Many elements of globalization have an overall positive impact on our world economy. Though some positive aspects may take time, there are still several aspects of globalization that impact the world economy in a negative way. Now that we have explored that positive aspects in the previous paper. It is important to now reflect on some negative realms of globalization. Again, globalization refers to the trend towards a more integrated and interdependent world economy. Within that brief definition, we also breakdown globalization in how it comes into play in terms of the globalization of markets, production, and global institutions as well as the specific drivers of globalization. From local business to foreign business coming into our markets, globalization is changing the way we see and operate in the world. In this, we begin to see several drawbacks that are economic, global, and political.
The first negative impact of globalization that is important to talk about is how the labor force has shifted. This is a negative economic effect that can be seen in both countries as a whole, as well as certain sectors of an economy. Developed countries are now outsourcing to other countries, which in turn hurts their home labor force. This is an inequality among countries. For example, beginning in the 1990’s many firms from the developed world began to move production overseas. This was great for emerging economies like China who because of this started to converge with those of the developed world and overall growing economically. However, this resulted in manufacturing firms outsourcing most of their production. Real wages for unskilled labor fell within these developed countries. This demonstrates why many old industrial countries and cities in both Europe and North America are now struggling to stabilize the economy and related the rising number of jobless people. This process has led to a transfer of jobs from developed, and highly-successful countries to those that are less developed. This is because less developed countries that have lower wages overall, inexpensive coal, and little to no regulations when it comes to pollution. Leaving most developed countries unable to possibly compete. Just in the US, the percentage of employed citizens has drastically dropped, especially since China joined the World Trade Organization. However, the globalization negative effects can be seen all around the world, not just in the USA. So many countries are hiring help off shore due to employees who are willing to do the same job, at lower prices, which actually influences the economy of a country in a negative way, all because of globalization. This negative shift has a lot to do with one of the major driving factors of globalization; Declining Trade & Investment Barriers. So, though we produce more goods and services than ever before, a greater proportion is being traded and manufactured across national borders. The textbook also covers this important topic, and is often times a topic that gets lots of attention from globalization opponents. They argue that because many barriers are being lifted to encourage international trade, it has in turn destroyed manufacturing jobs in more developed countries like the United States. One of the examples given in chapter 1 that I think perfectly encompasses this argument is the case of Harwood Industries. Harwood Industries was a U.S. clothing manufacturer who moved their U.S. manufacturing to Honduras. The main reason behind this change was because in the U.S. they were paying workers $9 an hour, where in Honduras they could get the same skill level and manufacturing ability for $0.49 per hour. It was two journalists, and anti-globalization activists, D.L. Bartlett and J.B. Steele who used this case to support their thoughts. It is shifts like this that have caused developed countries to have depressed wages. When in all reality because of globalization, countries are no longer thinking about their own residents and local economy, but this idea of an overall communal economy.
Another source of concern as far as the negative impact of globalization is how free trade encourages the shift of business to less developed countries who lack adequate regulations. A lot of this concern actually spurs from the manufacturing shift discussed above, and it is how the overall ethical aspects of international business are being ignored. In a lot of ways, globalization has led to exploitation of labor. Many of the countries now being used a manufacturing hubs have little to none international or local regulation laws. This can have a very negative effect on the safety of workers and the environment of a nation if not watched. We cannot deny that cheaper labor costs more often than not translate to immense profits for the organization, that is why it is so appealing to big business. However, there are large negative factors that cause a negative outcome of this. The best example of this would be with Nike. Nike is an American multinational corporation who is the world’s largest supplier of athletic shoes, apparel, and sports equipment. Like many large companies in the 20th century, in 1975 Nike began to move production overseas. The untapped markets across the globe presented several benefits at this time. This seemed to be Nike’s next great idea. Stockholders and managers were receiving large dividends, and consumers were continuing to get the products they love. However, starting in the 90’s, Nike began to receive flack for inhumane working conditions which clearly violated ethical practices, as well as paying their workers way under minimum wage. However, Nike is not the only company that has received criticism for overseas manufacturing. The world got a reminder of this consequence of globalization in April of 2013 when a commercial building, home of several factories, collapsed in Bangladesh. This collapse was later named the deadliest garment-factory accident in history, as well as the deadliest accidental structural failure in modern human history, claiming over 1,100 lives. Companies who sold clothing made in this factory included the Children’s Place, Primark, and Walmart, as well as several others who then sold to bigger brands. After further investigation after the incident, it came out that the building’s owners ignored warnings to avoid using the building after cracks had appeared the day before. Garment workers were ordered to return the following day, and the building collapsed during the morning rush-hour. This incident was a huge wake-up call for the fashion industry of some negative aspects caused by globalization. Many times, factories aren’t checked by companies who use them. The main concern is how cheap they can get their products made. However, in places like Bangladesh these jobs are what really helps their economy move. For example, more than 80% of Bangladesh’s export earnings come from the fashion industry. Karen Webster, who is former director of the Melbourne Fashion Festival, commented on the Savar building collapse and what it means for the fashion industry moving forward. “Every company is reassessing how they get their garments produced – not even just those large-scale chains, even smaller independent businesses. Anyone who’s producing offshore would have to be looking at how their garments are being produced and making sure they are being made in adequate conditions.”
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