Globalisation is the process by which ‘everything’ is becoming more integrated and generalised as a result of the increased prevalence of trade, movement of people and integration of political systems in society.
What drives it?
Globalisation is driven by numerous factors such as soial and economic groupings of nations which increase the integration economically, culturally and socially of countries by eliminating barriers to trade and movement of people. As well as developing transport links to enable this movement, such as 75,200km of road and 78000km of rail network which has been built by 2010 in the EU as well as the cross channel tunnel. Multiculturalism is rising, especially within the UK and 8% of British people now identify themselves as ‘European’. The WTO (world trade organisation) also increases the potential for globalisation as a development of GATT (General agreement on tariffs and trade) it has changed with the development of technology to include protection of not only goods and services, but intellectual property and designs creating a new market available for trade. It also acts as a lobbying body preventing powerful cartels form emerging and can be seen to ‘liberalise’ trade leading to further expansion worldwide and integration.
New markets also drive globalisation as they give companies an opportunity to expand into cheaper markets and to grow. Evident in the ‘Asian Tiger’ economies and further development of second and third generation NICs (newly industrialised countries). They arguably create the incentives that invite TNCs to locate within their markets, for example China has 5 special economic zones, 15 ‘open cities’ and 30+ special industrial development areas with particular tax incentives of reduced rents and fast processing of permits. This creates a multiplier effect of more TNCs moving to these markets to take advantage and also to supply other TNCs and industry developing such as the car industry which requires many suppliers for its vast components industry. China also has a vast market potential with a growing middle class the average Chinese salary is $1000 and rising it is currently the fastest growing motor car market in the world. So much so that despite costs being more expensive in China manufacturers such as Honda and Nissan still choose to locate here because of this reason.
TNC's or transnational companies can be seen to ‘drive’ globalisation as they create the ‘bridge’ between manufacturing base and market output. They arguably create the flow of capital connecting countries and also contribute to ‘westernisation’ as seen through brand association with Coca Cola and McDonalds, which some believe to be a symbol of western imperialism spreading throughout the world.
Other driving factors are technology itself as there are no physical barriers to trade and products can be bought and sold in seconds, people can connect with on-and-other from opposite sides of the world. [French film quote- it is impossible to ban American films in France when they can be watched over the internet]
Impacts
(Global, national, local) (social, economic, environmental)
Impacts of globalisation come in many forms, the most obvious being to the economy as well as environmental impacts. Industry in general (of any form) requires natural resources, typically carried out by the largest of transnational’s and predominantly involves exploitation of these resources. These include oil extraction and extraction of natural materials, metal ores and deforestation for timber. This has an impact to ecosystems at a fast scale as many of the world’s most needed natural resources are located in the most fragile ecosystems such as the Amazon rainforest where there is the 3rd largest iron ore mine. On a more general scale global warming is a result of industrialisation and growing to a global scale as globalisation has taken place.
The manufacture and processing of these materials by secondary industry also requires energy from fossil fuels which are running out, Brazil is an example of the development of new technology in the form of HEP in order to fuel this. However, there are many negative impacts to this on a local. Furthermore exponential growth in industrial activity in recent years will only fuel these needs and worsen their impact e.g. China uses 70% fossil fuels and has become a net importer of oil (it was a net exporter 10 years ago).
Globalisation has however, allowed for the vast expansion of economic output, rise in GDP and overall development which has benefited for example NICs seen though the growth in China and India economy and the increase in development of their middle class sector as a result of high spending power in the purchase of consumer goods, In Brazil growth has resulted in poverty falling by half of its 192 million population to one quarter. However, through this the most vulnerable in Brazil’s society have not benefited and its remains one of the most polarised societies. In China there is now a definite geographical divide between the developed coastal region of eastern China and the rural west as well as energy distribution issues between the north and south. Some regions such as Sichuan have barely been touched by Chinas ‘economic boom’ and suffer greatly due to lack of infrastructure for example following the 7.0 magnitude earthquake in Ya’an China on the 14th of April 2013. Many links used to transport rescue equipment were blocked by landslides caused by heavy rain and flooding and much aid had to be delivered on foot as a result.
There is a polarisation created between those who can globalise/ globalise at a faster rate and those who can't, as well as exploitation of developing nations to achieve this.
There is an Increase in the dependency of economies on each other e.g. if china’s economy crashes the world’s economy would crash as well, illustrated by the Asian economic crisis of 1997 caused somewhat by over-rapid development of the Asian tigers which led to a worldwide recession. This also puts firms at risk e.g. 2011 Japan tsunami HP lost $700 million as couldn’t produce products as parts sourced from Japan.
The risks posed to global supply chains of TNCs and GPN (global production networks) are also a result of globalisation as they have grown along with it. For example The American TNC Chrysler faced production issues following the 2011 Japanese tsunami as the red and black pigments for their cars was not available (manufactured in Japan), other issues similar to this caused many US and transnational globally to re-assess their GPNs and many US TNCs stated they would switch back to domestic suppliers as a result. Japan manufactured 70% of the world silicon chips and 40% of the world flash drive memory cards for phones and other devices, HP saw a $700 million loss as a result of not being able to manufacture its products. This event also had positive impacts for the TNC Hyundai, as Japanese high tech manufacturing temporarily shut down including car manufacturing. As a result Hyundai saw a 30% rise in sales as it took advantage of the temporary gap in the market.
Examples
Examples of globalisation include social and economic groupings of nations, they eliminate trade barriers and increase accessibility physically with other members, leading to increased trade and revenue. They also can be seen to increase globalisation through competition between itself e.g. the EU as its single market with high tariffs on imports deters outside trading leading to ‘outsiders’ forming alliances of their own such as new emerging economies of the BRICS may well do to challenge their power. In this way they can be seen as a catalyst for growth of other economies.
They can also be seen to decrease globalisation by reducing the necessity to trade outside of the grouping decreasing integration. It can be seen through the increase in GDP through the development of NAFTA and other such free trade areas, of which NAFTA is the largest in the world.The generalisation as a result of globalisation can be seen when looking as the EU in the creation of a single market and introduction of the Euro over a vast area of previously separate national identities.
Globalisation can be seen through the integration of culture as we live in a much more multicultural society, thanks to the enabled movement of people through transport and technology another possible result of social and economic grouping but also as we embark on better transport through aviation and cross nation rail and road networks. Many Europeans are dropping their national identity for a ‘European’ one – 8% of Britain’s identify as this.
As well as ‘westernisation’ as culture becomes similar world over, for example Coca Cola is a worldwide brand viewed by some to be a symbol of US imperialism spreading throughout the world as well as McDonalds.
