Is globalization beneficial or harmful to the world? Johnson (2002) on one hand is mainly focused on the beneficial side of globalization, but Stiglitz (2006) on the other hand diagnoses what has gone wrong and what can be done about it. Both authors have different points of view on globalization and illustrate this by giving some examples of the benefits and drawbacks of globalization. What are the thoughts of both Johnson and Stiglitz on globalization? And ff we assume that globalization is here to stay, then why is it an important issue in the context of corporate social responsibility (remainder of this paper: CSR)?
Definition of the concept of globalization
Both authors donât explicitly define globalization in their papers. There exist a lot of different perspectives on globalization. One of the more general views on globalization is formulated by Nikitin and Elliot in 2000:
âGlobalization involves economic integration; the transfer of policies across borders; the transmission of knowledge; cultural stability; the reproduction, relations, and discourses of power; it is a global process, a concept, a revolution, and âan establishment of the global market free from sociopolitical controlâ.â (Nikitin & Elliot, 2000, p. 14).
Johnson sees globalization as more than just moving around goods and money and his view looks al lot like the one Nikitin and Elliot presented (Johnson, 2002, p.428). According to Johnson, globalization is important because of the âflow of ideas and knowledgeâ (Johnson, 2002, p. 428). There are five aspects that are implicitly present in globalization: flow of goods, flow of ideas, flow of capabilities, spread of literacy and education, and the flow of institutions and required policies (Johnson, 2002, 429-430). These elements lead to a flow of ideas and knowledge and, therefore, define the concept of globalization according to Johnson.
Stiglitz doesnât define globalization clearly, he goes straight to slandering globalization by presenting all that has gone wrong (Stiglitz, 2006, p. 172). He mainly focuses on the economic aspects of globalization. A bit further down the road he gives some kind of a description by stating that capital market liberalisation and creating free markets for the flow of speculative capital cannot be a basis for economic growth (Stiglitz, 2006, p. 175). Furthermore he states that globalization has led us to become more integrated and interdependent (Stiglitz, 2006, p. 177).
Position of the authors on the benefits or drawbacks of globalization
Johnsonâs focus is on the benefits of globalization and Stiglitzâs focus is on the drawbacks and possible solutions. Right at the start of both articles, the reader can feel that Stiglitz is more inclined to the negative side than Johnson.
Johnson starts his discussion about the benefits of with a benefit that is very appealing to people; life expectancy and child mortality (Johnson, 2002, p. 430-431). Due to globalization life expectancy has increased, but how? Child mortality has decreased tremendously over the last century because of a couple of benefits. Because globalization opens doors for sharing knowledge and capabilities, there has been a greater availability of primary life resources in poorer countries (Johnson, 2002, p. 432). For example safe water, has been a great support to reduce child mortality and, therefore, increase life expectancy. Without the benefits of globalization, especially the spread of ideas and capabilities, this wouldnât have been possible to realize.Further on, Johnson comes up with increased agricultural productivity and immunization. New methods were needed in the US to boost corn and wheat yields during the 19th century. A new variety of methods was thought off, and because globalization shared with developing countries (Johnson, 2002, p. 432-434). The gain for the poorer countries was incredibly high because of the increased productivity and, because of that, reduced prices (Johnson, 2002, p. 435). Another important factor to reduce child mortality has proven to be immunization. A lot of children in poorer countries didnât survive because they didnât have access to immunization shots. As a result of globalization this became available and children all over the world are better protected now (Johnson, 2002, p. 436). All of these benefits come down to sharing knowledge over the world. The main drawback presented by Johnson is the fact that somehow there has been increased inequality in the world, how is it possible that some countries have failed despite these major benefits (Johnson, 2002, p. 430)? According to Johnson there is one thing which will lead to an increase of inequality: restraints on the market (Johnson, 2002, p. 437). The market should get space to function properly and globalization advantages should be able to work.
Stiglitzâs main focus is on the problems why globalization isnât working better. In this specific paper, he doesnât treat the benefits because the aim of this paper is to analyze why globalization hasnât lived up to its full potential (Stiglitz, 2006, p. 172). He and Johnson share the opinion that an increase of inequality is an unwanted side effect. Stiglitz poses a couple of main drawbacks related to globalization. His first point is that everyone was convinced at the beginning that the world would be so much better as a result of globalization (Stiglitz, 2006, p. 172). Eventually a lot people were worse off because the richest countries gained even more and the poorer countries got poorer because of tariff structures directed against trading with the poor countries (Stiglitz, 2006, p. 172). A second problem is that the global financial system isnât working properly (Stiglitz, 2006, p. 173). Money should be flowing from rich to poor, at least according to Stiglitz, but right now it seems to be flowing the other way. This leads to a crushing debt load for poorer countries that arenât receiving promised benefits from the rich countries (Stiglitz, 2006, p. 173). This is a major drawback because it isnât what globalization is supposed to be standing for. It should create this utopic free market, but according to Stiglitzâs findings, it is crushing smaller countries economies. Stiglitz says that there is more awareness of these problems (Stiglitz, 2006, p. 175). Even though there is awareness, not much is done. There are major problems with governance inside the IMF, which illustrates the fact that Stiglitz says that policy is making matters worse. The only one with veto power in the IMF are the US and they arenât cooperating that well (Stiglitz, 2006, p. 176). According to Stiglitz there are three underlying main issues: trade, financial market and resources (Stiglitz, 2006, p. 177). He says that we donât have democratic institutions or even mindsets to act cooperatively to make globalization work (Stiglitz, 2006, p. 177). A reason why globalization hasnât been working in the past was the tension between capitalism and communism (Stiglitz, 2006, p. 178). Yet again the decision was made to stay egocentric after the cold war instead of cooperating based on principles and good policy. The third main issue is that people believe that it will all be okay (Stiglitz, 2006, p. 178). Thinking that it will be okay somewhere in the future wonât reduce inequality right now. Lastly Stiglitz proposes that we look at the countries that make globalization work. He literally states: âwhat one needs to do is invest more in education and research, strengthen the safety nets, and have a more progressive tax systemâ (Stiglitz, 2006, p. 180). This possible solution for all the drawbacks clinging onto globalization are realizable if only countries would cooperate and there were to be a political will to do so (Stiglitz, 2006, p. 180). Another possible solution is to use trade sanctions more often if countries arenât cooperating (Stiglitz, 2006, p. 187).
Implications of globalization for corporate social responsibility
Does globalization mean anything for the CSR of internationally operating businesses? Shortly said CSR is defined as: âThe commitment by organisations to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.â (Johnson, Whittington & Scholes, 2012, p. 87). The inequality as a result of globalization both encountered by Stiglitz and Johnson asks for some responsible organizations.
Johnson pointed out that life expectancy and child mortality have declined because of shared knowledge. This shows the great importance for companies to share their acquired knowledge and share this with not only the western society, but also with poorer countries. One slight problem is that companies are aimed at achieving profit. If they were to find something incredible to cure for instance malaria, they would get a patent via intellectual property. By doing so they get monopoly rights and they can ask for their product whatever they want (Stiglitz, 2006, p. 182-183). Poorer countries canât afford these prices caused by intellectual property rights and, therefore, get less access to life-saving medicines (Stiglitz, 2006, p. 181). If this were to continue, companies are only improving the quality of life in richer countries and poorer countries will remain poor.
According to Stiglitz, there is a way. If there is a set of prices offered to innovators, it will be possible for other manufacturers to produce these medicines after the price for the invention is paid to the inventor (Stiglitz, 2006, p. 184). Developing countries can produce these medicines themselves again and therefore have access again. This will only be realizible if businesses and governments cooperate to achieve this kind of a policy on intellectual property rights. Stiglitz also points out the role of global warming and dept, but these are in general governmental issues.
Johnson also pointed out that agricultural productivity has increased due to globalization. This might even be a better example of how businesses can contribute by means of CSR. Due to low cost and speed of communication, knowledge that is created in one part of the world becomes available for everyone, even poorer countries (Johnson, 2002, p. 436). But what is knowledge if it is just words on a piece of paper? Nothing. Knowledge needs transformation into products and services before it can be of any help to society. And this is exactly where CSR comes around the corner. Businesses should contribute to economic development by using their RD&D departments in the developed western society to come up with new applications for certain knowledge. It has been proven to be effective in the wheat and corn business, so why not do it again? Businesses can help poorer countries that lack the ability of having a RD&D department by sharing their knowledge and applications with the world.
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