of Environmental Resouces - the advent of global environmental

challenges that might be solved with international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species.Since many factories are built in developing countries with less environmental regulation,globalism and free trade may increase pollution. On the other hand, economic developmenthistorically required a "dirty" industrial stage, and it is argued that developing countries shouldnot, via regulation, be prohibited from increasing their standard of living.
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World Culture - growth of cross-cultural contacts, advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one'sstandard of living and enjoy foreign products and ideas, adopt new technology and practices,and participate in a "world culture". Some bemoan the resulting consumerism and loss of languages. Also see Transformation of culture.

Spreading of multiculturalism, and better individual access to cultural diversity (e.g.through the export of Hollywood) . Some consider such "imported" culture a danger,since it may supplant the local culture, causing reduction in diversity or evenassimilation. Others consider multiculturalism to promote peace and understandingbetween people. A third position that gained popularity is the notion thatmulticulturalism to a new form of monoculture in which no distinctions exist andeveryone just shift between various lifestyles in terms of music, cloth and other aspectsonce more firmly attached to a single culture. Thus not mere cultural assimilation asmentioned above but the obliteration of culture as we know it today. In reality, as ithappens in countries like the United Kingdom, Canada, Australia or New Zealand, peoplewho always lived in their native countries maintain their cultures without feeling forcedby any reason to accept another and are proud of it even when they're acceptive of immigrants, while people who are newly arrived simply keep their own culture or part of it despite some minimum amount of assimilation, although aspects of their cultureoften become a curiosity and a daily aspect of the lives of the people of the welcomingcountries.

Greater international travel and tourism. WHO estimates that up to 500,000 people areon planes at any one time.In 2008, there were over 922 million international touristarrivals, with a growth of 1.9% as compared to 2007.

Greater immigration, including illegal immigration. The IOM estimates there are morethan 200 million migrants around the world today. Newly available data show thatremittance flows to developing countries reached $328 billion in 2008.

Spread of local consumer products (e.g., food) to other countries (often adapted to theirculture).

Worldwide fads and pop culture such as Pokmon, Sudoku, Numa Numa, Origami, Idolseries, YouTube, Orkut, Facebook, and MySpace. Accessible to those who have Internetor Television, leaving out a substantial segment of the Earth's population.

Worldwide sporting events such as FIFA World Cup and the Olympic Games. Incorporation of multinational corporations into new media. As the sponsors of the All-

Blacks rugby team, Adidas had created a parallel website with a downloadableinteractive rugby game for its fans to play and compete.

Technology Innovation, Emerging Economies

o Development of a Global Information System, global telecommunications infrastructureand greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones

o Increase in the number of standards applied globally; e.g., copyright laws, patents andworld trade agreements.

Legal/Ethical o The creation of the international criminal court and international justice movements.
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o Crime importation and raising awareness of global crime-fighting efforts andcooperation.

o The emergence of Global administrative law. Religious

o The spread and increased interrelations of various religious groups, ideas, and practicesand their ideas of the meanings and values of particular spaces.

Negative Effects

Globalization has been one of the most hotly debated topics in international economics over the pastfew years. Globalization has also generated significant international opposition over concerns that it hasincreased inequality and environmental degradation. In the Midwestern United States, globalization haseaten away at its competitive edge in industry and agriculture, lowering the quality of life in locationsthat lack the opportunity to adapt to the change.

Some also view the effect of globalization on culture as a rising concern. Along with globalization of economies and trade, culture is being imported and exported as well. The concern is that the stronger,bigger countries such as the United States may overrun the other, smaller countries' cultures, leading tothose customs and values being faded away. This process is also sometimes referred to asAmericanization or McDonaldization.

Export Poverty It can be said that globalization is the door that opens up an otherwise resource-poor country to theinternational market. Where a country has little material or physical product harvested or mined fromits own soil, large corporations see an opportunity to take advantage of the "export poverty" of such anation. Where the majority of the earliest occurrences of economic globalization are recorded as beingthe expansion of businesses and corporate growth, in many poorer nations globalization is actually theresult of the foreign businesses investing in the country to take advantage of the lower wage rate: eventhough investing, by increasing the Capital Stock of the country, increases their wage rate.

One example used by anti-globalization protestors is the use of sweatshops by manufacturers.According to Global Exchange these "Sweat Shops" are widely used by sports shoe manufacturers andmentions one company in particular Nike. There are factories set up in the poor countries whereemployees agree to work for low wages. Then if labour laws alter in those countries and stricter rulesgovern the manufacturing process the factories are closed down and relocated to other nations withmore conservative, laissez-faire economic policies.

There are several agencies that have been set up worldwide specifically designed to focus on anti-sweatshop campaigns and education of such. In the USA, the National Labor Committee has proposed anumber of bills as part of The Decent Working Conditions and Fair Competition Act, which have thus farfailed in Congress. The legislation would legally require companies to respect human and worker rightsby prohibiting the import, sale, or export of sweatshop goods.
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Specifically, these core standards include no child labor, no forced labor, freedom of association, right toorganize and bargain collectively, as well as the right to decent working conditions.

Negative effects of economic liberalization

The world today is so interconnected that the collapse of the subprime mortgage market in the U.S. hasled to a global financial crisis and recession on a scale not seen since the Great Depression. Governmentderegulation and failed regulation of Wall Street' s investment banks were important contributors to thesubprime mortgage crisis.

A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United States,Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in recent decades.However, Chinese textile and clothing exports have recently encountered criticism from Europe, theUnited States and some African countries. In South Africa, some 300,000 textile workers have lost their jobs due to the influx of Chinese goods. The increasing U.S. trade deficit with China has cost 2.4 millionAmerican jobs between 2001 and 2008, according to a study by the Economic Policy Institute (EPI). A

total of 3.2 million one in six U.S. factory jobs have disappeared between 2000 and 2007.

Brain drain

An opportunity in richer countries drives talent away from poorer countries, leading to brain drains. Brain drain has cost the African continent over $4.1 billion in the employment of 150,000 expatriateprofessionals annually. Indian students going abroad for their higher studies costs India a foreignexchange outflow of $10 billion annually.

Environmental degradationBurning forest in Brazil. The removal of forest to make way for cattle ranching was the leading cause of

deforestation in the Brazilian Amazon from the mid 1960s. Recently, soybeans have become one of themost important contributors to deforestation in the Brazilian Amazon.

The Worldwatch Institute said the booming economies of China and India are planetary powers that areshaping the global biosphere. In 2007, China overtook the United States as the world's biggest producerof CO2. At present rates, tropical rainforests in Indonesia would be logged out in 10 years, Papua NewGuinea in 13 to 16 years. A major source of deforestation is the logging industry, driven spectacularly byChina and Japan. Thriving economies such as China and India are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996 2006. Crude oilprices in the last several years have steadily risen from about $25 a barrel in August 2003 to over $140 abarrel in July 2008. State of the World 2006 report said the two countries' high economic growth hid a

reality of severe pollution. The report states:The world's ecological capacity is simply insufficient tosatisfy the ambitions of China, India, Japan, Europe and the United States as well as the aspirations of the rest of the world in a sustainable way

Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out by 2017,and terbium could be gone before 2012. It is said that if China and India were to consume as muchresources per capita as United States or Japan in 2030 together they would require a full planet Earth to
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meet their needs. In the longterm these effects can lead to increased conflict over dwindling resourcesand in the worst case a Malthusian catastrophe.

Food security

The head of the International Food Policy Research Institute, stated in 2008 that the gradual change indiet among newly prosperous populations is the most important factor underpinning the rise in globalfood prices. From 1950 to 1984, as the Green Revolution transformed agriculture around the world,grain production increased by over 250%.The world population has grown by about 4 billion since thebeginning of the Green Revolution and most believe that, without the Revolution, there would begreater famine and malnutrition than the UN presently documents (approximately 850 million peoplesuffering from chronic malnutrition in 2005).

It is becoming increasingly difficult to maintain food security in a world beset by a confluence of "peak"phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish. Growingpopulations, falling energy sources and food shortages will create the "perfect storm" by 2030,according to the UK government chief scientist. He said food reserves are at a 50-year low but the worldrequires 50% more energy, food and water by 2030. The world will have to produce 70% more food by2050 to feed a projected extra 2.3 billion people and as incomes rise, the United Nations' Food andAgriculture Organisation (FAO) warned. Social scientists have warned of the possibility that globalcivilization is due for a period of contraction and economic re-localization, due to the decline in fossilfuels and resulting crisis in transportation and food production.One paper even suggested that thefuture might even bring about a restoration of sustainable local economic activities based on huntingand gathering, shifting horticulture, and pastoralism.

The journal Science published a four-year study in November 2006, which predicted that, at prevailingtrends, the world would run out of wild-caught seafood in 2048.

Disease

Globalization, the flow of information, goods, capital and people across political and geographicboundaries, has also helped to spread some of the deadliest infectious diseases known to humans.Starting in Asia, the Black Death killed at least one-third of Europe's population in the 14th century. Evenworse devastation was inflicted on the American supercontinent by Europe. For instance 90% of thepopulations of the civilizations of the "New World" such as the Aztec, Maya, and Inca were killed bysmall pox brought by European colonization. Modern modes of transportation allow more people andproducts to travel around the world at a faster pace, they also open the airways to the transcontinentalmovement of infectious disease vectors. One example of this occurring is AIDS/HIV. Approximately 1.1million persons are living with HIV/AIDS in the United States, and AIDS remains the leading cause of death among African American women between ages 25 and 34. Due to immigration, approximately500,000 people in the United States are believed to be infected with Chagas disease. In 2006, thetuberculosis (TB) rate among foreign-born persons in the United States was 9.5 times that of U.S.-bornpersons.
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Drug and illicit goods trade

The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug tradegenerates more than $320 billion a year in revenues. Worldwide, the UN estimates there are more than50 million regular users of heroin, cocaine and synthetic drugs. The international trade of endangered

species is second only to drug trafficking. Traditional Chinese medicine often incorporates ingredientsfrom all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. Theuse of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelope horns, and tigerbones and claws) has created controversy and resulted in a black market of poachers who huntrestricted animals. In 2003, 29% of open sea fisheries were in a state of collapse.

International Inequality

Inequality must be defined and be able to be measured so that comparisons can be made between richand poor countries. Once the causes are determined, the effects of globalization can be evaluated andbe measured. The World Bank defines inequality as the disparity of income and standard of living among

nations and their citizens (Birdsall, 2002). To compare inequality among nations, incomes and livingstandards of their citizens should be reviewed. The World Bank has determined that people living on $1per day in developing countries and people living on $2 per day in medium economies are consideredpoor (Infoplease, 2005). In contrast to the $1-$2 per day standard, in the United States, Japan, Europe orother developed nations, a person trying to live on less than $1,000 per year is unimaginable becausethe cost of living is many times this amount. The US Census Bureau defines poverty for a single, elderlyperson (over age 65) earning less than $25 a day as poor (US Census, 2005). Younger workers and/orpeople living in multiple person families have a higher threshold than $25 a day before they areconsidered poor.The income gap that exists between rich and poor counties has become substantial. Although greatstrides have been made in improving income for poor nations, many regions of the world have 25% ormore of their population living off less than $1 per day (World Bank, 2005). Some people think that withthe poor people having limited earning capacity, they also have limited access to the worlds wealth. In2003, the richest fifth of the world's population received 85% of the total world income, while thepoorest fifth received just 1.4% of the global income (Infoplease, 2005). When the GDP is comparedbetween the richest and poorest nations over the past century, a wider income gap can be seengrowing. Between 1900 and 2000, the richest quarter of the worlds populat ion saw its per capita GDPincrease nearly six-fold during the century, while the poorest quarter experienced less than a three-foldincrease (IMF, 2005). Income inequality has increased and has continued widening.Income alone is not the only indicator to measure the wealth of a countrys citizens. Besides income,there are quality of life characteristics that should also be considered. Sri Lanka has a low income, buthas impressive social indicators such as life expectancy is the same as in developed nations, high literacyrates, low mortality rates and a declining population growth rate; results of a social welfare system put

in place during the 1940s (IMF, 2005; Sri Lanka, 2005). Cuba is another such example where livingconditions have improved, yet the incomes of the people have stagnated. Cuba has had limited tradingopportunities with a US boycott in place and the cessation of Soviet support to the island-nation; yet itshealthcare and education draw praise from the World Bank (Newsbatch, 2005). There are social benefitsthat a government can provide that will improve the quality of life and can be measured. Poverty ismeasured by several different organizations, but many are similar to the UN measure for poverty. TheUN's Human Poverty Index is a measurement of poverty that factors in illiteracy, malnutrition amongchildren, early death, poor health care, poor access to safe water, vulnerability to famine or flooding,
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lack of sanitation, exposure to disease, a diet poor in nutrients, and the absence of education(Infoplease, 2005). These factors are as much the signs of poverty as material deprivation. The UNconsiders nations that share in these characteristics to be in poverty. Countries with these conditionsunder control can limit the exposure that their people have to poverty. The World Bank has 14 keyindicators (Appendix 2) that measure poverty within a country. They are subdivided into four sections:growth and poverty reduction, governance and investment climate, infrastructure for development, andhuman development. A connection (Appendix 1) has been established that for each percentagepoint of economic growth, the average number of households existing on $1 per day decreases by 2%(World Bank, 2005). Several factors can drive economic growth, including increases in education, lifeexpectancy and economic policies - such as openness to trade.The World Banks measurement of poverty from the number of persons living on a dollar per day hasdecreased over the past decades, which would lead one to believe that poverty has decreased.However, when adjusted for inflation, the findings are that the income gap has widened and is wellbelow the income levels of the leading industrialized countries in 1870; but the social conditions of todays poor countr ies far exceed the social conditions of the leading industrialized countries of 1870(IMF, 2005). Incomes have risen for poor countries modestly, yet their social conditions have improvedconsiderably due to increased aid packages. Richer nations have made advances in medical research

and have given aid to poor countries for vaccines and expensive drugs that can improve the quality andlength of life for the citizens in the poor country. Inequality among rich and poor nations exists in termsof income and living conditions. Rich nations have tried to address this issue by distributing aid packagesaimed at specific needs of each poor country. These aid packages ranged from literacy programs to foodhandouts and health programs. Poor nations need more than aid packages; they need economicconditions that can sustain growth.

Trade verses AidWealthy nations have not always been rich. They have needed to have years of a stable government andthe ability to accumulate wealth. Establishing a fair and equitable system of distributing economic and

political power creates stable governments. These nations have been able to develop relationships withtrading partners beyond their own borders by lowering trade barriers and having a government seen asnon-corrupt. Wealthy nations have invested in infrastructure such as proper disposal of sewage,education for its children, healthcare, transportation systems, early immunization against childhooddisease, and efficient drainage systems. When the society invests in these types of programs andinfrastructure, all the citizens that live in the country reap the benefits.

The nations where people live longer and healthier contribute more labor hours to the production of goods on a per person basis. As a nation is able to increase its productivity, it is able to trade with othernations. A nations wealth is not limited by what it is able to produce domestically when that nationengages in trade beyond its own borders. Nations that pursue international trade are able to increasetheir growth rate. During the 20th century nearly all nations encountered unparalleled economic growthas global per capita GDP increased almost five-fold with the strongest expansion in the second half of the century, a period of rapid growth accompanied by increase in trade (IMF, 2005). International tradehas enabled economies to recover more quickly after war, natural disaster, and economic crisis. Thedeveloping countries of China, India and Mexico, which represent about 3 billion people, have adoptedpolicies enabling their citizens to take advantage of globalization and their economies are catching upwith rich ones (Manzella, 2002). Many economists predict that Chinas economy will surpass the United States in terms of GDP in a few decades (Johnson , 2005). International trade has had a beneficialimpact on these countries due to their policy changes and willingness to open their society.


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Nations that do not participate in international trade hinder their own growth. After World War I, thecountries around the globe became very protectionists and began putting high tariffs on goods fromabroad. This is argued by many economists to have been the reason for high unemployment during theglobal depression of the 1930s, with such legislation like the Smoot-Hawley Tariff Act tha raised tariffs tohistorical highs (Newsbatch, 2005). Even today there are countries that do not want to allow trade withother nations. The incomes of the least globalized countries, including Iran, Pakistan and North Korea,have declined or remained static over the past several decades (Manzella,2002). Countries that do notopen up their society to international trade choose to limit their growth potential. Examination of theper capita income between rich and poor countries verifies that poor nations have other factors workingagainst them. Poverty in the developing African nations is not the result of slow growth since the percapita incomes of poor nations grew since 1960 as fast as, and perhaps faster than the per capitaincomes of rich countries; it is the result of ineffective government spending such as the KenyanInternational Airport, which is barely used (Becker, 2005). Aid is part of the problem that keeps corruptpoliticians in power and keeps real economic development from happening.

In an interview with an African economist, James Shikwati discussing the best approach by Western

nations to help the developing nations of Africa, as cited by Thielke (2005): Huge bureaucracies arefinanced (with the aid money), corruption and complacency are promoted, Africans are taught to bebeggars and not to be independent. In addition, development aid weakens the local marketseverywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as itmay sound: Development aid is one of the reasons for Africa's problems. If the West were to cancelthese payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Whichis why they maintain that the world would stop turning without this development aid. Foreign aid topoor countries should be able to help the government develop the infrastructure and institutions toeventually become self-sufficient. Rich nations have been giving considerable amounts of aid, includinglow-interest rate loans to developing nations for the last half of the 20th century, yet many of thesenations are still poor. This is done through direct foreign aid from a donor country and through

international organizations like the World Bank. In many of these poor countries, the economic systemis comparable to pre-capitalist conditions where the goods and services they produce are very limited inscope.

Even if a country chooses to accept aid to improve the conditions of its people, the people may not beable to benefit due to corrupt leadership and institutions. Many developing nations have corrupt leadersthat do not invest in the social services or infrastructure needed for its people. They are more concernedwith staying in power and tend to reward people that will help them stay in power. The developingnations suffer from poverty not because of high debt burdens, but because inefficient governmentsredistribute the existing economic pie to privileged political elites rather than trying to make the piegrow larger through sound economic policies (Easterly, 2001). In their attempt to gain economicstability, they are in a constant search for more resources to generate wealth. African tribes war againstone another to scramble for land. President Yoweri Museveni of Uganda, has continued to spend moneyon questionable military adventures in the Democratic Republic of the Congo; and other governmentslike Angola, Ethiopia, and Rwanda have also preferred a military route rather than engaging in economictrade with their neighbors (Easterly, 2001). These corrupt governments spend large amounts of theirbudgets on their military and pet projects that do not serve the people well. Another example is thegovernment of North Korea that has spent its resources developing nuclear weapons while its peopleare starving. When government money is spent on the military and war, it is not spent on providingeducation, clean water, medicine, or the basic amenities that allow a countrys people to move out of


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extreme poverty.Many of the nations that receive aid packages are dictatorships and do not always spend the moneywhere it will do the most good for the people. The World Bank financed the dictatorial socialist regimeof Robert Mugabe in Zimbabwe until 2000, when the bank refused to give him any more money until hestopped his murdering rampage (Bovard, May 2003). There are countless examples of dictatorshipsmisusing funds to support their own agenda without moving forward their own people out of poverty.Cited by Bovard, 2003, William Easterly, former senior World Bank economist, discussed the failure of foreign aid, When governments incentives are for political patronage rather than development, aidsupports incompetent but politically connected schoolteachers, builds schools without textbooks, androads that attract crooked contractors but little maintenance. When donor nations see misuse of fundsthey become less likely to support poor nations and their governments. Scandinavian countries haverecognized that corrupt governments are part of the problem and have started denying them aid(Lambsdorff, 1999). Financial aid packages are given with good intentions by the donors that the aid willbe used to help the people that need it. Instead the people that need it are oppressed and do not havethe political means to change their own situation. Once the people can have more control over theirown political future, their economic future can improve.

Without trade, foreign aid is the alternative of choice to help the people move out of poverty. Yet manyof the people continue to live in poverty year after year due to inefficient governments and distributionof resources. Transparency International, a nongovernmental organization dedicated to stop corruptionin governments, reported that nine out of ten developing nations are corrupt and inefficient. Even whenaid is given, these nations are so corrupt that very little of the aid makes it to the people that it issuppose to help. Without aid, people will depose inefficient governments and collect the politicalwillpower to engage their problems and search for long-term solutions. Aid allows inept and corruptgovernments to stay in power. A unilateral transfer payment in the form of aid is not a long-termsolution. For a solution to become permanent, governments must be stable and be perceived as non-corrupt and willing to spend on the proper infrastructure and encourage trade.

Culture Clash

Not everyone believes international trade can benefit the poor, developing countries. People who arenot in favor of expanding international trade and desire preservation of local culture and customs arereferred to as anti-globalists. They are an assortment of several different groups with different issues; allmotivated toward a common cause: to stop global trade (Wikipedia, 2005). They believe many tradeagreements and multinational corporations can undermine the environment, labor rights, nationalsovereignty, and the third world.

The 20th century has seen international trade and the income gap between rich and poor nationsincrease. Some anti-globalists perceive that international trade and the widening of the income gapbetween rich and poor countries to be correlated. The World Economic Outlook studied 42 countries forwhich data was available for the entire 20 th century and reached the conclusion that output per capitahas risen but that the distribution of income among countries has become more unequal than at thebeginning of the century (IMF, 2005). This conclusion has erroneously accused rich countries of getting richer by exploiting poorer countries.


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Inequity does exist, but it is not because rich countries are taking advantage of poor countries. However,multinational corporations are taking advantage of market forces and introducing it to developingnations as a peaceful means to promote economic growth. Each nation uses its most abundantresources to a comparative advantage. This is true with land and the products it can produce; true whentoo much money is available to invest in businesses; and, true when there is too much labor. Developingcountries are labor abundant. When labor is abundant, there is a higher ratio of labor to other factorsfor the poor country than there are for its trading partners (Pugel, 2004). These market forces allow anefficient distribution of resources.

Population growth in poor nations is high and the people have little education, as it does not take mucheducation to work on a farm. Cited by Birdsall, 2002, Dr. Wade, a professor of political economics at theLondon School of Economics, blames this rising inequality on differing rates of population growthbetween rich and poor countries and the pressures of technological change. Many of these poorcountries still have an agrarian economy. Since the people cannot afford technology, like tractors towork the land or irrigation systems to increase productivity, human capital is employed. It is moreadvantageous for a family to have more children, so they can help work the farm. Many of the childrenwill get sick and some die, due to lack of proper healthcare. In some countries like India, there is agrowing industrialized sector. As these countries economies become industrialized, the population, whois uneducated in everything but farming, begin to move to the cities as unskilled laborers if they arelucky enough to find work. Unfortunately, most people who move to the city will become part of thegrowing unemployed. These developing countries are abundant with unskilled labor due to highpopulation growth and lack of education, especially among women, that make the country a source forinexpensive, unskilled labor in exchange for jobs. Its large population is a resource that makes anothernation want to trade with it.

Many of these developing countries do not have continuing growth as part of their culture, which leadsto the continuation of the stagnate economic conditions. Economic growth needs to be examined toverify or disprove the widening inequity gap because poor nations are being exploited by rich nations.

Economic growth is defined as the increase in the value of goods and services produced by an economyand can be measured as the percent rate of increase in real gross domestic product (Wikipedia, 2005).There are two types of economic growth a nation can undergo to move itself out of poverty: intensiveand extensive. Intensive growth is due to an increase in the quality of a nations factors of production,usually due to a change in technology or international trade; where as, extensive growth is growth dueto an increase in the quantity of a nations factors of production, usually increased by acquiring land viawar and colonialism. Technology means change to a society, and many pre-capitalist societieswere based on tradition and certainty, and change was uncertain, therefore discouraged (Berri, 2004). Inorder for pre-capitalist economies to grow they had to increase their factors of production. Land waslimited and technology did not exist to yield more crops. Lack of technology also limited capitalaccumulation. Population increases labor, but still limited by the same technologies and quality, per-capita growth does not increase. Therefore in the absence of trade, economic growth in pre-capitalistsocieties is zero (Berri, 2004). Capitalist nations have been able to increase technology and embracechange to become the wealthier nations on the globe. Many of these non-capitalists countries are stillconsidered developing nations.

Antiglobalists regard the extension of international markets and financial interests as the cause of increasing global inequality (and poverty) and declining levels of human welfare (Birdsall, 2002). Thepopulation of these poor countries is plentiful and willing to work at cheap wages, as they are laborabundant. Their own government is eager to oblige the multinational corporation and in many cases,


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such as in Nigeria, the environmental laws are more relaxed than in their home countries. However, if the wages were not low or environmental regulation required more expensive technology to beemployed, the corporation might choose to stay in their home country or choose to build in anothercountry. The developing countrys government needs the multinational corporation to provideinvestment and jobs for the people. Without these jobs, the government would spend money that itdoesnt have to care for the people, still increasing its debt burden. India is a good example of howefficient government policies open up a society to trade to improve the economic condition. Since itsindependence in 1947, India has been given more aid than any other nation. Yet for 40 years it had beengrouped among the worlds poorest countries and had a very slow growth rate. Around 1990, recessionsin donor nations threatened foreign aid to India. Dr. Manoman Singh, a reform-minded economist, wasbrought in as finance minister. India implemented many of his basic economic reforms, which includeddecreasing very high tariffs and quotas, substantially reducing regulation of private domesticinvestments, encouraging foreign direct investment, and privatizing many government sectors. India'srate of economic growth increased, due to these reforms, to more than 6% per year, without increasedforeign aid (Becker, 2005). India changed its policy without getting increased aid and was able toincrease its growth rate and begin to alleviate poverty conditions in its country. Aid had handicappedeconomic growth for India. Only when India was able to participate in trade with other nations was it

able to break its cycle of dependence on foreign aid.

Governments in developing countries have convinced their people that the aid and limits tointernational trade is necessary for their continued development. These governments have limited theirown growth by imposing tariffs and quotas on imports and claiming that international trade has kepttheir own countries from developing stable economies.

Many of the poor nations are forced to agree to economic reform before they are allowed to receiveaid, and additionally, many of these nations are reluctant to accept foreign aid because they believe itwill have a negative impact on their cultural identity. These economic reforms are seen as to favor therich nations by allowing them more access to the poor na tions resources. The World Bank and

International Monetary Fund (IMF) have lending policies that compel poor countries to adopt economicpolicy reforms, which are perceived to benefit only their wealthy trading partners and leave theemerging economy with an overwhelming debt burden (Newsbatch, 2005). Poor countries thinkinternational trade will destroy their culture and lifestyle. Many of these poor nations believe that if they participate in globalization, their culture will change and they will lose part of their identity(Tomlinson, 2003). Modern technology has actually led to the opposite being true. Globalization doesnot destroy local civilization and customs, but proliferates individual culture by using moderncommunication like the Internet and television satellite, so that a culture is not limited by location(Tomlinson, 2003). A person in their home country will go about their routine without giving anythought to their identity; however, when they travel to another country for employment or vacation,like the Mexican laborer in the US, they become more aware of their national identity. Globalization as adestroyer of cultural identity is a misconception that encourages poor countries to remain in the samecycle of poverty. Poor nations remain in the same cycle of poverty because of their culture is not growthoriented, has high population growth, low-level of education and a distrust of wealthier nations placingconditions on their economic aid. By accepting economic policy reforms, many nations feel they nolonger have control over their nations economic affairs. Developing nations have a distrust of richnations, which prevents them from taking advantage of market forces that will allow them to movetoward peaceful economic growth.


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Trade Liberalization

Trade allows people to make individual decisions concerning their own wellbeing. This requires adifferent approach to the traditional beliefs that the governments are best qualified to distribute goodsto its people. In the 1980s, the laissez-faire capitalist policies of Ronald Reagan and Margaret Thatcher

broke down trade barriers and business regulations as privatization and trade liberalization was seen asa more favorable method to distribute benefits and resources to the public, resulting in a moreweakened public sector (Wikipedia, 2005). Many ant globalists would like to see governments take amore active role in this distribution process. As multinational corporations control more resources andthe means to distribute them, they have more power when negotiating trading terms with poorcountries.

The poorest of the least- developed countries problem is not that they are being impoverished byglobalization, but that they are in danger of being largely excluded from it. Of the impoverishedcountries, 0.4 % of these countries had declining trade with international partners in 1997, down by half from 1980. Their access to foreign private investment remains negligible (PREM, 2000). These nationshave limited the outside worlds access to th eir nation, and in doing so, have limited their own growth.There are four aspects of globalization that should help poorer countries become more self-sufficient.These include trade, capital movements, movements of people, spread of knowledge and technology(IMF, 2000). Trade allows individuals to exchange labor, goods, land and technology and is moreefficient at putting these items into more peoples control rather than trying to control these from asingle point like the government or aid organizations. In developing countries, as a whole, trade hasincreased from 19% in 1971 to 29% in 1999, but not all countries have benefited equally. Countries inSoutheast Asia, China and India are on track to becoming economic powerhouses as they exportprimarily manufactured goods and have opened their society to allow international trade. Then thereare others, mainly in Africa, who primarily exports raw materials and food, and trade has not fared aswell (IMF, 2000). The agricultural subsidies of the rich countries inundate their markets with artificiallylow cost agricultural products, as a result ruining domestic agricultural industries (Newsbatch, 2005).

Further observation has also shown that African countries are more dictatorial and aid packages haveremainedprevalent.

Capital movements are the movement of financial assets across international borders. Since the 1980s,trade has opened up, allowing business investment to replace foreign aid as the single most importantcategory to help transition developing economies to market economies. The World Bank (Appendix 4)shows the net private flows to developing nations are at higher levels than net official flow consistentlyfrom 1992 through 2002, the period of the observed data. Not only did net private flows to developingnations outpace official net flows, they did so by a significant amount. By the end of the 1990s, privateinvestment exceeded net official assistance by seven times (World Bank, 2004). Private investment isinvestment that is made by private companies to developing countries that does not require direct

repayments from the country itself. The government does not control private investment; but thegovernment does benefit indirectly. Multinational corporations build factories and hire workers, andusually pay them above local wages, yet below the wages of their home country. Local governmentscan then collect more revenue from the increased tax base from the workers and the industry.

Workers will move to where the jobs are located. This means that unskilled workers will move to wheremore unskilled labor is required; or skilled workers moving to where more skilled labor is

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ESSAY GLOBALIZATION VS ANTI GLOBALIZATION