Social Conflict and Economic Impact of Globalization
Globalization and social conflict have been perceived as the new buzzwords which came to dominate the economy of the world ever since the early nineties (Balakrishnan, 2004). There has been intensely growing integration of the world economies as a result of globalization. This has resulted to liberalization of economies; however globalization has been severely opposed by sociologists for promoting social conflict and economic inequality.
It is already clear from this background information that the rules of globalization were set by the United States of America since it had more power in the world than other nations; the modern impacts that globalization has in the global economy has roots in the dominance of America over the world economy(Johnson, 2010) 1. 2 The problem 1. 2. 1 Application to Local Problem
This study will investigate the validity of social conflict as it applies to the economic impacts of globalization and contribute to the body of knowledge in both economics and sociology by providing a thorough analysis on how the economic impacts of globalization in both developed and developing nations demonstrate the existence of social conflict. Through this study, possible solutions will be availed for altering the global trade policy and the laws of globalization to ensure that they are helpful to both the southern and northern parts of the globe.
1. 2. 2 Professional application The research will be of great benefit to both economists and sociologists because it will broadly expose the impacts of globalization on the economies of both Western and third world nations to justify the existence or non existence of social conflict in both economies. Using the inferences of this research, the economical analysts in third world countries will be in better position to advocate for a re-composition of the laws of globalization to ensure that they are fair to both parties.
1. 3 Statement of the problem In essence, each and every society has its rules and laws; however, only the influential members of the society have ability in imposing them or altering their structure (Yeates, 2002). Social conflict presumes that powerful individuals or groups impose such rules for their own gains. It holds that the rules and regulations set for global trade are unethical and morally illegitimate since the poor countries do not have any capacity to alter the rules of the game.
At minimum, legal legitimacy holds that all people affected by a law ought to have a guaranteed chance to alter its content. Apart from a few,—such as the oil-rich nations—third world countries do not have a voice in the operations of global free trade and in this sense, economic globalization is a sole creation of the powerful nations and carries no moral legitimacy(Johnson, 2010). Economically, globalization brought about many opportunities to the developing nations such as better access to technology transfer and advanced markets; it has also aided in the improvement of their standards of living.
However, there are many economical challenges which globalization has posed which are seen through the eyes of social conflict; these entail inequality and market volatility. 1. 4 Purpose of the study The purpose of this is will be to provide enlightenment towards the economic impact of globalization in the light of social conflict. The study aims at examining and analyzing the arguments of social conflict theory and applying them to globalization through evaluating the economic impact that globalization has had in the world economies.
Through this evaluation and analysis, the researcher’s goal will be to make accurate and valid inferences regarding the application of social conflict in globalization. 1. 5 Justification of the study It is apparent to every economist and socialist that social conflict and globalization have become the count-words over the past two decades; for the reason that opponents of globalization have continually emphasized the economic harm that globalization has brought—the major one being social conflict.
On the other hand, the proponents of globalization are on the defense to nullify the arguments of their counterparts, through thorough exposition of the numerous economic benefits credible to globalization. This has created immense contention and confusion regarding the two concepts, leaving most world economies torn between embracing and rejecting the economic policies of globalization. To this end, the relevance of this study will be to research on the subject in order to provide useful statistics and information that will shed light and eliminate the prevailing contention and confusion in the field of sociology and economics.
1. 6 Scope and delimitations This research will involve gathering and collection of data for analysis from both primary and secondary sources. The primary data collected will be limited to the size of the sample that will be selected for interviews and survey. This is because the researcher will obtain primary data from conducting interviews and carrying out surveys on selected individuals and firms. Interviews will be conducted on 5 manufacturing and 5 service firms in addition to 20 individual respondents.
The interviewees will comprise of 7 middle class workers, 5 unemployed (lower class individuals) and 3 economic analysts. The remaining 5 interviewees will randomly selected from the general public. The inferences of the research will therefore be limited to this scope of study. 1. 7 Research objectives 1. To examine the relationship between social conflict and economic impact of globalization 2. To evaluate the existence of social conflict in the economic impacts of globalization by examining the situation in developed and developing countries
3. To find out whether globalization is a virtue or vice, economically and socially in both developing and developed nations. 1. 8 Research questions 1. What kind of relationship exists between the ideas of social conflict and the economic impact of globalization on both the developed and developing nations 2. Does globalization lead to social conflict? 3. Is globalization therefore a virtue or a vice in our economies and societies? 1. 9 Research hypothesis
As argued by social scientists, globalization results to economic inequality and conflict because only the powerful nations and individuals enjoy the full economic advantages linked to globalization. Globalization is both a virtue and a vice; it can be described as ‘a necessary evil’ in the economy or society of any nation: there are so many economic problems which are the multiplier effects of the policies of globalization but it is still important to the world economies since it also creates many benefits. 2.
0 LITERATURE REVIEW 2. 1 Introduction In economic the sense, globalization refers to the diminution of transaction of cross-border movements of goods and/or capital; globalization process includes the opening of global trade and internationalization of fiscal markets, advancement of communication means, emergent significance of Multinational Corporations (MNC’s) and increased population migrations which imply growing mobility of people, capital, ideas, goods, data as well as pollution, infections and disease (Balakrishnan, 2004).
Through globalization, an economy is thus able to generate networks which give it access to cross border trade and transactions, free global flow of capital, portfolio investments, foreign direct investments in addition to rapid diffusion of knowledge and technology (Yeh, n. d. ). The social conflict theory is a sociological theory that is used to explain the society as a multifaceted system which is characterized by struggle and inequality; these motivate social change.
Social conflict theory analyses the society by emphasizing on the power disparities among different groups and individuals in the society (Johnson, 2010). This theory is applied in the global trading system which emerged as a result of globalization: in the evaluation of the economic impact of globalization where poor countries are contrasted against the rich nations of the world. Basing on the arguments of the theory, modern social conflict can only be understood through a study into the impact that globalization has had on the economy of contemporary societies (Johnson, 2010).
Two contentious arguments on the topic of globalization and social conflict are usually held when analyzing the economic impact of globalization; some observers are of the opinion that globalization has brought about real economic growth to world economies while the other group of observers hold that globalization only serves the interest of metropolitan nations at the expense of marginal nations . The latter is the consequence of social conflict; which will be the center of this research (Scholte, 2000). 2.
2 The relationship between social conflict and economic impact of globalization Social conflict theory perceives globalization with a deeply critical approach. In a nut shell, it sees the economic impacts of globalization on the trading system as functioning according to the relationship between raw material suppliers and producers from the South and the developed industry in the North. The southern nations are commonly referred to as the third world countries and their role is to supply raw materials which the Southern industry transforms into finished products.
The finished goods are then sold back to the Southern producers (third world) at exorbitant prices so that the Northern nations make high profit margins from them. The result of this cycle is that the third world remains dependent upon the developed world and its economic structure stays distorted (Johnson, 2010). The key social conflict in globalization is founded on dependency. Dependency refers to a situation whereby the third parties cannot be sufficiently self-reliant without economical support from the industrialized countries.
The developing nations need the developed nations for markets, loans, capital and investment. Simply explained, globalization of the economy puts the third world at a perpetual disadvantage whereby they must comprise their economic domestic policies and strategies so that they rhyme with the requirements in the international market: their economic systems are constantly recreated so that they can serve the needs of the wealthy nations and the financial institutions which fund globalization (Johnson, 2010).
This part of the research aims at exposing the evaluating the validity of the ideas of social conflict in globalization through accessing the economic impacts of globalization in both the civilized and uncivilized nations. Since 1980s, global economy has become progressively more Integrated and connected; on the one hand the declining moving costs and the dissemination of Information Technology (IT) have meant a rapid downgrading of distance while technology transfers gross trade volume, capital flows and Foreign Direct Investment (FDI), have grown considerably.
In most economies, the present wave of globalization also has come with rising concern regarding its impact on the economy and per capita income distribution. The current debate is portrayed by acrimonious arguments between proponents and opponents of globalization (Wright, Morgan, Greenway, 2002). These positions deviate even further over the impact of globalization on the economies of developing countries (DCs). For example, the idealists underline the relationship between rising trade and economic expansion concluding that trade is excellent for economic growth and growth is excellent for developing nations.
In contrast, the realists explain that globalization is relatively uneven in its economic impact and results to negative impacts on the formerly protected regions (Goyal, 2006). Another case of this type of disparity of opinions is on poverty indicators: proponents of globalization highlight that international total poverty has reduced over the past two decades, while opponents of globalization illustrate that this product is nearly totally owing to statistical artifacts and absolute poverty has augmented in many Developing Countries and virtual poverty has increased in many countries (Lee, Vivarelli, 2006).
In 2002, members of the third committee of Social, Humanitarian and Cultural Development (SHCD) emphasized that negative effects of globalization were witnessed in widespread poverty among developing nations which they described as among the key threats of social progress. As the developing countries continued to embrace globalization, the disproportion in socio-economic situation was widening further and further (Kema, 2005).
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