Economic impact of globalization in the light of social conflict
In general, globalization has resulted to an increase in economic inequality amongst nations of the world. Two decades ago, when the economic policies and rules of globalization had not been well established, global economic inequality in terms of the disparity in the gross domestic product among the trading nations was estimated at sixty five percent; today it is estimated to be more than 70%. Furthermore, an article that was published in 2001by a group of economists who are opponents of economic globalization found out that it increased income inequality amongst the different social classes.
The article revealed that out of the World Bank statistics, the number of families living on less than a dollar a day had drastically increased while the income of the upper social class continued to swell each day (Lee, Vivarelli, 2004). More so, the United Nations Development Program (UNDP) statistics on the distribution of GDP among the social classes in the developed nations are a clear evidence of social conflict, as shown hereunder by the populace income quartile.
The most prevalent economic impact of globalization that has been realized over the past two decades is the emergence and growth of international production markets and easier access to a variety of foreign products, technologies and methods of production. For example, the trade volume between China and Africa grew by sevenfold between 2000 and 2007. It has also resulted to better access to international financiers for the developing nations (Schmuckler, 2004). The creation of a global common market has also led to improved terms of trade since it increased competition.
However, this has resulted to trade interconnectedness amongst the players in the global market such that a major economic breakdown in any of the key player economies cannot be contained without altering the nature, volume and stability of the global common market. This narrows down to the arguments of the proponents of social conflict for the reason that it is only a collapse of the powerful traders in the global common market that affects economies of the other partnering countries.
This thus implies that the smaller economies which heavy depend on such an economy for financial support or for the market for its products can no longer remain stable when the powerful trader’s economy collapses (Goyal, 2006). 2. 5 Negative economic impact of globalization 2. 5. 1 Impact in third world countries Globalization has increased competition and interdependence amongst economies in global market. This is evidenced by interdependence in terms of capital movement and trade in goods and services.
Consequently, domestic fiscal developments have not been entirely determined by the market conditions and policies but rather by international fiscal conditions. This has, in a great deal resulted to loss of domestic policy autonomy and economic decision making (Yeh, 2010). Lack of economic autonomy has in turn resulted to unclear definitions of an economy’s fiscal objectives and lack of precise planning for future expenses revenues.
This is because, the total gross domestic product that the third world countries generate in a fiscal trading period cannot be easily predetermined due to uncertainty of export prices, laws and regulations which are set by the northern market (Kema, 2005). In addition, this creates unplanned borrowing and spending, especially when the international market prices are too low to generate enough revenue for these economies.
It is for this reason that the third world countries are currently caught in debt cages and ever increasing loans from world bank and other international financing agents (Schumkler, 2004). The major exploit for the third world countries is agricultural products which are exported to the foreign markets. Larger countries however, usually sponsor their farmers and this reduces the market price of agricultural products from the poorer countries relative to the prices under free trade.
The larger nations sponsor their farmers to motivate them into participating in agricultural activities since they are not so popular in their countries (Wright, Morgan, Greenway, 2003). Consequently, the international market becomes crowded, forcing the exporting third world nations to sell their products at extremely low prices which mostly don’t generate any significant profits (Stiglitz, 2002). Globalization has also resulted to decline in protection of the weaker countries by the powerful and industrialized countries.
Formerly, the strong economies applied the free trade laws to protect the weaker economies from exploitation. However, this has changed since the larger, powerful economies seem to be in tight competition, as each attempt to acquire the largest market share from the third world countries, regardless of the means used. This consequently causes exploitation of citizens from the poorer nations as they are hired by the stronger economies for cheap labor (Yeates, 2002).
Furthermore, the third world nations now suffer from brainwash of their productive professionals and ‘best brains’. Brainwash is the process whereby the developed nations attract the best talents from the third world countries in terms of work professionalism, through enticing then with better salaries than offered in their home countries. The result of this is that the local industries are left under management of semi-skilled individuals and they cannot perform effectively.
In the long run, local firms and industries collapse due to of lack creative and talented managers, thus giving an opportunity for the developed nations to invest in their countries (Lee, 2000). In addition, due to deteriorated protection measures, firms from the stronger industrialized economies have been able to give employees adequate salaries to lure them into enduring exceedingly long working hours under unsafe conditions of work.
Social conflict argues that although these employees are free to decline these jobs, the conditions in their countries would lead them into financial crisis and poorer living standards (Ravallion, 2001). Using their economic powers, Europe and the US thus effectively overpowered the peripheral countries in application of global trading terms and today, the third world countries do not have any control over the prices in international markets for their primary products; the prices fluctuate unstably under the control of the powerful and economically stabilized nations.
These fluctuations are caused by unfair and hostile trading terms in the international market (Kema, 2005). 2. 5. 2 Impact on developed countries Unlike in the developing nations, the economic impact of globalization in developed nations is seen in terms unbalanced benefits to companies and corporations, at the expense of families and individuals due to off shoring and outsourcing practices which are on the increase (Borade, 2010).
Due to reduced costs of labor through hiring workers from third world countries, many firms in the developed nations have been laying off their employees, especially in the manufacturing sector and replacing them with cheap southern labor. The laid off employees are forced to work in the service sector, which is characterized by low employments benefits and wages, but high turnover. As a result, the middle case status continues to deteriorate and this is a key factor in escalating the degree of economic inequality in most developed nations (Stiglitz, 2002).
It is for this reason that most developed countries (such as the US) are described as capitalist economies, with the highest gaps between the ‘haves and the have-nots’. Many individuals who were formerly in the middle class have slowly moved to the lower class as the layoffs continue to have massive effects and more cheap is outsourced (Stiglitz, 2002). What is more, people in the lower social class now find it harder to overcome poverty since the middle class which acts as the stepping stone is slowly dying.
It is no wonder therefore, that even with all the benefits from cheap labor and raw materials from the third world nations, the industrialized countries are still struggling with deteriorating economic performance, evidenced by poverty and unemployment. In recent research that was conducted in the United States of America found out that while most American citizens were not employed while it only took a short time for immigrants from the third world to find suitable employment opportunities in the same country.
The research indicated that the reason for this scenario was that while most companies were willing to hire new immigrants, they were reluctant to employ American natives, for the reason that they would not ready accept low salaries or insecure working conditions (Borade, 2010). An empirical research that was carried out by World Bank economist put the benefits of globalization at questionable standards because according to him, the enhanced estimation purchasing power parity showed that the industrialized countries are economically worse off than earlier, prior to the implementation of fiscal policies on globalization.
He explained that although globalization was viewed as cost-saving strategy by large companies and multinationals, it did improve the living standards of the middle and low classes of the society; these two groups are the major economic contributors and a decrease in their purchasing parity affects their productivity of the economy to very great extent (Johnson, 2010). Social conflict is evident through exploration of the economic impacts that globalization has had on world economies.
The reviewed literature provides enough proof that although globalization brought about numerous economic benefits through opening connecting and integrating world economies, it is responsible for the promoting social inequality and conflict. Previous studies in both developed and developing countries indicate that globalization has directly improved the economic performance but indirectly created many undesirable multiple in the overall performance of the same economies.
This is because while the developing nations are largely affected by over dependence on developed countries, the developed countries suffer from excess outsourcing and off shoring which also has its economic multiplier consequences which push the gross domestic product downwards. 3. 0 RESEARCH METHODOLOGY 3. 1 Research design This study will be carried out using survey; structured interviews and observation will be used as the main primary instruments for the research.
Survey will assist the researcher to be in position to control the range and kind of sample to be used in addition how the procedure will be conducted. The interview schedules will be used to generate comprehensive first hand information from the field. Using observation, the researcher will be able to gather first hand crucial data on the topic of research. 3. 2 Research strategy The study will be conducted using both qualitative and quantitative methods. Qualitative approach will assist in the linking of the relationship between sociologist and economic ideas on the economic impacts of globalisation.
On the other hand, quantitative approach will be vital since the researcher will analyse the ideas, opinions and views of the research sample statistically in order to come up will accurate recommendations and conclusions. 3. 3 Sampling method The research will use purposive sampling method to pick the interviewees and sample size from a research population comprising of economic analysts, sociologists, organisational managers from large firms and the general public.
Purposive sampling will be largely relevant since it will ensure that the picked interviewees are well informed and so that they will be in a position to provide accurate information for making correct research inferences. 4. 0 DATA COLLECTION AND ANALYSIS This study will make use of both primary and secondary data collection techniques. Primary data will be gathered through observation and interviews whilst secondary data will be obtained from journals, magazines, books, theses newspapers, internet sources and related studies.
Primary data will provide firsthand information which will be supported through by secondary sources. The gathered data will be analysed using charts, tables, graphs and other relevant comparatives to warrant a balanced analysis of the gathered information. To aid in accurate and fast analysis of data, the researcher will employ modern statistical tools and programmed research aids are valuable and accurate in making conclusions and inferences. 5. 0 RECOMMENDATIONS This study will be limited to the economic impacts of globalization, reflected through social conflict.
Further research is recommended on the topic to explore other impacts such as environmental, social and political effects of globalization. This will help in making more accurate inferences regarding the positivity or negativity of globalization on the globe. Other recommendations that are based on this study include the following; The laws and regulations that govern global market should be altered in such a way as to give equal powers to all the market participants—both the buyers and the sellers to ensure that both participants are in a legal and lawful position to alter the provisions under the policy.
This will be important and useful in eliminating the trading inequalities that are prevalent in the global trading market. The developed nation fiscal policies should put bans to off shoring and outsourcing of human capital in their manufacturing industry as a method of reducing the current unemployment problems. Furthermore, corrective measures ought to be taken that will help in reducing the gap between the poor and the rich so as to eliminate economic capitalism in the society: in this case, redistribution of wealth in the economy is recommended.
Finally this study recommends that an independent regulatory body should be formed and assigned the responsibility of checking into the operations of the international market, to ensure that the market prices and fluctuations are regulated to comparative fair terms. What is more, the membership of this body ought to be drawn from both sides of the market players and equal representation guarded. This will reduce the exploitation of the weak by the strong and establish an economically sound trading environment for both parties.
6. 0 REFERENCES Balakrishnan, C. (2004). The impact of globalization on developing countries and India. Retrieved from http://economics. about. com/od/globalizationtrade/l/aaglobalization. htm Borade, G. (2010). Bad effects of globalization. Retrieved from http://www. buzzle. com/articles/bad-effects-of-globalization. html Goyal, K. A. (2006). Impact of globalization on developing countries. International research Journal of finance and economics, 5: 166-171. Johnson, M. (2010).
The social conflict theory and globalization. Retrieved from http://www. ehow. com/about_6387724_conflict-theory-globalization. html Kema, I. (2005). Globalization and the development of underdevelopment of the third world. Journal of third world studies, 5(2):56-72. Lee, E. , Vivarelli, M. (2006). The social impact of globalization in the developing countries. Retrieved from http://ftp. iza. org/dp1925. pdf Lee, E. (2000). Globalization and Employment: the New Policy Agenda. Development, 43: 18-
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