October 2018 SUSTAINABLE DEVELOPMENT

JOHANNES KEPLER UNIVERSITÄT LINZ AltenbergerStraße694040Linz,Österreichwww.jku.atDVR0093696

Submitted by Brooke Baldwin Submitted at Institute of Strategic Management Supervisor Dr. Regina Gattringer October 2018

THE EFFECTS OF GLOBALIZATION ON SUSTAINABLE DEVELOPMENT

Master’s Thesis toconfertheacademicdegreeof Master of Science intheMaster’sProgram

General Management

October18 BrookeBaldwin 2/148

STATUTORY DECLARATION

Iherebydeclarethatthethesissubmittedismyownunaidedwork,thatIhavenotusedotherthanthesourcesindicated,andthatalldirectandindirectsourcesareacknowledgedasreferences.Thisprintedthesisisidenticalwiththeelectronicversionsubmitted.Linz,______________Signature


Executive Summary The aim of this thesis is to provide a general perspective on the effects of

globalization on sustainable development (SD) in our current world. Globalization has

various aspects, which have varying effects on SD (Martell, 2010, p. 12; Held et al., 1999,

p. 15). Therefore, three aspects of globalization (economic, environmental, and cultural &

social) will be assessed in relation to SD in order to analyze the current environment

(Keohane & Nye, 2007, p. 5). Globalization has led to increased interdependence amongst

nations and has brought about much benefit and opportunity to many people in many parts

of the world (UN, 2018). Despite that, there still remains a large part of humanity which

has not been able to experience the benefits of globalization, as extreme poverty and

inequality still remain a reality for some (Stiglitz, 2017, p. 16; UN, 2018). Hence a major

aspect of SD has been devoted to fairly distributing the benefits of globalization in order

to eradicate the world’s gravest challenges (UN, 2018). These efforts have not gone

unnoticed, as there has been much change and progress in the field of SD over the past 5

years (Lozano et al., 2015, p. 14; Ertrugul et al., 2016, p. 553; Shaikh et al., 2016).

In order to assess the development in the academic literature, a systematic

literature review has been conducted using academic articles published between January

2013-January 2018. The following new frameworks and concepts have been proposed

throughout the recent academic literature: Broman & Roberts’ (2015) FSSD Framework,

Holden et al.’s (2017) renewed SDG framework, Voegltin & Scherer’s (2017) concept of

RI, Herrschel’s (2013) concept of Smart (New) City Regionalism, Stiglitz’s (2017) Policy

Program, Schmitz & Mitchel’s (2016) RBA for NGOs, and Huckle & Wals’ (2015)

GESC. Additionally, the following topics were popular throughout literature and have

been critically assessed: transparency in global governance, citizen participation in global

governance, transnational business governance and VSSs, the SDGs, income inequality

and ESD. Based on the findings of the systematic literature review, it has been concluded

that the effects of globalization on SD are both positive and negative. However, the

positive effects present an optimistic outlook for the future of the SD agenda. Overall, the

results showed that there has been significant progress made in the global coordination

and cooperation of SD initiatives. Based on the analysis the three main challenges facing

globalization and SD are: (1) effective global governance and the coordination of policies;

(2) gaining societal support of SD; (3) gaining business support of SD.


Table of Contents

EXECUTIVESUMMARY.......................................................................................................................3

TABLEOFCONTENTS.........................................................................................................................4

ACRONYMS&ABBREVIATIONS......................................................................................................6

1.INTRODUCTION...............................................................................................................................81.1.PROBLEMSTATEMENT...............................................................................................................................111.2.OBJECTIVES...................................................................................................................................................111.3.STRUCTURE...................................................................................................................................................12

2.METHODOLOGY............................................................................................................................122.1.DATACOLLECTION......................................................................................................................................13

3.CONCEPTUALBACKGROUND...................................................................................................143.1.GLOBALIZATION...........................................................................................................................................14

3.1.1. The Concept of Globalization........................................................................................................153.1.2. Defining Globalization.....................................................................................................................213.1.3 Dimensions of Globalization...........................................................................................................223.1.3.1. Economic Globalization...............................................................................................................23

3.1.3.1.a. Trade..............................................................................................................................................................................243.1.3.1.a.i. The Economics of Trade.............................................................................................................................253.1.3.1.a.ii. Controversial Topics of ITAs..................................................................................................................273.1.3.1.a.iii. Recent Controversial ITAs.....................................................................................................................30

3.1.3.1.b. Investment...................................................................................................................................................................323.1.3.1.b.i. Foreign Direct Investment.........................................................................................................................32

3.1.3.1.c. Short-term capital flows..........................................................................................................................................343.1.3.1.d. The Increasing Role of MNCs in the Global Economy...............................................................................35

3.1.3.1.d.i. The Development of Corporate Globalization.................................................................................363.1.3.1.d.ii. TBL Thinking................................................................................................................................................40

3.1.3.2. Environmental Globalization.....................................................................................................413.1.3.2.a.AirPollution...............................................................................................................................................................433.1.3.2.b.DifferingStandards................................................................................................................................................443.1.3.2.c.GlobalWarming........................................................................................................................................................45

3.1.3.3. Social and Cultural Globalization...........................................................................................473.1.3.3.a.ClashofCultures......................................................................................................................................................473.1.3.3.b.KnowledgeandMovementofLabor...............................................................................................................483.1.3.3.c.RecentControversialEvents...............................................................................................................................50

3.1.3.4. New Dimensions..............................................................................................................................51A New Global Economy....................................................................................................................................................52

3.1.3.5. Summary.............................................................................................................................................533.2SUSTAINABLEDEVELOPMENT....................................................................................................................55

3.2.1. The Concept..........................................................................................................................................553.2.2. The Goal.................................................................................................................................................583.2.3. SD Initiatives........................................................................................................................................59

3.2.3.1. The UN’s MDGs...........................................................................................................................................................603.2.3.2. The UN’s Agenda 2030..............................................................................................................................................61


3.2.4. Summary.................................................................................................................................................633.3GLOBALGOVERNANCE.................................................................................................................................63

3.3.1. Intergovernmental Organizations................................................................................................653.3.1.1. The UN.............................................................................................................................................................................663.3.1.2. The IMF, the WTO and the World Bank..............................................................................................................67

3.3.2. Criticism of IGOs................................................................................................................................693.3.3. Summary.................................................................................................................................................71

3.4.SUMMARY......................................................................................................................................................71

4.SYSTEMATICLITERATUREREVIEW......................................................................................734.1.THEEFFECTSOFGLOBALIZATIONONSD...............................................................................................76

4.1.1. Income Inequality...............................................................................................................................774.1.1.1. Environmental Degradation......................................................................................................................................784.1.1.2. Technological Change.................................................................................................................................................814.1.1.3. Stiglitz’s Inequality Reducing Policy Program..................................................................................................83

4.1.2. Growth through Economic Globalization.................................................................................844.1.2.1. Knowledge Transfer....................................................................................................................................................84

4.1.3. Development through Cooperation.............................................................................................854.1.3.1. An SDG Framework....................................................................................................................................................86

4.1.4. Summary.................................................................................................................................................904.2.GLOBALGOVERNANCE................................................................................................................................93

4.2.1. Citizen participation..........................................................................................................................944.2.1.1. CSOs & NGOs...............................................................................................................................................................944.2.1.2. Designing a System for Citizen Participation.....................................................................................................964.2.1.3. Receptiveness of Citizen Participation..................................................................................................................964.2.1.4. Smart (New) City Regionalism................................................................................................................................97

4.2.2. Transnational Business Governance...........................................................................................984.2.3. Transparency......................................................................................................................................100

4.2.3.1. Industrialization Focus.............................................................................................................................................1024.2.4. Summary...............................................................................................................................................103

4.3.EDUCATIONFORSD.................................................................................................................................1054.3.1. ESD in Higher Education..............................................................................................................106

4.3.1.1. Implementation of ESD...........................................................................................................................................1074.3.1.2. GESC.............................................................................................................................................................................1084.3.1.3. Focus of ESD in Higher Education.....................................................................................................................109

4.3.2. Summary...............................................................................................................................................1104.4.SDBUSINESSMODELS&SOLUTIONS...................................................................................................111

4.4.1. The SD Business Challenge..........................................................................................................1124.4.2. Sustainability Strategies.................................................................................................................114

4.4.2.1. FSSD Framework & RI...........................................................................................................................................1174.4.3. Summary...............................................................................................................................................120

4.5.SUMMARY&DISCUSSION........................................................................................................................121

5.CONCLUSION................................................................................................................................127

BIBLIOGRAPHY...............................................................................................................................131


Acronyms & Abbreviations BoP- Bottom of the Pyramid

CETA- Comprehensive Economic and Trade Agreement

CP- Cleaner Production

CSO- Civil Society Organization

DESD- Decade of Education for SD

EEA- Europe Environmental Agency

EPA- Environmental Protection Agency

ESD- Education for SD

EU- European Union

FDI- Foreign Direct Investment

FFSD- Framework for Strategic SD

GATT- General Agreement on Tariffs and Trade

GESC- Global Education For Sustainability Citizenship

IA- Investment Agreements

IGO- Intergovernmental Organization

ILO- International Labor Organization

IPR- Intellectual Property Rights

ISDS- Investor State Dispute Settlements

IMF- International Monetary Fund

ITA- International Trade Agreement

M&As- Mergers & Acquisitions

MDGs- Millennial Development Goals

MNCs- Multinational Corporations

MNEs- Multinational Enterprises

NGOs- Non-Governmental Organizations

OECD- The Organization for Economic Co-operation and Development

OFDI- Outward Foreign Direct Investment

RBA- Rights Based Approach

RI- Responsible Innovation

SD- Sustainable Development

SDGs- Sustainable Development Goals

TBL- Triple Bottom Line


TTIP- Trans Atlantic Trade and Investment Partnership

TPP- Trans-Pacific Partnership

UN- United Nations

US- United States

UNIDO- UN Industrial Development Organization

UNDP- UN Development Program

VSS- Voluntary Sustainability Standards

VSSSO- Voluntary Sustainability Standard Setting Organizations

WHO- World Health Organization

WTO- World Trade Organization


1. Introduction Over the past decades the world has become exponentially more interconnected

and interdependent (UN, 2018). This development began ages ago with the exchange of

products and services between countries and continents (Das, 2010, p. 67). As demand

in domestic regions increased so did the supply of these foreign products, leading

exporters to search for more efficient ways to get their products overseas. Innovations

led to advancements in transportation and technology and have allowed the world today

to exchange much more than just products/services and are largely part of what has

made globalization possible (Das, 2010, p. 67; Gopinath, 2008, p. 14). Globalism is

defined as “a state of the world involving networks of interdependence at multi-

continental distances. The linkages occur through flows and influences of capital and

goods, information and ideas, and people and forces, as well as environmentally and

biologically relevant substances,” (Keohane & Nye, 2007, p. 4). Globalization is

therefore the increase of globalism, the strengthening of the links between all the

countries in the world, through the formation of networks and the international

exchange of each nation’s physical and intangible resources (Keohane & Kye, 2007, p.

6). However, globalization is a concept with many dimensions having varying and often

unpredictable effects and implications on the world and its environment, economy, and

humanity; i.e. SD.

Although the world has benefited from globalization in many aspects, new and

serious problems arose along side, causing controversy: one of the greatest

controversies facing globalization today is SD (Meadowcroft, 2016, p. 988; Stiglitz,

2017, p. 312; Docalavich, 2016, p. 50), which is defined, as “development that meets

the needs of the present without compromising the ability of future generations to meet

their own needs,” (UN, 1987). Sustainability is also referred to as the “Triple Bottom

Line” as there are three components to it: economy, environment, and equity (social)

(Elkington, 1997). Research has shown that globalization is both harmful (Stiglitz,

2004, p. 473; Stiglitz, 2017, p. 475; Brondoni, 2014, p. 19; Stewart, 2016, p. 75; Holden

et al., 2016, p. 3) and beneficial (Das, 2013, p. 104; Chia, 2015, p. 1; Jaumotte et al.,

2013, p. 31; Brondoni, 2014, p. 15) to SD in various ways, but due to the diversity of

the world’s countries, what is good for one may not be for another.

The UN is the largest supporter of SD and its main objective is to create an

environment where global peace and equality can be fostered (Docalavich, 2016, p. 6).


Part of this effort has been the development of numerous global initiatives working

towards SD; currently, the UN’s Transforming Our World: the Agenda 2030 for SD is

the SD plan for the next 15 years. Agenda 2030 is made up of 17 SD Goals (SDGs) with

169 targets, to stimulate action from all countries and stakeholders acting in partnership

with the UN (UN, 2015). Such efforts by the UN have been in motion since the 1970s.

Almost 50 years later, and the world is still struggling with global SD issues such as

inequality, unemployment and uneven distribution of resources (Stiglitz, 2017, p. 16;

Brondoni, 2014, p. 28; Stewart, 2016, p. 62; Holden et al., 2016, p. 3; Firat, 2017, p. 6;

Meadowcroft, 2013, p. 988). At the same time there have been significant

improvements in SD, particularly in developing countries such as China, India, and

Africa (Docalavich, 2016, p. 62-66; Das, 2013, p. 104; Srivastava & Khan, 2016, p. 22;

Chia, 2015, p. 1).

SD has also gained increased global awareness and acceptance by the public and

authorities over the past ten years (Stiglitz, 2017, p. xxxi; Meadowcroft, 2013, p. 989).

For instance in 2015 the Paris Agreement was signed by 195 countries agreeing to

reduce climate change, even developing countries like India supported this despite their

unstable environment. Additionally, more and more corporations have started to

integrate some form of sustainability into their processes (Almeida et al., 2015, p. 3;

Belz & Binder, 2015). These improvements over the past ten years illustrate how

globalization can enforce SD if it is utilized the right way. Many claim that in order for

globalization to be utilized the right way, it will require policies and regulations that are

fair and justified by accounting for the varying levels of development in today’s world

(Stiglitz, 2017, p. 16; Fura et al., 2017, p. 977; Kacowicz & Mitrani, 2016; p. 203;

Herrschel, 2016, p. 1). This will require global governance that assess the impacts of

their actions and that looks at the various aspects of globalization and SD.

As activities increasingly take place at the global level, forms of global

governance including intergovernmental organizations (i.e. UN, WTO, IMF, World

Bank) as well as Non-Governmental Organizations (NGOs) have provided some

structure to handling global issues and mediating problems between national and global

governments. While these supranational authorities of global governance have been put

in place to promote the equality and development of all countries, many scholars

(Stiglitz, 2004, p. 481; Stiglitz, 2017, p. 366; Meadowcroft, 2013, p. 988, 2013;

Srivastava & Khan, 2016, p. 22; Gopinath, 2008, p. 126-128) believe that they (i.e.

IMF, WTO, World Bank) have become a source of the problem in the globalization


debate. These scholars characterize today’s globalization as run by neo-liberal

supranational authorities supporting capitalism by prioritizing the needs of corporations

over the needs of world development (Stiglitz, 2017, p. 367; Meadowcroft, 2013, p.

988; Holden et al., 2016, p. 3; Gopinath, 2008, p. 126-128; Brondoni, 2014, p.19). Over

the past fifteen years globalization has enabled corporations to gain increasing amounts

of influence and control in the global market and global governance, Stiglitz (2017)

argues that this is the main cause for the failure of globalization today (Stiglitz, 2017, p.

xxii). Whether intentionally or not, globalization has allowed for corporations to expand

beyond their national borders and search the globe for the most profitable locations to

exploit while increasing their revenues and market share (Stiglitz, 2017, p. 39;

Gopinath, 2008, p. 132).

Unfortunately, such activities have come at the expense of economic, social and

environmental prosperity and permitted the uneven development the world is currently

facing (Stiglitz, 2017, p. 39). International trade and investment agreements have been a

controversial topic of globalization since the beginning (i.e. formation of the GATT),

because such agreements restrict the sovereignty and control of the countries involved

(Stiglitz, 2017, p. 366; Kacowicz & Mitrani, 2016, p. 203; Fura et al., 2017, p. 977). In

today’s global economy, MNCs are increasingly gaining influence and control over

such agreements, which has become even more troubling since the authority and control

of the nation state is no longer confined by foreign governments but by foreign

corporations; which are known for their activities of arbitrage and immoral capitalism

(Ghemawat, 2003; Johanson & Vahlne, 2009, p. 1411; Brondoni, 2014, p. 19; Gopinath,

2008, p. 132).

Furthermore, the effects of globalization are no longer only considered harmful

to developing countries but have also come to have adverse effects on developed

countries in recent years (Stiglitz, 2017, p. xxv; Rasiah et al., 2015, p. 6). While many

scholars, policy makers, and supranational authorities have varying ideas on how to

‘solve’ the globalization problem it must be understood that the motives of each party

widely vary, so coming to a cohesive and mutually beneficial solution will require the

collaboration of governments, individuals, corporations, IGOs and NGOs at various

levels of the global scale (Almeida et al., 2015, p. 5; Fura et al., 2017, p. 977). This

effort will require compromises, knowledge, and awareness to come to terms that can

lead to a mutually beneficial outcome for the world and its stakeholders.


1.1. Problem Statement SD and globalization have been working against each other, leaving the world in

an unequal state of poverty and inequality, while straining the earth beyond its limits

(Holden et al., 2016, p. 4; Meadowcroft, 2013, p. 988). Some claim that the greatest

challenge with making globalization and SD work is having inequality, which is

preventing developing countries from adopting sustainable methods, while others claim

it lays in the policies and regulations of global governance which should be better

regulated (Stiglitz, 2017, p. 16; UN, 2018). Several methods have been proposed in

order to combat this problem; including the SD initiatives of the UN, citizen

participation in global governance and numerous frameworks for integrating SD into

businesses practices. Despite these efforts, SD continues to remain a growing concern

with poverty still present and the levels of environmental pollution rising (WHO, 2018;

Meadowcroft, 2016, p. 988). Why is this, what is causing these problems and how can

they be overcome? Evaluating the effects of globalization on SD will provide a basis for

understanding what issues are preventing the world from achieving SD goals and what

could be done better in the future.

1.2. Objectives The main objective of this thesis is to provide a current and thorough assessment

of the effects of globalization on SD. There are varying views on the effects of

globalization on SD; hence it will be of importance to review many perspectives and

opinions in order to achieve an impartial result. Additionally an important aspect will be

highlighting key themes and topics throughout the academic literature. Once the effects

of globalization on SD have been determined, it will be possible to determine the

current status of certain topics in the field and hence reveal the progress or regress the

world is currently facing with regards to SD. As an American business student, working

at an Austrian based start-up that aims to deliver global SD goals, I am very interested

in gaining further insight on how globalization and SD have altered the world and

particularly the business context in recent years. It is this interest, which has led me to

write my master thesis in this field and on this specific topic.


1.3. Structure The structure of this thesis will proceed as follows. In the next chapter the

methodology of the study will be explained in detail, and the data collection will be

discussed. Following the methodology section, the conceptual background begins by

explaining the concept of globalization and its definitions before moving onto its

various dimensions. Once the concept and the dimensions of globalization have been

reviewed, the conceptual background of SD will be discussed and past and present SD

initiatives and their goals will be analyzed. After covering the various dimensions and

definitions of globalization and SD and clarifying their interlinked relationship, the

numerous institutions of global governance will be introduced.

In the following chapter, a systematic literature review will be conducted using

scholarly journal articles, which have been published in the last five years. The selected

articles will be categorized and ordered to reveal the most popular themes and topics of

globalization and SD currently under discussion in the academic literature. After

highlighting the most common themes in the literature, the findings will be reviewed

and the main challenges facing globalization and SD today will be summarized. This

thesis concludes with a discussion on how to initiate and transition the change towards

SD and use globalization as a catalyst.

2. Methodology The method of research for this paper will take the form of a systematic,

evidence informed literature review (Tranfield et al., 2003, p.207). Only scholarly

articles, which have been published in the last five years, will be selected for analysis in

order to determine the current effects of globalization on SD in today’s world. There are

various aspects of both globalization and SD, and the varying effects of each dimension

are rarely discussed together (Martell, 2010, p.2). Therefore, this thesis aims to fill that

void and provide a general overview of the various effects. The objective of this

systematic literature review is to determine the effects of globalization on SD in the

recent literature and to determine key themes and topics in the literature. Hence, four

different databases were used to conduct the systematic literature review of this thesis.

These were: EBSCO, JSTOR, Emerald and Google Scholar.


2.1. Data Collection In the advanced search settings of each database, I searched for peer-reviewed

articles and journals, which contained both words ‘globalization’ and ‘sustainable

development’ somewhere in the text. Initially I had searched for ‘globalization’ and

‘sustainable development’ or ‘sustainability’ but the search results were too large and

the articles too unspecific for the use of this paper. The publication type was set to

articles and/or journals, which were peer reviewed, ‘accepted articles,’ or classified as

‘scholarly journals’. On EBSCO I searched for ‘journals’ and ‘academic journals’,

which were classified as ‘scholarly peer reviewed journals’. On JSTOR ‘journals’

which had been peer reviewed were selected. On Emerald I looked for ‘articles and

chapters’, which were ‘accepted articles’. Additionally, on all databases I have searched

for English articles only. To provide an up to date assessment on the literature in this

field, I have only searched for articles and journals, which have been released within the

last five years, so between January 2013 and January 2018.

For the purpose of narrowing down my search, I have also refined my search

two more times. First, I have refined it to articles and journals, which had the words

‘globalization’ and ‘SD’ in the abstract of the article. The purpose of this was to

hopefully find articles, which were more focused on the relation of ‘globalization’ and

‘SD’. However, because JSTOR does not provide abstracts in the search results, the

results for this category are inconclusive. Second, I searched for articles and journals,

where ‘globalization and SD’ were found in the text and which I had full access to.

Lastly, I also searched for articles on Google Scholar with the search terms

‘globalization and SD’ from the periods of January 2013 to January 2018 and found

42200 search results. However, the advanced search function of Google Scholar does

not allow the search to be narrowed down to ‘peer reviewed scholarly articles’ so the

results also include books and book chapters. As a quality control, only articles

published in academic (peer reviewed) journals, ranked with a “B” level or higher, or

with a JCR Impact Factor of 1.5 or higher, or equivalent, have been selected. After a

thorough review of the search results, 35 articles have been selected for the data

analysis.


3. Conceptual Background The purpose of this section will be to gain an understanding of the concepts of

globalization and SD. Apart from understanding the two concepts solely; the main

objective of this section will be to illustrate the interconnectedness and interlinking of

the various aspects of globalization and SD. The globalization section will include

conceptualizing, defining and explaining globalization and it’s various dimensions:

economic, environmental, and social & cultural (Keohane & Nye, 2007, p.4-6).

Following the globalization section, the concept of SD will be discussed and several

past and present SD initiatives will be introduced. Once globalization and SD have

become familiarized, the various forms of global governance will be explained. At the

end of this chapter, a summary highlighting the main themes and problems of

globalization and SD will be presented before moving onto the next chapter, the

Systematic Literature Review.

3.1. Globalization Globalization is a difficult term to define as it has multiple dimensions to it,

which overlap, relate and affect one another. As a result definitions of globalization

widely vary, as many scholars define globalization in the context of a single dimension.

Author Martell states “you can’t understand globalization without looking at its

economic and political dimensions, or by analyzing cultural and social spheres instead

of, or separately from, politics and economics,” (Martell, 2010, p.2). He explains that if

one dimension of globalization is assessed without consideration of the others, then the

effects that these dimensions have on the other dimensions is overlooked. Therefore this

section will begin by conceptualizing globalization. Following the concept, the

definitions of globalization will be compared and the various dimensions of

globalization will be described.

Defining globalization and its dimensions will set the foundation of this paper,

and will include an array of various foci. Globalization has become a large and popular

topic of interest in today’s world and due to its multiplicity of dimensions; perspectives

and opinions in the literature widely vary making it a highly debated topic with no clear

overall opinion or definition (Martell, 2010, p.12; Held, 1999, p.15). Martell (2010) for

instance suggests four pluralist views of globalization to prevent mono-causal, over-


westernized, homogenizing perspectives on the concept. He argues that pluralist, hybrid

and multidimensional views of globalization view globalization as operating at different

levels from the economic to the cultural or political.

Martell’s (2010) Pluralist Views of Globalization are multi-causal, multilevel,

hybrid and localized (Martell, 2010, p.12). Multi-causal implies that globalization is not

just caused by one chief factor. Multilevel classifies five levels: economic, political,

cultural, military and environmental. The hybrid view includes mixtures of inputs from

East/West/North/South. Lastly, the form globalization takes varies depending on where

it is received for this purpose a localized view is important (Martell, 2010, p.12). By

maintaining a pluralistic view of globalization throughout this paper, an unbiased and

fair representation of the concept of globalization will be the aim.

3.1.1. The Concept of Globalization Due to the complexity of globalization, it is key to clarify the concept and the

definitions as well as the varying dimensions of globalization in order to fully gain an

understanding of the topic itself. This section will begin with the concept of

globalization, as it is crucial to understanding the roots of its definition. Various

scholars have conceptualized globalization over the past two decades, and despite all the

changes that the world has encountered several of these concepts overlap highlighting

key themes in the literature.

Held et al. (1999) highlights the complexity of defining globalization and

explains it as being located on a continuum with the local, national and regional- these

three factors make up the varying levels in which globalization takes form. On this

continuum of globalization, one end makes up the social and economic relations and

networks, organized on a local and/or national basis; and on the other end of the

continuum lies social and economic relations and networks which crystallize on the

wider scale of regional and global interactions (Held et al., 1999, p. 15). Held &

McGrew (2003) further explain this continuum, stating that globalization does not

displace or take precedent over local, national or regional orders of life but that the local

becomes more embedded within more expansive sets of interregional relations and

networks of power (Held & McGrew, 2003, p. 3). Martell (2010) emphasizes these

varying levels with his concept of globalization and draws upon “guidelines” to


differentiate the phenomenon from other similar concepts. These “guidelines” are

important when considering globalization since without any geographical referents it

becomes difficult to distinguish globalization from internationalization, regionalization

or trans-nationalization (Held & McGrew, 2003, p. 4; Scholte, 2005, p. 59). Martell’s

(2010) guidelines aim to form a coherent and universal concept of globalization

because, “if the global cannot be interpreted literally, as a universal phenomenon, then

the concept of globalization lacks specificity,” (Held & McGrew, 2003, p. 4). These

four guidelines will be described below, followed by the key themes making up the

concept of globalization.

Martell (2010) claims that globalization involves the compression of space in

such a way that distance is less of a factor than it previously was in terms of knowledge,

communication and movement (Martell, 2010, p. 12). In their work Keohane & Nye

(2007) also remark on the significance of space in their conceptualization of

globalization (Keohane & Nye, 2007, p. 4-7). Held et al. (1999) further emphasize that

“globalization can be taken to refer to those spatio-temporal processes of change which

underpin a transformation in the organization of human affairs by linking together and

expanding human activity across regions and continents,” (Held et al., 1999, p. 15). As

a result of this “shrinkage” of global distance, geography and territory is undermined

and things begin to develop at the global level, a level way above the international

relations level (Martell, 2010, p. 12).

(1) Therefore globalization must be global, meaning that it needs to reach all

continents and majority of those continents (Martell, 2010, p. 6).

(2) Another ‘global’ factor is that globalization needs to have inputs from across

continents and multiple countries within them (Martell, 2010, p. 12). According

to Martell (2010) and Held et al. (1999) relations need to be stable and regular to

establish a structure or system in order to be global in scale.

(3) Furthermore, Martell (2010) claims that globalization needs to involve the

elites as well as the masses and a global consciousness must happen so people

have an awareness of the globe as a single place (Martell, 2010, p. 12). Held &

McGrew (2003) further explain this idea, “globalization thereby engenders a

cognitive shift expressed both in a growing public awareness of the ways in

which distant events can affect local fortunes (and vice versa) as well as in


public perceptions of shrinking time and geographical space,” (Held &

McGrew, 2003, p. 4).

(4) Lastly, as Martell (2010) mentions in his definition, for it to be global there

must be interdependency in the relationships between countries, companies, or

groups rather than solely interconnection. Detrimental repercussions arising

from a loss of a relationship or agreement can distinguish interdependency from

interconnectedness (Martell, 2010, p. 12).

Martell’s guidelines will guide this section to form the concept of globalization

and include four main points: For it to be globalization it must (1) be global in scale, (2)

have inputs from across continents and multiple countries within them, (3) involve the

elites as well as the masses and a global consciousness must occur, and (4) entail

interdependency between global parties (Martell, 2010, p. 6-12).

Interdependence (the Network Effect)

Trans-regional interconnectedness

In relation to Martell’s concept and guidelines, Held et al. (1999) states that

globalization first and foremost implies the stretching of social, political and economic

activities across frontiers to such an extent that events, decisions and activities in one

region can come to have significance for individuals and communities in distant regions

of the globe; in other words it embodies trans-regional interconnectedness (Held et al.,

1999, p. 15). He defines trans-regional interconnectedness as the widening reach of

networks of social activity and power and the possibility of action at a distance (Held et

al., 1999, p. 15).

Networks

Economists refer to the situation in which a product becomes more valuable the

more people use or have it as a “network effect,” because it is a happening that triggers

a chain reaction (Keohane & Nye, 2007, p. 7). The systematic relationships within

different networks become more important as globalism increases and this leads to more

interconnections: “Intensive economic interdependence affects social and environmental

interdependence; awareness of these connections in turn affects economic

relationships,” (Keohane & Nye, 2007, p. 8). Furthermore, the awareness of this


problem is widely spread leading to more involvement and skepticism from those

outside the network. According to Brondoni (2014), global networks have been the

source of increased interdependence and hyper competition between firms since the

start of Firm Globalization in the 1980s but Network Globalization (2010-2020)

characterizes the current era (Brondoni, 2014, p. 15).

The Effects of Global Interdependence

In accordance with Martell (2010) and Keohane & Nye (2007), Held et al.

(1999) argue that a greater level of interconnectedness forms through relations, which

occur regularly and intensify. This growing extensity and intensity of

interconnectedness may result in a speeding up of global interactions and processes, “as

the development of worldwide systems of transport and communication increases the

potential velocity of the global diffusion of ideas, goods, information, capital and

people,” (Held et al., 1999, p. 15).

Velocity

Vahlne et al. (2011), explain that globalization has led to increased

interdependence as a result of networks- a firm is embedded in a web of relationships

with multiple parties within its environment (i.e. customers, suppliers, governmental

authorities), and as time goes on the number of mutual experiences grows and the

parties adjust to each other which increases their degree of interdependence (Vahlne et

al., 2011, p. 3). In their article, Keohane & Nye (2007) underline the concept of velocity

and its relation to interdependence in their theory of globalization. The authors explain

that institutional velocity reflects the speed in which a system and the units within that

system can change and refers to the intensity of contact between individual linkages as

well as between networks and interconnections among networks (Keohane & Nye,

2007, p. 10). This in turn increases the relevance of “complex interdependence,” or

transnational participation (Keohane & Nye, 2007, p. 11). Consequently, the growing

extensity, intensity and velocity of global interactions may result in the deepening

enmeshment of the local and global to such an extent that the impact of distant events is

magnified (Held et al., 1999, p. 15).

Message velocity, or the speed of communication, has allowed for information

to diffuse rapidly and for capital to be moved quickly (Keohane & Nye, 2007, p. 10).

Starting from the inventions of the telegraph and the steam ship to the airplane and the


Internet, all of these innovations have increased the velocity of communication but more

importantly have decreased the cost of communication (Keohane & Nye, 2007, p. 10-

12). The reduction in communication costs increases institutional velocity and allows

more actors to participate. Castells (2000) describes the influence of the Internet on

globalization, as having ‘spread throughout the globe with lightning speed’ in the past

decades, ‘connecting the world’ in a more fundamental sense than was the case with

previous technological revolutions (Castells 2000, p. 32). Hence, velocity (institutional

& message) has permitted and increased the process of globalization by allowing

people, products, capital and knowledge to flow across the world and form networks

sparking enhanced interdependence between nations (Vahlne et al., 2011, p. 3; Keohane

& Nye, 2007, p. 10).

Thick Globalism

Globalism has been apparent in various degrees throughout history, some

scholars distinguish between these degrees as periods of thick or thin globalism;

Keohane & Nye (2007) use “thicker globalism” to explain the increase of globalism,

globalization, where times of thick globalism imply a greater level of apparent

globalization than periods of thin globalism. Factors determining an increase in

thickness arise from the level of interdependence between global parties (Keohane &

Nye, 2007, p. 10-12; Held et al., 1999, p. 21). Scholte (2005) provides a multifaceted

social explanation on some of the factors increasing trans-planetary connectivity in the

modern global economy:

(1) Capitalist production and accumulation strategies;

(2) Changes in regulatory and governance mechanisms that have facilitated

increasing global connections in the economy, travel, cultural exchange, disease

control etc.;

(3) Changes in identity construction so that there is ‘a shift from nationalism

towards pluralism and hybridity in respect of identity’;

(4) The spread of rationalism and instrumental reason as the dominant

knowledge framework, accompanied by the rise of a secular global

consciousness.

(Scholte, 2005, p. 121)


Therefore the thicker globalism is, the more interconnected and interdependent

the world becomes. Thicker globalism implies complex interdependence: complex

interdependence is an idealized concept describing a hypothetical world with three

characteristics: multiple channels between societies, with multiple actors, and multiple

states; multiple issues, not arranged in any clear hierarchy; and the irrelevance of the

threat or use of force among states linked by complex interdependence (Keohane &

Nye, 2007, p. 10-13). The authors state that an idealized concept of complex

interdependence is already apparent in different parts of the world, and as it becomes

more of a reality the thicker globalism is. In accordance with Keohane & Nye (2007),

Held et al. (1999) further explain thick and thin globalization in their typologies of

globalization.

The typologies present alternative ways of conceiving globalization; “global

flows, networks and relations can be mapped in relation to their fundamental spatio-

temporal dimensions: extensity, intensity, velocity and impact propensity,” (Held et al.,

1999, p. 21). The first typology is, thick globalization describing a world in which the

extensive reach of global networks is matched by their high intensity, high velocity and

high impact propensity across all the domains or facets of social life from the economic

to the cultural (Held et al., 1999, p. 21). The formation of global empires in the late 19th

century era is similar to a period of thick globalization. According to the definition of

Keohane & Nye (2007) and Held et al. (1999), globalization today is becoming

increasingly thick as the interdependence between countries becomes stronger (intensity

& velocity) and more and more countries continue to develop (impact) and enter the

global market place (extensity).

Thin Globalism

The opposite of thick globalism is thin globalism, explaining a state in which the

high extensity of global networks is not matched by a similar intensity, velocity or

impact, as these all remain low (Held et al., 1999, p. 22). For instance the early silk and

luxury trade circuits ‘the Silk Road’ connecting Europe with China and the East could

fall into the fourth typology of thin globalization. While trade itself has historically been

a driving force of cultural exchange (the Silk Road), colonization resulted in the

integration of economic and political views through a structure that fostered the sharing

of ideas (Gopinath, 2008, p.28). Therefore, the main variation between periods of thick


and thin globalism is based on the velocity of communication between the global

networks and the impact that these relationships have on the networks.

3.1.2. Defining Globalization Held et al. (1999), Held & McGrew (2003), Keohane & Nye (2007) and Martell

(2010) all drew upon similar key themes in their concepts of globalization. These key

themes were the shrinkage of space, velocity (time-space compression), accelerated

interdependence, and interconnectedness. Building off of the key themes mentioned in

the concept, Held et al. (1999) defines globalization as “a process (or set of processes),

which embodies a transformation in the spatial organization of social relations and

transactions- assessed in terms of their extensity, intensity, velocity and impact-

generating trans-continental or interregional flows and networks of activity, interaction,

and the exercise of power,” (Held et al., 1999, p. 16).

As was mentioned before, globalization is a difficult term to define because it

varies depending on which dimensions are being assessed and what values the authors

may have. Discussing the various dimensions and definitions of globalization will

demonstrate why it is necessary to assess all aspects and will reveal how they overlap.

While the concept of globalization explained how the phenomenon works, defining it

sheds light on the importance of the material aspects of globalization. The material

aspects of globalization are considered to be the flow of trade, capital and people across

the globe (Held & McGrew, 2003, p. 2). In this respect, Held et al. (1999) state that

globalization is a process fueled by, and resulting in, increasing cross-border flows of

goods, services, money, people, information, and culture (Held et al., 1999, p. 236).

For instance, authors Keohane & Nye (2007) define globalism as a state of the

world involving networks of interdependence at multi-continental distances where these

multiple networks of interdependence, reliance and coordination between two or more

parties, at multi-continental distances, allow for the world to metaphorically shrink and

become closer together as there is more interaction and knowledge shared between

people across the world (Keohane & Nye, 2007, p. 4-7). A similar definition is from

Economist and Nobel Prize winner Joseph Stiglitz, who describes globalization as “the

closer integration of the countries and peoples of the world which has been brought

about by the enormous reduction of costs of transportation and communication, and the


breaking down of artificial barriers to the flows of goods, services, capital, knowledge,

and (to a lesser extent) people across borders,” (Stiglitz, 2002, p. 9).

While, geographers Gibson-Graham’s define globalization as, “a set of

processes by which the world is rapidly being integrated into one economic space via

increased international trade, the internationalization of production and financial

markets, the internationalization of a commodity culture promoted by an increasingly

networked global telecommunications system” (Gibson & Graham, 2006, p.120). From

a political science perspective, Robert Gilpin defines globalization as “increasing

interdependence of national economies in trade, finance, and macroeconomic policy,”

(Gilpin, 1987, p.389). Globalization scholar Guillen (2001) defines globalization as “a

process leading to greater interdependence and mutual awareness (reflexivity) among

economic, political, and social units in the world, and among actors in general- the term

also appears linked to cross-border advocacy networks and organizations defending

human rights, the environment, women’s rights or world peace,” (Guillen, 2001, p.

236).

Although these definitions differ in their focus, they reinforce key aspects

highlighted in the concept of globalization such as interdependence, velocity, the

shrinkage of space and interconnectedness and emphasize the varying dimensions of

globalization. The main dimensions that will be discussed below are economic

globalization, social and cultural globalization and environmental globalization. These

various dimensions exist within globalization because one global interaction has effects

on other aspects of the world, whether intentionally or not. Below we will discuss how

these dimensions overlap, relate, and to some extent enhance each other as globalization

continues to increase.

3.1.3 Dimensions of Globalization The concept and definitions of globalization have been presented in the previous

sections. This section is dedicated to presenting the various dimensions of globalization,

which include; economic globalization, environmental globalization and social &

cultural globalization. Before introducing the dimensions, it must be mentioned that

globalization effects advanced economies and developing economies differently in two

ways (Stiglitz, 2017, p. xxv). For one, advanced economies like the US have been able

to set the game of globalization, while developing countries have been forced to choose


between either agreeing to those terms or being ostracized, excommunicated (Stiglitz,

2017, p. xxv). Secondly, advanced economies possess the resources and capabilities

they need to ensure that almost all within their borders benefit. In contrast, developing

economies typically have less capacity to raise taxes and generate revenues necessary to

compensate those hurt by globalization (Stiglitz, 2017, p. xxv).

Economic globalization introduces the various activities and parties involved in

the globalization process. The economic globalization section will be the largest and

apart from explaining the various aspects of economic globalization, which include;

trade, foreign direct investment, and short-term capital flows, it will also introduce the

influence of MNCs in the globalization process. Following the economic aspect of

globalization, the environmental and social & cultural aspects will be explained to

illustrate how all the aspects correlate and influence one another to form the

globalization process. Current events such as Brexit, the Global Refugee Crisis, and

recent ITAs are discussed to provide examples on how the activities of globalization

have a global cause and effect relationship with SD issues. After the three main

dimensions of globalization have thoroughly been explained, some new dimensions

characterizing our current state of globalization according economist and Nobel Prize

Winner Josef Stiglitz will be discussed to exemplify the current course of globalization

(Stiglitz, 2017, p. 38-50). A summary on the topics of globalization (i.e. concept,

definition, & dimensions) will be presented at the end of the section to summarize how

global activities have an economic, environmental, and social & cultural effect on the

world.

3.1.3.1. Economic Globalization Economic globalism refers to the flow of goods, services, and capital across

long distances and involves the organization of the processes that link these flows

(Keohane & Nye, 2007, p. 4). A more specific definition of economic globalization is

from Bhagwati who defines it as, the “integration of national economies into the

international economy through trade, FDI, short-term capital flows, international flows

of workers and humanity generally, and flows of technology,” (Bhagwati, 2004, p. 439).

Stiglitz’s five dimensions of globalization align with Bhagwati’s definition, and are

trade, foreign direct investment, short-term capital flows, knowledge and movement of

labor (Stiglitz, 2004, p. 469). The economic dimension of globalization is the most


complex dimension of globalization, as it has many aspects, forms and implications.

Hence this section will be dedicated to explaining the economic dimension of

globalization and will focus on trade, investment and short-term capital. Stiglitz’s last

two dimensions; knowledge and the movement of labor, will be included in the cultural

and social dimension of globalization discussed in the next sections.

3.1.3.1.a. Trade

One of the first forms of global exchange between nations has been through

trade; such exchanges date back to around 100BCE when the Silk Road was a main

trans-Eurasian network for the exchange of goods and materials between the East and

the West (Andrea, 2014, p. 105). While merchants traveled the Silk Road for business,

they were also able to exchange cultures and ideas between people from other parts of

the world and were able to introduce foreign goods and materials back to their local

cultures. Since the Silk Road, trade has evolved into much more than the exchange of

goods between merchants but is now done on a larger scale involving countries and

corporations.

A change in the perceived value of trade became apparent in the 16th-18th

century when a popular and dominant ideology began to form: the theory of

mercantilism, which argues, “a nation’s prosperity depended on the amount of capital it

accumulated,” (Gopinath, 2008, p. 28). Mercantilism supports a positive balance of

trade, with the goal being for exports to exceed imports in order for a nation to make a

profit (Gopinath, 2008, p. 28). Policies followed in order to support this theory, and

created monopolies in trade to allow close control. By the 19th century another

revolutionary change took place in international trade when Britain initiated the notion

of free trade with the abolishment of the Corn Laws in 1846 (Rodrik, 2010, p. 23;

Glasner & Cooley, 1997). This led to the formation of the first bilateral free trade

agreement in 1860 the Cobden-Chevalier Treaty, an agreement between the United

Kingdom and France. Soon after “the first truly international crisis,” the Panic of 1873,

struck and left citizens skeptical and apprehensive about international relations and

trade (Glasner & Cooley, 1997). Bilateral trade agreements persisted, while multilateral

trade halted being perceived as risky. To tackle this problem, at the turn of the 21st

century yet another groundbreaking event took place in the history of trade with the


formation of IGOs for the purpose of monitoring and controlling multilateral trade

agreements between participating parties (Gopinath, 2008, p. 28).

This brief history of trade illustrates the complexities of trade and how the

exchange of foreign goods has both social and economic implications for a country.

Below the complexities and implications of trade in today’s globalized world will be

discussed, starting with the economics of trade. Following the economics of trade, some

of the most controversial topics surrounding trade will be explained and two current

examples of ITAs will be discussed to illustrate the effects that ITAs have on

participating parties.

3.1.3.1.a.i. The Economics of Trade

Trade refers to the imports and exports of each nation’s goods and services, and

follows the standard theory of trade, which argues that countries benefit from removing

their own barriers to trade, even if the countries with which they trade do not remove

their own barriers (Stiglitz, 2004, p. 470). Under the theory of comparative advantage,

created by David Ricardo in the 19th century, each country can produce more of what it

can produce cheaply and effectively compared to another country (Rodrik, 2010, p. 23).

In effect this allows each country to focus on what they are best at and to sell beyond

their domestic borders into the global market (Stiglitz, 2017, p.31). Additionally, the

standard theory of comparative advantage argues that by eliminating trade barriers,

resources will move from low productivity uses to high productivity uses and results in

an increase in GDP (Stiglitz, 2004, p. 472). This resulted in the governments of the

world’s major economies to significantly reduce the restrictions they had placed on

trade in the form of tariffs and explicit prohibitions (Rodrik, 2010, p. 22). However,

“depending on where a country stands in the world economy and how trade policies

align with its social and political cleavages, free trade can be a progressive or a

regressive force,” (Rodrik, 2010, p. 25).

Increased Competition

From an economic perspective, free trade opens up the markets to foreign

suppliers and in turn increases competition. This competition is beneficial because

without it, domestic companies could form monopolies or oligopolies increasing their


power and control over the market prices and product offerings (Choudhri & Hakura,

2000, p. 30; Irwin, 2008). Additionally, increased import competition can result in

medium-growth manufacturing sectors to enhance their overall productivity growth

(Choudhri & Hakura, 2000, p. 30). Additionally, free trade can lead to increased

efficiency through greater competition, and allows firms to produce in economies of

scale since they can then sell in larger markets (Irwin, 2008). Having more players,

playing in bigger markets exposes countries to other countries’ techniques and

technology, and trade disseminates this knowledge across the entire market (Irwin,

2008). In turn this greater awareness and transparency in the global market, provides

firms with a greater incentive to invest in R&D activities and to copy and improve their

competitor’s techniques leading to greater innovation in the market (Irwin, 2008).

Additionally, research has shown that developing countries, which join ITAs, are more

likely to attract FDI and hence increase their economic growth (Büthe & Milner, 2008,

p. 741). As more countries became interested in attaining these benefits and ITAs

became more complex, it became clear that a monitoring system must be put in place.

This monitoring system is the WTO (WTO), which today consists of 164 member

countries. ITAs facilitate the removal of trade barriers and are set in place to monitor

the goods coming in and out of a country and provide a legally binding agreement on

these terms (Irwin, 2008). In doing so, ITAs permit a more stable and transparent

trading and investment environment (WTO, 2017).

Unemployment

However, increased competition also has economic and social implications as

more imports may lead to less production in the home country and therefore a loss of

jobs (Irwin, 2008). Under standard theory, opening up trade to cheap imports would

result in the loss of jobs in the import-competing sectors but would create new better

paying jobs in the export sectors (Stiglitz, 2017, p.7). Stiglitz argues that often old jobs

in the protected industries are eliminated before new jobs are created, resulting in

resources moving from low productivity uses to zero productivity uses rather than from

high productivity uses to low productivity uses; as standard comparative theory implies

(Stiglitz, 2017, p. 7). As a result there is an increase in poverty and a decrease in GDP.

Hence, job creation is the core of growth and poverty reduction and globalization may

hinder job creation if it continues to be managed as it has (Stiglitz, 2004, p. 473).


In his 2017 article, Stiglitz comments on the debate of job creation arising

through trade agreements, “contrary to what our politicians assert, trade agreements are

not about creating jobs,” (Stiglitz, 2017, p. 7). It is the responsibility of a country’s

monetary and fiscal policy to keep the economy at full employment, not that of trade

policy (Stiglitz, 2017, p. 7). The result of a scarce job market is therefore caused by an

ineffective monetary policy or the political constrains facing fiscal policy. Therefore,

mismanaged globalization is more likely to result in job loss when there is already an

unemployment problem present (Stiglitz, 2017, p. 8). For instance Stiglitz (2017) argues

that, areas of the country that are producing products in competition with Chinese

imports, like the US, are experiencing lower wages and greater levels of unemployment

as a result of free trade (Stiglitz, 2017, p. 6). Stiglitz (2017) states that the effects of

globalization are real, as he explains that the flood of imports is directly responsible for

destroying jobs and affecting others in the community as a result of the drop in prices in

the housing market and the decrease in demand for non-traded goods (Stiglitz, 2017, p.

6).

Therefore trade is no longer just the exchange of products and services between

countries but also affects the employment rate of a country, the income of a country, the

competition in the global market, the growth of a country and the innovation and

knowledge in the global market (Büthe & Milner, 2008, p. 741; Rodrik, 2010, p. 22;

Stiglitz, 2017, p. 7; Irwin, 200; Meyer, 2008). Discussing some of the most

controversial topics around ITAs today will illustrate the impact that international trade

has on the world. Additionally this section will introduce the increasing power of MNCs

in today’s globalized world, as the issues included in ITAs have been expanding their

scope.

3.1.3.1.a.ii. Controversial Topics of ITAs

Historically, there is much controversy around trade agreements as there are

many controllable and uncontrollable factors at play when two or more countries enter

into an agreement and increase their relations. Free trade agreements in general aim to

create fair and equal conditions for businesses competing across free trade zones- but

this requires participating nations to adapt their regulatory requirements to the jointly

agreed standards that can’t and don’t please all parties (Meyer, 2017). Studies have


shown that countries open to international trade experience rapid income growth in

comparison to those that are closed to trade (Büthe & Milner, 2008, p. 741; Irwin,

2008). However due to the loss of sovereignty and the consequences of competition and

unemployment there are four broad areas of controversy revolving around ITAs:

consumer protection, environmental and social responsibility, shifting bargaining power

between MNEs and host countries, and IPR (Meyer, 2017).

Consumer Protection

Free trade agreements require the parties involved to negotiate and compromise

on jointly agreed upon standards. Issues around trade and consumer protection deal with

the standard of food, products and services that a country has implemented to protect its

consumers. Not all countries have equal standards (ex. US permits genetically modified

foods (GMOs) and hormone treated beef), and different societies have different views

and priorities shaping their domestic regulations (Winters, 2014; Meyer, 2017).

Environmental and Social Responsibility

Similar to the issues of consumer protection, labor standards and environmental

protection standards vary by country, especially between developed and developing

countries. The gap between developed and developing countries’ labor standards and

environmental protection makes it challenging to decide which country’s standards to

use when goods are being produced for export (Meyer, 2017). On the one hand, if the

standards of developed countries are used then developing countries may not easily

accept decisions made outside of their borders. On the other hand, if the standards of

developing nations are used, then the developed countries will argue that these

standards will reduce their competitive advantage, which they have attained by holding

their producers to higher and more expensive standards (Meyer, 2017). Additionally,

trade permits the transfer of technology between nations, and to developing countries,

which allows wage rates to rise (Rodrik, 2010, p. 22). This rise in income makes cleaner

production technologies more affordable for developing countries and improves the

environmental standards in that country (Irwin, 2008).

There has also been pressure to include labor and environmental standards to

trade agreements to improve working conditions and prevent environmental damage

(Meyer, 2017; Irwin, 2008). Some believe that having unrestricted trade will result in a

“race to the bottom” in labor and environmental standards because it will allow


multinationals to search the globe to find where they can cut costs on labor and

environmental standards (Irwin, 2008, Crotty et al., 1998, p. 1). Irwin (2008) argues that

labor unions and environmentalists in rich countries are the strongest supporters of

implementing labor and environmental standards into trade agreements, but if these

standards were implemented it could become an excuse for ‘rich-country

protectionism’; as a result, workers in poor countries could be harmed because they are

not able to meet the standards and unable to join in trading activities (Irwin, 2008).

Shifting Bargaining Power Between MNEs and Host Countries

Developing countries may argue that imposing higher and more expensive

standards will make them less competitive by shifting bargaining power between MNE

and host governments. Generally, FDI by MNCs has grown rapidly over the recent

decades (Büthe &Milner, 2008, p. 741; Stiglitz, 2017, p. 37). Additionally, ITAs have

been expanding their scope in other ways leading to the increasing power of MNCs in

international trade relations:

“FTAs often include international investment agreements (IIA) which empower

MNEs to take legal action – in international arbitrage councils – against nation states.

While it is true that this shift is not entirely a result of globalization, there is no denying

that countries' voters and those they elected to represent them have lost some of their

ability to shape the rules by which people live in their country,” (Meyer, 2017).

Investment agreements are agreements between countries stating how investors

from abroad should be treated and effectively encourage corporations to invest abroad

(Sitglitz, 2017, p. 37). ITAs and preferential trade agreements provide mechanisms for

making commitments to foreign investments about the treatment of their assets, thereby

reassuring investors and increasing investment (Büthe & Milner, 2008, p. 741).

Therefore the more powerful multinational enterprises become, the more they can

influence the governments of countries in which they do business (Meyer, 2017;

Stiglitz, 2017, p. 37). The WTO and other large agreements like NAFTA have also

received much criticism from ant-globalization protesters, who argue that they only

support the interests of multinational corporations and not the workers (Irwin, 2008;

Stiglitz, 2017, p. 37). Investment agreements are one of the new discontents of

globalization today, Stiglitz argues that they, “are really an attempt by corporations to

write the rules of the economic game in their favor through trade agreements negotiated


behind closed doors, with corporate interests at the table, in ways that would not pass

muster in an ordinary legislative process,” (Stiglitz, 2017, p. 37).

IPR

Lastly, regulations on IPR are also increasingly being included in trade

agreements between countries, two recent examples are RCEP and TTP. The free

movement of ideas, also known as intellectual property rights (IPR), has become a

growing debate in the field of globalization as they have become more important due to

our knowledge-based economy (Stiglitz, 2017, p. 41). Stiglitz (2017) claims that IPR

has been included in trade agreements because these agreements give the governments

in advanced countries control and allow them to impose trade sanctions (Stiglitz, 2017,

p. 41). Typically, the advanced countries like the US possess the most valuable IPR in

the world- meaning that the low-middle-income countries are paying royalties to the

high-income countries for the use of their IPR (Stiglitz, 2017, p. 41). Lastly, the scope

of international transactions flowing in and out of countries has widened over the past

decades making it difficult to assess the implications these transactions may have on a

country’s national security (Meyer, 2017). Having no clear-cut and defined rules agreed

upon internationally makes it even more difficult to assess the risks involved (Meyer,

2017).

3.1.3.1.a.iii. Recent Controversial ITAs

Ex) TTP: The Trans-Pacific Partnership (TPP) was under discussion between

the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada,

Mexico, Chile and Peru. Together these countries make up 40% of the global trade. TTP

is still under negotiation but currently excludes the US from the agreement as of

Trump’s withdrawal in 2016. However, TPP also came with disadvantages that have

caused controversy. For one, it included an investor-state dispute settlement (ISDS). An

ISDS allows foreign-owned private firms to seek settlement against governments for

actions infringing the agreement, which some argue allow capitalists to take advantage

(Tucker, 2016). Another issue was the fact that TPP excluded China from the

partnership. In consequence, China has continued to form its own trading blocks with

other countries allowing it to increase its power and control. TPP also aimed to extend


restrictive intellectual property laws across the globe, which caused concern for the

protection of each country’s patents and copyrights (Tucker, 2016).

US’ President Trump stated five reasons why he withdrew the US from the TPP

agreement (Blackwill, 2017). First, Trump stated that he is no longer interested in

entering into multilateral trade agreements because unlike multilateral trade agreements,

bilateral trade negotiations promote US industry, protect US workers, and increase US

wages. Second, he argued that it would have economic consequences for the US as it

would give away US jobs and part of the US’s wealth and income. Third, he stated it

would enable competitors to ship cheap subsidized goods into the US increasing

competition. Fourth, he claimed that entering into TPP would lead to an attack on US

business. Lastly, Trump remarked how TPP was designed for China to enter the

agreement and take advantage of the market. The US has been refraining from entering

into multilateral trade agreements with China, who has become one of the most

powerful global leaders in international trade and investment over the last half decade

(Stiglitz, 2017, p. 374; Blackwill, 2017).

After Trump’s withdrawal, the negotiations for RCEP commenced in 2013 and

included topics on trade in goods and services, investment, economic and technical

cooperation, intellectual property, competition, dispute settlement, e-commerce, and

SMEs amongst others (ASEAN, 2016). Together the parties of RCEP (incl. China)

account for almost half of the world’s population (3,536.6 million), make up about 30%

of the global GDP ($23.8 trillion) and control over a quarter of the world exports (AG-

DFAT, 2017).

Ex) TTIP: The Transatlantic Trade and Investment Partnership (TTIP) is a

trade and investment deal that was under negotiation between the European Union and

the United States till 2016 when it was stopped. Specifically in relation to the EU, TTIP

would allow the EU to have a greater influence on world trade rules, and to project their

values globally (EU, 2015). From the perspective of the US, TTIP would essentially

reinforce the US’s TPP agreement by ensuring no one could globally oppose it, and

would offer the US a chance to enter into some of the EU’s more sensitive markets such

as the food industry (Winters, 2014). The EU has much tighter restrictions on its food

and agriculture production than the US, and TTIP would have allowed the US to export

its produce, which includes GMOs and growth hormones (Winters, 2014). The differing

standards in health, safety and environment between the EU and the US made some feel


that TTIP would circumvent the democratic process by combining the standards of the

two nations. This could result in loss of competitive advantage for the EU and

sovereignty. One EU politician stated:

“No EU trade agreement will ever lower our level of protection of consumers, or

food and safety, or of the environment. Trade agreements will not change our laws on

GMOs, or how to produce safe beef, or how to protect the environment,”

Cilcia Malström (EU commissioner for trade)

3.1.3.1.b. Investment

When a company decides to expand its reach beyond its borders and go

international, there are two common modes of entry, either through trade (exports) or

local production (Gupta & Govindarajan, 2000, p. 49). In the case of exports,

companies can choose between exporting finished goods or the export of components,

also known as outsourcing. Outsourcing, another popular activity for MNCs, has also

been a large source in the increase of transportation across the globe and the increase in

competition in developing countries. Outsourcing, or offshoring, deals with the flow of

money across countries and job creation (Gopinath, 2008, p. 134). In the case of local

production, companies can decide between Greenfield acquisition or cross-border

acquisition (M&As) both of which provide sources of FDI into the host country. Below,

FDI will be discussed in greater detail.

3.1.3.1.b.i. Foreign Direct Investment

Both trade and FDI are often seen as important catalysts for economic growth in

developing countries (Makki & Somwru, 2004, p. 795). Foreign direct investment deals

with the flow of capital between countries in the form of portfolio investment or foreign

direct investment (i.e. M&As and Greenfield investments). FDI is becoming an

increasingly important aspect of globalization because it allows large amounts of money

to flow between developed and developing countries (Büthe & Milner, 2008, p. 741;

Makki & Somwaru, 2004, p. 795). FDI inflows bring in resources, technological

transfers, knowledge spillovers, access to markets, valuable training and improvements

in human capital; all of which are beneficial to the ‘host’ country (Makki & Somwaru,

2004, p. 795; Stiglitz, 2000, p. 1076). Greenfield acquisitions involve a parent company

building its operations in a foreign country and hence offers the company freedom to


impose its own management policies, culture and modes of operations in its new

subsidiary (Gupta & Govindarajan, 2000, p. 49). Since Greenfield acquisitions entail

building a new production site abroad, they are a slower mode of entry into foreign

markets compared to M&As. Some countries, such as China, have joint-venture laws

requiring foreign firms to partner with them rather than fully controlling their own

business (Gupta & Govindarajan, 2000, p. 49). Additionally, a new production facility

can result in more intense local competition caused by the addition of new production

capacity (Gupta & Govindarajan, 2000, p. 49). Cross-border acquisitions, M&As, differ

from Greenfield investments as they involve the purchase and or merging of a foreign

business for the purpose of production. Since M&As entail the collaboration or

ownership of a foreign firm in a new company, they can pose a much tougher challenge

to cultural transformation and post-merger integration (Stiglitz, 2017, p. 366; Gopinath,

2008, p. 132).

Hence, when choosing a mode of entry it is essential to assess the local market

and competition. Countries in the emerging or high growth phase (such as China and

India a decade ago) are more attractive to corporations since they have low capacity and

low competition in comparison to developed countries (Gupta & Govindarajan, 2000, p.

50). In his 2008 book, Gopinath claimed that there was an increasing trend among firms

to undertake cross-border M&As, particularly with developed countries. He noted that

Greenfield investments were becoming commonly undertaken in developing countries.

Trade liberalization, regional integration efforts and developments in capital markets

have allowed for massive international expansions through M&As (Gopinath, 2008, p.

132). Over the past five years, there has been an enormous increase in FDI transactions,

particularly M&As, and large shifts in the dynamics of the market (Büthe & Milner,

2004, p. 795). For instance in 2014 the UN Conference on Trade and Development

(UNCTAD) World Investment Report 2015, revealed that China had become the

world’s largest recipient of FDI with inflows reaching $129 billion U.S. dollars

(UNCTAD, 2015, p. 41). Three years later and China has become one of the world’s

largest providers of FDI; from 2015 to 2016, Chinese investments through M&As into

the US went from around $15bn to $45.6bn (White Case, 2017, p. 5). Many attribute

China’s success to the knowledge spillovers that accompany incoming FDI (Stiglitz,

2017, p. 11).

Gopinath (2008) argues that FDI through M&As suggest a need to quickly

expand and access new markets and resources rather than developing those markets,


which is problematic because it allows for oligopolies to form (Gopinath, 2008, p. 132).

As oligopolies continue to form in the global market, it will become problematic for

policymakers since oligopolies increase competition, reduce the choice available to the

consumer, and increase the negotiation power of the firm (Gopinath, 2008, p. 132).

Gopinath emphasizes the challenges facing policy coordination amongst countries:

“While having a coordinated business policy across countries on antitrust would be

helpful for businesses planning their growth, it would restrict a country’s ability to

pursue an independent policy to suit national objectives,” (Gopinath, 2008, p. 133).

3.1.3.1.c. Short-term capital flows

According to Stiglitz, short-term capital flows refer to the freer flow of short-

term capital around the world; in other words, capital market liberalization The result of

capital market liberalization is the dismantling of barriers between nations, and is in the

eyes of Stiglitz the most controversial aspect of globalization (Stiglitz, 2004, p. 473).

When short-term capital flows into a country it appreciates the country’s exchange rate,

and can make it difficult for its export business to compete and for many businesses to

compete against cheaper imports (Stiglitz, 2017, p. 34). Bhagwati (2011) points out that

the freer flow of capital puts nation-states at serious risk of experiencing massive,

panic-fed outflows of short-term capital that would crash their economy, unless

monitoring and regulatory mechanisms and bank reforms are put in place (Bhagwati,

2011). Stiglitz (2000) argues that capital market liberalization produces instability and

not growth. In their paper Rasiah et al. (2015) argue that selective interventions in the

liberalization of markets are necessary in order to ensure that these processes can open

the path to the ‘high road to industrialization’ (Rasiah et al., 2015, p. 2). The authors

claim that the processes of globalization and industrialization have had a large impact

on the labor markets in Asia (Rasiah et al., 2015, p. 2).

Industrialization is considered to drive its own growth and that of other sectors,

to stimulate structural change from low value-added activities to high value-added

activities resulting in differentiation and division of labor, which in turn generates

employment growth (Rasiah et al., 2015, p. 2). Although industrialization may not

engender rapid economic development in poor countries, it still remains an important

route for other countries since it entails increasing returns characteristics (Rasiah et al.,

2015, p. 5). The research of Rasiah et al. (2015) has shown that sustained expansion in


productivity and wages has been a driver in the path to high-road industrialization, and a

lack of similar policies has hindered their ability to ensure sustained productivity

growth and structural change towards higher value-added activities preventing

improvements in the material conditions (Stiglitz, 2017, p. 34).

3.1.3.1.d. The Increasing Role of MNCs in the Global Economy

The economic dimension of globalization has demonstrated the increasing role

of MNCs in the global economy. MNCs have become an increasingly important force in

the dynamics of the global economy. In his 2017 book, Stiglitz claims that the influence

and power of MNCs over the past 15 years is largely to blame for the failure of

globalization (Stiglitz, 2017, p. 39). Over the past decade, we have seen more and more

corporations entering into the global market place and selling products to international

customers (Büthe & Milner, 2004 p. 795). Some of the largest global companies today

like Wal-Mart, McDonalds, and Apple have not just appeared in foreign markets but

have positioned themselves to appeal to foreign markets. However, unlike individuals

and countries MNCs are primarily focused on expansion and capital gain, which has

become problematic in today’s globalized world (Brondoni, 2014, p.13; Stiglitz, 2017,

p. 39).

In 1998, Crotty et al. (1998) identified five views on the likely effects MNCs

will have on the trajectory of the world. The first is the “race to the bottom” which

implies that capital will increasingly be able to play workers, communities, and nations

against one another as they demand tax, regulation, and wage concessions while

threatening to move and the increased mobility of MNCs benefit capital while workers

and communities lose; the result will be winners including highly educated and skilled

workers or those with particular MNC rent-appropriating professions and losers which

include unskilled workers and the unemployed (Crotty et al., 1998, p. 1). The “climb to

the top” is the second view and suggests that MNCs are attracted less by low wages and

taxes than by highly educated workers, good infrastructure, high levels of demand and

agglomeration effects arising from the existence of other companies that have already

located to a particular place (Crotty et al., 1998, p. 2). According to the climb to the top

view, competition among states for FDI will lead countries in the North and South to

provide well educated labor and high-quality infrastructure to retain and attract FDI.


The third is the view of “neo-liberal convergence” which was a widely held

mainstream claim at the turn of the century that the freer mobility of MNCs, in the

context of deregulation and free trade, will produce increased living standards in all

countries (Crotty et al., 1998, p. 2). Under this view, the mobility of MNCs will allow

for capital and technology transfers abroad, increasing the standards of the poor quicker

than the wealthy resulting in a worldwide convergence in living standards (Crotty et al.,

1998, p. 2). The fourth view, “uneven development” results in the growth of one region

of the world at the expense of another and is similar to the theory of imperialism- if the

South integrated itself with the North, the North would grow at the expense of the South

(Crotty et al., 1998, p. 2). Lastly, and contrastingly the “much a do about nothing view”

implies that FDI and MNCs play a rather modest role in generating negative outcomes,

such as increases in inequality, unemployment and wage stagnation (Crotty et al., 1998,

p. 2).

The impact of MNCs on developed and developing countries in relation to FDI

is a debated topic. Some argue that MNCs provide more stable capital inflows, jobs,

technology transfer and investment to ‘host countries’ in addition to increasing growth

and employment in the ‘home’ country. While others argue that international capital

mobility in general and MNCs are creating a race to the bottom- “enhancing profits and

political power for MNCs and local elites who benefit from their presence, while

eroding wages, tax bases, social protections and the environment” (Gopinath, 2008, p.

105; Crotty et al., 1998, p. 1). Brondoni’s (2014) four periods of corporate globalization

explain how corporations have been evolving in a globalized world.

3.1.3.1.d.i. The Development of Corporate Globalization

Brondoni (2014) defines corporate globalization as the increased technological,

economic and cultural interconnectedness between global organizations (Brondoni,

2014, p. 10). This interconnectedness entails the exchange of labor forces, R&D,

knowledge, products and services. Brodoni (2014) claims that from 1980-2015 the

largest worldwide corporations made an extraordinary socio-economic and

technological development resulting in international growth and an increase in living

standards like never before (Brondoni, 2014, p. 13). “From a corporate point of view,

globalization cannot be indeed examined as a bulk process, but it requests a deeper

analysis, recognizing the key-elements of each period linked to the evolution of global


competition,” (Brondoni, 2014, p. 14). Therefore Brondoni has categorized four

periods of corporate globalization between 1980-2020, which explains the shift in the

firm’s global investment strategies: product globalization, firm globalization, financial

globalization, network globalization.

1. Product globalization (1980-1990);

At this time large corporations made large transformations in their corporate

governance, R&D activities, production operations, and marketing policies. Sectors at

the heart of product globalization were: brand-name consumer articles, tourism,

banking, insurance, informatics, telecommunications and electronic mass media, and

aircraft production (Brondoni, 2014, p. 15). American and European firms massively

utilized M&As with the goal of creating large global firms to succeed the competition

or expand their international operations. To obtain a worldwide primacy for their offers,

corporations shifted their attention to global networks focused on specific financial

tasks to satisfy the shareholder view which demands that value creation is closely tied to

growth. Under the shareholder’s view (Karnani, 1999), growth is essential if economies

of scale in technology development, operations, capacity utilization, marketing,

distribution and network externalities are to be captured and due to the high competition

those that fail to quickly expand will experience a loss of competitive advantage in the

market (Brodoni, 2014, p. 15).

2. Firm globalization (1990-2000);

During the period of firm globalization, there was growing competition between

global networks. This competition revealed that the firm’s analytical skills at the global

level and its rapid decision making processes were the key to corporate success

(Brondoni, 2014, p. 16). Corporations were mainly focused on corporate profits during

this period and the global networks permitted new opportunities for the firm to make its

processes more efficient through ‘global outsourcing.’ Ultimately this allowed firms to

reduce production costs and produce a product anywhere in the world, allowing them to

access resources from anywhere, by a company located anywhere and allowed them sell

their products anywhere (Brondoni, 2014, p. 16; Naisbitt, 1994). The firm globalization

phase paired with an increasing importance in corporate governance, and hence there


was a shift from the shareholder view to the stakeholder view (Huse et al., 2005) calling

for transparency and accountability of firms (Brondoni, 2014, p. 17).

3. Financial globalization (2000-2010);

While the US and some other Nation-States were able to maintain high

development of the financial economy (i.e. ‘paper economy’), there was an unbalance

between real development caused by many crises occurring over the past 15 years (i.e.

the subprime mortgage crisis of 2008). These crises changed the accumulation rules of

financial richness and increased the power of financial institutions on real economy

choices (Brondoni, 2014, p. 18). Transactions on the major securities and derivatives

markets were able to occur via phone or computer and major financial activities were

conduced in the world as a single place (Brondoni, 2014, p. 18). Profit and performance

objectives pushed firms to direct their marketing costs and R&D expenses towards

strategies of open innovation, which was able to detect, collect and interpret both strong

and weak signals of global business order to anticipate the tendencies of consumers and

the rivals (Brondoni, 2014, p. 18; Brondoni, 2012). This introduced the ‘corporate

view,’ where corporations tended to disclose ‘specific’ and ‘partial’ ‘information

guiding the public’s perception (Brondoni, 2014, p. 18; Brondoni, 2006). Hence, the

largest corporations as an ethical principle of orientation for all those required to

legitimize the content of economic communication reinterpreted the culture of

transparency during this period (Brondoni, 2014, p. 18; Mol, 2015, p. 154).

4. Network globalization (2010-2020).

The primacy of knowledge management, the worldwide localization of

production and the new policies of innovation and imitation have been modified in

opportunities for M&As, global competitive alliances and joint ventures during this

period (Brondoni, 2014, p. 19; Brondoni, 2012a). During this period, the fusion of

several industries involved a ‘mega-merger’ of corporate giants, which transformed the

competitive balance in these sectors. Globalizing capitalism, permitted by strategic

alliances and M&As brought about an increased concentration of ownership in power to

many areas of production (Brondoni, 2014, p. 19). These activities largely reflect Crotty

et al.’s (1998) “race to the bottom” view which implies that capital will increasingly be


able to play workers, communities, and nations against one another as they demand tax,

regulation, and wage concessions while threatening to move and the increased mobility

of MNCs benefit capital while workers and communities lose (Crotty et al., 1998, p. 1).

The growth of these capital focused global networks has resulted in high corporate

competitiveness (Brondoni, 2014, p. 19). Castells (2010) has identified four sources of

competitiveness in the current global economy:

1. The technological capacity of a country or the articulation of science,

technology, management, and production

2. Access to large, integrated, affluent markets;

3. A profitable differential between production costs at the production site

and prices at the market of destination (incl. labor costs, land costs,

taxes, and environmental regulations)

4. The political capacity of national and supranational institutions to guide

the growth strategy of those countries or areas under their jurisdiction

(Castells, 2010, p. 103).

As a result, corporate competitiveness in global networks has led to: corporate

tasks of profit and growth with large expansion plans and the vision of a global

company, the development of hybrid sectors by the convergence of technologies, the

reorganization of distinctive competitive competence in search for broader boundaries

of scale economies (market-space management), and continuous changes to the

competitive base (Brondoni, 2014, p. 19). One of the most well-known

internationalization strategies, the Uppsala Model, has been updated three times since

1977 to keep up with the influence globalization and the growth of global networks has

had on the corporate environment. Johanson & Vahlne’s revisions of the Uppsala

Model second Brondoni’s description of ‘Network globalization.’ Originally in 1977

the Uppsala Model based internationalization on the experiential learning and

commitment building of a firm (Vahlne et al., 2011, p. 3).

In 2009 they updated the model to include sub-processes, most notable trust

building, opportunity identification and exploitation and placed their model in a

network context instead of a neoclassical type market because “now the business

environment is viewed as a web of relationships, a network, rather than as a neoclassical

market with many independent suppliers and customers,” (Johanson & Vahlne, 2009, p.


1411; Vahlne et al., 2011, p. 3). A neoclassical type market is one which the firm

independently can control its own destiny (Vahlne et al., 2011, p. 3). Again in 2011, the

authors revised their model to emphasize the globalization process and defined

globalization as “an effort to optimize a business in terms of its configuration and

coordination systems,” (Vahlne et al., 2011, p. 1). These revisions emphasize the value

that networks have in the internationalization process and hence the incentive that firms

have to form these networks.

Therefore it can be said that, the past decade of globalization has largely

changed the global corporate environment and has resulted in a highly competitive and

capital focused market controlled by the powerful networks of MNCs (Castells, 2010, p.

103; Brondoni, 2014, p. 19). Crotty et al.’s (1998) ‘race to the bottom’ view claims that

such activities by MNCs will result in a division of winners and losers in the labor force

as education and skills gain value in the market, resulting in the unemployment of

unskilled workers (Crotty et al., 1998, p. 1), a current reality Stiglitz emphasizes in his

2017 Globalization and Its Discontents book. Therefore according to Brondoni’s (2014)

phases of corporate globalization and Crotty et al.’s (1998) definition, the effect that

MNCs have had on the trajectory of the world suggests the ‘race to the bottom’ view

(Stiglitz, 2017, p. 39).

3.1.3.1.d.ii. TBL Thinking

While business is a major source of global pollution as a result of harmful

manufacturing and production processes and global arbitrage, several authors argue that

because firms represent the productive resources of the economy, SD cannot be

achieved without the support of businesses (Bansal, 2002, p. 122; Hopewood et al.,

2005, p. 38). “We are embarking on a global cultural revolution. Business, much more

than governments or NGOs will be in the driving seat,” (Elkington, 1994, p. 2).

Business is often considered the root of the problem, but some believe that industry has

the potential to reverse the negative environmental trends by leading the world into the

‘next industrial revolution’ (Hawken et al., 1999; Senge & Carstedt, 2001, p. 24;

Braungart & McDonough, 2002). Elkington’s (2004) TBL focuses corporations on the

economic, environmental and social value that they add or destroy. He defined seven

sustainability revolutions, which will make the sustainable capitalism transition easier


for businesses and people, these are: markets, values, transparency, life-cycle

technology, partnerships, time and corporate governance (Elkington, 2004, p. 3-6).

(1) The revolution of markets will be driven by competition of corporations; in

response businesses will operate in markets more open to competition,

domestically and internationally, resulting in economic earthquakes that will

change our world.

(2) The revolution of values driven by the worldwide shift in human and societal

values.

(3) The revolution of transparency will result with businesses having their

thinking, priorities, commitments and activities under intense worldwide

scrutiny.

(4) The revolution of life-cycle technology, which will result in a shift from

companies focusing on the acceptability of their products at the point of sale to

their performance.

(5) The revolution of partners will be the acceleration of new forms of

partnership between companies and between companies and other organizations.

(6) The revolution of time will be a profound shift in the way we understand and

manage time as the world becomes more interconnected.

(7) The revolution of corporate governance to build towards genuinely

sustainable capitalism.

Elkington (2004) argues that as companies start to be challenged by TBL

commitments and performance from stakeholders, businesses will shift to a new

approach using TBL thinking and accounting. Referring to Brondoni’s four periods of

corporate globalization, the world is still waiting for the seventh sustainability

revolution to complete Elkington’s (2004) cycle.

3.1.3.2. Environmental Globalization The economic dimension of globalization illustrated how the global flow of

goods, services, capital, knowledge and people around the world is increasing. As these

activities increase, so does the production and transportation of goods across multi-

continental distances. While science and technology have progressed and led to

innovations such as the Internet, planes, ships, and phones allowing the world to


communicate and travel at a faster rate, they have also shed light on the harmful effects

that industrial and capitalistic activities have been having on our planet. Environmental

issues are tied to globalization and development, as poverty is a major cause and effect

of global environmental problems: As stated in Our Common Futures, “ecology and

economy are becoming ever more interwoven locally, regionally, nationally, and

globally into a seamless net of causes and effects,” (UN, 1987). Hence one of Keohane

& Nye’s (2007) forms of globalism is environmental globalism, which looks at the

harmful effects that the transportation of materials and biological substances across the

oceans and atmosphere are having on the well being of humankind (Keohane & Nye,

2007, p. 5).

One of the most fundamental aspects of environmental globalism is the concept

of environmental limits, which evolved already in1972 at the Stockholm Conference

where the Club of Rome released the concept of ‘Limits to Growth’ (Waisman et al.,

2014, p. 107; Meadows et al., 1972). The theme of ‘Limits to Growth,’ is that the earth

has limits, and exponential growth in population and industrialization are inevitable, and

make the urgency for change increasingly more vital (Meadows et al., 1972, p. 30). “If

the present growth trends in world population, industrialization, pollution, food

production, and resource depletion continue unchanged, the limits to growth on this

planet will be reached sometime within the next one hundred years,” (Meadows et al.,

1972, p. 23). Over the next 30 years, it is expected that most of the world’s population

growth will occur in the urban areas of poor countries which makes the rapid,

unplanned and unsustainable styles of urban development, the key focal points for

emerging environmental and heath hazards (WHO, 2018).

According to WHO, environmental factors are a root cause of a significant

burden of death, disease and disability- particularly in developing countries (WHO,

2018). The main key areas of risk derive from: poor water quality, availability and

sanitation: vector borne diseases; poor ambient and indoor air quality; toxic substances;

and global environmental change (WHO, 2018). The most significant environmentally

related causes or conditions resulting in global deaths are: unsafe water; indoor smoke

from the use of solid fuels; malaria from poorly designed irrigation and water systems,

inadequate housing, poor waste disposal and water storage, deforestation and loss of

biodiversity; urban air pollution from vehicles, industries, and energy production;

traffic; lead exposure; climate change; and unintentional poisonings from inappropriate

use of toxic chemicals and pesticides (WHO, 2018). Hence, the health impacts of


environmental risks are the worst amongst poor and vulnerable populations in

developing countries (WHO, 2018). Yet at the same time, the poor may be the most

dependent on natural resources as sources of livelihood and well-being, and thus the

most impacted by unsustainable exploitation and depletion of those resources (WHO,

2018; DFID, 2002; UNDP, 1998).

3.1.3.2.a.AirPollution

Many believe that the increased combustion of fossil fuels is responsible for the

change in the composition of the atmosphere over the past centuries and that

anthropogenic activities are the major cause of environmental air pollution (Kampa &

Castanas, 2008, p. 362; Ritchie & Roser, 2018, WHO, 2018). According to the World

Health Organization (WHO) the major causes of air pollution derived from human

activity are:

• Fuel combustion from motor vehicles (e.g. cars and heavy duty vehicles)

• Heat and power generation (e.g. oil and coal power plants and boilers)

• Industrial facilities (e.g. manufacturing factories, mines, and oil

refineries)

• Municipal and agricultural waste sites and waste incineration/burning

• Residential cooking, heating, and lighting with polluting fuels

(WHO, 2018).

Air pollutants such as ozone (O3), particulate matter (PM), sulfur dioxide (SO2),

carbon monoxide (CO) and nitrogen oxides (NOx) have acute and chronic effects on

human health and can lead to premature mortality or reduced life expectancy (Kampa &

Castanas, 2008, p. 362; WHO, 2018). According to WHO, air pollution causes 1 in 9

deaths worldwide, 9 out of 10 people worldwide breath polluted air, 24% of all stroke

deaths are attributable to air pollution, 25% of heart disease deaths derive from air

pollution, 43% of all lung disease and lung cancer deaths are from air pollution, and

80% of urban residents live in areas exceeding WHO’s guideline levels (WHO, 2018).

Additionally, while most ambient emissions of air pollution derive from local or

regional sources, they can travel long distances across borders affecting those far away

from its original source (WHO, 2018). Therefore global cooperation is needed to

address international flows and sources of air pollution (WHO, 2018).


3.1.3.2.b.DifferingStandards

In developed countries, federal agencies such as the Environmental Protection

Agency (EPA) in the US, and the Europe Environment Agency (EEA) in the EU set

laws, standards, regulations and policies to limit environmental pollution, and generally

implement specific acts to fight specific environmental or health burdens. However,

developing countries, are still struggling with their basic fundamental needs such as

water, food, hygiene, energy, health and education do not have the structure, capital or

capacity to implement environmental, health or labor standards (OLPC, 2008). This has

become problematic in our globalized world, as the corporations of developed countries

have been able to move across the world and benefit from the low standards and

regulations of the developing countries (Stiglitz, 2017, p. 16; Beck, 2016, p. 309;

Castleman, 1985, p. 60). Consequently, while the higher standards and regulations in

developed countries may have limited pollution in the home countries, the pollution has

been pushed over to the developing countries (WHO, 2018; Beck, 2016, p. 309;

Ghemawat, 2003). Increased industrial and agricultural production has intensified poor

countries’ production and use of both newer and older chemicals, including some

chemicals, which have been banned in other countries (WHO, 2018). By 2020 it is

expected that nearly one third of the world’s chemical production will take place in non-

OECD countries (compared to one fifth in 1995), and this shift of chemical production

from non-affluent to poorer countries could increase the overall health and

environmental risks arising from the production and use of such chemicals (WHO,

2018).

Studies have shown that MNCs established in developed countries regularly

export hazardous factories to developing countries due to their lower regulatory

standards (Beck, 2016, p. 309; Castleman, 1985, p. 60). MNCs are the main producers

and suppliers of international products, and it is not only the pollution from

transportation which is causing environmental harm but also the production &

manufacturing processes of MNCs in addition to the mass consumption of natural

resources and exploitation of foreign environmental and labor standards (Stiglitz, 2017,

p. 16). Because the negative impacts of environmental degradation are more severe in

developing and emerging countries than developed countries, developing countries are

more inclined to consent to environmental degradation for increased prosperity and

living standards through the dirty industries; therefore trading environmental harm for


social and economic benefit (Ahmed et al., 2017, p. 1142; Ertugrul et al., 2016, p. 543).

This results in greater environmental degradation in developing countries as MNCs take

advantage of the situation in developing countries (i.e. economic arbitrage) and allows

MNCs to circumvent their national standards and policies (Ghemawat, 2003).

3.1.3.2.c.GlobalWarming

Apart from the harmful effects of air pollution on human health, there is another

fundamental aspect of environmental pollution. This is CO2 emissions and other

greenhouse gas emissions (GHG), which are having a significant impact on the

concentration of CO2 in Earth’s atmosphere (Ritchie & Roser, 2018). “Rather, by

polluting the Earth’s atmosphere with GHG emissions through fossil fuel combustion,

deforestation and agricultural activities, emitting countries are degrading the world’s

climate system, a common resource shared by all biodiversity, including people,”

(Althor et al., 2016, p. 1). Today CO2 emissions are spread almost equally between

coal, oil and gas (Ritchie & Roser, 2018). Since the industrial revolution, energy-driven

consumption of fossil fuels has resulted in the rapid increase of CO2 emissions and has

disrupted the global carbon cycle leading to a planetary warming impact (Ritchie &

Roser, 2018). This is known as global warming, or climate change (Ritchie & Roser,

2018; Stiglitz, 2017, p. 16). Consequently, global warming, leads to extreme weather

events (such as floods, droughts, storms and heat waves), sea-levels rising, altered crop

growth, and disrupted water systems (Ritchie & Roser, 2018). A loss of biodiversity can

have health consequences by increasing disease transmission in animal populations and

can result in the depletion of genetic resources available for future/food production and

medicinal development (WHO, 2018).

However, CO2 emissions are tied to economic growth and industrialization,

which is particularly problematic in developing countries (Waisman et al., 2014, p. 104;

Stewart, 2016, p. 68, Ritchie & Roser, 2018; Althor et al., 2016, p. 1). Consequently,

developing countries are the major CO2 emitting countries to date (Ertrugul et al., 2016,

p. 543). While many high income countries have been able to limit or stabilize their

CO2 emissions, the growth of CO2 emissions in low to middle income economies

dominates the global trend- resulting in a continuous increase in CO2 emissions despite

the changes made by high income countries (Ritchie & Roser, 2018). Therefore it

becomes challenging for developing countries to limit their CO2 emissions without


harming their economic growth (Waisman et al., 2014, p. 104; Ertrugul et al., 2016, p.

543). This has led some to feel that the largest CO2 and GHG emitting countries are

‘free riders’ that are causing others to bear the burdens of climate change, and are not

incentivized to mitigate their own emissions (Althor et al., 2016, p. 4). Developing

countries suffer the most from the effects of environmental globalism, yet they are the

largest emitters of environmental pollution (WHO, 2018, Ritchie & Roser, 2018).

Consequently, there has been much discussion on the so called ‘poverty traps’ of

developing countries (Althor et al., 2016, p. 4; Kraay & McKenzie, 2014, p. 127).

‘Poverty traps’ describe a set of self-reinforcing mechanisms whereby poor countries

start poor and remain poor because poverty itself is a direct cause of poverty in the

future (Kraay & McKenzie, 2014, p. 127; Azariadis & Stachurski, 2005). However,

recent research has concluded that ‘poverty traps’ are a rare occurrence (Kraay &

McKenzie, 2014, p. 145).

Hence, overcoming the challenges of climate change and environmental

globalism will require the cooperation and coordination from both developed and

developing countries (Althor et al., 2016, p. 4; Ritchie & Roser, 2018). “The current

generation is the first to feel the anthropogenic effects of climate change,” (Althor et

al., 2016, p. 1; IPCC, 2014). In Australia a hole has formed in the earth’s ozone layer as

a result of chlorofluorocarbons (CFCs), but due to the action that has been taken by

humanity to limit CFCs the hole has already shrank (Stiglitz, 2017, p. 16; NASA,

2018). Since the realization of global warming, there has been significant action taken at

the global and national levels to limit CO2 emissions, the most recent global initiative is

the 2015 Paris Agreement on Climate Change. It is considered a “historic agreement to

combat climate change and unleash actions and investment towards a low carbon,

resilient and sustainable future” (FCCC, 2015). In combination with the 2030 Agenda,

the UN Secretary General concluded that,

“We are the first generation that can end poverty, and the last one that can take

steps to avoid the worst impacts of climate change. With the adoption of a new

development agenda, SD goals and climate change agreement, we can set the world on

course for a better future.”


3.1.3.3. Social and Cultural Globalization Although humanity is largely affected by environmental globalism, another

aspect of social capital is the culture and traditional values of a country. According to

Keohane & Nye, social and cultural globalism refers to the movement of ideas,

information, images, and people across long-distances (Keohane & Nye, 2007, p. 5).

Isomorphism, the imitation of a society’s practices and institutions by another, is an

important aspect of social globalism (Keohane & Nye, 2007, p. 5). Similar to Keohane

& Nye’s definition of social and cultural globalism, Srivastava & Khan define cultural

globalism as the transmission of ideas, meanings and values around the world by

extending and intensifying social relations (Srivastava & Khan, 2016, p. 20). They state

that the process of cultural globalization is visible through the common consumption of

cultures diffused through the Internet, popular culture media and international travel

(Srivastava & Khan, 2016, p. 18). On the one hand, social and cultural globalism would

not be possible without the flow of goods, services and capital across the world, which

allow for the global exchange of cultures. On the other hand, the flow of goods, services

and capital across intercontinental distances would not have been possible without the

“openness” of a country and its culture, allowing new cultures to mix and integrate.

Coming back to Martell’s (2010) argument, that the effects of globalization cannot be

considered in the context of single dimensions as they all overlap, relate and influence

one another.

3.1.3.3.a.ClashofCultures

Several authors claim that globalization has a negative effect on culture

(Srivastava & Khan, 2016, p. 20; Stiglitz, 2017, p. 366; Gopinath, 2008, p. 28).

Globalization often implies a new culture entering into a traditional culture resulting in

a clash of cultures. As a country’s identity is defined by its culture, this has an adverse

effect on the social capital of a country (Stiglitz, 2017, p. 366). This could be due to the

isomorphism involved with social and cultural globalization. If social and cultural

globalism spreads ideas, information, images and people across long-distances, then

more local cultures are exposed to foreign cultures. The more local cultures adopt the

foreign cultures they are exposed to, isomorphism, the more diluted their culture

becomes. This is similar to what happened during the colonial era, where the powerful


colonies overtook the weak and imposed their culture, political views, and structure on

the inhabitants of the weak colonized countries:

“Psychologically, the superior attitude of the colonist who viewed the local

culture and practices as inferior, local religions as barbaric, and local institutions as

inefficient not only created a new Westernized ruling class among the natives in the

country but also had a psychological impacting the local self esteem and sense of

identity,” (Gopinath, 2008, p. 28).

Culturally, the colonial era played a large role in the sharing of knowledge on

various topics including art, literature and lifestyle between the West and the East but it

also resulted in a loss of local culture and identity (Stiglitz, 2017, p. 366). Unlike the

colonial era, foreign culture is not being forcefully imposed on new cultures but is

happening as a result of globalization; herein lays the criticism of globalization on

culture. Although it is not a direct effect of globalization, globalization increases the

interconnectedness between countries and in doing so exposes people to foreign

cultures. For instance, Indian culture has been largely exposed to western culture as a

result of interconnectedness (Srivastava & Khan, 2016, p. 18). Technologies such as the

Internet, social networking sites, television and mobile phones have catalyzed this

interconnectedness prompted by globalization (Srivastava & Khan, 2016, p. 18).

Technological development has stimulated globalization and sparked cultural change.

Globalization has prompted the expansion of shopping malls and MNCs such as Wal-

Mart, McDonalds, Dominos and the use of online shopping in countries such as India.

This has resulted in less demand for local markets and traditions due to the advantages

they comparably provide (Srivastava & Khan, 2016, p. 20).

3.1.3.3.b.KnowledgeandMovementofLabor

Knowledge refers to the free flow of ideas, which due to advances of the New

Economy, has increased as the costs of communication have lowered and has allowed

for a closer integration of societies (Stiglitz, 2004, p. 469). Knowledge is the basis of a

firms competencies and this knowledge is increasingly created by and held within the

firm, moving with the firm wherever it operates (Stiglitz, 2017, p. 31). Therefore,

openness to FDI into a country allows for a firm’s knowledge to flow across borders.

When knowledge is transferred across borders, spillovers can occur and the host country


can benefit from this inflow of knowledge (Stiglitz, 2017, p. 32). One current example

of knowledge spillovers as a result of inward FDI can be seen by China. In an attempt to

take advantage of China’s comparative advantage in labor-intensive manufacturing, the

US made a large and rapid shift in its production from the US to China over the recent

years (Stiglitz, 2017, p. 11). As a result of shifting its production to China, the US

allowed China to “marry” America’s advanced technology with cheap labor and in

doing so exposed China to its advanced technologies (Stiglitz, 2017, p. 11). In turn,

China gained a comparative advantage in manufacturing as they learned from the US

and started to develop their own technological capacities, at the same time they began to

see an increase in their income levels (Stiglitz, 2017, p. 12). This gain in comparative

advantage and wealth that China has attained from inward FDI has further global

implications, as China has shifted from the largest recipient of FDI to one of the world’s

largest providers of FDI over the past five years; the new role of China in the global

economy (White & Case, 2017).

Labor flows reflect the flow or movement of people around the world, in

relation to global economic efficiency (Stiglitz, 2004, p. 473). As some areas of the

world become more productive than others, the movement of labor follows. This can be

harmful and beneficial at the same time: while it can lead to an inflow of labor in certain

areas that are lacking a labor force, it can also result in an outflow of young and skilled

workers from countries who need this labor for its economic growth (Stiglitz, 2004, p.

473).

Stiglitz claims that immigration- the movement of people across borders- in both

Europe and the US is the most controversial aspect of globalization today, even more

than trade (Stiglitz, 2017, p. 43). Coming back to the concept of globalization, “global

interactions may be associated with a deepening enmeshment of the local and global

such that the impact of distant events is magnified while even the most local

developments may come to have enormous global consequences,” (Held et al., 1999, p.

15). This implies that due to globalization, local events can quickly form into global

events. Consequently, a natural disaster and/or political change for example in one

country today, is likely to be felt and have an effect outside of that country. For

instance, if a natural disaster or political change makes it more difficult or undesirable

for its citizens to remain in their country, they may evacuate their country and

immigrate to a new country resulting in an increase in population and flood of foreign


culture in the new country. The Global Refugee Crisis starting in 2015 and BREXIT

2016 are two recent events, which illustrate the global implications of labor flows.

3.1.3.3.c.RecentControversialEvents

The Global Refugee Crisis

In 2011 a civil war in Syria resulted in a huge outflow of immigrants into

Europe in 2015 leading to the global Refugee Crisis. This mass inflow of asylum

seekers and refugees had a considerable strain on public authorities in several Member

States, and even had effects in the US. The European Commission’s assessment of the

Refugee Crisis summarizes the implications of this labor flow:

“While heterogeneous as a group, many asylum seekers are relatively young, the

vast majority is of working age, and increasingly more people come from countries

considered unsafe. Based on the information available, the number of asylum seekers in

the EU more than doubled between 2014 and 2015 to reach about 1.26 million persons.

Given that around 70 % of asylum seekers are of working age (between 18 and 64 years

old), compared to 63 % in the EU’s population in 2014, their arrival has somewhat

altered the age distribution in the countries most concerned. More individuals are

coming from countries deemed by EU Member States to be ‘unsafe’, such as Syria. As a

result there has been an increase in the share of applicants recognized as refugees (in

2015 the first instance recognition rate was 52 % compared to 46 % in 2014). Evidence

from some recent studies suggests an average education level of asylum seekers below

that of natives, with a relatively large share of low-skilled, and the educational

attainment of the population in the country of citizenship of the asylum seeker seems to

be lower than in the EU Member States,” (EC, 2016, p. 3).

Brexit

As of March 29th 2017 the UK government will begin to formally withdraw its

membership of the EU. Since the formation of the EU in 1958, Britain is the first

member state to invoke Article 50 of the Lisbon Treaty, which states the intention to

withdraw from the union and gives both parties two years to agree to the terms of the


split. One of the strongest drivers of this was the UK’s desire to exit the Single Market,

which had permitted large labor flows across borders and a loss of national sovereignty.

The Single Market of the EU endorsed a truly free market, which increased market

competition and created winners and losers now that the countries could “compete”

against each other for labor and services (Matthijs, 2017). Since the wealth and

standards in all EU member states are not the same, poorer countries are able to offer

lower prices with their cheaper wages and living standards than the richer countries can,

resulting in an imbalance. This imbalance in wages and income between the Member

States also resulted in a mass influx of citizens from the poorer EU countries like

Poland and Hungary to the richer EU countries like Germany and the UK. Over a

million Poles have migrated to the UK and other western European countries since its

membership of the EU in 2004 (ADU, 2017). In turn this led to further issues and

concerns with the single market since it has no mechanisms in place to handle such

sudden influxes of people and left national governments unable to control their own

economies in such dire times (Matthijs, 2017).

3.1.3.4. New Dimensions Stiglitz (2017) has added a new dimension of globalization in his new book; this

is the fiscal paradises and tax competition dimension of globalization. According to

Stiglitz (2017), globalization has expanded opportunities for tax avoidance and made

tax evasion easier. Globalization has enabled companies to relocate their production or

intellectual property (if it’s claimed that it makes majority of the firms profits) to a low-

taxed jurisdiction, while still selling their goods globally, “with so much freedom to

locate production and to decide where the local of profits would be, tax competition and

the race to the bottom become even worse,” (Stiglitz, 2017, p. 39).

Stiglitz defines fiscal paradises as places where individuals or corporations can

avoid or evade taxes, which are increasingly popping up around the globe; some of the

most famous include Luxembourg and Ireland (Stiglitz, 2017, p. 38). These fiscal

paradises provide corporations or individuals with a loophole to avoid taxes and often

remain in secrecy until there are leaks such as the Panama papers and the Luxleaks. One

of the most shocking incidents of globalization being used for tax avoidance was

revealed at a congressional hearing 2013 in the case of Apple, one of the most profitable

companies today. It came out that Apple had been doing secret deals with Ireland to get


its tax rate down to 0.005 percent (Stiglitz, 2017, p. 39). Such activities emphasize the

capitalistic agenda of corporations in the global economy.

Lastly, another new dimension of globalization is the political global economy

or the “failure to make globalization work” (Stiglitz, 2017, p. 45). The political global

economy is increasingly influenced by MNCs and the left parties have failed according

to Stiglitz (2017). He claims that the left parties have failed to speak out about

globalization and defended the interests of the working class. This allowed for the

campaigns of New Protectionism boasted by Trump in the US and Le Pen of France to

fill the void and gain the vote of the unattended working class (Stiglitz, 2017, p. 49). It

is the New Protectionism advocated by Trump and Le Pen, which Stiglitz claims will

have one of the most detrimental effects on the future of globalization (Stiglitz, 2017, p.

49; UN, 2018). He argues that in order to avoid backlash against globalization,

governments need to come forward with economic policies that push the economy

toward full employment, adjustment policies that help workers and firms adapt to new

circumstances and social protection policies protecting them against the losses to the

standards of living that they may face as they’re adjusting (Stiglitz, 2017, p. 50).

Not only will New Protectionism hinder progress in globalization, but it also has

its own implications (Stiglitz, 2017, p. 50; UN, 2018). As countries like the US continue

to withdraw from ITAs like TTP and TTIP, and international environmental agreements

like the Paris Agreement and build barriers between countries like Mexico in a time

when global support and collaboration are needed, there will be consequences. As

emerging economies like India and China continue to gain power and influence there

will be a change in the global political arena. China has been steadily increasing its

growth, investment portfolio, and expansion over the past decade and if the US

continues to deter from international relations, then unlike ever before, there will be a

new global leader there to step in and take its place in our new global economy (Stiglitz,

2017, p. 374).

A New Global Economy

Stiglitz defines four changes, which distinguish globalization today from what it

was in 2001 when he first released GAID. These changes define our current state of

globalization as the New Global Economy (Stiglitz, 2017, p. xxxi). The first change has

been a heightened awareness of climate change over the past 15 years. Stiglitz claims


that the advanced economies are the main cause of the increase in atmospheric

concentration, which is having the most harmful effects on developing countries.

Secondly, the unforeseen consequences of the East Asia crisis and the way the IMF

mismanaged it in 1977 has led to a change in the credibility of the IMF (Stiglitz, 2017,

p. xxxi). The third change is an increasing importance in intellectual property rights

(IPR) and the payments related to it. Stiglitz (2017) explains that as the world has

shifted into a more knowledge-based economy the payments on IPR increased which

has led to an inflow of capital from the South to the North since majority of the patents

resign with the North (Stiglitz, 2017, p. xxxi). The fourth and last change is the

increasing economic power of emerging economies, which have been experiencing

tremendous growth in GDP with China in particular becoming a leader in the global

arena (Stiglitz, 2017, p. 374; White Case, 2017, p. 5).

3.1.3.5. Summary The concept of globalization, its definitions and its key dimensions have been

discussed throughout this chapter to generate a deep and thorough understanding of the

topic. The concept of globalization emphasized globalization as a process involving the

compression of space in such a way that distance is less of a factor than it previously

was in terms of knowledge, communication and movement (Martell, 2010, p. 12), and

which embodies trans-regional interconnectedness (Held et al., 1999, p. 15) leading to

increased interdependence through enhanced institutional velocity (Keohane & Nye,

2007, p. 10) and ultimately results in a deepening enmeshment of the local and global to

such an extent that the impact of distant events is magnified (Held et al., 1999, p. 15).

Defining globalization tied the concept to the material aspects of globalization

and emphasized its dimensions: globalization is “the closer integration of the countries

and peoples of the world which has been brought about by the enormous reduction of

costs of transportation and communication, and the breaking down of artificial barriers

to the flows of goods, services, capital, knowledge, and (to a lesser extent) people

across borders,” (Stiglitz, 2002, p. 9). The main dimensions of globalization were then

defined as economic globalization, environmental globalization and social & cultural

globalization and each section revealed the activities and parties involved and effected

by globalization. Trade, investment, and short-term capital flows made up the economic


dimension of globalization and illustrated the implications that these activities have at

the global level.

Trade is no longer just the exchange of products and services between countries

but also affects the employment rate of a country, the income of a country, the

competition in the global market, and the innovation and knowledge in the global

market (Meyer, 2017; Stiglitz, 2017, p. 37). ITAs have been expanding their scope and

starting to include policies on intellectual property rights, investment agreements, and

investor state dispute settlements (ISDS) (Meyer, 2017; Stiglitz, 2017, p. 37; Tucker,

2016). With trade agreements expanding their scope to cover topics of consumer

protection, and labor and environmental standards, countries and citizens feel a loss of

sovereignty, as they must adopt the policies decided on at the global level by IGOs,

MNCs or foreign governments. Therefore the more powerful multinational enterprises

become, the more they can influence the governments of countries in which they do

business (Irwin, 2008; Stiglitz, 2017, p. 37).

Brondoni’s (2014) four periods of corporate globalization showed that

capitalistic interest and competition is inherent to MNCs, and having MNCs included in

global governance decision-making is unlikely to improve the challenges currently

facing globalization (Brondoni, 2014, p. 19; Stiglitz, 2017, p. 39; Gopinath, 2008, p.

132). FDI has become a vital aspect of economic globalization, as corporations are able

to move across global distances and search for the most advantageous locations, and

investment opportunities possible to expand and sustain their global power and control

in the market place. In other words globalization has allowed MNCs to search for the

most capital intrinsic loopholes in the global arena either through finding fiscal

paradises for tax avoidance or by scouting locations to minimize costs (Stiglitz, 2017, p.

39). Such exploitive behavior has resulted in economic, social and environmental harm

in developing countries (Ritchie & Roser, 2018; WHO, 2018; Kampa & Castanas, 2008,

p. 362; Stiglitz, 2017, p. 39).

Both international trade and FDI have environmental and cultural & social

effects on the countries involved because the economic exchange results in an exchange

of ideas, knowledge, culture, pollution and people (WHO, 2018; Ritchie & Roser, 2008;

Gopinath, 2008, p. 23). Hence, the economic dimension of globalization is linked to the

social & cultural dimension as well as the environmental dimension. Cultural globalism

is defined as the transmission of ideas, meanings and values around the world by

extending and intensifying social relations (Srivastava & Khan, 2016, p. 20).


Globalization often results in a clash of cultures when new cultures enter into traditional

cultures (i.e. via trade & investment) and because a country’s identity is defined by its

culture this has an adverse effect on the social capital of a country (Stiglitz, 2017, p.

366). Environmental pollution as a result of trade, manufacturing processes, and mass

production and consumption has harmed local citizens and led to global warming and

depletion of the Earth’s ozone layer (Stiglitz, 2017, p. 16; Ahmed et al., 2017, p. 1142;

Erugrul et al., 2016, p. 543). As stated in Our Common Futures, “ecology and economy

are becoming ever more interwoven locally, regionally, nationally, and globally into a

seamless net of causes and effects,” (UN, 1987). Coming back to Martell’s (2010)

argument, that the effects of globalization cannot be considered in the context of single

dimensions as they all overlap, relate and influence one another.

3.2 Sustainable Development The previous sub-chapter focused on globalization and its various dimensions,

which were: economic, environmental, and cultural & social. This chapter is dedicated

to explaining SD and its aspects, which are: economic, environmental and social. As the

aspects of globalization and SD strongly overlap, it is apparent that these two processes

strongly correlate. The previous chapter demonstrated how the activities of

globalization can have harmful economic, social and environmental effects on the

world. SD is focused on preventing and mediating these harmful effects to ensure a

peaceful and prosperous future. This section begins by introducing the concept of SD

and explaining its origin. Following the history of SD, several SD initiatives will be

discussed, including the UN’s most recent Agenda 2030. A short summary will

conclude this sub-chapter before moving on to the next: Global Governance.

3.2.1. The Concept A collapse of futurity is a troubling concern for many critics of globalization as

future people and environmental sustainability are not currently the concerns of the

world (Huebener et al., 2016, p. 250). The anxiety induced by this troubling concern for

the future is reflected in the rapidity and complexity of changes occurring across and

within the realms of culture, economy and environment which characterize

globalization (Huebener et al., 2016, p. 250). Hence, SD has become an increasingly


important topic in our current globalized world. “SD is about protecting and conserving

the planet’s natural environment and promoting social equity and a degree of economic

equality within and between nations,” (Blewitt, 2015, p. 29).

Although SD has become a global topic of debate in recent years, it is a concept

that first gained popularity around the 1970s when it became apparent that the Earth’s

resources are not infinite (Meadows et al., 1972, p. 23; UN, 1987). Since environmental

awareness became a topic, trade and business have been at the roots (WHO, 2018; UN,

2018). Starting from the unsustainable use of timber wood for fuel and shipbuilding in

the earliest days of trade, to the use of chemical pesticides on fruit and vegetables for

larger crops already in the 1960s, the Earth has been harmed by human activity for the

purpose of business and consumption (Meadows et al., 1972, p. 23; WHO, 2018;

Ritchie & Roser, 2018). Elkington (1994) states that the first public pressure wave

responding to sustainability was ‘Limits’ which was built from the early 1960s

(Elkington, 2004, p. 7). By the mid 1970s a wave of environmental legislation swept

across the OECD region and industry went into compliance mode (Blewitt, 2015, p.

20). It was around the 1970s that activist groups fighting for better preservation of the

Earth’s ecosystem started to form such as Friends of the Earth and Greenpeace

(Meadows et al., 1972; Blewitt, 2015, p. 20).

The landmark study, Limits to Growth by the Club of Rome was released in

1972 sparking the first serious international discussion on global environmental issues

at the UN Conference on the Human Environment in Stockholm (Blewitt, 2015, p. 20).

Limits to Growth (1972) provided evidence highlighting the need for a change from

contemporary trends in order to transcend environmental and demographic problems

worldwide (Blewitt, 2015, p. 20; Docalavich, 2016, p. 26). Five major trends were

investigated throughout the Club of Rome’s 1972 report: accelerating industrialization,

rapid population growth, widespread malnutrition, depletion of non-renewable

resources and a deteriorating environment.

However, it was not until the World Conservation Union’s World Conservation

Strategy was published in 1980 that the first definition of SD came to be:

“Development is defined here as: the modification of the biosphere and the

application of human, financial, living and non-living resources to satisfy human needs

and improve the quality of human life. For development to be sustainable it must take


account of social and ecological factors, as well as economic ones; of the living and

non-living resource base; and of the long term as well as the short-term advantages and

disadvantages of alternative actions,” (IUCN, 1980, p. 2).

[SD] then contained within it two key concepts:

1 The concept of ‘needs’, in particular the essential needs of the world’s poor,

to which over-riding priority should be given.

2 The idea of ‘limitations’ imposed by the state of technology and social

organization on the environment’s ability to meet present and future needs (UN,

1987).

Soon after the IUCN’s World Conservation Strategy, the Brandt Commission

published the Brandt Report in 1980. In comparison, the Brandt Report focused on the

social and economic aspects of SD by emphasizing the great differences existing

between the rich and the poor countries. The Brandt Commission’s North-South: A

Program for Survival, reviews the then current international development issues and

highlights the prevalent differences in economic development between the North and

the South, called the North-South divide. The difference in the standard of living

between the rich North (US, Canada, Western Europe, Australia, New Zealand, and

developed parts of Asia) and the poor South (Africa, Latin America and developing

countries in Asia including the Middle East) is a pressing problem and cooperative

action to change is needed:

“Change and reform cannot take place in a one-way street: they must be

supported by governments and people in both industrialized and developing countries.”

(Brandt, 1980, p. 7)

In the 1980 report, North-South relations are claimed to be the greatest social

challenge of our time, and provide equal importance to counteracting the dangers of the

arms race and fostering world peace (Brandt, 1980, p. 5). People living in the South are

still dying from starvation and diseases while the North is prospering in food, medicine

and commodities. To eliminate hunger, developed countries should increase their

international food production and promote agriculture in those parts of the world


dependent on imports (Brandt, 1980, p. 11).

“We have a change- whether we are living in the North or South, the East or

West- if we are determined to do so, to shape the world’s future in peace and welfare, in

solidarity and dignity,” chairman of the Brandt Commission, Willy Brandt, (Brandt,

1980, p. 5).

3.2.2. The Goal By 1987 the UN published the Brundtland Report also known as “Our Common

Futures”, which gained the most global reach and became the most commonly used

definition of SD today. Here SD is defined as:

"Development which meets the needs of current generations without

compromising the ability of future generations to meet their own needs."

(UN, 1987)

The Brundtland Report

“Our Common Futures” brought to attention the need for co-operative action

and coordination amongst nations in protecting the environment and economic and

social development of the world for future generations. The Brundtland Report set four

main goals:

1. To propose a long-term environmental strategy for achieving sustainable

development by 2000 and beyond

2. To promote greater co-operation among developing countries and between

countries at different stages of development

3. To find ways the international community can contribute to environmental

concerns

4. To help define shared perceptions of long-term environmental issues and

solutions for future generations (UN, 1987)


The second ‘Green’ pressure wave began with the publication of ‘Our Common

Futures’ and exposed the term ‘SD’ to the political mainstream (Elkington, 2004, p. 7).

This brought about the new movement ‘green consumerism’ and public concerns such

as ‘mad cow disease’ and genetically modified foods. Following the publication of Our

Common Futures the UN hosted the Rio Earth Summit in 1992. The Rio Earth Summit

hoped to build off the foundation of the Stockholm Declaration. At this time, public

awareness and debate around environmental issues peaked with a number of new

agreements that dealt with varying issues such biodiversity and climate change

(Docalavich, 2016, p. 42). In Rio a series of twenty-seven principles were proclaimed to

establish a new international partnership through the creation of new levels of

cooperation among nations to produce international agreements respecting the interests

for all people and protect the best interests of the world’s environment and economic

systems (Docalavich, 2016, p. 43). Additionally, the UN formed the Commission on SD

(CSD) to monitor the implementation of the agreements reached in Rio (Docalavich,

2016, p. 43).

3.2.3. SD Initiatives After the Brundtland Report, the UN Conference on Environmental

Development (the Rio Earth Summit) in 1992 revealed Agenda 21 (Docalavich, 2016, p.

48). In 1998 the Assembly held a special session, Rio+5, and acknowledged that SD

progress was ‘uneven’ and identified new issues such as increased globalization,

widening inequalities in income, and a continued deterioration of the global

environment (Docalavich, 2016, p. 50). Following this discovery, several sessions took

place to develop a new SD plan leading to the creation of Agenda 21. Agenda 21

consists of twenty-seven principles designed to address every area of economic

development and its forty chapters are divided into four sections (Docalavich, 2016, p.

48). The initiative provides a plan of action for SD covering various issues such as

population control, transparency, partnership working, equity and justice, and placing

market principles within a regulatory framework (Blewitt, 2015, p. 25). According to

the UN (2016), Agenda 21 is the ‘UN Blueprint for SD’ (Docalavich, 2016, p. 47).

Local Agenda was the local approach to Agenda 21 and despite not being legally

binding gained a following of many countries by 2000 (Docalavich, 2016, p. 51). Local


Agenda has been proven to be most successful in countries where the local government

has a high level of autonomy to raise income locally and regulate environmental matters

(Blewitt, 2015, p. 25).

3.2.3.1. The UN’s MDGs

In the literature, The Rio Earth Summit in 1992, which introduced Agenda 21, is

commonly referred to as a turning point in SD (Blewitt, 2015, p. 25; Senit et al., 2016,

p. 533; Fox & Stoett, 2016, p. 555) for two main reasons: first it instigated a movement

towards citizen participation in global governance issues, and second it revealed the

importance of establishing SDGs for the purpose of assessing improvements in SD.

Inspired by the issues and topics discussed at the Rio Earth Summit, the UN released its

first Millennium Development Goals (MDG) in 2000 to address human development

and provide a framework for the UN’s economic development efforts with a target date

of 2015. The MDGs consists of eight goals which affect economic development,

whether by alleviating poverty, creating a healthy and educated labor force, protecting

limited resources or developing a global infrastructure for industry and commerce and

were made to be measurable and achievable (Docalavich, 2016, p.10).

The UN’s MDGS:

(1) To eradicate extreme poverty and hunger

(2) To achieve universal primary education

(3) To promote gender equality and empower women

(4) To reduce child mortality

(5) To improve maternal health

(6) To combat HIV/AIDS, malaria, and other diseases

(7) To ensure environmental sustainability

(8) To develop a global partnership for development

(Docalavich, 2016, p.10)


According to the UN’s 2014 report on the effectiveness of the MDG campaign

there has been progress in developing countries: the likelihood of a child dying before

the age of five have reduced by 50%, maternal mortality rates have dropped by 45%,

enhanced HIV treatment has saved an estimated 6.6 million lives, over 22 million have

been saved from tuberculosis, and 3.3 million have fought malaria (Docalavich, 2016, p.

14). “Fewer people are in poverty, more children are in school. We are making inroads

in the fight against malaria and tuberculosis. Families and communities have greater

access to an improved drinking water source,” remarked the Secretary General on the

MDG progress (Docalavich, 2016, p. 14).

In comparison to the MDGs, the UN’s next SD initiative aimed to formulate

SDGs that could be applicable to every country due to their concise, easy to

communicate, limited in number, aspirational, global and action orientated nature

(Blewitt, 2015, p. 27). The General Assembly of the UN convened on the 25th of

September 2015 to declare another SD initiative, the 2030 Agenda for SD. Building off

of the Millennium Development Goals issued by the UN in 2000, Agenda 2030 sets out

17 SD Goals and 169 targets to be achieved in relation to the triple bottom line

(environment, economy, social) over the next 15 years (UN, 2015).

3.2.3.2. The UN’s Agenda 2030

Similar to the notions of the Brundtland Report, the 2030 Agenda states

“eradicating poverty in all its forms and dimensions is the greatest global challenge and

an indispensable requirement for SD,” (UN, 2015). Again emphasizing the cause and

effect link between global social and economic matters, and the need for global

cooperation. The 17 SDGs of Agenda 2030 are as follows:

The UN’s 2030 SDGs:

1. End poverty in all its forms everywhere

2. End hunger, achieve food security and improved nutrition and promote

sustainable agriculture

3. Ensure healthy lives and promote well being for all at all ages

4. Ensure inclusive and equitable quality education and promote lifelong

learning opportunities for all


5. Achieve gender equality and empower all women and girls

6. Ensure availability and sustainable management of water and sanitation

for all

7. Ensure access to affordable, reliable, sustainable and modern energy for

all

8. Promote sustained, inclusive and sustainable economic growth, full and

productive employment and decent work for all

9. Build resilient infrastructure, promote inclusive and sustainable

industrialization and foster innovation

10. Reduce inequality within and among countries

11. Make cities and human settlements inclusive, safe, resilient and

sustainable

12. Ensure sustainable consumption and production patterns

13. Take urgent action to combat climate change and its impacts

14. Conserve and sustainably use the oceans, seas and marine resources for

SD

15. Protect, restore and promote sustainable use of terrestrial ecosystems,

sustainably manage forests, combat desertification, and halt and reverse

land degradation and halt biodiversity loss

16. Promote peaceful and inclusive societies for SD, provide access to

justice for all and build effective, accountable and inclusive institutions

at all levels

17. Strengthen the means of implementation and revitalize the Global

Partnership for SD

(UN, 2015)

These 17 SDGs emphasize the three key aspects of SD (economic, social, and

environment) and the need for global cooperation in order to combat the world’s most

pressing matters (UN, 2015). Forms of measuring globalization and SD today are still a

debated topic but there has been some consensus on a few forms of measurement. The

UN has developed an indicator for measuring SD, to track the progress of their SD

initiatives. This is the human development report, which provides the UN with a means

of shaping their policies (Docalavich, 2016, p. 61). The HDI is a composite index


measuring average achievement in three basic dimensions of human development—a

long and healthy life, knowledge and a decent standard of living (UNDP, 2017).

3.2.4. Summary SD is the process of creating a world where social, economic and environmental

problems are shared amongst all of humanity and eventually eradicated in order to form

a world of peace, prosperity and justice for all. SD “is about protecting and conserving

the planet’s natural environment and promoting social equity and a degree of economic

equality within and between nations,” (Blewitt, 2015, p. 29). As the process of

globalization increases the flow of goods, services, people, knowledge and capital

across the world and transforms local issues into global ones through the growing

presence of trans-regional networks, the world has become tied together. This means

that the issues facing developing countries are no longer bound to these countries but

have become global problems requiring the attention and support of the developed

countries (UN, 2015; UN, 1987).

Although the world has become more interconnected and interdependent as a

result of globalization, not all countries have developed at the same pace leading to the

uneven distribution of resources, capital, and knowledge in the world. In addition to the

challenges of uneven development, the diversity of the cultures, countries and citizens

in the world makes global cooperation even more challenging as the values and

priorities of humanity differ (Keohane & Nye, 2007, p. 5; Meyer, 2017). Sustainability

initiatives have not only promoted awareness of global problems by instigating a single

value and priority for humanity but they have also provided a means to combating

global problems at various levels. Therefore while globalization may have increased the

urgency for resolving SD issues, it has also provided a way for these issues to be

globally acknowledged and worked towards.

3.3 Global Governance As has been demonstrated, activities of globalization take place at the global

level, above the international and national levels. This section begins by introducing

The Spatial Scale to illustrate the varying levels of influence in the world and therefore

the impact each level can have on SD. Following The Spatial Scale the main


organizations mediating global governance will be presented to reveal the actors in

charge of global and SD activities, these include: the UN, the World Bank, the IMF, and

the WTO. Although these global institutions have been formed to improve and monitor

globalization and SD activities, they have become the subject of criticism by several

scholars (Stiglitz, 2017, p. 366; Gopinath, 2008, p. 132; Srivastana & Khan, 2016, p.

22). These opinions will be explained and a summary of global governance will

conclude this section.

“With global ecological changes, an ever more integrated global economy, and

other global trends, political activity increasingly takes place at the global level,” (GPF,

2018). Each nation has its own local governmental structure and policies by which it

leads its country and citizens. This complicates matters and has resulted in some forms

of global governance to oversee and mitigate such issues. Understanding the role of the

spatial scale in SD by Grainger (1999) in Figure 1 provides a deeper insight into the

complexity of the various levels involved when working towards a global goal (Blewitt,

2014, p. 30; Grainger, 1999.)

Figure 1: The Spatial Scale

(Blewitt, 2014, p. 30; Grainger, 1999)

On the global scale (World), international bodies (i.e. IGOs) such as the UN and

the World Bank operate. This means that the actions, policies, and treaties implemented

by these institutions affect all ecological scales. Operating at the supranational level are

institutions such as the European Union, because its power is delegated to an authority

by the governments of its Member States. The actions of institutions and organizations

at the supranational and national level have wider effects than their size, since they

control the actions of those below their level and influence the actions of others on their

level and above (at all levels) (Blewitt, 2015, p. 30). National or neighborhood


campaigns aiming towards SD will have to rely on the actions of individual households

and citizens to attain their goal (Blewitt, 2015, p. 30).

Natural or other endowments/grants may prevent a small town or village from

being sustainable if it is isolated from the wider ecological or political processes.

Meaning, if a single town works towards becoming more sustainable it may be

practically impossible for them to do so although it could inspire others around them to

act in the same way (Blewitt, 2015, p. 29). A country’s towns and cities are the largest

consumers of its resources and hence often have a large environmental footprint. If the

towns or cities of a country make a move towards sustainability and communicate their

motive, it will have a positive impact on global sustainability (Blewitt, 2015, p. 29).

Therefore, sustainable action applied by many at the local level will be able to influence

the policy and practice at the higher levels, so “we can act locally and think globally”

(Blewitt, 2015, p. 30).

3.3.1. Intergovernmental Organizations Three multilateral institutions play an important role in setting the rules,

overseeing the global economic environment and helping nations to develop and

improve their economic capabilities; these are the IMF, the WTO and the World Bank.

These Intergovernmental Organizations (IGOs) offer four different types of systems:

market creating (property rights and enforcing contracts), market regulating (regulatory

agencies for different kinds of industries or financial services), market stabilizing

(central banks and policies requiring fiscal discipline of the government), and market

legitimization (such as public pension programs or unemployment schemes) (Gopinath,

2008, p. 95-99).

The UN, the European Union, the International Monetary Fund, and the World

Bank are amongst the oldest and most significant intergovernmental organizations

(IGOs) existing today. With the UN, the IMF, the World Bank and the WTO being

some the most influential global IGOs and the largest players of global governance

today. By definition an IGO is an organization, comprising of sovereign states or other

IGOs, and is formed through agreements or treaties acting as a charter to form the group

(UIA, 2017). Hence, IGOs allow the world’s inhabitants to cooperate together in areas

of peace, security, and economic and social issues (UIA, 2017).


3.3.1.1. The UN The Charter of the UN came into existence on October 24, 1945 and was then

ratified by 29 nations. As printed in the Charter of 1945, the purpose of the UN is:

1. To maintain international peace and security, and to take effective

measures to prevent and remove threats to the peace

2. To develop friendly relations among nations based on respect for the

principle of equal rights and self-determination of peoples

3. To achieve international cooperation in solving international problems of

an economic, social, cultural or humanitarian character and to promote

and encourage respect for human rights and fundamental freedoms for all

without distinction

4. To be a center of harmonized actions of nations in the attainment of these

common ends

(UN, 2017).

Today the primary function of the UN is “promoting peace and security for the

people of the world is essential to development, as armed conflict is devastating to most

individuals’ economic security,” (Docalavich, 2016, p. 19). Hence, the main aim of the

UN is to provide an environment in which development can take place.

Since its formation, the UN has designed several official programs to assist

countries in developing healthy economies. The primary body is the UN Development

Program (UNDP), which is the UN’s global development network, working to connect

countries to knowledge, experience and resources, to help them create their own

solutions to global and national development challenges (Docalavich, 2016, p. 16). One

specific task of the UNDP is helping countries integrate the MDGs into their individual

and national development strategy. Furthermore, the UNDP can help the development

of these countries to be more effective by ensuring a greater awareness of poverty,

expanding access to productive assets and economic opportunities, and coordinating aid

programs with countries’ international economic and financial policies (Docalavich,

2016, p. 18). Established in 1966, another very important UN program is the UN

Industrial Development Organization (UNIDO), which is responsible for promoting

industrialization throughout the developing world. They work with some of the poorest

countries and countries with economies in transition to deliver critical skills,


information and technology to promote the growth of unemployment, a competitive

economy, and a sound environment (Docalavich, 2016, p. 18).

3.3.1.2. The IMF, the WTO and the World Bank It wasn’t until after World War II that the desire and need for a structured

international trading system began to form (WTO, 2011). Seeking prevention measures

to further international crises and depressions, institutions from all over the world

gathered to come up with a solution to trade (WTO, 2011). The Bretton Woods

conference of 1944 set the foundation necessary for a multilateral trading system

amongst the nations and envisaged three new international economic institutions: The

International Monetary Fund, the International Trade Organization, and the World Bank

(WTO, 2011).

The International Monetary Fund came into existence in 1945 to stabilize

fluctuating exchange rates between the countries. Forming in 1944 the International

Bank for Reconstruction and Development, the World Bank, would help the

restructuring of war-torn countries by providing capital. The International Trade

Organization was responsible for the administration of an open and non-preferential

multilateral trading order. By 1947 the provisional General Agreement on Tariffs and

Trade (GATT) had been negotiated and signed by 23 contracting parties and went into

effect in 1948 (WTO, 2011).

The GATT included the structure of past bilateral agreements into a single

multilateral convention by reflecting and reinforcing the commitment of its members to

a wider trade cooperation than ever before (WTO, 2011). While GATT promoted

multilateralism, it did not restrict bilateral and regional approaches to trade. Between

the 1950s and 1960s regionalism remained popular, in particular in Europe where

continental integration was highly desired. In 1957 the European Economic Community

(EEC) formed with a complex network of preferential trade arrangements amongst its

members (WTO, 2011). The EEC fostered trade and integration amongst its member

states and by the 1980s was ready to board its “single market” program to demolish the

remaining physical, technical and tax barriers within the community. With the

Maastricht Treaty of 1993, the EEC became the European Community (EC), today

known as the European Union (WTO, 2011).


As mentioned before, the IMF and the World Bank were established with the

Bretton Woods Conference in 1944, and in 2017 are still working for the same goals as

back then. Today the IMF is responsible for monitoring and ensuring stability of the

international monetary and financial system. According to their website in October

2017, the IMF has 189 members and its goals are to: promote exchange stability,

provide opportunity to correct countries’ balance of payments problems, and facilitate

the expansion and balanced growth of international trade (IMF, 2017). The objective of

the World Bank today is still to provide financial and technical assistance to developing

countries worldwide and has grown to comprise of five institutions managed by their

member countries. The World Bank Group today consists of: The International Bank for

Reconstruction and Development, The International Development Association, The

International Finance Corporation, The Multilateral Investment Guarantee Agency, and

the International Centre for Settlement of Investment Disputes (The World Bank, 2017).

The 1948 GATT remained until a new and legally distinct General Agreement

on Tariffs and Trade replaced it in 1994 (GATT 1994). Along with the new GATT

1994, came the formation of the WTO established in 1995 (also known as the

Marrakesh Agreement 1994). The purpose of which was to “provide the common

institutional framework for the conduct of trade relations among its Members in matters

related to the agreements and associated legal instruments included,” in the Multilateral

Trade Agreements, Plurilateral Trade Agreements and the GATT 1994 (GATT, 1994).

As stated in the Marrakesh Agreement, the WTO shall work largely in cooperation with

the IMF and the International Bank for Reconstruction and Development to achieve a

greater coherence in economic policymaking (GATT, 1994). The IMF and the WTO

work closely together to ensure a strong system of international trade and payments that

is open to all countries. Currently the WTO has 164 members including all the major

trading economies of the world, and its primary purpose is to ensure that trade flows as

freely as possible without creating harmful effects (Docalavich, 2016, p. 75).

NGOs or non-governmental organizations have also become large global players

in today’s society by providing a voice to the public and acting as a mediator between

citizens and the global authorities. NGOs are increasingly becoming active in policy-

making at the UN, and include the most outspoken advocated of human rights, the

environment, social programs, and women’s rights and more (GPF, 2017). CSOs have

emerged as a major force in international development over the past 30 years and the

World Bank has been working closely with CSOs on a daily basis to engage with them


through information sharing, policy dialogue, strategy consultation, operation

collaboration, and institutional partnerships (The World Bank, 2018).

According to the World Bank, CSOs includes: “the wide array of non-

governmental and not for profit organizations that have a presence in public life,

express the interests and values of their members and others, based on ethical, cultural,

political, scientific, religious or philanthropic considerations,” (The World Bank, 2018).

CSOs are formed by community groups, NGOs, labor unions, charity organizations,

indigenous peoples movements, faith-based organizations, professional associations,

think thanks, charitable organizations, foundations and other not-for-profit

organizations (The World Bank, 2018).

3.3.2. Criticism of IGOs Despite the apparent good intentions of intergovernmental institutions, they have

become a topic of criticism amongst anti-globalization supporters who claim they

facilitate the needs of corporations and capitalism over the needs of citizens and the

planet (Stiglitz, 2017, p. 366; Gopinath, 2008, p. 132). Lenin (1917) defines the

characteristics of capitalism as the form of monopolies, oligarchy, and the exploitation

of the weak by the strong nations. Gopinath (2008) explains the link between capitalism

and anti-globalization stating that globalization is in a sense the capitalistic exploitation

of the weak nations making globalization an instrument for exploitation of the weak

nations (Gopinath, 2008, p. 132). Anti-corporation attitudes towards globalization arise

from the notion of “monopolies”, some argue that MNCs are an exploitive force

delaying doomsday for capitalism in the home country while harming those abroad-

while others state that global integration without global regulation is highly

advantageous for MNCs allowing them to search for the most likely locations to exploit

workers and labors to avoid national regulations (Gopinath, 2008, p. 126-128).

Furthermore, Stiglitz (2017) states that powerful corporations like Wal-Mart are able to

impose their market power to drive down producer prices and ultimately drive out small

producers, illustrating our global state of imperfect competition (Stiglitz, 2017, p. 367;

Srivastava & Khan, 2016, p. 20).

According to Srivastava and Khan (2016), the emergence of intergovernmental

organizations such as the World Bank and the IMF intensified the concept of economic

globalization at the global level. In response, various developing nations were forced to


adopt structural development policies, i.e. SAP, which had a direct effect on the social

sectors such as education and health (Srivastava & Khan, 2016, p. 22). In the event of

economic crisis, IMF programs intervene and dictate & undermine fragile political

consensus but here lies another problem (Stiglitz, 2017, p. 366). Excessively

contradictory monetary and fiscal policies imposed by the IMF can lead to further

depression in developing countries once capital market liberalization has already led to

a crisis. These interventions by the IMF can result in greater political and social turmoil

leading to greater flights of capital and human capital making recovery even more

difficult. Hence, “globalization- in the way that it has been managed- undermines social

cohesion, social consensus,” (Stiglitz, 2004, p. 481). In this case, the democratic

political processes are undermined by bribes to win concessions or to obtain protection

for investment purposes. Consequently, this leads to a poor investment environment and

therefore poor economic growth. Areas controlled by corporate interests, as is the case

with banana republics- countries dependent on the exports of limited resources, can then

almost replace governments and exert influence through international financial

institutions and the national government’s trade representatives (Stiglitz, 2004, p. 480).

Market economies require that contracts are abided by and that legal systems are

central but most contracts are rather self-enforcing dependent on reputation mechanisms

(Stiglitz, 2017, p. 366). Economic disruption undermines the effectiveness of these

reputation mechanisms to such an extent that the value of “cheating” exceeds that of

complying with the contract (Stiglitz, 2017, p. 366). This can lead to the perception that

the poor countries feel they are not being treated fairly, as imposing policies from

outsiders (the IMF), which go unexplained, often reflect international corporate and

financial interests rather than the interests of the country (Stiglitz, 2017, p. 366).

Additionally, globalization has been associated with opening up financial service

markets. This makes it more difficult for banks in developing countries to compete with

large international firms and may drive them out of business and prohibit a country

from accessing services they need (Stiglitz, 2004, p. 479). As a result and suggestion

Srivastava and Khan (2016) state that, all policies adopted by the government should be

filtered to prevent negatively affecting the marginalized section of the market

(Srivastava & Khan, 2016, p. 22). Since citizens are affected by the decisions made by

IGOs, there has been a growing demand for citizen participation in global governance.

Several authors claim that there is a dire need for citizen participation in the decision-

making processes of global governance (Fox & Stoett, 2016, p. 558; Melber, 2014, p.


1087). For instance Porta (2013) argues that it is necessary for there to be multiple

spaces of participation by the citizenry in decision-making in order to balance out the

principle of representation and for a deliberative process of preference definition in

order to balance out the majoritarian decision making principle. This is because greater

citizenship participation characterized by nonhierarchical modes of direction can

contribute to greater effective global governance (Risse, 2004, p. 288). However, Grant

& Kehoane (2005) state that an effective level of accountability at the global level will

require new pragmatic approaches to be used that focus both on delegation of power

and participation.

3.3.3. Summary Similar to how each nation has its national government to ensure that its rules

and regulations are enforced; global activities require global governance to ensure

fairness and justice at the global level. Unlike a national government, which is generally

democratic and acting on the needs and demands of its economy and citizens, IGOs are

meant to act on the needs and demands of the world. For this purpose the UN is focused

on the humanitarian and environmental needs of the world while the WTO, IMF and

World Bank are focused on the economic needs. While Member States influence the

decisions made by these IGOs, many feel that these organizations have capitalistic

interests, which support corporations over citizens (Stiglitz, 2017, p. 366; Gopinath,

2008, p. 132). As many of the rules and regulations decided by IGOs have national

implications, many authors have argued that citizen participation in global governance

is becoming a necessity. NGOs have formed to fill this void and are already becoming a

valuable player in the global governance process. However, when dealing with global

problems it is difficult to establish a one size fits all policy since the values and

priorities of citizens differ. Therefore effective global governance that satisfies all

parties will be a challenging effort.

3.4. Summary “SD is about protecting and conserving the planet’s natural environment and

promoting social equity and a degree of economic equality within and between nations,”

(Blewitt, 2015, p. 29). Globalization is “a state of the world involving networks of


interdependence at multi-continental distances. The linkages occur through flows and

influences of capital and goods, information and ideas, and people and forces, as well as

environmentally and biologically relevant substances,” (Keohane & Nye, 2007, p. 4).

When considering the concept of globalization in the context of its various aspects the

link between SD and globalization becomes more prominent. The concept of

globalization states that it is a process engendering trans-regional interconnectedness,

spatio-temporal processes of change, networks of intensive interdependence, and due to

velocity, including the shrinkage of space from the local to the global (Held et al., 1999,

p. 15; Keohane & Nye, 2007, p. 10). The concept implies that the activities as

mentioned in the aspects of globalization (1) are global in scale, (2) have inputs from

across continents and multiple countries within them, (3) involve the elites as well as

the masses and a global consciousness must occur, and (4) entail interdependency

between global parties (Martell, 2010, p. 6-12).

Economic globalization was defined as “the integration of national economies

into the international economy through trade, FDI, short-term capital flows,

international flows of workers and humanity generally, and flows of technology,”

(Bhagwati, 2004, p. 439). Trade, investment and short-term capital flows, in the context

of globalization result in intensive economic interdependence between networks and,

“intensive economic interdependence affects social and environmental

interdependence,” meaning that economic, social and environmental activities are

linked (Keohane & Nye, 2007, p. 8). Since corporations, national governments, and

IGOs facilitate the flow of trade, investment, and short-term capital flows they are the

major decision makers of globalization. However, as can be seen in the below

definitions of environmental and social & cultural globalization: environmental

globalism being the harmful effects that the transportation of materials and biological

substances across the oceans and atmosphere are having on the well-being of

humankind and the earth (Keohane & Nye, 2007, p. 5); and social and cultural

globalization being the transmission of ideas, meanings and values around the world by

extending and intensifying social relations (Srivastava & Khan, 2016, p. 20); these

global economic activities have social, cultural and environmental implications. Current

events such as Brexit, the Global Refugee Crisis and the recent actions of President

Trump have illustrated that national activities can have global negative effects and that a

loss of national sovereignty is a major cause for global controversy (Stiglitz, 2004, p.


481; Srivastava & Khan, 2016, p. 22). Furthermore, as the power in global governance

shifts to MNCs it becomes less likely that the economic, social, cultural and

environmental consequences of globalization are resolved due to the capitalistic

interests and hence immoral actions of MNCs (Gopinath, 2008, p. 126-128; Stiglitz,

2017, p. 39). The more global activities affect national social, economic and

environmental concerns, the more troublesome it becomes for citizens and countries

that global governance is largely controlled by IGOs and MNCs.

Therefore, if SD is focused on promoting social & economic equality and

conserving the earth and the activities of globalization currently harm social &

economic equality and the earth then one could say that globalization is directly harmful

to SD. However, the activities of globalization do not have to harm social & economic

equality and the earth as they currently do. Globalization detached from its activities is a

process that (through interdependent networks) connects the world in such a way that

activities and decisions in one region come to effect those in a distant region, sparking a

transformative change from the local to the global (Held et al., 1999, p. 15). In this

sense, globalization is a developed concept that, with the presence of global

interdependent networks, has the ability to initiate a global transformative change

towards SD. The largest challenge is then changing the activities of globalization from

harming SD to benefiting SD.

4. Systematic Literature Review The purpose of this chapter is to analyze the current literature on the topic of

globalization and SD. Based on the data collection, the 35 selected articles will be

analyzed and discussed and categorized into four main topics. Current progress and

challenges facing SD will be revealed and the effects of globalization on SD will

become definable. The following four main topics have been identified throughout the

academic literature, and will be discussed in the following order: (1) The Effects of

Globalization on SD (2) Global Governance (3) Education for SD (4) SD Business

Models & Solutions. Below the 35 articles selected for the literature review will be

summarized and explained. This chapter concludes with a summary of the systematic

literature review and an analysis of the main challenges facing globalization and SD

today. Based on the topics emphasized throughout the literature review the three main


challenges facing globalization and SD today are: (1) effective global governance and

the coordination of policies; (2) gaining societal support for SD, and; (3) gaining

business support for SD.

Listofthe35sourcesassessedthroughouttheLiteratureReview:

1. Adomßent, M., Fischer, D., Godemann, J., Herzig , C., Otte , I., Rieckmann , M., et al.

(2014). Emerging Areas in Research on Higher Education for SD Management

Education, Sustainable Consumption and Perspectives from Central and Eastern

Europe. Journal of Cleaner Production, 62, 1-7.

2. Almeida, C., Agostinho, F., Gianetti, B. F., & Huisigh, D. (2015). Integrating cleaner

production into sustainability strategies: an introduction to this special volume. Journal

of Cleaner Production (96), 1-9.

3. Barkemeyer , R., Holt , D., Preuss , L., & Tsang, S. (2014). What Happened to the

‘Development’ in SD? Business Guidelines Two Decades After Brundtland. SD, 22 (1),

15-32.

4. Beck, M. (2016). The Risk Implications of Globalisation: An Exploratory Analysis of

105 Major Industrial Incidents (1971–2010). International Journal of Environmental

Research and Public Health, 13 (309), 1-21.

5. Bennett, E. A. (2018). Voluntary Sustainability Standards: A Squandered Opportunity

to Improve Workers’ Wages. SD, 26, 65-82.

6. Biermann, F., Kanie, N., & Kim, R. E. (2017). Global governance by goal-setting: the

novel approach of the UN SD Goals. Current Opinion in Environmental Sustainability,

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4.1. The Effects of Globalization on SD To begin, this section of the systematic literature review will pickup from topics

discussed throughout the conceptual background to portray the current state of

globalization and SD today. The inequality gap was a key topic throughout the

academic literature with varying perspectives on the topic, and will start off this section

of the literature review. First the inequality gap will be explained and perspectives on

the topic will be discussed. The two main drivers of inequality throughout the academic

literature were defined as environmental degradation, and technological change. While

several authors focused on the drawbacks of globalization on SD, some focused on the

benefits and these contrasting views will be assessed. Furthermore, the change induced

by the UN’s SD initiatives will be discussed. While some authors argue that the UN’s

newest SDGs have enabled development through the cooperative actions prompted by

working towards common global goals, others feel that they have restrained societal


support. These varying perspectives will be explained before concluding this section

with a summary on the effects of globalization on SD.

4.1.1. Income Inequality On the one hand, critics of globalization argue that globalization has caused an

increase in the gap between the rich and the poor and the widespread imbalances in the

social system (Beck, 2016, p. 1; Herrschel 2013, p. 15; Stewart, 2016, p. 62; Firat 2017,

p. 5; Rasiah et al., 2015, p. 6). On the other hand, supporters of globalization argue that

the increase in living standards and the reduction in poverty caused by increased trade

and capital flows, the sharing of ideas, and the extensions of democratic institutions

between nations would not have been possible without globalization (Das, 2013, p. 104;

Chia, 2015, p. 2; Grossman & Helpman, 2015, p.v100). Neither perspective is wrong; it

is just a matter of the area of focus when considering globalization and SD issues.

Income inequality, or the uneven distribution of earnings from capital, labor,

assets, transfers or other sources, is a concerning topic for many authors across the

academic literature (Bennett, 2018, p. 67; Stewart, 2016, p. 68; Stiglitz, 2017, p. 14:

Jaumotte et al., 2013, p. 30; Ertrugul et al., 2016, p. 14). Income inequality is still

prevalent in both developed and developing countries today and this reality challenges

the ability of the world as a whole to make the transition towards SD (Jaumotte et al.,

2013, p. 30; Stiglitz, 2017, p. 14; Stewart, 2016, p. 68). Globalization is believed to be

the main driver of this current challenge as it has increased competition in the global

market and enabled corporations to expand across the globe (Stiglitz, 2017, p. 1;

Stewart, 2017, p. 68). Income inequality is particularly challenging to conquer in

developing countries, which are already struggling to compete in the global market

(against competitors and technology) and are living in unsustainable conditions with

poor environmental, labor and social standards (Bennett, 2018, p. 67; Beck, 2016, p. 1;

Hart et al., 2016, p. 412; Stewart, 2016, p. 68; Ertrugul et al., 2016, p. 553; Shaikh et al.,

2016; Jaumotte et al., 2013, p. 30; Stiglitz, 2017, p. 14). The UN’s 2030 Agenda has

highlighted the protection of wages, supporting labor rights, and raising incomes for the

bottom 40% of the global population as key strategies for reducing income inequality

both within and among countries by 2030 (UN, 2015, Goals 8, 10; Bennet, 2018, p. 67).

As well, several authors claim that improving wages, especially for low-wage earners


with little wealth, is a key to improving the prevalent income inequality both globally

and within individual countries (Bennett, 2018, p. 67; Stiglitz, 2017, p. 16).

However, Stewart (2016) suggests that income inequality will present further

obstacles in achieving SD for two reasons: the issue of the “catch-up” effect and that of

fairness (Stewart, 2016, p. 68). Stewart explains that higher economic growth remains

tied to greater carbon emissions and a slow down in economic growth is likely to be an

important aspect of achieving sustainability. Inter-country distribution, or the gap

between the rich countries and the Third World, is a common concern for governments

of developing countries and catching up is a major objective of many developing

countries policy makers (Stewart, 2016, p. 68). Hence, people and countries at lower

levels will continue to push for growth and strive to reach the living standards of those

above them. The second issue Stewart (2016) emphasizes is that of fairness and the

distribution of scarce global resources. These aspects will be discussed in greater detail

below.

4.1.1.1. Environmental Degradation

Hart et al. (2016) explain the link between poverty and environmental

degradation:

“The reality, of course, is that poor communities experience the most severe

consequences of environmental unsustainability. Indeed, poverty and environment are

deeply intertwined in at least two main ways: The poor are often hardest hit by the

floods, droughts, fires, famines, and other calamities driven by environmental

degradation and climate change—witness the inundating floods in the low-lying areas

of Bangladesh, driving growing numbers of poor farmers off the land. Yet,

paradoxically, poverty is often blamed for exploitation and degradation of the natural

environment, as those in abject poverty appropriately prioritize survival over

“environmental” concerns.”

(Hart et al., 2016, p. 412)

In this regard, Beck (2016) has analyzed the relationship between

industrialization and risk exposure of developing countries. The socio-political


amplification of risk predicts that those in developing countries are exposed to greater

risk than residents of developed nations (Beck, 2016, p. 1). Beck has empirically

assessed the socio-political amplification of risk by assessing 105 major multi-fatality

industrial disasters occurring from 1971-1980, 1981-1990, 1991-2000, and 2001-2010,

in order to determine whether there is evidence of socio-political amplification of risk in

the distribution of accident patters across industrialized nations (Beck, 2016, p. 3). His

findings show that the export of waste and hazardous waste recycling to industrializing

countries (environmental globalism) and the new patters of domestic industrialization

do increase the socio-political amplification of risk in developing countries, as they

continue to face high levels of hazard exposure and greater fatality rates per industrial

incident (Beck, 2016, p. 1). Furthermore, Ertugrul et al. (2016) has studied the

relationship between CO2 emissions, trade openness, real income and energy

consumption in the top 10 CO2 emitting countries: China, India, South Korea, Brazil,

Mexico, Indonesia, South Africa, Turkey, Thailand and Malysia between 1971-2011.

Their findings showed that real income, energy consumption, and trade

openness are the main determinants of CO2 emissions in the long run (Ertrugul et al.,

2016, p. 553). In majority of the countries analyzed, energy consumption stimulated

environmental pollution (Ertrugul et al., 2016, p. 553). Waisman et al. (2014) has

investigated this topic and emphasized some of the challenges arising from

environmental pollution in combination with the scarcity of natural resources. The

authors have analyzed the socioeconomic effects of energy sustainability challenges

arising from oil depletion and climate change at the European and global levels by

assessing the macroeconomic impacts between 1971- 2011. Oil scarcity and climate

change are two closely related sustainability challenges. They both focus on the decline

of fossil energy as the major source of anthropogenic greenhouse gas emissions, they

are a key determinant of international trade flows, they are both crucial components of

the energy mix, and the moderation of fossil fuel consumption caused by an ambitious

climate policy has the potential co-benefit of lowering dependency on importations in

energy-importing countries (Waisman et al., 2014, p. 105).

The main challenge of oil scarcity derives from the heavy reliance on

international markets to satisfy oil-dependent development patters in combination with

the supply imposed by investment decisions and reserve availability (Waisman et al.,

2014, p. 104). Climate change remains a challenge since despite the implementation of

carbon-reduction policies; CO2 emissions continue to increase at a rapid rate (Waisman


et al., 2014, p. 103). “This context is the result of both the difficulty to decouple growth

and carbon emissions in developed regions, where development styles cannot be

changed overnight, and the rapid carbon-intensive growth patterns of emerging

countries,” (Waisman et al., 2014, p. 104). The authors found that fragmented capital

markets affect the pace and direction of change while also inducing further economic

losses in the long run, and regionalized goods markets have a positive effect in the long

run, as less intense international trade moderates the effects of fossil fuel constraints

(Waisman et al., 2014, p. 101). Waisman et al. (2014) conclude their study stressing the

need to switch to sustainable energies, as Etrugul et al. (2016) and Shaikh et al.’s (2016)

articles also emphasize.

Ertrugul et al.’s (2016) study revealed that, because in majority of the top CO2

emitting countries energy consumption stimulated environmental pollution, one of the

most effective and efficient ways for developing countries to reduce their environmental

pollution without harming their economies is to limit their energy consumption

(Ertrugul et al., 2016, p. 553; Shaikh et al., 2016). Shaikh et al.’s (2016) article

highlighted some of the activities countries like Malaysia have been implementing to

reduce their energy consumption to support the SD agenda. Malaysia has tackled this

problem by focusing on the building sector, as buildings in Malaysia consume 14.3% of

the overall energy use and 53% of only electrical energy is consumed in residential or

commercial sectors- making energy consumption in buildings the leading contributor of

greenhouse gas emissions in the country and energy efficiency a main focus of the

Government of Malaysia (Shaikh et al., 2016). The key factors making building sector

sustainability possible in Malaysia are rating tools, transforming generous ownership

from the stakeholders, enhanced knowledge and awareness dissemination campaigns

amongst the public, Government of Malaysia interests and sustenance, support from

local manufacturers and suppliers and competitive market place approaches (Shaikh et

al., 2016). Hindrances include public interests and demands, status quo in rules and

regulations, developers, population, project costs and the contributing players’

awareness.

Therefore, several authors agree that energy sustainability offers a positive

outlook for limiting global environmental pollution (Ertrugul et al., 2016, p. 553;

Shaikh et al., 2016; Waisman et al., 2014, p. 101). Waisman et al. (2014) suggest that a

sustainable energy future will require implementing policies and measures, which can;


(a) Provide correct incentives for long-term investments by resorting to other

signals than the current market price;

(b) Incorporate sectoral measures that act complimentary to pricing scheme

measures for sectors facing biased agents’ behaviors or strong inertias, and;

(c) Foster globalization patterns that are consistent with energy sustainability

objectives;

(Waisman et al., 2014, p.101).

To support this, policy instruments based on the synergies between different

objectives to combine the benefits of each of the instruments must be favored and the

articulation and the time sequence of policy instruments must be a focus when

designing the policy mix (Waisman et al., 2014, p. 125). Additionally, Shaikh et al.

(2016) have highlighted some of the strategies adopted to promote green aspects in the

building sector, these are: showcasing energy efficient buildings, public awareness

campaigns, incentives on less energy consumption, and use of efficient appliances; as

they target the general public and private sector with pulling strategies (Shaikh et al.,

2016). When such strategies are combined with energy efficient practices, codes and

other mandatory requirements then they become push strategies (Shaikh et al., 2016).

These push and pull strategic forms illustrated by the Government of Malaysia have

significant environmental and societal benefits (Shaikh et al., 2016). Hence, economic

globalization has increased environmental pollution and has had a negative effect on

developing countries; but these countries can overcome these challenges by focusing on

innovative solutions and gaining the support of state-governments as exemplified by the

Government of Malaysia (Shaikh et al., 2016; Ertrugul et al., 2016, p. 553).

4.1.1.2. Technological Change

The above authors have shown how environmental degradation is closely tied to

economic globalization, and to income inequality in developing countries. However

according to several scholars in the recent literature, income inequality is not only

present in developing countries today but also in developed countries; this shift has

been attributed to technological change (Jaumotte et al., 2013, p. 30; Stiglitz, 2017, p.


14). Jaumotte et al. (2013) has conducted a study assessing the effects of economic

globalization on income inequality in both developed and developing countries. The

authors’ findings showed that the globalization of trade has tended to reduce inequality

while financial globalization, especially FDI, rather intensified the trend towards rising

inequality (Jaumotte et al., 2013, p. 30). In both country groups inward FDI was found

to increase inequality, while outward FDI showed negative effects on developed

countries. Inward FDI occurs in higher skill and higher technology sectors which favor

relatively higher skilled and higher educated workers (Jaumotte et al., 2013, p. 31). This

results in a higher demand for higher skilled workers in both developing and developed

countries, which results in the increase in inequality. Outward FDI in developed

economies reduces employment opportunities in relatively lower skill sectors (Jaumotte

et al., 2013, p. 31). Stiglitz (2017) seconds Jaumotte et al.’s (2013) findings, claiming

that the middle class has experienced a decline in income as a result of technological

change: “that answer itself is paradoxical: technical change and progress were sold as

something good for everybody; but now the middle class is told that it may be good for

those at the top, but not for the rest,” (Stiglitz, 2017, p. 14).

The theme of Stiglitz’s 2017 article, is that the failures of globalization have

surpassed the benefits originally protested by the economists and politicians of our time

and thus, “globalization has been oversold.” The potentially large distributive effects,

the large adverse effects on employment in certain locales, the consequences of

imperfect competition, and the implications for dynamic comparative advantage were

not clearly analyzed and explained while the benefits of global integration were boasted

(Stiglitz, 2017, p. 20). A lack of focus on the harmful effects of globalization has left

large segments of the population worse-off than before and created winners and losers,

“When globalization worked well, the winners gained enough that they could

compensate the losers so that everyone could be better off. But the theory said that they

could compensate the losers, not that they would. And typically they didn’t.”

(Stiglitz, 2017, p. 13)

Overcoming the failures of globalization will require change, and Stiglitz (2017)

proposes that the government take an integral role in facilitating this change by shifting

their policies. “If government makes use of the full range of instruments at its disposal,

it can help ensure that globalization works for most citizens, smoothing the transition


from the manufacturing economy to the service sector economy, maintaining full

employment along the way, and doing so in ways that maintain economic stability while

avoiding excessive trade or fiscal deficits,” and therefore overcome the major pitfalls of

globalization (Stiglitz, 2017, p. 19). Below is his recommended policy outline.

4.1.1.3. Stiglitz’s Inequality Reducing Policy Program

Hence, Stiglitz’s policy outline aims to shift globalization in the right direction

and allow citizens and countries to finally benefit from globalization:

(a) Improving equality of market incomes to ensure shared prosperity by:

• Curbing market power and abuses of corporate governance;

• Making the financial sector perform the functions is should be;

• Reforming corporate governance and the financial sector to encourage

long term decision making;

• Increasing the minimum wage and extending other labor market

protections, and;

• Strengthening the bargaining rights of workers and unions.

(Stiglitz, 2017, p. 16)

(b) Reducing the intergenerational transmission of advantage and disadvantage:

the life prospects of a young American should no longer be dependent on the

income and education of his parents;

(c) Improving equality of after tax distribution of income;

(d) Helping the economy adjust to the new reality;

(e) Social insurance: the government should ensure that globalization works for

most citizens since the market on its own cannot.

(Stiglitz, 2017, p. 16-19)


4.1.2. Growth through Economic Globalization

Das (2013) on the other hand has focused on the positive effects that

globalization has had on SD particularly in developing economies like India. In his

2013 article, Das (2013) identifies the link between trade liberalization and poverty and

therefore between globalization and SD. Das (2013) defines globalization as “the

integration of economies and societies around the world as a result of flows of goods

and services, capital, people and ideas,” (Das, 2013, p. 101). He explains that trade

liberalization, financial integration, free flow of labor across global markets and various

technical and technological changes eventually globalize an economy (globalization)

which in response increases the overall economic growth of a particular country which

then leads to poverty reduction in that country (Das, 2013, p. 104). Das (2013) suggests

that with the appropriate domestic policies and institutions in place and if the

appropriate coordination among involved parties is organized, then globalization can

“open the door for some new opportunities even for the poor,” (Das, 2013, p. 110).

Similarly, Grossman & Helpman (2015), have also emphasized how economic

globalization can lead to economic growth through knowledge transfer and innovation

in the global market.

4.1.2.1. Knowledge Transfer

Grossman & Helpman (2015) state that the most direct link between

globalization and growth arises when knowledge in one country can be used to facilitate

research in another country; FDI and trade can facilitate this (Grossman & Helpman,

2015, p. 100). International knowledge spillovers often accelerate growth in all

countries, as the cost of further innovation declines in all the countries with advances

made, and foreign ideas can help create new products or improve existing ones

(Grossman & Helpman, 2015, p. 101). A country’s own cumulative research experience

is inversely tied to the cost of innovation; a country’s education and openness to

international integration affect this (Grossman & Helpman, 2015, p. 102). Hence, the

integration of product markets through international trade allows those who invent or

improve products a greater potential market to reap returns from, despite the additional

competition from foreign rivals, as “the extra profit opportunities that result from


greater aggregate demand are exactly offset by the loss of market share to foreign

producers,” (Grossman & Helpman, 2015, p. 101).

Therefore, the incentives for innovation affect the integration of product markets

depending on whether the “scale effect” or the “competition effect” is stronger

(Grossman & Helpman, 2015, p. 101). The “scale-effect” generally boosts the incentive

for knowledge acquisition, while the “competition effect” of globalization presents an

offsetting disincentive for knowledge acquisition (Grossman & Helpman, 2015, p. 101).

However the “competition effect” can be offset as, “the intensified competition

resulting from an opening of trade can lead the country with lesser incentives for R&D

to specialize in industries that they themselves have lesser innovation prospects,”

thereby closing the innovation gap between the countries (Grossman & Helpman, 2015,

p. 102). Because the integration of world markets has general-equilibrium implications

for input prices and relative output prices, these price changes also affect the cost of

innovation (i.e. the cost of labor) (Grossman & Helpman, 2015, p. 100). Therefore the

authors argue that international integration affects the incentives for investment in

activities, which foster the diffusion of technologies as well as the productivity of those

activities enabling sustained growth in some environments; such as China (Grossman &

Helpman, 2015, p. 103).

4.1.3. Development through Cooperation Furthermore, several authors have highlighted the greater challenge SD imposes

on developing countries, who are already unable to meet their basic needs. The

countries of the world have not developed at the same pace, and the developed countries

are more capable of affording sustainable energies, limiting pollution and paying higher

wages than the developing countries are (Stiglitz, 2017, p. xxv). Similarly, the wealth

and the socioeconomic development status of the 28 member countries of the EU vary

(Fura et al., 2017, p. 969). Therefore, the dynamics of the EU provide an interesting

example of what a global union could potentially look like, by having member-states act

autonomously while abiding by higher global standards. With regards to SD, the Europe

2020 Strategy offers great insight into the collaborative efforts necessary to achieve SD.

In June 2010 the European Council of the EU adopted the Europe 2020

Strategy. In their article, Fura et al. (2017) observed the EU-28 member countries over

three-time intervals, 2004-2010-2015- to measure and analyze each country’s individual


adoption of the Europe 2020 Strategy (Fura et al., 2017, p. 968). According to the

Europe 2020 Strategy, all EU countries will adopt the concept of smart, sustainable, and

inclusive growth and will improve Europe’s competitiveness. Five headline targets were

laid out in the Strategy, which included (1) employment; (2) R&D; (3) climate change

and energy sustainability; (4) education; (5) fighting poverty and social exclusion. (EC,

2010).

Fura et al.’s (2017) findings showed that there are imbalances with

implementing the Europe 2020 Strategy due to the varying wealth and socioeconomic

development levels of the EU member states. However, their study also revealed that

many EU countries have been able to improve their standards and development as a

result of joining the EU (Fura et al., 2017, p. 977). In this respect, Fura et al. (2017)

claim that it is highly unlikely that all EU member states will achieve these targets

individually, but the cumulative actions and their impacts at national levels for member

states could lead to the accomplishment of common EU objectives (Fura et al., 2017, p.

977). Furthermore, the authors brought up the issue arising from how these goals were

implemented into each country- member countries superimposed EU strategic

objectives over their national objectives by adapting them to their national specificity

and own areas of difficulty (Fura et al., 2017, p. 977).

In conclusion, Fura et al. (2017) state that the implementation of the SDG

targets into each member country will not be achievable without increasing the internal

cohesion within the EU, particularly with regards to the area of poverty and

socioeconomic status of each country (Fura et al., 2017, p. 977). Despite that, by

adopting the 2020 Strategy the EU has shown that it understands that the best chance of

coping with contemporary global challenges is acting together as a unitary EU market.

Lastly, the authors emphasized that integration, cooperation, and coordination are all

equally vital to the success of undertaking initiatives such as the Europe 2020 Strategy

(Fura et al., 2017, p. 978).

4.1.3.1. An SDG Framework

There have been mixed views on the UN’s newest SD initiative, the 2030

Agenda and its 17 SDGs. Critics like Holden et al. (2016) characterizes the UN’s SDGs

as unspecific, vague, and repetitive finding them incapable of gaining the support of


society (Holden et al., 2016, p. 2). While advocates, like Biermann et al. (2017)

characterize the UN’s SDGs as new and unique and very capable of gaining societal

support. Holden et al. (2016) argue that there are too many SDGs (with the 17SDGs and

the 169 targets) and that this is restraining the ability of society to grasp the concept or

prioritize goals. On the contrary, Biermann et al. (2017) stress the benefit of having so

many SDGs and targets; enabling countries to choose and select which targets and goals

they can and want to commit to (Biermann et al., 2017, p. 26). Despite their contrasting

views of the 2030 Agenda, both authors have developed similar suggestions to improve

the effects of the UN’s SDGs.

On the one hand, Biermann et al. (2017) claim that the new 17 SDGs (2030

Agenda) offer a new and unique type of governance that makes use of the non-legally

binding, global goals set by the UN member-states (Biermann et al., 2017, p. 26). The

new approach to global governance by goal-setting differs from previous initiatives in

the following ways: it is largely separated from the international legal system, it

functions through weak institutional arrangements at the intergovernmental level, it

works through global inclusion and comprehensiveness of the global goal-setting

process (new SDGs have been agreed upon in a public process involving over 70

governments, and numerous CSOs; and addresses both industrialized and developing

countries), and it grants much leeway to national choices and preferences (the 169

targets leave freedom for governments to determine their own ambition of

implementation) (Biermann et al., 2017, p. 26-27). This change in the use of the SDGs

for global governance, the authors argue, offers potential for developing a global

governance strategy through goals to advance public policy and private efforts towards

an ambitious sustainability agenda (Biermann et al., 2017, p. 27).

On the other hand, Holden et al.’s (2016) criticism is fourfold: there is no

prioritization of goals and too many, the SDGs ‘are mere tautologies’ (i.e. necessity of

‘promoting agriculture’ and ‘make cities sustainable’), they are a mix of goals to be

achieved and ways to achieve them, the environmental goals (12-15) are not

quantifiable (Holden et al., 2016, p. 2). Arguing that the academic literature on SD has

taken “an ethical turn”, Holden et al. (2016) has developed a normative model of SD

based on three moral imperatives: satisfying human need, ensuring social equity and

respecting environmental limits. These three moral imperatives are the three key

constraints SD has on human behavior (Holden et al., 2016, p. 3). The authors describe


a moral imperative as the strong, ethical or moral pronouncement of what needs to be

done.

The moral imperatives build off of the three-pillar model of SD and Our

Common Futures to provide a conceptual foundation of SD. These constraints are

equally needed as human activity is already exceeding limits, income and wealth are

still unevenly distributed and extreme poverty still remains in the world (Holden et al.,

2016, p. 4; Meadowcroft, 2013, p. 988). ‘Needs’ focuses on principles such as income,

education and health, and ultimately links the capability approach to the literature on

human development and SD (Holden et al., 2016, p. 6). ‘Equity’ focuses on the

principles of fairness and rich participation guaranteeing that everyone can have an

equal voice and opportunity. ‘Limits’ refers to environmental limits and has been based

off of the ‘planetary boundary approach’ which has defined nine planetary boundaries

correlating to the planet’s biophysical processes: climate change, ocean acidification,

stratospheric ozone depletion, interference with the global phosphorus and nitrogen

cycles, rate of biodiversity loss, global freshwater use, land system change, aerosol

loading and chemical pollution (Rockström et al., 2009).

Despite the progress Biermann et al. (2016) see in the UN’s 17SDGs, there are

still challenges present in implementing the SDGs into global governance and the

authors suggest that these challenges could be overcome by: further strengthening the

goals through indicators and commitment, strengthening global governance

arrangements, adapting global ambitions to national circumstances and priorities,

ensuring effective policy integration in implementation, and improving the adaptability

of governance mechanisms (Biermann et al., 2017, p. 27-29). A key to the success of

the SDGs will rely on the ability to measure genuine progress in relation to better

governance, more transparent policies, less corrupt administrations, or the better rule of

law; which currently does not exist (Biermann et al., 2017, p. 29). Additionally, the

academic support for the integration of the economic, social and environmental

dimensions of the SDGs will be essential, “integrating these aspects with their different

agendas and rationales in the implementation of the SDGs is a key challenge for

decision-makers and other stakeholders at all levels of governance,” (Biermann et al.,

2017, p. 29).

Holden et al.’s model for global SD, consists of key themes, selected indicators

of SD and certain thresholds to be met in order to globally move towards SD (Holden et

al., 2016, p. 10). The key themes defined by the authors are globally applicable and


adhere to the moral imperatives of needs, equity and limits. Corresponding to the UN’s

17SDGs, six key SD themes were defined: eradicating extreme poverty, enhancing

human capabilities, ensuring ‘rich’ participation, ensuring fair distribution, mitigating

climate change and safeguarding biosphere integrity (Holden et al., 2016, p. 10).

Linking to the defined themes, the indicators provide a way to measure and easily

communicate the status of each goal. Each theme represents a goal, and each theme has

its own indicator with an explicit threshold value, as can be seen in Figure 2 (Holden et

al., 2016, p. 10).

Figure 2.

As Holden et al. (2016) and Biermann et al.’s (2017) articles both emphasized,

indicators, or having better forms of measurement, for SD progress is vital. Frugoli et

al. (2015) has assessed the impact of some of the most popular measurement indicators

(specifically: GDP, GDP per capita, Human Development Index, Happiness Index, Life

Expectancy, Democracy Index, Ecological footprint, Surplus Bio-capacity, Wellbeing


index, and Environmental Sustainability Index 2002) on helping societies achieve SD

(Frugoli et al., 2015, p. 378). Both Holden et al. (2016) and Frugoli et al. (2015) have

emphasized that human decisions determine the flows of the economy and the

environment, and hence it is vital that humans have a fundamental understanding of

their actions on the environment in which they live (Frugoli et al., 2015, p. 378; Holden

et al., 2016, p. 3). The findings of Frugoli et al. (2015) suggest that a combination of

socio-economic and biophysical indictors, is essential to generating a better

understanding of the limits of economic growth while also ensuring sustainable societal

well-being (Frugoli et al., 2015, p. 379). The model proposed by Holden et al. (2016)

and its respective themes, indicators and threshold values provide a means to improve

and measure SD at the global level and gain the support of societies. However, Holden

et al. (2016) stress that policymaking must adhere to all the moral imperatives of needs,

equity and limits if it is to lead to SD by changing the behavior of society (Holden et al.,

2016, p. 2).

4.1.4. Summary The prevalence of income inequality means that there is an uneven distribution

of earnings from capital, labor, assets, transfers or other sources between people and

countries of the world. The studies of Beck (2016), Ertrugul et al. (2016), Jaumotte et

al. (2013) and Waisman et al. (2014) provided evidence of there being income

inequality present in both developed and developing countries as a result of economic

and environmental globalization. The key drivers of income inequality have been

defined as technological change, the catch-up effect (competition), and the uneven

distribution of resources (labor, capital, knowledge) (Jaumotte et al., 2013, p. 30;

Stiglitz, 2017, p. 14; Ertrugul et al., 2016, p. 553; Waisman et al., 2014, p. 104; Stewart,

2016, p. 68). Several authors emphasized the increasingly harmful effects that

globalization is having on developing countries who are torn between competing in the

global market place and developing their own economies (Beck, 2016, p. 1; Ertrugul et

al., 2016, p. 553). The result is that many developing countries enter the global market

at the expense of their own health and economic well-being (Waisman et al., 2014, p.

104; Ertrugul et al., 2016, p. 553; Hart et al., 2016, p. 412). In this respect, globalization

is further challenging the SD agenda than supporting it. However, Ertugul et al.’s


(2016) study revealed the value of energy sustainability and the way that it can enable

developing countries to participate in the SD agenda without harming their own

economies. Shaikh et al.’s (2016) study then shed light on how developing countries

like Malaysia are restructuring to support the SD agenda by focusing on energy

sustainability. The support of the Government of Malaysia in transitioning the building

sector of Malaysia into renewable energy solutions shows the progress developing

countries have made with respect to SD, and how the success of their actions can act as

an example for other developing countries to follow.

Technological change on the other hand, has caused income inequality to spread

across both developed and developing countries as a result of globalization. Simply put,

the advances in technology have progressed to such an extent that they have replaced

unskilled and uneducated workers leaving an increasing number of workers

unemployed and out of demand (Jaumottet et al., 2013, p. 30; Stiglitz, 2017, p. 14). This

is troubling since, economic globalization has essentially hurt those who needed the

most help and benefitted those who were already doing well (Stiglitz, 2017, p. 13).

Stiglitz (2017) attributes this to the overselling of globalization, which describes how

the benefits of globalization were boasted while the consequences were not

communicated. Hence, Stiglitz’s (2017) policy outline aims to reduce the inequality

induced by globalization and allow everyone to benefit from globalization.

Contrastingly, Das (2013), Grossman & Helpman (2015), Fura et al. (2017) and

Biermann et al.’s (2017) articles focused on the progress made as a result of economic

globalization and the SD agenda. Das (2013) and Grossman & Helpman’s (2015)

articles both highlight the additional benefits economic globalization (particularly

international trade and FDI) can have on developing countries. Das’s (2013) article

emphasized how trade liberalization, financial integration, free flow of labor across

markets and various technical and technological changes has globalized India’s

economy and led to economic growth and reduced poverty. The exchange of knowledge

inherent to globalization is a part of what enables an economy to be globalized and

supports this economic growth (Stiglitz, 2017, p. 31; Grossman & Helpman, 2015, p.

100). However, several authors previously emphasized just how technological change

and competition both hinder developing countries from experiencing the benefits of

globalization. Grossman & Helpman’s (2015) article highlighted how international

integration affects the incentives for investment in activities, which foster the diffusion

of technologies as well as the productivity of those activities allowing sustained growth


in some environments (Grossman & Helpman, 2015, p. 103); such as the growth India

and China have experienced as a result of economic globalization (Das, 2013, p. 104).

Hence some developing countries, such as India and China, have been able to overcome

the downfalls of technological change and global competition by utilizing the

knowledge shared through global activities.

Fura et al. (2017) and Biermann et al.’s (2017) articles emphasized how the

UN’s SD agendas can lead to economic development through global cooperation by

working towards common global goals. Fura et al.’s (2017) study provided evidence of

the EU member-states ability to work together towards the goals of the Europe 2020

Strategy, and despite their differences and challenges, their ability to improve their

standards and development as a result of joining the EU. Biermann et al.’s (2017) article

emphasized how the 2030 Agenda, can essentially lead to a similar result as the EU

experienced in Fura et al,’s study but between the UN member-states by working

towards global goals such as the SDGs.

Hence both authors have highlighted the impact that such SD initiatives as the

UN’s 2030 Agenda can have by providing a set of goals for the world to work towards

and in some ways acting as a global governance strategy. However, as Fura et al.’s

(2017) study pointed out, the achievement of such initiatives will not be possible

without increasing the internal cohesion within the EU and superimposing EU strategic

objectives over national ones. Therefore, increasing the varying wealth and

socioeconomic development levels of the member-countries of the UN, and working

towards integration, cooperation and coordination amongst the countries will be vital to

achieving the SDGs of the 2030 Agenda. This will require greater transparency and

measurement of the SDGs and global governance, policy shifts and coordination, as

well as support from the academia on educating society (Biermann et al., 2017, p. 27-

29; Holden et al., 2016, p. 10; Frugoli et al., 2015, p. 379; Stiglitz, 2017, p. 16-19;

Almeida et al., 2015, p. 5; Meadowcroft, 2013, p. 988). Holden et al.’s (2016) article

has generated a new model for global coordination of the SDGs based on the three

moral imperatives (equity, needs, limits), which has prioritized six of the SDGs and

attached individual indicators and threshold values in an attempt to gain further societal

support and understanding of the SD agenda. Frugoli et al. (2015) and Holden et al.

(2016) both emphasized how better indicators, particularly socio-economic and

biophysical indicators, can help society better understand and support the SD agenda as

well. Therefore, the academic literature has revealed both progress and regress of the


SD agenda as a result of globalization. However, several new models and outlines

proposed throughout the literature may be able to reverse this regress.

4.2. Global Governance Globalization and SD require global governance, yet many authors feel that the

current forms of global governance are insufficient to meeting the needs of the world

(Brandi, 2017, p. 26; Bennet, 2018, p. 68; Toffel et al., 2014, p. 2; Fox & Stoett, 2016,

p. 558; Senit et al., 2016, p. 533). Hence two key topics have emerged on the topic of

global governance, these are citizen participation in global governance and transnational

business governance. Citizen participation will first be explained and the development

thus far on the topic will be discussed. Transnational business governance will then be

defined and the key instruments and drivers will be introduced. As global governance is

fundamental to globalization and SD, transparency is fundamental to global governance

(Mol, 2015, p. 154). However, the value attributed to transparency may have led to its

demise in our increasingly knowledge based society. While these new forms of global

governance provide resolution to the some of the key challenges of global governance,

several authors emphasize the new challenges they further induce. These topics will be

discussed in further detail below.

Senit et al. (2016) argue that one of the main challenges facing global

governance today is the growing economic deficit of the intergovernmental

policymaking system. This deficit is the result of a lack of responsiveness of

intergovernmental norms and policies to collective concerns and preferences, and a lack

of accountability of IGOs and institutions; resulting in a loss of legitimacy (Senit et al.,

2016, p. 533). The need for a change in global governance is commonly attributed to the

increasing levels of interdependence entailed in globalization, leading to a

corresponding erosion of national sovereignty; which has sparked debates on the need

for global democratic institutions or implementing some form of democracy or

accountability at the global level (Fox & Stoett, 2016, p. 558). Therefore, a common

theme throughout the academic literature has been focused on determining alternative

forms of global governance systems to fill this void; two popular topics have been

citizen participation and transnational business governance. Hence, global governance is

shifting from intergovernmental and governmental organizations to CSOs, NGOs, and

the private sector.


4.2.1. Citizen participation In response to the lack of support from businesses, IGOs and state-governments,

several authors claim that in our age of globalization, citizen participation is vital to the

effectiveness and legitimacy of global governance (Hong, 2015, p. 572; Meng et al.,

2014, p. 1; Senit et al., 2016, p. 533; Fox & Stoett, 2016, p. 558). Citizen participation

has become a popular theme in the academic literature for fostering a more transparent,

cohesive and effective global governance system (Hong, 2015, p. 572; Meng et al.,

2014, p. 1). However, citizen participation is not a new topic but has been a popular

topic in global governance since the Rio Earth Summit in 1992, where it was revealed

that sustainability required the acknowledgement of and responsiveness to the

interconnectedness of local and wider global processes (Herreschel, 2016, p. 2; Fox &

Stoett, 2016, p. 558). Despite that, the 2030 Agenda is the first UN SD initiative, which

has focused on citizen participation in global governance by aiming to foster global

cooperation through civil societies (Biermann et al., 2017, p. 27; UN, 2015). “To

conceptualize global civil society in analytical terms as a political space, in which a

diversity of political experiences, action strategies, identities, values and norms are

articulated and contested; a space of struggle and conflict over the values, norms and

rules that govern global social space(s) – and ultimately over the control of material

resources and institutions,” (Melber, 2014, p. 1087).

4.2.1.1. CSOs & NGOs

Schmitz & Mitchel (2016) have focused on enhancing the role and impact of

NGOs in both citizen participation and global governance. The authors claim that the

transformation of NGOs from traditional aid providers substituting for absent

government service, into catalysts for citizen empowerment represents a fundamental

philosophical shift with valuable implications for public administration and public

managers (Schmitz & Mitchel, 2016, p. 253). In this respect, Schmitz and Mitchel

(2016) emphasize the growing importance of NGOs in the contemporary global arena:

“The role of NGOs in international development will remain influential as the

economic, social, and political significance of low- and middle-income countries

continues to grow and transnational governance challenges multiply with ongoing

globalization,” (Schmitz & Mitchel, 2016, p. 253).


Over the past twenty years, many NGOs have adopted versions of the rights-

based approach (RBA), which is a framework that conditions civil society’s interactions

with government agencies around the world (Schmitz & Mitchel, 2016, p. 252). RBA

strategies include advocacy and litigation, coalition building, mobilization, and

awareness raising and emphasize the need for more holistic, cross-level activism at the

local, subnational and national levels (Schmitz & Mitchel, 2016, p. 252). RBA has

changed how NGOs, local communities and government agencies understand their role

in the development process and compels them to pay greater attention to the domestic

and local political context and to facilitate the empowerment of individuals and

communities to make greater demands on public agencies (Schmitz & Mitchel, 2016, p.

260). By implementing RBA, the focus shifts from increasing wealth and development

to determining a more fair distribution of resources (Schmitz & Mitchel, 2016, p. 260).

This implementation begins with a situational analysis:

(1) It seeks to identify the social and political root causes of a condition (i.e.

poverty);

(2) It names the key rights holders and duty bearers;

(3) It identifies applicable domestic and international human rights laws as

they pertain to a particular development challenge;

(4) It focuses on the relationships between rights holders and duty bearers,

and questions what capacities both sides lack in developing a more

productive accountability relationship.

(Schmitz & Mitchel, 2016, p. 255)

As it has with NGOs, the adoption of RBA by public managers will influence

them to rethink their role in governance, their responsibility to citizens, and the

principles guiding their everyday interactions and strategic decisions (Schmitz &

Mitchel, 2016, p. 255). This shift has become an emerging idea of public value

governance emphasizing democratic theory, deliberation and dialogue (Bryson et al.,

2014, p. 447).


4.2.1.2. Designing a System for Citizen Participation

Hong (2015) on the other hand, has pointed out several challenges with the

implementation of citizen participation. He claims that a main challenge in achieving

public deliberation and participation is incorporating both inclusiveness and

knowledgeability into a public participation system; two fundamental features desired in

the participating citizens group (Hong, 2015, p. 573). Inclusiveness reflects the

openness of the political system and the degree of the members’ participation while

knowledgeability refers to the participating citizens’ capacity to evaluate and make a

thoughtful decision on the issues under discussion (Hong, 2015, p. 573). Hong (2015)

proposes that when designing a public participation system there is a trade-off between

inclusiveness and knowledgeability, as greater inclusiveness may dilute the impact of an

individual and the necessity of knowledgeability in citizens may hinder engagement or

weaken participations’ embodiment of normative and intrinsic democratic values

(Hong, 2015, p. 574). Hence, Hong (2015) has empirically assessed this trade-off of

inclusiveness and participating citizens’ knowledge-ability, on two performance

metrics: citizen engagement and process efficiency (Hong, 2015, p. 572). His findings

suggest that citizen knowledgeability and inclusiveness both have a positive correlation

with participatory process efficiency, while inclusiveness has a negative effect on

citizen engagement (Hong, 2015, p. 579). Furthermore, his findings revealed that

including a large share of members who are openly recruited helps maintain a high level

of citizen engagement (Hong, 2015, p. 580). Hong’s (2015) findings provide

suggestions for forming an effective system of citizen participation; while Meng et al.

(2014) has focused on the impact that citizen participation can have on global

governance.

4.2.1.3. Receptiveness of Citizen Participation

Another important aspect of citizen participation is the actual effectiveness or

‘receptiveness’ of it by the decision makers of global governance topics. In their article,

Meng et al. (2014) has empirically assessed ‘receptivity’ or, the willingness of

authoritarian regimes to incorporate citizen preferences into policy. The authors have

assessed 1,377 provincial- and city-level leaders in China (Meng et al., 2014, p. 8).

Based on their findings, the authors suggest that leaders are most receptive to


implementing citizen suggestions when these suggestions have been obtained through

formal institutions or the Internet (but only when leaders perceive there is little

opposition present between the state and citizens) (Meng et al., 2014, p. 17-25).

Furthermore the perceived quality of state-society relations is an important aspect of

quasi-democratic institutions (i.e. public administration hearings, online government

forums) being a ‘true channel of responsiveness’ or a ‘mere window dressing’; In other

words state-society relations are vital to the effectiveness of these institutions voicing

citizen preferences (Meng et al., 2014, p. 2). In this respect, Herrschel’s concept of

smart (new) city regionalism brings together the rationales, principles and legitimacies

of publicly negotiated, collaborative sectoral policy with network-based and policy-

described spatiality (Herrschel, 2013, p. 15).

4.2.1.4. Smart (New) City Regionalism

Building off of the challenges facing SD due to the globalization-driven agenda

of economic competitiveness, Herrschel (2013) introduces the term ‘smart (new) city-

regionalism’ as a form of policy coordination. He explains competitive agendas as neo

liberalism-inspired and globalization-driven place-based competitive economic policies;

and sustainability agendas as critical reflections about immediate and long-term

ecological costs of growth. Herrschel (2013) describes ‘smart (new) city-regionalism’ as

a policy-shaping mechanism and analytical framework as a solution to the clashing

policy fields of globalization and SD through collaborative governance (Herrschel,

2013, p. 1). He states that city regions have emerged as the most prominent scale for

negotiating and implementing conflicting agendas forming from sustainability and

competiveness. ‘Smart’ has been adopted from the concept of Smart Growth, which

aims to facilitate a shift in values, priorities, and perspectives to include collaborative

political processes and spatial perspectives (Herrschel, 2013, p. 15). Hence, city-regions

offer a good arena for discussing Smart Growth since they tie together political-

economic, social and governmental-administrative arrangements and agendas

(Herrschel, 2013, p. 15).


4.2.2. Transnational Business Governance Transnational business governance, differs from traditional state and inter-state

institutions by including a variety of intuitions from the private sector, civil society, and

multi-stakeholder and hybrid public-private institutions (Brandi, 2017, p. 26; Eberlein et

al., 2014). Currently transnational business regulations have been implemented through

private voluntary programs such as certification regimes and codes of conduct (Toffel et

al., 2014, p. 2). Supply chains have extended across the globe, as a result of economic

globalization, and have shifted SD issues, such as labor standards, from states and IGOs

to MNCs, NGOs and multi-stakeholder certification regimes (Toffel et al., 2014, p. 2).

Supply chain governance initiatives, including voluntary sustainability standards, have

emerged to include standards and certification initiatives, often filling the regulatory

void created by a lack of state regulation and effective global environmental policies

(Brandi, 2017, p. 26; Bennet, 2018, p. 68; Toffel et al., 2014, p. 2). Hence, voluntary

sustainability standards (VSS) can promote SD and have environmental and

socioeconomic benefits while also acting as a symbol of credibility and a proof of

sustainable business practices for those that implement them.

Bennett (2018) has specifically investigated VSS in the context of income

inequality, in relation to the impact of VSS on improving the incomes of the workers

who produce certified products. Such standards are generated by voluntary

sustainability standards-setting organizations (VSSSOs) which generally aim to enforce

national minimum wages and International Labor Organization (ILO) standards, but

currently rarely support living wages or actively bolster collective bargaining (Bennett,

2018, p. 66). Bennett (2018) argues that VSSSOs should take on a larger role in global

governance and should focus on improving workplace conditions globally, as they have

the knowledge, capacity, networks and power needed to generate this shift (Bennett,

2018, p. 68). Hence, Bennett suggests that VSSSOs can leverage their existing

capacities to improve wages and address income inequality by including wage outcomes

in their standards and supporting process rights for workers such as freedom to

associate and right to collectively bargain (Bennett, 2018, p. 68).

Brandi’s (2017) study however has pointed out some of the challenges arising

from the implementation of VSSs. He has investigated the potential trade-offs between

the socioeconomic and environmental dimensions of development and inclusive

development, within the context of transnational governance and sustainability


standards. To determine these trade-offs, Brandi (2017) has assessed smallholder

certification in the palm oil sector of Indonesia, since there are over one million

smallholders there which amount to almost 40% of the cultivation area and 35% of the

production output (Brandi, 2017, p. 26; IPOC, 2012). Smallholders and small producers

have a considerable negative impact on the environment; such as greenhouse gas

emissions through land-use conversion or deforestation, and smallholder certifications

could be a means to mediating these negative effects (Brandi, 2017, p. 26). Specifically,

smallholder certification can generate economic benefits for smallholders by increasing

productivity and higher yields (Brandi, 2017, p. 26).

However, the potential trade-offs arising from smallholder certifications are

twofold; first, there is a concern that the diffusion of standards aimed at enhancing

environmental sustainability undermine the socioeconomic situation of smallholders by

leading to exclusion from global value chains and international markets that demand

certified commodities and require a set of financial, managerial and agronomic

capacities; that most smallholders lack (Brandi, 2017, p. 26). Second, although

smallholder certification can generate socioeconomic benefits, these potential benefits

may have contradictory and undesirable implications for environmental sustainability,

in so far as they increase incentives to expand palm oil plantations therefore

contributing to greater environmental harm (Brandi, 2017, p. 26). Brandi’s findings

show that although certification projects may create socioeconomic benefits for

smallholders, large-scale environmental benefits focused on deforestation and

greenhouse gas emissions are difficult to achieve- hence private sustainability standards

hardly provide an all-encompassing solution to all problems (Brandi, 2017, p. 31). One

major reason for this is that sustainability standards (such as RSPO) contain loopholes

and face implementation and control changes (Brandi, 2017, p. 31).

While Brandi (2017) focused on the trade-offs of implementing voluntary

sustainability standards, Toffel et al. (2014) has analyzed how transnational business

guidelines have been implemented, and what influences the adherence to these

guidelines. Toffel et al. (2014) has analyzed which international, domestic, civil society,

and market institutions promote the adherence of supply chain factories to global labor

standards expressed in codes of conduct by multinational buyers. The authors have

empirically studied this by assessing 44,838 social audits of 21,836 establishments in 12

industries and 47 countries (Toffel et al., 2014, p. 2). Their findings suggest that

adherence to global labor standards is greater when suppliers, are embedded in states


participating actively in the International Labor Organization (ILO) treaty regime, have

stringent domestic labor laws and press freedom, and when they serve buyers in

countries where consumers are wealthy and socially conscious (Toffel et al., 2014, p.

21-23). Hence, Toffel et al. (2014) claim that overlapping state, civil society, and

market governance regimes are essential to having meaningful transnational regulation

(Toffel et al., 2014, p. 1).

4.2.3. Transparency As global governance shifts from intergovernmental and governmental

organizations to civil societies, NGOs, and the private sector, transparency practices and

developments, particularly in environmental and sustainability politics, have spread

across the globe to other nations and localities including China and Southeast Asia, as

well as to transnational networks and institutions over the past two decades (Mol, 2015,

p. 154). Transparency politics and practices in global governance are based on

normative criteria related to democracy, participation, accountability and right-to-know

(Mol, 2015, p. 154). Transparency, or the disclosure of information, is a key topic in

national and global environmental politics and governance (Mol, 2015, p. 154). “The

general idea was that through transparency powerless environmental victims and

advocates were empowered vis-à-vis the major market and state forces that failed to

protect and ruined the planet’s sustainability,” (Mol, 2015, p. 160).

Transparency in global value chains will continue to be a key topic of

globalization, but despite the positive connotations associated with greater transparency,

Mol (2015) investigates the implications of transparency in global value chains and

defines new challenges, which can arise therefrom. “What has become clear from the

analysis is that transparency as disclosure of information has lost it innocence in the

environmental politics of global value chains,” (Mol, 2015, p. 160). Mol (2015) claims

that because of the growing value attached to transparency in value chains, this

transparency becomes an object of power struggles as markets and states utilize

transparency arrangements for their own goals and motives- which may not then be

normative and in the best interests of consumers and civil society. Hence, transparency

should no longer be automatically assumed as desirable, but the specific transparency

arrangements and infrastructures should be critically examined and designed on their

social, distributional, and sustainability consequences (Mol, 2015, p. 160). This


sentiment of transparency being utilized for ones advantage is also brought up in

Scherer et al.’s article where the authors emphasize the challenges that SD is imposing

on corporations.

Scherer et al. (2013) claim that the legitimacy of corporations is increasingly

challenged by sustainability problems with regards to the production, distribution, and

consumption of goods and services. They argue that it is because the globalization

process intensifies problems such as global warming, chemical pollution, ocean

acidification, water scarcity, and biodiversity loss, and because these are problems

manifested as negative side effects of business activities occurring along globalized

systems of production and consumption, that businesses are facing legitimacy

challenges today (Scherer et al., 2013, p. 261).

Furthermore, Scherer et al. (2013) emphasize that legitimacy in the context of

business refers to the social acceptance of actions or institutions by corporations and it

is challenged when their actions are perceived as inappropriate and undesirable within

their respective societal contexts: “Business firms are considered legitimate when their

organizational practices are perceived to satisfy the social expectations of their

environment,” (Scherer et al., 2013, p. 262). In addition, the authors argue that dealing

with SD-related legitimacy issues becomes particularly difficult when operating in

fragmented and dynamic global environments with a multitude of complex and

contradictory sustainability demands (Scherer et al., 2013, p. 262).

Legitimacy strategies of corporations are influenced by two factors: the cost of

organizational change and the heterogeneity of environmental demands (Scherer et al.,

2013, p. 262). They suggest that the opportunity to solve perceived legitimacy

challenges is the motivation of corporations to adopt sustainable practices and engage in

debates on SD (Scherer et al., 2013, p. 262). In order to overcome the current legitimacy

challenge the authors suggest employing all three legitimacy strategies: the isomorphic

adaptation strategy, the strategic manipulation strategy, and the strategy of moral

reasoning. Scherer et al. (2013) explain these three strategies as follows: isomorphic

adaptation strategy refers to corporations that can change their organizational practices

and adapt to societal expectations for the purpose of maintaining their cognitive

legitimacy. The strategic manipulation strategy describes corporations actively

influencing social expectations by swaying or manipulating the perceptions of key

actors or policy-makers. Lastly, the moral reasoning strategy is when organizations

engage in open discourse with focal stakeholders and societal groups in order to argue


for acceptability of its status quo and behavior (Scherer et al., 2013, p. 262-264). Hence,

as Mol (2015) emphasized, transparency should be critically examined as corporations,

governments and IGOs may utilize it for self-gain as societal pressures to commit to SD

increase. The findings of Meadowcroft (2013) and Barkemeyer et al. (2014) further

emphasize the illegitimacy of transparency in global politics in their studies.

4.2.3.1. Industrialization Focus

Meadowcroft (2013) and Barkermeyer et al.’s (2014) articles both provide

evidence of the increasing attention that intergovernmental organizations and business

support bodies have been placing on the concept of SD. While Meadowcroft (2013)

focused on policy orientations, and found that they have favored environmental issues,

Barkemeyer et al. (2014) has focused on the SD business guidelines, and found that

they have also favored environmental issues. Both articles have used Our Common

Futures as a foundation for SD, and have suggested that the way SD has been

implemented does not support the original concept. Therefore, Meadowcroft (2013) and

Barkemeyer et al. (2014) both argue that SD has been reinterpreted to support the needs

of the industrialized rather than the needs of developing countries (Meadowcroft, 2013,

p. 988; Barkemeyer et al., 2014, p. 31).

Meadowcroft (2013) argues that the largest challenge facing sustainability today

is living within environmental limits. Meadowcroft (2013) claims that the

environmental focus of SD in business practice is the result of ‘reinterpreting’ the

concept for industrial gain rather than the gain of developing countries (Meadowcroft,

2013, p. 988). He states that the strain imposing our limits is mainly the result of

continuous material growth, growth in per capita consumption of environmental

resources, the rise in population, and the increasingly disruptive character of

technological deployment (Meadowcroft, 2013, p. 990). There have been numerous

shifts in policy orientation over the past 25 years focused on limiting environmental

degradation, and there has been an increase in awareness and reactiveness to

environmental issues, yet aggregate environmental burdens are continuously growing

(Meadowcroft, 2013, p. 990).

In light of the increasing focus of businesses in the transition to SD, Barkemeyer

et al. has assessed how the original principles of SD (as conceptualized in Our Common

Futures) have been embedded within key (voluntary) business guidelines such as the


UN Global Compact, the OECD Guidelines for Multinational Enterprises, the ICC

Business Charter for SD, the CAUX Principles, the Global Sullivan Principles and the

CERES Principles (Barkemeyer et al., 2014, p. 15). Based on their findings, the authors

argue that these business guidelines focus on environmental rather than social aspects of

SD and claim that this is because environmental aspects stress win-win situations and

have a managerialist focus (Barkemeyer et al., 2014, p. 31). Despite the environmental

focus the authors found that there has not been a focus on conceptual environmental

issues concerning systems of interdependencies, critical thresholds or systemic limits to

growth (Barkemeyer et al., 2014, p. 30). Therefore, the two key concepts of Our

Common Futures, which focused on prioritizing the needs of the poorest and living

within environmental limits, have been overlooked.

Policy orientation is a transparent action of IGOs and governments, while the

implementation of voluntary sustainability standards are a transparent action of the

private sector; both leading to the belief that SD is being supported. However, the

findings of Meadowcroft (2013) and Barkemeyer et al. (2014) suggest that these

activities have not only not limited environmental pollution but have also only focused

on aspects of financial return instead of on development of the world. Hence, as Mol

(2015) stated, transparency can no longer be automatically assumed as beneficial but

should be critically assessed. In fact, Meadowcroft (2013) exclaims that it is actually the

transparency of these environmental policy shifts in combination with the continuous

trend in global environmental deterioration which is hindering developed societies from

coming to terms with the realities and concept of environmental limits. In addition to

this, the disruption of existing social expectations and entitlements imposed by coming

to terms with environmental limits further challenges adoption. Hence, Meadowcroft

(2013) and Barkemeyer et al. (2014) stress the importance in gaining the support of the

private sector in order to transition towards a more sustainable society.

4.2.4. Summary Based on the academic literature, it is clear that the dynamics of global

governance are shifting and new forms are already being implemented. These two

mains forms are citizen participation and transnational business governance (Hong,

2015, p. 572; Meng et al., 2014, p. 1; Senit et al., 2016, p. 533; Fox & Stoett, 2016, p.

558; Brandi, 2017, p. 26; Toffel et al., 2014, p. 2; Bennet, 2018, p. 68). Global


governance is a challenging topic, as the concept alone will require national

governments to adapt their policies and regulations to abide by the standards of a global

network. In a world where the wealth and socioeconomic development levels and the

values and cultural beliefs between countries greatly vary, the topic becomes even more

challenging as some are simply unable or unwilling to keep up with the same standards

as others.

On the one hand, citizen participation has emerged as a way for citizens to voice

their needs and preferences on decisions of global governance which effect their social,

economic or environmental well-being; CSOs and NGOs play a large role in translating

these preferences at the global level (Schmitz & Mitchel, 2016, p. 252; Herreschel,

2016, p. 2; Fox & Stoett, 2016, p. 558; Melber, 2014, p. 1087). They key issues tied to

citizen participation are then educating society well enough to be trusted with global

decision making, gaining enough citizens to participate and voice their needs and

preferences, and the willingness of decision makers to adhere to citizen preferences

(Hong, 2015, p. 573; Meng et al., 2014, p. 17-25). Hong’s (2015) study then provided

suggestions on how to design a system for citizen participation which includes both

knowledgeability and inclusiveness, while Meng et al.’s (2014) study shed light on how

to increase the engagement of authoritarian regimes to respond to citizen preferences.

Meng et al.’s (2014) study highlighted the importance of enhancing state-society

relations to increase the effectiveness of citizen participation. Both, Herrschel’s (2013)

concept of ‘Smart (New) City Regionalism’ and Schmitz & Mitchel’s (2016) RBA

strategy provide ways to enhance state-society relations and therefore enhance the

effectiveness of citizen participation (Herrschel, 2013, p. 15; Schmitz & Mitchel, 2016,

p. 225).

On the other hand, transnational business governance has formed as a way for

the private sector, CSOs, and multi-stakeholder and hybrid public-private institutions to

transparently support the SD agenda; VSSSOs and their VSSs have played a large role

in the implementation of transnational business governance (Brandi, 2017, p. 26;

Bennet, 2018, p. 68; Toffel et al., 2014, p. 2). Bennett’s (2018) article provided insight

on how VSSs can offer a way to improve the labor and living standards in developing

countries, and Toffel et al.’s (2014) study then shed light on what incentivizes the

adherence to global sustainability standards. These were having suppliers embedded in

states actively participating in ILO treaty regimes, having stringent domestic labor laws


and press freedom, and serving buyers in countries where consumers are wealthy and

socially conscious (Toffel et al., 2014, p. 21-23).

However, Brandi’s (2017) study highlighted some of the trade-offs that come

with VSSs, such as undermining the socioeconomic situation of smallholders and

causing greater environmental degradation (Bennet, 2017, p. 68; Brandi, 2017, p. 26).

Additionally, Mol (2015), Barkemeyer et al. (2014) and Meadowcroft’s (2013) articles

further emphasized the drawbacks of VSSs and transparency, as they enable

corporations, organizations and governments to look like they’re supporting the SD

agenda without actually tackling the problem and making a difference (Mol, 2015, p.

160; Meadowcroft, 2013, p. 988; Barkemeyer et al., 2014, p. 31). Therefore, while

citizen participation in global governance and transnational business governance both

offer solutions to some of the key problems of global governance, they also come with

their own new challenges.

4.3. Education for SD Education for SD (ESD) was a common theme throughout the academic

literature, and numerous authors agree that ESD is essential to combating the world’s

challenges (Biermann et al., 2017, p. 29; Adomßent et al., 2014, p. 3-7; Lozano et al.,

2015, p. 1; Ramos et al., 2015, p. 3). In effect, ESD has significantly developed over the

past two decades (Lozano et al., 2015, p. 5; Ramos et al., 2015, p. 3; Michalos et al.,

2014; Adomßent et al., 2014, p. 3). Gaining society’s support for SD is considered vital

in conquering the world’s challenges, and education is fundamental to forming an

understanding of SD (Ramos et al., 2015, p. 3; Lozano et al., 2015, p. 1; Biermann et al,

p. 29). Particularly because such knowledge has to be generated into effective action in

order to have a transformative impact on SD; “global citizenship education aims to be

transformative, building the knowledge, skills, values and attitudes that learners need to

be able to contribute to a more inclusive, just and peaceful world,” (UN, 2015, p. 15).

Hence, the increasing number of higher education systems implementing SD education

into their curriculum is not only increasing the awareness of SD but also enables

researchers and academic systems to point out areas for improvement and work towards

generating the most effective methods for providing ESD (Michalos et al., 2014;

Lozano et al., 2015, p. 14); Ramos et al., 2015, p. 9). This section will begin by

explaining the progress made thus far in education for SD. Several studies will be


analyzed, and current forms of implementation will be discussed. Lastly,

recommendations for more effective and better implementation of ESD will be

reviewed.

4.3.1. ESD in Higher Education Several authors agree that over the past two decades, education has increasingly

become an imperative to transforming into a more sustainable society (Ramos et al.,

2015, p. 3; Lozano et al., 2015, p. 1). In response, there have been many efforts by

higher education institutions to implement SD into their academic systems (Ramos et

al., 2015, p. 3; Lozano et al., 2015, p. 14). Lozano et al.’s (2015) article focused on the

recent adoption of SD education by higher education institutions by conducting a study

on how SD education has been implemented into the academic system. The study has

been conducted through a survey answered by 84 respondents of 70 institutions

worldwide (Lozano et al., 2015, p. 5). Their findings showed that there were multiple

examples of ESD implementation throughout the academic system (particularly in

Europe), but holistic implementation was found to be challenging and hindering

(Lozano et al., 2015, p. 1). Additionally, Ramos et al.’s article showed that SD has been

implemented into higher education systems in numerous ways. Some forms of

implementation included: implementing ESD into courses and curricula, gaining

stakeholder engagement and participation, making improvements of campus operations,

by utilizing sustainability assessment and reporting, and emphasizing the impacts of

ESD on organizational change management and curricula development (Ramos et al.,

2015, p. 9). Lozano et al.’s article showed that the academic leaderships’ commitment

to SD played a large role in the higher education systems’ adoption and commitment to

SD. The institutions commitment and implementation of SD was strongest when the

institution had signed a declaration, charter or initiative, and the academic leaderships’

commitment was the leading cause for the signing of a declaration, charter or initiative

(Lozano et al., 2015, p. 14). Ramos et al.’s (2015) article highlights some of the current

challenges higher education institutions are still having with the integration of SD, these

are: integrating ESD into curricula, research and most importantly holistically

implementing it into their systems, a main challenge Lozano et al.’s (2015) study also

emphasized.


4.3.1.1. Implementation of ESD

Therefore, a failure to holistically implement ESD into the higher education

systems has been a main challenge found throughout the literature (Lozano et al., 2015,

p. 14; Ramos et al., 2015, p. 9; Michalos et al., 2014). Hence, Michalos et al.’s study

shed light on the impact that not compartmentalizing SD education can have. Michalos

et al. (2014) have conducted a study to assess the knowledge, attitudes and behaviors

that 10th grade students in Manitoba, Canada have concerning SD, based on the

understanding of SD concepts in the UNESCO. Manitoba has taken an integrated

approach to implementing SD across the entire curriculum of its elementary and

secondary classrooms, rather than developing a standalone/compartmentalized course

for SD (Michalos et al., 2014). Since 2004, the Ministry of Education in Manitoba has

declared ESD a priority and has developed an action plan, which has since been

committed to. There are four key points to this action plan:

1. Benchmarking of sustainability outcomes in the curriculum.

2. Integrating SD concepts into new curricula;

3. Holding in-service teacher training workshops and other projects to

enhance teaching and learning for sustainability;

4. Providing information, best practices, and learning resources on ESD.

(Michalos et al., 2014)

Hence the 10th grade students of Manitoba, Canada have had an exposure of

ESD throughout majority of their formal education. The authors’ results showed that the

students’ knowledge, attitudes and choices in relation to SD have notably improved as a

result of consistent and long-term exposure to ESD, and the holistic implementation of

SD into the curriculum (Michalos et al., 2014). Knowledge of social and environmental

dimensions of SD were stronger than the economic dimension, however some students

were challenged with formally defining SD despite understanding it (Michalos et al.,

2014). Savelyeva & Douglas (2017) have assessed the implementation of the UN-based

SD model in Hong Kong higher education systems through the formal liberal studies

curriculum, which is aimed at fostering the sustainability consciousness of students

(Savelyeva & Douglas, 2017, p. 220). Sustainability consciousness describes a way of


constructing one’s reality through the reflectiveness process of formulating personal and

group-related systems of values, beliefs, goals and strategies that lead to sustainable

changes (Savelyeva & Douglas, 2017, p. 220). Their findings suggest that implementing

sustainability education as part of the formal compulsory liberal studies curriculum in a

continuous manner (from secondary school to formal education) increases students’

knowledge-attitude-behavior axis and fosters their sustainability consciousness through

a process of transformative learning and identity building (Savelyeva & Douglas, 2017,

p. 236). Hence both Michalos et al. and Savelyeva &Douglas’ articles have emphasized

the importance of continuous and holistic implementation of ESD in order to transform

society.

While, Savelyeva & Douglas did find the UN-based SD model to be useful, in

terms of raising sustainability awareness, and increasing the knowledge and support of

environmentally friendly behaviors in students, they also emphasized that the model has

a ‘highly anthropocentric and compartmentalized structure’ resulting in a lack of

completeness and continuity (Savelyeva & Douglas, 2017, p. 235; NAS, 2015). Several

authors have proposed adding a fourth pillar to the UN’s three pillar model of SD which

could, “consciously and systematically incorporate a deeper, at once more internal and

more contextual dimension, designated variously as cultural- aesthetic, political-

institutional, or religious-spiritual” (Velasco & Harder, 2014, p. 6554). Huckle & Wals

(2015) emphasized this notion of a fourth pillar in their new model of Global Education

for Sustainability Citizenship (GESC).

4.3.1.2. GESC

Huckle & Wals (2015) have assessed the UN’s Decade of Education for SD

(DESD 2005-2015) initiative in their article. DESD aimed, ‘to integrate the values

inherent in SD into all aspects of learning to encourage changes in behavior that allow

for a more sustainable and just society for all’ (UNESCO 2005a), and was structured to

provide oversight, advice and coordination of the efforts of member states, UN agencies

and other groups (Huckle & Wals, 2015, p. 491). Based on their assessment, Huckle &

Wals (2015) claim that the UN has failed to acknowledge or challenge neoliberalism as

a barrier to sustainability, “if key causes of the global crisis are the prevailing

geopolitical order and lack of global governance, together with a lack of ‘civic

pedagogy’, as the authors of TEWN maintain, then global citizenship education should


lie at the heart of an international initiative on ESD, such as DESD;” but this is not the

case (Huckle & Wals, 2015, p. 493). Therefore, Huckle & Wals (2015) have identified

four dimensions of what they call “global education for sustainability citizenship”

(GESC), which will better support ESD and will lead to a more sustainable society:

(1) Scale (understanding of global society and the ways in which personal

and collective decisions have impacts on distant human and non-human

others);

(2) Ethical (recognition of sustainability as a normative notion” which

encompasses respect for nature, universal human rights, economic justice

and a culture of peace);

(3) Relational (understanding of the socially constructed nature of notions

and discourses of sustainability, citizenship and globalization);

(4) Political (exploration of structural causes of social and environmental

injustice and reformist and radical solutions)

(Huckle & Wals, 2015, p. 494-495)

4.3.1.3. Focus of ESD in Higher Education

Furthermore, Adomßent et al. (2014) suggest that despite the increase in ESD in

higher education systems, there should be a greater focus in three key areas:

management education for SD, sustainable consumption in higher education

institutions, and higher education for SD in Central and Easter Europe. Adomßent et al.

(2014) argue that these are considered the three highly relevant emerging areas in

research on higher education for SD as they have the potential to make a large overall

impact on the transformation to SD (Adomßent et al., 2014, p. 3).

“A paradigm shift towards sustainability will thus greatly impact the education

and training processes of future professionals, opening up new perspectives on lifelong-

learning processes and developing new attitudes towards nature, different cultures, and

consumption patterns,” (Adomßent et al., 2014, p. 3)

Management education for SD, refers to the role of business schools and other

management education institutions, and is particularly relevant since management

education has been accused of having failed to integrate reflection on ethical values,


social responsibility and sustainability into the curriculum in order to educate future

decision-makers to act more sustainably (Adomßent et al., 2014, p. 5). The UN’s

supported Principles and Responsible Management Education (PRME) (UN Global

Compact 2007) was the first global initiative focused on responsible management

education and has been considered an important catalyst of the transformation since

(Adomßent et al., 2014, p. 5). Management education systems have started to accept the

broader responsibility of management in society, and business schools/faculties have

made progress in educating and preparing students for future market realities

(Adomßent et al., 2014, p. 10). Sustainable consumption in higher education could

enable the shift in consumption and production systems, which is a key concern in the

SD agenda (Adomßent et al., 2014, p. 7). The authors claim that addressing the role of

students as consumer citizens should be a priority issue in research, education,

operations and community outreach that requires strategic leadership (Adomßent et al.,

2014, p. 9). Higher education for SD in Central and Eastern Europe, has been noted for

its potential impact but there is relatively little research on the matter (Adomßent et al.,

2014, p. 8). However, the European Commission has acknowledged ESD in their

adoption of the European Strategy for SD (EC, 2006; EC, 2007) and encourages

member states to develop strategic approaches to sharing knowledge and good practice

in order to stimulate ESD (Adomßent et al., 2014, p. 8).

4.3.2. Summary ESD has been a main theme throughout the recent academic literature in varying

contexts. Numerous authors agree that ESD is fundamental to transitioning into a more

sustainable society. The aim of education for SD is to change the values, beliefs and

attitudes of the youth of today in order to change the consumption patters and activities

of the leaders of tomorrow. Based on the academic literature, ESD is spreading across

the globe and becoming a standard aspect of education in many higher education

institutions (Michalos et al., 2014; Savelyeva & Douglas, 2017, p. 220; Ramos et al.,

2015, p. 3; Lozano et al., 2015, p. 14; Adomßent et al., 2014, p. 3). Several studies

showed that ESD is actually effective in changing the values, beliefs, attitudes and

actions of students towards SD (Michalos et al., 2014; Savelyeva & Douglas, 2017, p.

235). However, these studies also highlighted the difficulty in holistically implementing


ESD into the curriculum and the necessity of holistic implementation, as well as

continuous implementation, in order to enhance the sustainability consciousness of

students (Michalos et al., 2014; Savelyeva & Douglas, 2017, p. 235; Ramos et al., 2015,

p. 9; Lozano et al., 2015, p. 14). A key factor found to enhance the effectiveness and

adoption of ESD by higher education systems was the academic leaderships’

commitment to SD, which was strongest when the institution had signed a declaration,

charter or initiative (Lozano et al., 2015, p. 14; Michalos et al., 2014).

Furthermore, Huckle & Wals (2015) have criticized the content of the UN’s

framework of ESD and have proposed their ‘Global Education for Sustainability

Citizenship’ model which aims to enhance society’s support and understanding of SD

by emphasizing four key dimensions: scale, ethical, relational and political (Huckle &

Wals, 2015, p. 494-495). Lastly, Adomßent et al.’s (2014) article highlighted three key

topics: management education for SD, sustainable consumption in higher education

institutions, and higher education for SD in Central and Eastern Europe, which should

be of greater focus and attention in the higher education of SD as they could have the

most efficient and effective impact on building a sustainable society and transforming

the business sector towards SD (Adomoßent et al., 2014, p. 3).

4.4. SD Business Models & Solutions Numerous authors have emphasized the integral role of the private sector in the

transition to SD throughout the academic literature (Brandi, 2017, p. 26; Eberlein et al.,

2014; Toffel et al., 2014, p. 2; Almeida et al., 2015, p. 5). One major aspect in gaining

the support of the private sector is educating society on SD, as has been discussed

above. Another major aspect however is gaining the support of businesses. Businesses

do not only possess valuable assets such as financial and personnel resources,

infrastructure, innovation and technology, but they also have the ability to influence

society, their supply chain and other stakeholders, and promote good governance

(Brandi, 2017, p. 26; Bennet, 2018, p. 68; Toffel et al., 2014, p. 2; Barkemeyer et al.,

2014, p. 15; Voegltin & Scherer, 2017, p. 230). Hence, gaining the support of

businesses in the SD agenda has been a popular theme throughout the academic

literature. The topic of sustainable businesses is not new, but has received much

attention over the past decades (Kolk et al., 2015, p. 353; Hart et al., 2016, p. 403).


Despite that, several authors agree that there has been little change or adoption of SD in

the business context (Kolk et al., 2015, p. 353; Simanis, 2012; Hart et al., 2016, p. 403).

These challenges will be discussed before moving onto the topic of sustainability

strategies. The growing importance and potential impact of sustainability strategies will

be explained, followed by the introduction of several new sustainability frameworks and

concepts.

4.4.1. The SD Business Challenge Corporations have largely utilized globalization for personal and financial return

over the past decades, and the result has been increased levels of environmental

degradation and harm to humanity despite the increasing awareness of SD issues ((Hart

et al., 2016, p. 412; Ertrugul et al., 2016, p. 553; Beck, 2016, p. 3; Waisman et al., 2014,

p. 104). Several authors pointed out the ‘favoring’ of addressing environmental issues

over socio-economic ones in light of sustainability pressures, and the capitalistic intent

and harm this is further causing humanity and SD (Meadowcroft, 2013, p. 988;

Barkemeyer et al., 2014, p. 31; Holden et al., 2016, p. 2). Therefore, as Hart et al.

(2016) put it, “the time is ripe for reconciling business-based poverty solutions with the

threats that growth poses to the natural environment,” (Hart et al., 2016, p. 412).

The BoP strategy is one of the most renowned sustainability strategies, and has

focuses on the socio-economic aspects of SD (Kolk et al., 2015, p. 538). In 2002,

Prahlalad & Hart introduced the concept of the BoP, which reframed the poorest four

billion people in the world as a potential market to be served rather than a large

population in need of aid (Prahalad & Hart, 2002; Hart et al., 2016, p. 403). Since then,

the concept of the BoP has evolved dramatically throughout the academic literature

(Kolk et al., 2015, p. 532). “Yet despite all this research over the past 15 years, the

unfortunate truth is that most inclusive business ventures and BoP corporate initiatives

have either failed outright, been converted to philanthropic programs, or achieved only

modest success at great cost,” (Hart et al., 2016, p. 403). Few have been able to build a

foundation, or have gathered significant commercial momentum, or achieved substantial

scale (Simanis, 2012; Hart et al., 2016, p. 403).

Hart et al. (2016) partially attribute the lack of traction and progress of BoP

ventures, to the incremental approach taken by many early BoP ventures and

corporations. Consequently there is a distinction between “BoP 1.0” and “BoP 2.0”


approaches. On the one hand, the “BoP 1.0” focuses on adapting existing products,

reducing price points and extending distribution to previously underserved or un-served

customers, often with NGO partners to compensate for the lack of prior experience

(Hart et al., 2016, p. 403). On the other hand, the “BoP 2.0” approach stresses the

importance of co-creating products and compelling value propositions with undeserved

communities, innovating from the bottom-up, leapfrogging to environmentally

sustainable technology, and creating a dedicated set of metrics and timelines suited to

the unique features of the undeserved space (Hart et al., 2016, p. 403; Hart, 2015;

London & Hart, 2011). However, it is clear that knowledge about parameters for

successfully integrating business, poverty alleviation, and SD appear to still be rather

ambiguous (Hart et al., 2016, p. 403; Kolk et al., 2015, p. 353). With reference to the BoP concept, Kolk et al. (2015) suggest that new and

renewed frameworks of implementing BoP initiatives be created, “given the variation

that exists across BoP contexts, across products, and industries, and across consumer

needs, different BoP business models are likely to be necessary in different BoP

settings,” (Kolk et al., 2015, p. 353). Additionally, as the original BoP concept targeted

MNEs several scholars have highlighted the important role that MNEs, as well as small

companies, domestic companies, social entrepreneurs, and even non-profit

organizations and government agencies can play as well, and hence a discussion on the

role of these actors in BoP initiatives is still needed (Kolk et al., 2015, p. 353; Voegltin

& Scherer, 2017, p. 230; Bocken, 2015). In this regard, Hart et al. (2016) has generated

a conceptual map of the terrain (Figure 3.) explaining the gap between the BoP

business revolution and the knowledge of implementing BoP strategies in hopes to gain

further support (Hart et al., 2016, p. 405):

Figure 3.


The domain, ‘Process Focus’ emphasizes the importance of co-creation and

embedding in local context, as successful innovation for the BoP requires firms to tap

into new types of knowledge in order to develop products and business models and to

meet the challenge of conflicting economic, social and ecological stakeholder demands

in these new contexts (Hart et al., 2016, p. 405). Next the domain, ‘Content Focus’ aims

to enhance international strategy, organizational design and structure, systems and

incentives, and business model innovation to launch successful BoP ventures (Hart et

al., 2016, p. 409). Lastly, ‘Outcome Focus’ emphasizes the use of new tools and

methodologies to systematically measure and track the impacts of BoP ventures on

business poverty alleviation (Hart et. al., 2016, p. 410). This framework should facilitate

the growth of more poverty alleviating business strategies in the future, as it is

becoming exponentially more vital in our world. Hart’s idea of “green leap” innovation

is one new approach of reconciliation between poverty alleviation and environmental

sustainability, as it connects BoP businesses to clean and regenerative technology

commercialization, building from the logic of disruptive innovation (Hart et al., 2016, p.

411; Hart, 2005; Hart 2011; Hart & Christensen, 2002).

4.4.2. Sustainability Strategies Consequently, new and renewed models and frameworks for integrating SD into

business practices are still needed if all three aspects and goals of SD should be

implemented. Broman & Robert (2015), Bocken (2015), Almeida et al. (2015) and

Voegtlin & Scherer (2017) all focus on changing the business environment in a way that

works towards SD instead of against it while attaining a competitive advantage. The

above authors argue that one of the largest challenges with globalization is the increase

in production, consumption and flow of goods around the world. Almeida et al.’s (2015)

article highlights the urgent need for a change from unsustainable production and

societal patterns to truly sustainable societal development and suggests that

sustainability strategies could be the solution.

Based on 54 articles presented at the 4th International Workshop Advances in

Cleaner Production, Almeida et al. (2015) analyzed numerous sustainability strategies

that integrate cleaner production and have categorized them according to the level of

strategy hierarchy and related them to Mintzberg’s strategies, as can be seen in Figure


4. Cleaner production (CP) is a preventative integrated continuous strategy for

modifying processes to enhance efficiency, which improves environmental performance

and reduces costs (APINI, n.a.). Almeida et al.’s (2015) findings suggest that the

transition towards SD via CP has already been having an increasing impact on global

production, consumption and international trade (Almeida et al., 2015, p. 4).

Figure 4: Sustainability strategies for cleaner production in order of hierarchy

(Almeida et al., 2015, p. 3)

At the highest level of strategy hierarchy, is the global level where several

countries and cultures must share strategies and work together towards common goals.

The broader goals are established by society’s perceptions with regard to SD,

development and wellbeing (Almeida et al., 2015, p. 3). Indicators should be set in

place to provide information on the status of each society and help leaders establish

priorities for action in each country (Almeida et al., 2015, p. 3). However, the current

indicators of ‘progress’ misguide the elaboration of public and sectoral policies at all

levels and the weaknesses of these indicators are key stimuli for the development of

alternative indices to measure and guide the needed transition towards truly equitable

and sustainable societies (Almeida et al., 2015, p. 3). Research showed that sustainable

strategies are dependent on a country’s development model, its degree of development

and its societal structure in which the plans and policies would be applied (Almeida et

al., 2015, p. 3). Additional support and influence from the academia to teach and

influence students on sustainability and CP topics is also vital to improving professional


activities for SD. Environmental sustainability knowledge can be enhanced and spread

with the help of academic leaders through valuable recommendations, designed training

programs and eco-design models (Almeida et al., 2015, p. 3).

At the National level of strategic hierarchy, actions are guided by governmental

decisions, regulatory agencies and legislation. National governments are already

developing and implementing policies to promote CP to enhance the ability of

enterprises, societies, and local administrators (Almeida et al., 2015, p. 3). At the

Sectoral strategy hierarchy level, policies and actions applied for sectors can provide

direction to guide decisions and actions covering a broader territory. Management

practices improving a company’s environmental performance can quickly be

disseminated across a larger area of influence (Almeida et al., 2015, p. 3). Input and

participation from all levels of management and across all departments in support of

sectoral policies are required for an effective strategy. Integrating green supply chain

management can further support the effectiveness of sectoral strategies by influencing

different members in the supply chain to reduce their individual and joint wastage of

materials and energy (Almeida et al., 2015, p. 5).

At the lowest strategic hierarchy level is the individual level. Although

individual initiatives are independent, it is imperative that a sufficient and varied

number of efforts are made to catalyze systemic changes towards SD (Almeida et al.,

2015, p. 5). Development of environmental technologies at the individual company

level can provide promising solutions to SD as can be seen by the outcomes of recent

developments in “green chemistry,” “green engineering,” and “sustainable materials.”

These developments have presented opportunities for new feedstock and intermediate

materials, alternative reuse approaches, emission reductions and production based upon

renewable approaches (Almeida et al., 2015, p. 5). Furthermore, the integration of

frameworks targeted towards SD goals such as the ISO 14001, environmental

management systems, and the Sustainable Value concept and CP were found to improve

the adoption of SD activities at the individual level. The use of assessment methods and

tools to review, revise and monitor all of the firm’s SD strategies at all hierarchical

levels is also critical to successful implementation (Almeida et al., 2015, p. 7).


4.4.2.1. FSSD Framework & RI

Broman & Robert (2015) and Voegltin & Scherer (2017) have devised

sustainability frameworks for organizations to implement into their business activities in

order to gain a competitive advantage in the market while benefiting and not harming

the environment or humanity. Broman & Robert (2015) claim that there has been a

problem with the fundamental understanding of SD in the business context, which has

restricted the support of MNCs in SD initiatives. They argue that the issue lies in two

aspects:

(1) Inability to comprehend the strain industrialization inflicts on SD;

(2) An inability to translate the definition into effective action.

(Broman & Robert, 2015, p. 5)

In response the authors have revised the FSSD, Framework for Strategic SD,

and have made additions to support businesses in understanding the concept of SD with

a step-by-step guide on how to achieve it. Their FSSD model includes the funnel

metaphor facilitating the understanding of the challenge facing sustainability, a five-

level structuring inter-relation model, a principled definition of sustainability (including

eight dimensions), and an operational procedure for creative co-creation of strategic

transitions towards sustainability.

The Funnel Metaphor:

“The systematic decline of the ecological and social systems' potential to

support the fulfillment of human needs, in combination with the growing population,

can be metaphorically illustrated as the human civilization entering deeper and deeper

into a funnel, ” (Broman & Robert, 2015, p. 5).

In Broman & Robert’s (2015) explanation of the funnel metaphor the authors

state that the inclined funnel wall clarifies the systematic character of the challenge as

well as the self-benefit of having and working towards a sustainable vision. Hitting the

wall of the funnel should be avoided while moving towards the vision at the opening of

the funnel (Broman & Robert, 2015, p. 5). Once the unsustainable basic design and

mode of operation of society has been resolved the funnel will turn into a cylinder

implying sustainability. Broman & Robert (2015) claim that the funnel metaphor is

particularly useful for illustrating the self-benefit of proactivity for sustainability and


therefore gaining the attention of leaders. In addition to the funnel metaphor the authors

have also defined sustainability principles, which should guide organizations away from

unsustainable practices.

These eight guiding principles of SD are characterized as follows:

In a sustainable society, nature is not subject to systematically increasing….

1. Concentrations of substances extracted from the Earth’s crust (e.g. fossil

carbons and metals);

2. Concentrations of substances produced by society (e.g. conscious

molecular designs, limited production and safeguarding);

3. Degradation by physical means (e.g. over-harvesting of forests and over-

fishing);

4. Health (e.g. dangerous working conditions or insufficient rest from

work);

5. Influence (e.g. by suppression of free speech or neglect of opinions);

6. Competence (e.g. by obstacles for education or insufficient possibilities

for personal development);

7. Impartiality (e.g. by discrimination or unfair selection to job positions);

8. Meaning-making (e.g. by suppression of cultural expression or obstacles

to co-creation of purposeful conditions).

(Broman & Robert, 2015, p. 7)

Broman & Robert (2015) claim that the FSSD framework offers numerous

benefits including enhancing the effective management of system boundaries and trade-

offs and offers the possibility for more effective collaboration across disciplines and

sectors, regions, value-chains and stakeholder groups (Broman & Robert, 2015, p. 1).

Voegltin & Scherer (2017) on the other hand do not focus as much on the business

process but more on the product or output of the business. In their 2017 article Voegltin

& Scherer (2017) argue that ‘responsible innovation’ at the organizational level

accompanied by the global governance of hard and soft law measures is a key

mechanism to globally achieving the 2030 SDGs.


“The idea of responsible innovation is that new products should not damage the

health of consumers and the general public, new processes should be safe for workers

and everyone involved, and neither of these should pollute or harm the environment in

any way,” (Voegltin & Scherer, 2017, p. 230).

Responsible innovation is innovation that consists of three dimensions:

(1) Innovations avoid harming people the planet;

(2) Innovations ‘do good’ by offering new products, services, or

technologies which foster SD;

(3) Global governance schemes are in place to facilitate innovations that

avoid harm and ‘do’ good.

(Voegltin & Scherer, 2017, p. 227)

They have developed an model, which states that CSR fostering responsible

innovations, conveys a political role to business organizations and that SD requires

collective problem solving to encourage ‘do good’ innovations and ‘soft law’

arrangements to promote the development of innovations that ‘avoid harm’ (Voegltin &

Scherer, 2017, p. 229). Both Broman & Roberts (2015) and Voegtlin & Scherer (2017)

highlight the strategic advantage that can be achieved by producing products in different

ways or producing products different than their competitors through envisioned SD

objectives. In other words, gaining a competitive advantage (as defined by Porter) by

working towards SD. Another approach to changing the business environment is

suggested by Bocken (2015) in her 2015 article on sustainable venture capital. In her

article Bocken (2015) claims that in order to works towards solving the global

sustainability challenge the world is currently facing, venture capitalists should target

sustainable businesses that deliver triple bottom line results.

Broman & Roberts (2015), Voegltin & Sherer’s (2017), and Almeida et al.’s

(2015) approaches emphasized the importance of SD at the organizational level. While,

Bocken (2015), Holden et al. (2016), and Voegltin & Scherer’s (2017) approaches

additionally focused on the importance of external stakeholders as a support and

incentive system for encouraging sustainable businesses practices. To compare,

Voegltin & Scherer’s (2017) support system calls upon the government and non-

governmental organizations to support and incentivize entrepreneurs to invest in

responsible innovations, and Bocken (2015) focuses on the incentives venture


capitalists can provide through targeting their investments. Based on an empirical study,

Bocken (2015) argues that venture capitalist investments play a key role in forming

sustainable start-ups. Apart from providing financial assistance, venture capitalists can

contribute to sustainable business success by helping to prove the success of sustainable

business formats, by mitigating the financial risk through co-investments and by

exercising patience through balancing financial with both social and environmental

returns (Bocken, 2015).

4.4.3. Summary Sustainability strategies in the business context are not a new topic; they have

actually been a topic of much popularity and attention over the past decades (Kolk et al.,

2015, p. 532; Hart et al., 2016, p. 403; Meadowcroft, 2013, p. 988). In light of the

continuous awareness of SD issues and the negative impacts that business activities

have on the environment, businesses have increasingly been adopting some sort of

sustainability initiative (Almeida et al., 2015, p. 4; Barkemeyer et al., 2017, p. 15).

Despite that, environmental burdens continue to increase and areas of extreme poverty

still remain (Holden et al., 2016, p. 10; Meadwocroft, 2013, p. 990; Hart et al., 2016, p.

412). Several authors attribute the little progress made in the support of SD in the

business sector to a lack of understanding of SD, an inability to comprehend SD and

strain of industrialization, and a lack of (universal) methods of implementation (Kolk et

al., 2015, p. 353; Hart et al., 2017, p. 403; Broman & Robert, 2015, p. 5). While others

attribute it to a lack of incentives and support from external stakeholders such as

investors, suppliers, customers, governments, NGOs, CSOs, and IGOs (Voegltin &

Scherer, 2017, p. 227; Bocken, 2015; Kolk et al., 2015, p. 353; Bennett, 2018, p. 68).

Whatever the reason may be, numerous authors agree that transforming the business

sector towards SD is vital to combating the world’s gravest SD challenges

(Meadowcroft, 2013, p. 988; Barkemeyer et al., 2014, p. 31; Adomßent et al., 2014, p.

5; Hart et al., 2016, p. 412). Furthermore, contributions from the business sector need to

alleviate environmental, economic, and as well as social burdens, all aspects of SD

(Hart et al., 2016, p. 412; Kolk et al., 2015, p. 532; Frugoli et al., 2015, p. 379:

Barkemeyer et al., 2014, p. 31; Holden et al., 2016, p. 4; Meadowcroft, 2013, p. 98).

Almeida et al.’s (2015) article emphasized how global- national- sector-

individual sustainability strategies have a positive impact and the importance in gaining


support and cooperation from both the public and the private sector (Almeida et al.,

2015, p. 3-5). Broman & Robert’s (2015) renewed FSSD framework redefines SD in the

business context and provides a set of guidelines for businesses to follow in order to

refrain from unsustainable practices (Broman & Robert, 2015, p. 5). Voegltin &

Scherer’s (2017) concept of responsible innovation aims to foster sustainable

innovations (product output) in the market, which do not add to environmental or social

burdens but offer new solutions; and are incentivized through global governance

schemes (Voegltin & Scherer, 2017, p. 227). Bocken’s (2015) article then highlighted

how venture capitalists can play an integral role in fostering and incentivizing

sustainable start-ups, by providing financial assistance, protection and connections

(Bocken, 2015). Therefore sustainability strategies in the business context are spreading

beyond the actions of a single company, but also to the external stakeholders of the

company.

4.5. Summary & Discussion The articles assessed throughout the academic literature covered a wide range of

topics and solutions on globalization and SD. What has become clear throughout the

literature is that globalization is both beneficial and harmful to SD. This implies, as well

the findings of Das (2013), Fura et al. (2017), Shaikh et al. (2016), Ertrugul et al. (2016)

and Grossman & Helpman (2015), showed, that globalization is actually able to support

the SD agenda, and even more so if changes are made. However these changes are not

simple, but require collaborative and cohesive decision-making and implementation

across and between countries and continents (Fura et al., 2017, p. 978; Stiglitz, 2017, p.

16; Biermann et al., 2017, p. 27-29). This leads to the topic of global governance and

the coordination of policies and regulations. While new forms of global governance,

such as citizen participation and transnational business governance, have evolved to fill

the gaps of inadequate global and state regulations, they are far from encompassing a

true solution to the current challenges of global governance (Meng et al., 2014, p. 2;

Brandi, 2017, p. 31; Toffel et al., 2014, p. 1; Meadowcroft, 2013, p. 988; Barkemeyer et

al., 2014, p. 31). Furthermore, new and unexplored solutions do not come without new

or unknown challenges (Brandi, 2017, p. 26). Despite that, numerous sustainability

solutions have been proposed throughout the academic literature.


Almeida et al.’s (2015) article emphasized the value of sustainability strategies

at all levels of the sustainability strategy hierarchy, so from the global to the individual

level. Throughout the academic literature, numerous sustainability strategies were

discussed and examples of sustainability strategies at each level have been presented. At

the global sustainability strategy level, Biermann et al.’s characterization of the 2030

Agenda offers global common goals for the UN member states to work towards, based

on their abilities and preferences (Biermann et al., 2017, p. 26). Holden et al.’s (2016)

renewed model of SD also functions as a global sustainability strategy focused on

gaining societal support by connecting the SDGs to specific indicators and threshold

values (Holden et al., 2016, p. 10). At the national level, Herrschel’s concept of Smart

(New) City Regionalism offers a framework for guiding policy and regulatory

preferences from the local to the national level (Herrschel, 2013, p. 15). Schmitz &

Mitchel’s proposition of RBA strategies further strengthens the communication and

support of NGOs for citizen empowerment (Schmitz & Mitchel, 2016, p. 253).

Additionally, Stiglitz’s policy program outline aims to guide national policies away

from inflicting greater harm on those suffering the most from globalization (Stiglitz,

2017, p. 16).

At the sectoral level, Voegltin & Scherer’s concept of RI incentivizes

sustainable innovations/businesses with the support of global governance schemes

(Voegltin & Scherer, 2017, p. 227). As well, VSSs and VSSSOs can play a role in

enhancing sectoral standards in countries where the governments are unable to upgrade

their standards (Bennet, 2018, p. 68). Lastly, at the individual level Broman and

Robert’s FSSD framework aims to guide businesses away from unsustainable activities

(Broman & Robert, 2015, p. 7). Additionally, Bocken’s (2015) sustainable venture

capitalist concept aims to change the initiatives and incentives of entrepreneurs at the

individual levels (Bocken, 2015). Hence, as Almeida et al.’s (2015) article emphasized,

sustainability strategies have different functions and impacts at various levels and

therefore may be necessary at various levels. What this implies is that there is no one

solution to overcoming the challenges of globalization and SD.

However, based on the content of ESD in the academic literature, it would

appear that ESD is the closest thing to a solution of globalization and SD for several

reasons. First, the studies of Meadowcroft (2013) and Barkemeyer et al. (2014) revealed

how governments and corporations have been utilizing the value attributed to

transparency in SD topics for their own economic gain (Mol, 2015, p. 160). What this


implies is that awareness of SD has significantly increased, and hence many

stakeholders understand the implications of their actions at some level. Yet despite that

awareness and general understanding, they still choose to act unsustainably while

appearing otherwise due to the societal pressures of SD (Mol, 2015, p. 160;

Meadowcroft, 2013, p. 988; Barkemeyer et al., 2014, p. 31). This leads to the question

of ones values, beliefs and morals, which are deeply embedded within an individual and

guide their actions (Savelyeva & Douglas, 2017, p. 220). Therefore, societal pressures

guide their actions to act sustainably but their personal values, beliefs and morals do not

(Toffel et al., 2014, p. 21-23; Lozano et al., 2015, p. 14; Michalos et al., 2014; Scherer

et al., 2013, p. 262-264).

Second, ESD aims and succeeds at transforming the values, beliefs and morals

of students and fostering a sustainability consciousness (Savelyeva & Douglas, 2017, p.

220). ESD was found to be most effective when implemented holistically into the

academic system and continuously throughout the student’s formal education

(Savelyeva & Douglas, 2017, p. 236; Michalos et al., 2014). Hence this will require

commitment and dedication from the academic system. Third, the signing of a charter or

initiative was found to significantly strengthen ones commitment to SD by both the

business and academic contexts (Lozano et al., 2015, p. 14; Michalos et al., 2014;

Toffel et al., 2014, p. 21-23). However, the incentives for signing such a charter were

strongest when the faculty was already committed to SD or when goods were sold to

sustainability conscious consumers (Toffel et al., 2014, p. 21-23; Lozano et al., 2015, p.

14; Michalos et al., 2014). This implies that when powerful stakeholders are committed

to SD, the actions and activities around them shift to support SD even at the global

level. Therefore, if a sustainability consciousness can be fostered through ESD, then the

values, morals and beliefs embedded within students, or the society, business owners

and leaders of tomorrow, will dictate their individual actions to genuinely support SD

(Savelyeva & Douglas, 2017, p. 220; Michalos et al., 2014; Adomoßent et al., 2014, p.

3).

Therefore, ESD may be able to set the foundation needed to build a truly

sustainable society in the future. However, it is really ESD in combination with

sustainability strategies and global governance regimes, which will enable a global shift

towards SD. Global sustainability strategies such as the 2030 Agenda, and Holden et

al.’s SD framework create the outline for common global goals to work towards and act

as a reference point for humanity. IGOs set the targets, goals and indicators of SD,


while facilitating the coordination of policies and regulations, which are fair, supportive

and responsive to the individual needs of each country; Stiglitz’s policy outline and

Herrschel’s concept of Smart (new) City Regionalism can act as a reference.

Transnational business governance in combination with citizen participation can then

guide national policies and regulations to support SD, and voice it from the national to

the global level. As well these global governance regimes can help foster the adoption

of signing SD charters and standards. Businesses can then utilize such models as the

FSSD framework, the BoP framework or the RI concept to monitor and guide their

business activities when in doubt (Prahalad & Hart, 2002; Hart et al., 2016, p. 403; Kolk

et al., 2015, p. 353; Broman & Robert, 2015, p. 5-7; Voegtlin & Scherer, 2017, p. 230).

With the foundation of ESD, incentivizing SD should not be much of a concern since

individuals are individually incentivized by their own personal beliefs, values and

morals (Savelyeva & Douglas, 2017, p. 220; Michalos et al., 2014). The above scenario

is of course hypothetical since, although ESD has gained popularity and adoption over

recent years, it is still not a global standard. Additionally, not all of the population has

access to education, and this is a major goal of the SD agenda (UN, 2015). This comes

back to one of the main issues brought up throughout the academic literature, the

uneven development of the world, or the prevalent income inequality within and

amongst countries.

The main drivers of income inequality were global governance and the

coordination of policies, and the harm inflicted by environmental and economic

globalism. These two topics strongly correlate, as many authors feel that better global

governance and policy coordination will help limit the harmful effects of economic and

environmental globalism (Das, 2013, p. 110, Biermann et al., 2017, p. 27-29; Holden et

al., 2016, p. 2; Stiglitz, 2017, p. 16-19; Frugoli et al., 2015, p. 379; Meadowcroft, 2013,

p. 988; Almeida et al., 2015, p. 5; Waisman et al., 2014, p. 101). To reiterate the

harmful effects of economic and environmental globalism: FDI commonly flows from

developed to developing countries allowing developed countries to cut costs on labor,

property, and environmental standards by relocating to developing countries which are

in exchange benefitted with capital, jobs and knowledge (Grossman & Helpman, 2015,

p. 101; Das, 2013, p. 104; Stiglitz, 2017, p. 16). The result is often greater

environmental pollution and continuously poor social standards (i.e. living, working,

health) in developing countries and increased capital and control in developed countries

(Hart et al., 2016, p. 412; Brandi, 2017, p. 26; Stiglitz, 2017, p. 1; Stewart, 2017, p. 68;


Ertrugul et al., 2016, p. 553; Shaikh et al., 2016; Beck, 2016, p. 3). Additionally, FDI

harms local businesses and competition in developing countries, further enabling their

own ability to develop their own economies (Chia, 2015, p. 1; Firat, 2017, p. 4;

Ampuja, 2015, p. 29; Kimatu, 2014, p. 2).

However, the developing countries endure the harmful effects of FDI and

continue to draw in foreign investment in order to compete in the global market (Hart et

al., 2016, p. 412; Stewart, 2016, p. 68; Stiglitz, 2017, p. 16; Ahmed et al., 2017, p.

1142; Ertugrul et al., 2016, p. 543). Again, the result is the greater suppression of

developing countries and greater capital gain and control of developed countries.

Therefore, global governance regimes come in to play to oversee global activities and

help national governments, which are unable to function on their own. A simple

example of the conflict forming from the original forms of global governance is the

WTO. When member states of the WTO enter into an ITA, a set of policies, rules and

regulations are set for all the countries of the ITA to follow (Docalavich, 2016, p. 75).

What can happen then is that the poorer countries are held to the same standards as the

richer countries, making it more difficult and expensive for the poorer countries to enter

the agreement than the richer (Meyer, 2017). Additionally, the rules, regulations and

policies imposed no longer follow the rules, regulations and policies decided on

democratically by the citizens of the country (EU, 2015; Winters, 2014; Blackwell,

2017).

Consequently, national governments feel at a loss of sovereignty in both

developed and developing countries (Stiglitz, 2017, p. 37; Tucker, 2016; Meyer, 2017).

Hence, the new forms of global governance such as citizen participation and

transnational business governance. Citizen participation aims to voice citizen

preferences at the global level so that global activities such as ITAs, and FDI, don’t

infringe the rights and well-being of citizens (Hong, 2015, p. 572; Meng et al., 2014, p.

1; Senit et al., 2016, p. 533; Fox & Stoett, 2016, p. 558). Transnational business

governance, such as VSSs, aim to enhance the social standards of countries engaging in

global activities (Brandi, 2017, p. 26; Eberlein et al., 2014; Toffel et al., 2014, p. 2).

However, an agreed upon set of rules, regulations and policies facilitates the global

activities between and amongst developed and developing countries (Meyer, 2017).

Therefore, when it comes to coordination of policies between these countries it becomes

challenging to choose between the higher standards of the developed countries vs. the

lower standards of the developing countries. Brandi’s (2017) study highlighted some of


the trade-offs that come with even with VSSs, such as undermining the socioeconomic

situation of smallholders and causing greater environmental degradation (Bennet, 2017,

p. 68; Brandi, 2017, p. 26). Hence, one of the largest challenges facing globalization

and SD today is (1) global governance and the coordination of policies.

Furthermore, transnational business governance aims to enhance the social

standards of countries engaging in global activities but the extent thus far has not been

sufficient (Bennett, 2018, p. 66; Brandi, 2017, p. 26; Mol, 2015, p. 160; Barkemeyer et

al., 2014, p. 31). Several authors emphasized how the adoption of VSSs has been

utilized for capital gain or false transparency of SD by many businesses (Barkemeyer et

al., 2014, p. 31; Scherer et al., 2013, p. 262; Mol, 2015, p. 160). Therefore, while

increased awareness of SD and societal pressures of SD have led businesses to adopt

VSSs, they are still not supporting the SD agenda for the right reasons nor are they

contributing as much as they should (Barkemeyer et al., 2014, p. 31; Scherer et al.,

2013, p. 262; Mol, 2015, p. 160).

Yet, several authors agree that gaining the support of the private sector is vital to

meeting the SDGs and concurring the world’s greatest challenges (Meadowcroft, 2013,

p. 988; Barkemeyer et al., 2014, p. 31; Hart et al., 2017, p. 412). This support should

cover the social, environmental and economic dimensions of SD and will require

increased societal support of SD and increased business support of SD, which many

authors agree both facilitate each other (Hart et al., 2016, p. 412; Kolk et al., 2015, p.

532; Frugoli et al., 2015, p. 379: Barkemeyer et al., 2014, p. 31; Holden et al., 2016, p.

4; Meadowcroft, 2013, p. 98). Increased societal support will not only push businesses

to support the SD agenda, but will also guide society’s individual consumption patterns

while also enhancing their knowledge and ability to indulge in citizen participation

(Meadowcroft, 2013, p. 990; Adomßent et al., 2014, p. 3; Almeida et al., 2015, p. 4;

Huckle & Wals, 2015, p. 493). Increased business support will not only educate and

guide society’s consumption patterns, but will also limit global pollution, environmental

degradation and arbitrage in developing countries (Stiglitz, 2017, p. 16; Ahmed et al.,

2017, p. 1142; Erugrul et al., 2016, p. 543). Therefore, two of the largest challenges

facing globalization and SD today are (2) gaining societal support of SD, and (3)

gaining the support of business in the SD agenda.


5. Conclusion Today’s globalization is characterized by global networks of interdependence

made up of countries, corporations, and people, which exchange products, services,

knowledge, and capital at an increasingly fast rate and frequency due to innovative

technologies permitting the metaphoric shrinkage of space (Keohane & Nye, 2007, p. 5;

Held et al., 1999, p. 15; Martell, 2010, p. 12). This motion of globalization has changed

the business environment, allowing companies to search and settle in areas of the world,

which provide them with the most financial benefit and tactic (Stiglitz, 2017, p. 39;

Gopinath, 2008 p. 132). The free flow of capital and corporations across the world in

combination with the innovations of the Internet and technology have allowed wealth

and mass production to accrue in the 21st century like never before (Brondoni, 2014, p.

13). Yet despite income levels rising, income inequality is still prevalent suggesting that

the wealth is not being fairly distributed within nations (Stiglitz, 2017, p. 16; Stewart,

2016, p. 68). As well, environmental burdens are continuously increasing (Waisman et

al., 2014, p. 103; WHO, 2018; Hart et al., 2016, p. 412).

The aim of this thesis has been to determine the effects of globalization on SD.

What has become clear is that the effects of globalization on SD are both harmful and

beneficial in both developed and developing countries. The harmful effects of

globalization on SD have been defined as: increased income inequality, increased

competition, increased unemployment, increase environmental degradation, increased

environmental pollution, increased capitalism, a loss of sovereignty of national

governments and increased control of MNCs (Ritchie & Roser, 2018; WHO, 2018;

Meadowcroft, 2013, p. 988; Waisman et al., 2014, p. 103; Bennett, 2018, p. 67; Beck,

2016, p. 1; Hart et al., 2016, p. 412; Stewart, 2016, p. 68; Ertrugul et al., 2016, p. 553;

Shaikh et al., 2016; Jaumotte et al., 2013, p. 30; Stiglitz, 2017, p. 14). The key drivers

of the harmful effects have been expressed as technological change, FDI, and

competition (Jaumotte et al., 2013, p. 30; Stiglitz, 2017, p. 14; Stewart, 2016, p. 68).

The beneficial effects of globalization on SD have been defined as: knowledge transfer

and spillovers, increased income levels, increased support in supply chain networks,

increased collaboration and coordination, increased awareness of SD, increased ESD,

and increased support of SD (Das, 2013, p. 101; Bennet, 2016, p. 66; Grossman &

Helpman, 2015, p. 100; Ertrugul et al., 2016, p. 553; Shaikh et al., 2016, Lozano et al.,

2015, p. 1; Ramos et al., 2015, p. 3; Fura et al., 2017, p. 977). The most common


solutions proposed throughout the academic literature were citizen participation in

global governance, transnational business governance, ESD, policy coordination and

sustainability strategies.

However, an interesting finding was how the drawbacks of technological

change, FDI and competition can be overcome by utilizing some of the beneficial

effects of globalization on SD; particularly with respect to developing countries. For

instance, how Das’ (2013) article highlighted how technological change and global

trade and investment activities can globalize an economy and lead to an increase in

living standards in countries like India (Das, 2013, p. 101). Additionally, how

Grossman & Helpman’s (2015) article, as well as Stiglitz’s (2017) article, emphasized

how countries like China have significantly benefitted and developed as a result of

knowledge spillovers and knowledge transfers from inward FDI. Furthermore

Grossman & Helpman’s (2015) article also emphasized the link between knowledge

transfers, innovation and competition and how developing countries can benefit despite

having low innovations and high competition.

Additionally, the findings of the systematic literature review highlighted the

value of collaboration, coordination and support of key stakeholders in the SD agenda.

This was emphasized in several different contexts throughout the academic literature.

First with regard to the SDGs, Fura et al.’s (2017) article shed light on how the 28

member countries of the EU have been working together to meet the goals of the

Europe 2020 Strategy. Due to the varying socioeconomic development status’ of the

EU member states, Fura et al. (2017) emphasized that it is unlikely that each country

individually meets all targets, but by working together many countries have been able to

increase their standards and development and together their cumulative actions could

lead to the accomplishment of EU objectives (Fura et al., 2017, p. 977). Additionally,

Shaikh et al.’s (2016) article highlighted how developing countries such as Malaysia

have been able to support the SD agenda by limiting CO2 emissions with the support of

the Government of Malaysia (Shaikh et al., 2016). Second with regards to ESD, the

findings of Michalos et al. (2015) emphasized how the government of Mantioba,

Canada has been supporting the SD agenda by implementing ESD across the entire

curriculum of its elementary and secondary classrooms since 2004; and the success that

has come therefrom (Michalos et al., 2015).

Third with regards to citizen participation, Meng et al.’s (2014) study on the

effectiveness of citizen participation revealed the importance of state-society relations


in having authoritarian regimes incorporate citizen preferences into policy (Meng et al.,

2014, p. 2). Fourth with regards to transnational business governance, Toffel et al.’s

(2014) article shed light on how the suppliers and consumers of the value chain network

influence adoption and adherence to VSSs, and how overlapping state, civil society, and

market governance regimes are essential to having meaningful transnational regulation

(Toffel et al., 2014, p. 1). Fifth with regards to policy coordination, Stiglitz’s (2017)

article emphasized the necessity of governments to take an integral role in shifting

policies so that globalization can also benefit those who have been harmed by

globalization, since the market on its own can not facilitate this change (Stiglitz, 2017,

p. 19). Sixth and lastly, with regards to sustainability strategies, Almeida et al.’s (2015)

article defined four sustainability strategy hierarchies and the value that each one has as

well as the necessity of global cooperation and coordination from the private and public

sectors in order to achieve sustainability at each level (Almeida et al., 2015, p. 5).

Furthermore, throughout the conceptual background, several authors stated that

a major dilemma of the SD agenda in developing countries is their inability to support

the SD agenda due to their poor socioeconomic development status (Ritchie & Roser,

2008). Here the findings of Ertrugul et al. (2016) and Shaikh et al.’s (2016) articles

were particularly interesting, as they revealed how major CO2 emitting countries like

Malaysia can support the SD agenda without harming their economies by focusing on

energy sustainability. Specifically, Shaikh et al.’s (2016) article revealed how the

Government of Malaysia is working with its key stakeholders to limit energy

consumption in the building sector to support the SD agenda. These findings offer a

positive outlook for the SD agenda, as developing countries are becoming more

educated and supportive of SD despite their low socioeconomic development status.

Another finding inducing a positive outlook on the SD agenda was the increased

adoption and importance of ESD throughout the academic systems of many higher

education institutions worldwide.

The increased adoption and dedication of ESD in higher education systems

clearly shows the increased awareness, understanding and support of SD globally.

Furthermore, the findings of Michalos et al. (2014) and Savelyeva & Douglas (2017)

highlighted the transformative impact that ESD can have on the values, beliefs, morals

and actions of students. Implementing ESD into the academic system helps students

understand the importance of SD, by establishing credibility of the concept and the

necessity and urgency to change their individual habits. If ESD becomes a standard


aspect of general education it has the potential to generate an intrinsic motivation to

support SD by the key stakeholders of the global economy. This is important since

currently, many of the pitfalls of globalization are caused by a lack of intrinsic

motivation to support SD, which results in superficial support that does not significantly

contribute to the SD agenda (Meadowcroft, 2013, p. 990; Barkemeyer et al., 2014, p.

31; Mol, 2015 p. 160).

In conclusion, the effects of globalization on SD are both harmful and

beneficial. However, the findings of the systematic literature review present a positive

outlook for combating several of the challenges facing globalization and SD today. The

increased adoption and support of the SD agenda by developing countries, the

academia, national governments, and global governance regimes exemplifies the global

progress made in working towards SD. However, due the limited scope of this study,

there are numerous effects of globalization on SD, which have not been accounted for

since there are thousands of academic articles and books on the topic, that have not been

considered throughout the study. Furthermore, the data search of this study had a large

scope and therefore may have led to more general results than if it would have pertained

more to the specific forms of globalization or aspects of SD. However the results of this

study could provide a general overview of the main topics and themes discussed

throughout the recent academic literature and provide a good foundation of knowledge

for future researchers to build off of. Particularly with respect to the three main

challenges facing globalization and SD: (1) effective global governance and the

coordination of policies; (2) gaining societal support for SD, and; (3) gaining business

support for SD.


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