Globalization: Societal Implications

This article provides an overview of the process of globalization. It describes the rise and spread of globalization as well as its future and explores the implications of globalization and how it can affect various facets of a society. In particular, the impact of globalization on technology, culture, and politics is discussed. Additionally, the relationship between globalization and economics is examined. Globalization has been affected by changing economics, and economies around the globe have been affected by globalization. This article explores such issues as free trade, international investment, and the expansion of the marketplace to the global context. Finally, this article discusses some of the applications of globalization to facets of modern life, including human rights, immigration, and the environment.

Keywords Capitalism; Culture; Economic Integration; Globalization; Human Rights; International Monetary Fund; Technology; United Nations; World Bank; World Trade Organization

Societies > Globalization: Societal Implications

Overview

Globalization is a process of increasing contact and assimilation between the cultures, business enterprises, economies, and governing bodies of countries throughout the world. This process is fueled by both international trade and information technology and has profound and lasting effects on the autonomy of unique societies, economies, principles of government, and human rights protections of all nations ("What Is Globalization?," 2008). Globalization facilitates the gradual economic integration of many formerly separate national economies into one global economy through free trade, the movement of capital and investments by multinational companies, and the migration of people from one nation to another. This process creates increasing interdependence among governments and corporations.

Globalization is seen as both a benefit and a liability. On the one hand, this interconnectedness results in the possibility of greater profits due to marketplace expansion while promoting greater transparency in government and enforcement of universal rights. On the other hand, it can result in the homogenization of once-unique cultures, with dominant economies influencing the tastes and interests of other cultures. While proponents of globalization argue that the process of integration enables less advantaged nations to enter international commerce, thus increasing the standard of living of their citizens and encouraging multiculturalism across the globe, critics argue that globalization has enabled dominant, and particularly Western, governments and multinational corporations to exercise undue global influence at the expense of local trade and distinctive cultures and traditions.

The praise and condemnation of globalization have occurred at many levels, from villages to international governmental bodies. This article describes the many facets of the globalization process and the implications of the convergence of economics, culture, and politics that is occurring in the world.

Introduction to Globalization

Globalization has profound effects on the financial, physical, cultural, and environmental resources of societies around the world. Although globalization is often considered a recent phenomenon, the development of trade routes and agreements, political and economic integration, and cultural migration date back hundreds of years. However, the rise of technological advancements greatly facilitated the speed and scope of this process. The following sections explain the rise and spread of globalization as well as the future of this complex process.

Rise of Globalization

The human population has increased dramatically in the twenty-first century, greatly augmenting the rate at which economies, cultures, and governments have become integrated. However, globalization is rooted in centuries of human development. Early forms of globalization were evident during ancient eras of political and economic dominance. For instance, the rise of the silk trade promoted the integration of ancient civilizations. International trade throughout Europe expanded further in the sixteenth and seventeenth centuries with the discovery and settlement of the Americas. The exploration of new lands and the high seas led to the development of commercial trade routes, which enabled the increased flow of products to markets throughout the world.

In the seventeenth century, international commerce became increasingly widespread as the first multinational corporations took root. The Dutch East India Company, generally considered the first multinational corporation, was chartered during this time by the States-General of the Netherlands to expand trade and maintain close ties to its colonial enterprises in Asia. It became the first company in the world to issue shares of stock. The rise in risk allocation through public investment in shares of stock fueled the expansion of global commerce.

The nineteenth century was characterized by increased economic integration and investment among the ruling European monarchs, the United States, and their trading partners around the world. As governments began to expand their empires around the globe, business and private enterprises also increasingly shifted from regional to global markets. This process of globalization was hampered somewhat by world wars, the separation of developed and developing nations, and the economic depressions of the early 1900s. Thus, while globalization slowly spread across the globe over many centuries, the process was uneven at times, as economic, political, and cultural unrest hindered the integration of governments and corporations.

Spread of Globalization

Globalization has spread rapidly as technology has eased international trade and communication. Additionally, political leaders, special interest groups, and economic advisers urged an end to protectionist measures that impeded the progress of global assimilation. As the ravages of the world wars were seen and condemned by people and nations throughout the world, leaders of the world's most powerful nations met to discuss ways to repair the damages of the wars and usher in a new era of global cooperation and prosperity.

Several international institutions were founded from these meetings and tasked with facilitating the spread of globalization, promoting economic growth, and managing the changing tides of political and financial influences. These institutions include the World Bank and the International Monetary Fund, both founded at the Bretton Woods Conference of 1944. The World Bank was intended to promote the development of the world's poorest nations through loans and technical assistance. The International Monetary Fund (IMF) was created as a global financial institution comprising 184 member countries as part of the United Nations system. The IMF was established to synchronize international monetary markets, support economic growth, and provide various forms of financial assistance to poor and debtor nations.

The spread of globalization was also facilitated through international trade agreements. The end of World War II led to decreased barriers to international trade through formalized agreements, such as the General Agreement on Tariffs and Trade (GATT). These agreements enabled greater international economic integration through policies that promoted free trade, reduced or eliminated tariffs, created free trade zones, reduced transportation costs, and instituted common intellectual property protections among member nations.

Future of Globalization

Globalization means a historical transformation, with profound implications for power relations and the ability of local communities to compete in larger economies. Globalization is, in a sense, a coin with two sides. On the one side, the processes of globalization promote advancements in productivity, technology, the availability of consumer products, and the exchange of valuable information that can lead to political opposition to oppressive governmental regimes. On the other side, these same forces can result in a loss of economic, political, and cultural autonomy, especially in the developing world (Mittelman, 2000).

These conflicting sides of globalization have caused many theorists to grapple with the question of whether globalization is indefinitely sustainable. In the twenty-first century, globalization has ranks of advocates and critics alike. Additionally, others call for a modified form of globalization, in which the relationships among the market, governments, and societies are redrawn in ways that allow for continued economic integration while retaining political autonomy.

At the core of autonomy is the principle of self-determination, which derives from the ability of unique communities and nations to establish governing principles that reflect their core values. However, the ideals of self-determination can be threatened through the process of globalization by the encroaching presence of other cultures and economies. While consumers may desire the increased resources and cheaper products—the hallmarks of globalization—governments and corporations may push back against economic, cultural, or political pressures that threaten to undermine their power. Thus, the future of globalization is marked by both increasing opportunity and focused resistance (Mittelman, 2000).

Impact of Globalization

Globalization has impacted virtually every aspect of society in every nation. The importing and exporting of ideas, political tenets, and economic theories along with products from remote regions of the world have enabled diverse people to explore new exotic goods as well as challenge constraining beliefs and political systems. The following sections describe the impact of globalization on technology, culture, and politics.

Technology

Technology has been a principal driver in the spread of globalization. As technological advancements in computer hardware and software have made rapid gains, almost all sectors of the global economy experienced corresponding growth. In addition, information technology, which creates a communication platform that enables the exchange of goods, communication, and resources regardless of geographic proximity, greatly increased the international flow of commerce and ideas. These increased technological capabilities began uniting individuals, communities, and nations in ways that crossed political and economic boundaries.

Developments in information technology have also provided enhanced resources by which individual consumers as well as businesses and investors can determine the most profitable means to compete more efficiently in the global economy. For instance, technology can be used to extract information about developing economic opportunities and emerging markets and help small businesses grow efficiently while also enabling larger businesses to streamline operations to cut costs or focus on increasing the availability of their most popular products ("Technology," 2008).

Culture

Globalization has been most frequently criticized for being a force that erodes the unifying ties of culture and tradition in local communities. Cheap goods produced abroad may be imported and sold in local markets for less than products made by native merchants, thus undermining the self-sufficiency of laborers and the traditions of familiar trade patterns.

Globalization also enables the spread of novel cultural, political, and philosophical influences through such mediums as movies, the Internet, popular music, and print publications. These influences can weaken ties to local communities as individuals begin to engage with, and perhaps develop loyalty to, larger populations and differing viewpoints than those traditionally understood as cultural norms.

Because of the clash between culture and the development of globalization, the meaning and importance of culture and the interaction between culture and globalization are being examined with greater attention and discourse. No longer is globalization considered largely a financial and political phenomenon. Many modern organizations and affiliations that were created to preserve cultural traditions are included in global economic and political agendas. This increased interest in the preservation or advancement of culture signifies an increase in societies that consider certain cultural identities and characteristics to be fundamental to their existence ("Culture & Globalization," 2008).

Political

Political globalization can occur through the development of unified systems of government that exert control over formerly independent or autonomous nations. Although the United States has historically maintained a dominant role among the world's most powerful countries, the sway of political influence is subject to change as world economies shift and develop. Other countries or regions poised to exert a greater level of influence in global politics in the twenty-first century include the People's Republic of China, the Middle East, the European Union, the Russian Federation, and India (Emily Meierding & Rachel Sigman, 2021).

However, political globalization is fraught with difficulties because nations joining with others in a trade or political bloc must give up some degree of national sovereignty. While this process can be accomplished, it can require significant amounts of time and commitment from all nations. The most notable example of political integration among sovereign nations is the European Union. The European Union started out as a free trade zone and has slowly become increasingly politically integrated. However, much more work will be required before the European Union will be able to function to its highest ideal, and in the meantime, other nations are seeking alignments that will position them favorably in the years and decades ahead and that may alter the landscape of world powers as it exists in the twenty-first century.

Globalization & the Economy

Developments in technology and trade agreements spur increases in international investment and commerce to such an extent that questions may be raised about the sustainability of such complex global trade patterns. As international investments enable the flow of capital to reach industries and businesses poised for growth, these practices have created a far-reaching marketplace that is truly global in scale. Technological advancements have enabled individuals to see the world as their market simply by accessing the Internet. The defining features of globalization, therefore, include international economic systems. The following sections will describe this feature in greater detail.

Free Trade

Fundamental to the spread of globalization is the creation of a global common market, supported by the ready exchange of goods and capital. Generally, principles of free trade are considered essential to promote the spread of globalization. Free trade involves the trade of goods and services between countries that permit the unimpeded flow of commerce through the elimination or reduction of taxes, tariffs, or other regulatory forms of market control, such as quotas. For example, the North American Free Trade Agreement (NAFTA) allowed US automobile companies to move to their production to Mexico, where labor costs were lower ("Effects of economic globalization," 2023).

Free trade is often supported as a means of promoting economic advancements and strengthening civil liberties through exposure to peaceable commerce, thereby creating market efficiencies that yield products and services at competitive prices. However, critics of free trade argue that global commerce is most beneficial to multinational corporations, which already have the capacity to compete across national boundaries, and least beneficial to the local merchants and vendors who are in most need of assistance. Thus, globalization has become less popular as a means of leveling obstacles to entry into the world economy and instead has come to be viewed as another influence that has threatened the viability of local communities and individual markets ("Trade & Globalization," 2008).

Fair trade is another economic and social movement that has grown in popularity as a means of combating market inefficiencies while promoting the economic sustainability of local communities. Fair trade is based on a system of the payment of a fair price for goods that are produced in conformity with approved social and environmental standards. The idea behind fair trade is to promote small businesses and individual merchants through equitable trade and economic policies.

Fair trade has become increasingly important to many businesses and consumers. Certain industries have made significant progress in promoting the movement of fair-trade products from local sellers to international markets, including coffee, cocoa, sugar, tea, bananas, and flowers ("Trade & Globalization," 2008).

International Investment

International investments have risen substantially as globalization has connected emerging markets with established economies. Although the influx of capital into impoverished countries can help raise the standard of living, it can also create substantial changes in the political and economic autonomy of both individual nations and entire regions. Because of this, international investment is sometimes considered a double-edged sword, in that capital can bring both new opportunities and greater outside influence on the affairs of a nation ("Effects of economic globalization," 2023).

International investments tend to take one of four forms. First, banks may make commercial loans to foreign businesses or governments. Second, financial assistance may be provided to developing countries by more prosperous ones. Third, foreign investors may purchase ongoing interests in the primary industries of another country, such as an investment in a plant, factory or equipment. ("What are the…," 2008). Finally, international investors may purchase the stocks or bonds of a foreign government or business. Although commercial loans from banks have traditionally been the predominant method of international investment, the level of global investment in the financial instruments of foreign governments and enterprises has increased significantly.

Global Marketplace

Companies may choose to compete in the global marketplace for many reasons. However, there are typically four main reasons for choosing to invest beyond national borders.

First, firms may seek to find new consumers for their goods and services from foreign markets. Market-seeking investments commonly occur when companies reach static sales flows in their home market or when overseas investments pose the opportunity to bring substantially higher returns than increased sales at home. Second, companies may invest in foreign markets because it is cheaper to produce goods in overseas production facilities abroad. Third, firms may seek new assets or investments in foreign companies to develop new technologies or distributional channels. This may also involve partnering with existing foreign firms that have expertise in desirable industries.

Finally, companies may invest in global markets to seek increased efficiencies. This may include reorganizing domestic or foreign holdings in response to changes in the global or regional economy. For instance, free trade agreements or other tax increases or decreases may make investments in these areas more cost effective than other options. Changes in the global exchange rates may also prompt companies to alter the allocation of its resources ("Why do companies…," 2008).

Applications

Globalization & Human Rights

The steady growth of globalization has raised concerns that gains in economic profits and efficiencies may have come at the expense of basic human rights. Critics of globalization have pointed out the fundamental inequities of large corporations moving their manufacturing facilities to overseas markets in an effort to capitalize on lower wage levels or less restrictive employment regulations ("Effects of economic globalization," 2023). To combat the power of multinational corporations relative to the foreign workers who are employed by these firms, governmental and non-profit organizations around the globe have increasingly called for a universal international commitment to uphold basic human rights.

Human rights include principles that all humans are entitled to enjoy and that are so fundamental that they should be incorporated into the laws and regulations of any nation. Human rights are generally understood to include security, social, and economic rights. Security rights include liberty, physical safety, and the right to participate in the process of government. Social and economic rights include basic access to food, health care, and education. Some rights have been extended to groups of people as well as individuals, such as the right to participate in a cultural community and live in a healthy environment ("Universal declaration," 2008).

Many national and international organizations have been founded to address the impact of globalization on human rights. At the international level, the fifty-eight states that make up the United Nations all accepted the Universal Declaration of Human Rights, which contains an International Bill of Human Rights that codifies universally accepted human rights, without objection. The Universal Declaration provides basic principles on which a more complete framework of human rights can be constructed.

Globalization & Migration

Just as globalization has facilitated the increased flow of goods and capital across national borders, people are also moving in and out of nations throughout the world, seeking work, improved quality of life, or a safer place to raise a family. However, while many countries have lowered barriers to trade to promote international trade and investment, there has not been a corresponding reduction in barriers to migration. In fact, some countries are seeking ways to stem the flow of immigrants through their borders.

The effects of migration on a country are complex and difficult to measure. Part of this is because immigration brings both benefits and disadvantages to the host country. Immigration provides cheap labor for host countries, and the money immigrants send back to their home countries can be beneficial for their economies. However, immigration can also lead to resentment in host countries when native workers are displaced by immigrant labor, and the loss of educated and productive citizens can cripple the ability of emerging countries to compete in a more advanced global marketplace.

Although globalization generally encourages migration as individuals seek the flow of capital and resources, the effects of globalization can also hamper migration patterns. For example, as businesses grow, they may begin to move production facilities to developing countries to take advantage of lower labor costs. Thus, in a global economy, companies can move the jobs to regions that migrants might once have left in search of better employment opportunities. This phenomenon of jobs shifting from advanced economies to the developing world negates many reasons for migration and provides an increased incentive for people to stay closer to their homes and newfound work opportunities ("Migration," 2008).

Globalization & the Environment

Globalization and concern about the environment are among the most pressing issues facing companies and governments around the world. Both issues are extremely complex, and at times they seem to be in conflict with one another. Advocates of more stringent environmental protections argue that unregulated economic development has resulted in significant environmental damage and that this process must be curtailed to protect global natural resources. Critics of increased environmental protection measures argue that environmental damage has been exaggerated and that the economic impact of overzealous environmental regulations is a drain on companies and governments. Additionally, these critics argue that an excess of government regulation can be potentially harmful because it prevents developing nations and fledgling firms from competitively using their resources if they cannot comply with stringent requirements.

Both globalization and environmental regulation are complex, multifaceted issues, and they have a profound impact on one another. Environmental protections can impede immediate economic growth by requiring companies to invest in new production measures or facilities to meet environmental regulations, which can undermine their profit margins and competitive ability. On the other hand, many argue that environmental regulations encourage economic and technological solutions that will provide stronger options for averting environmental destruction and protecting natural resources ("Globalization and the environment," 2008).

However, the interaction between the environment and economic development does not end there. In some ways, environmental protections and economic growth can be mutually beneficial, in that poverty in developing countries is a significant contributor to environmental destruction and income disparity ("Effects of economic globalization," 2023). For instance, as subsistence farmers have continued to cut down and burn trees to make way for more arable land, forests across continents have been depleted. Also, communal uses of waterways can pollute these natural resources, making the water unsuitable for human consumption. By stimulating economic growth, communities accumulate greater wealth that they can use to protect and preserve their natural resources. This principle has gained sufficient traction in the global discourse to fuel sustainable international movements to provide greater economic opportunities for developing nations using methods that preserve and protect the environment ("Globalization and the environment," 2008).

Conclusion

Globalization can affect almost every aspect of life across the globe. The interaction between globalization and modern life can be extremely complex, and some issues at the forefront of this dialogue include the impact of globalization on technology, culture, and politics. In addition, globalization and economic advancement are interrelated. Some of the most significant issues affecting economic growth and the spread of globalization are free trade, international investment, and the global expansion of the marketplace. Globalization even affects the movements of people and their quality of life. The rise of a global economy can have a ripple effect on human rights, immigration, and environmental concerns.

Terms & Concepts

Capitalism: An economic system in which goods and services are controlled by individuals or private corporations rather than the government.

Colonialism: The practice of occupying land that is separate from the ruling nation but is nonetheless under its governance.

Economic Integration: The process of creating commercial regulations and trade policies that promote commercial development.

Fair Trade: The practice of ensuring that any two trading partners benefit from advantageous trade policies.

Free Trade: The untaxed movement of goods and services between countries.

General Agreement on Tariffs and Trade (GATT): An agreement under the World Trade Organization to ensure equitable trade and tariff policies among member nations and to ban products harmful to human health.

Globalization: The integration of economies and societies throughout the world, which can influence economic, social, cultural, and political policies.

Industrial Revolution: A period of rapid development in industrial and technological advancements during the late eighteenth and early nineteenth centuries that created the means of increased production through mechanization.

International Monetary Fund: An international financial institution that is part of the United Nations system and was established to promote economic growth and stable monetary policies.

Nation-State: A state or country that has defined borders and territory and is composed principally of the same type of peoples, organized by either race or cultural background.

Tariff: A tax placed on imported goods that is intended to protect domestic industries from foreign competition by making the foreign product more expensive.

United Nations (UN): An international organization created to promote international security, economic development, human rights protections, and a legal framework for resolving international conflicts.

Urbanization: The movement of people, commerce, and labor from rural areas into cities or towns.

World Bank: An international financial institution created to provide funds to assist developing nations through commercial loans and technical assistance.

World Health Organization (WHO): A United Nations agency created to promote public health by controlling and eradicating diseases.

World Trade Organization (WTO): The international institution that manages international trade by facilitating trade negotiations, resolving trade disputes, and monitoring international trade policies.

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Suggested Reading

Azhar, M. (2008). Economic cooperation between India and Saudi Arabia: Performance and prospects. Middle Eastern Studies, 44, 323-334. Retrieved May 30, 2008, from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=31168244&site=ehost-live

Ehteshami, A. (2008). Globalization and geopolitics in the Middle East: Old games, new rules. Middle East Journal, 62, 168-199. Retrieved May 30, 2008, from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=28601154&site=ehost-live

Kashima, Y., Shi, J., Tsuchiya, K., Kashima, E. S., Cheng, S. Y., Chao, M., & Shin, S. (2011). Globalization and folk theory of social change: How globalization relates to societal perceptions about the past and future. Journal of Social Issues, 67, 696–715. Retrieved November 14, 2013, from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=69604602&site=ehost-live

Liang, S. & Xiangchen, Z. (2007). Redefining development, reimagining globalization: The WTO and China's new economic vision. Journal of World Trade, 41, 1275-1296. Retrieved May 30, 2008, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=28350423&site=ehost-live