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GLOBALIZATION.
Term Paper ID:26506
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Essay Subject:
Definition, overview of benefits & drawbacks, transnationals, labor, investment, taxation.... More...
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5 Pages / 1125 Words
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Paper Abstract:
Definition, overview of benefits & drawbacks, transnationals, labor, investment, taxation.
Paper Introduction:
Introduction
Today's business environment has been called a "global village," and many Americans simply accept without question the concept that transportation, finance and telecommunications has made the world a "smaller" place. Traditionally, attention has focused on the benefits to consumers and corporations by the global economy, including greater choices for consumers, and lower costs for companies. In recent years, however, there has been increased attention by analysts on the negative effects of globalization; some of these criticisms are addressed in this research.
What is Globalization?
Multinational companies came into existence before the
Text of the Paper:
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(1997). Traditionally, attention has focused on the benefits toconsumers and corporations by the global economy, including greater choicesfor consumers, and lower costs for companies. With capital and skilledlabor more dynamic than in years past, it has become more difficult forgovernments to finance social spending through taxation, and privateinstitutions (such as religious groups) are now responsible for a greatershare of social insurance or, in increasing numbers of instances, socialinsurance is simply unavailable.[4] Conclusion The benefits to corporations which accrue as a result of globalizationare difficult to ignore. The idea here is that workers in poorer nations will be able tobid up wages; so long as the wages remain lower than those in othernations, companies will continue to use these employees.[2] Instead, very much the opposite effect has been observed in a numberof labor markets. In this context, the "fairness" principle which issubstituted is that the destination country should benefit more from theinvestment of the multinational corporation.[3] Taxation can be a particularly difficult issue in today's globaleconomy, and social insurance, typically provided by governments, erodedconsiderably in the latter half of the twentieth century. One result of this is that multinationalcompanies typically have higher relative costs associated with theirinternational operations than their global counterparts. (Summer 1998). "Spoilt forChoice: Multinational Corporations and the Geography of InternationalProduction." Oxford Review of Economic Policy, , 74-92. When an American or European company opens a manufacturingplant in Latin America or Asia to take advantage of low-cost labor,proponents argue, the local economy benefits from the increased number ofjobs and the increased training that takes place. Other companies(referred to as "multinational" companies by analysts) have operations(production or other facilities) in more than one nation. Critics of globalization argue that the benefits of multinational andglobal trade accrue only to a few while the vast majority of workers andconsumers both in the host and destination countries may actually suffer asa result of these activities. (1997). Prior to WorldWar II, the share of average government spending in industrialized nationswas approximately 2 percent of the gross domestic product (GDP); by themid-199 s, it had risen to nearly 5 percent. Herman, "A Critique of Tabb onGlobalization," Monthly Review, November 1997, 28. Some companies (referred to as "global"companies by some analysts) market to different nations, but maintainoperations in a single company. (November 1997). Herman. Bibliography Du Boff, Richard B. "A Critiqueof Tabb on Globalization." Monthly Review,, 27-35. Countries which are eager to attract foreign investment may set asidetraditional concerns in order to bring foreign companies into the nation.Thus workers in developed nations may be competing with child labor inother countries; this violates a "fairness" doctrine to which many workerssubscribe, but which is difficult to quantify from an economic standpoint.This fairness principle goes to a deeper heart of the criticism ofglobalization; that is, that globalization benefits rich and developednations more than poorer or less developed nations. Rodrik, Dani. At the heart of the criticism leveled atglobalization is the idea that international economic integration can, andoften does, result in domestic social disintegration. Unions in the United States have given considerableconcessions to companies (including concessions regarding pension plans andtermination clauses) in order to keep jobs from leaving the United States.At the same time, workers in other nations are accepting low wages, andemploying children, in order to lure jobs away from more developedcountries. Kozul-Wright, Richard and Robert Rowthorn. Companies can seek out low-costproduction environments and thus improve their profitability; consumershave more choices both in the number and type of products that are nowavailable. In recent years, however,there has been increased attention by analysts on the negative effects ofglobalization; some of these criticisms are addressed in this research. The Economist, 21, 82. Introduction Today's business environment has been called a "global village," andmany Americans simply accept without question the concept thattransportation, finance and telecommunications has made the world a"smaller" place. Thus a company such as Coca-Cola willmarket the same product or group of products throughout the world, but acompany such as General Motors will manufacture automobiles with specificfeatures for specific markets. Both global andmultinational companies produce an economic impact in nations other thantheir "home" country, but multinationals are generally considered to have agreater effect since their level of activity is greater. Instead of wages being pushed up as a result of globalization,there is considerable argument in support of the idea that wages are, infact, declining on a global basis. Critique Proponents of globalization cite the choices that are available toconsumers and companies worldwide. Multinational companies came into existence before the twentiethcentury (the East India Trading Company is a prime example), but advancesin telecommunications and transportation systems in the twentieth centuryhave resulted in a profound increase in the number of companies withtransnational operations. Vernon-Wortzel, Heidi and Laurence Wortzel. [2]Ibid., 29. What is Globalization? New York: John Wiley.----------------------- [1]Richard B. However, those benefits carry consequences forother stakeholders, including employees, consumers and governments, andthose consequences are only now beginning to be addressed by analysts.Greater disparity between employees and employers is one area of concern; ageneral downward turn in wages and benefits for all workers is another.Still another criticism of globalization is the lack of resources availablefor social insurance. Multinationalcompanies typically engage in target marketing so that the productsproduced within a specific country or region are adapted to the uniqueneeds of that country or region. Washington, DC: Institute for International Economics. Profits frommultinational companies are generally not distributed within the foreignnations beyond wages; instead, that capital is brought back to the homecountry. "Second Thoughts About Globalisation." (June 1997). Such concerns may well result in additional analysiswhich is not likely to stem the growth of globalization, but which maybring about changes in the way that globalization progresses. [3]"Second Thoughts About Globalisation," The Economist, 21 June 1997,82. and Edward S. [4]Ibid. Some analysts maintain that the rise of the transnational corporationis due at least in part to the rising "power and militancy of labor,"suggesting that companies have sought labor markets which are characterizedby low-cost both in terms of direct wages and indirect benefits.[1]Proponents of globalization argue that wages are likely to stabilize on aglobal level, and that workers in countries which currently enjoy lowerlabor rates will increase as they compete with workers in higher-costnations. StrategicManagement in a Global Economy. Capital which is invested may well take the form of equipment,often imported, while the wealth created by the plants located in foreigncountries does not contribute to the financial environment of thedestination country. Thus an American company might exportproducts made within the United States to other nations, but would nototherwise have operations in the destination country. Du Boff and Edward S. Has Globalization Gone Too Far?
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