Introduction – What is globalisation?
International trade has been around for centuries and while globalisation may feel like a modern concept, changes across borders have happened ever since. Silk and spice trade routes in East Asia, which originated in the first century BCE, brought diverse civilizations and linked various nations’ economies. In the 1500s, the British and Dutch import and export empires followed suit in this regard. The development of technology improving transport and communication has facilitated the growth of globalisation which includes sharing of language, culture, wealth and products. There is a large amount of information that is shared between peoples of different cultures and political, social or geographic backgrounds. Economies today are more interdependent than ever which further enhances the process of globalisation.
Globalisation is a word that is commonly used today, but its meaning is sometimes unclear, even among people who use it. Globalisation can be defined as the compression of the world in an attempt to strengthen the consciousness of the entire globe as one, based on a foundation of interdependency.
More than simply products and services are swapped as international trade evolves to become faster and more prevalent. Cultural traditions and ideas are also passed amongst different groups from group to group, which we know as a process termed diffusion. It’s a descriptive term for when material moves from areas of high concentration to areas of low concentration. Ideas and practices spread from locations where they would be well-known to regions where they are new and rarely noticed. Exploration, military conquest, missionary work, and tourism were formerly used to facilitate the exchange of ideas, but technology has dramatically accelerated the rate of diffusion. There is debate on whether globalisation should be seen as a never-ending process as some scholars suggest the possibility of future historians calling the period we are in the ‘era of globalisation’. This would indicate that there is a start date to the globalisation period, the end of the Cold War being a popular option for most.
The Three Globalisation Theories; Explained with Examples
World System Theory
World-systems theory emphasises the significance of the entire globe as a whole instead of individual nations. The world is divided into three regions: core nations, periphery countries, and semi-periphery countries. Countries in Western West Europe and the United States of America are examples of core countries. These countries have a powerful central government that is well-funded through taxes. They are economically diverse, industrialised, and largely self-sufficient. They have a sizable middle and working class, and they prioritise the manufacture of finished commodities above raw materials. Periphery countries generally refer to nations in Latin America and Africa that have unstable governments. They often rely on a single economic activity, which is more often than not, raw material extraction. There is a large proportion of impoverished and illiterate individuals, as well as a small elite class that controls the majority of the economy. As a result, there is a significant disparity in the population. Core nations and transnational firms have a significant impact on these countries. This has the potential to impair the peripheral nations’ future economic prospects.
Semi-periphery states such as India and Brazil fill the gap between the Core and the Periphery. They are not always influential in international commerce, but their economies are broad and advanced. These semi-periphery countries might arise from either Periphery countries climbing up to the modernised Core countries or Core countries descending to Periphery status. The World-Systems Theory is a fluid model, but it has been criticised for being overly focused on the economy and the Core nations, overlooking culture and even class conflicts inside individual countries.
The United States (core nation) reaps disproportionate gains from economic and political interactions with Brazil (semi-peripheral nation) and Kenya (peripheral nation). The United States has a large, successful economy that is backed by a stable government whereas Brazil has a wide economy but is not an important international player in global trade activities. Meanwhile, Kenya only has the raw materials to offer to both countries and since they have no other buyers, they have to make do with the minimal prices offered by the USA and Brazil.
According to the Modernization theory, all states follow the same route of transition from a traditional to modern society. It implies that traditional countries, with some assistance, may evolve into contemporary countries in the same manner that the modern nations of today emerged in the first place. Modernisation theorists examine the country’s internal factors affecting its progress (eg: economic policies of the country) as it adapts to new technology, as well as the socio-political changes that arise. One myth that modernisation theorists hold onto is that every population is on the path of modernising and that it is always desirable. This ignores the consequences, such as the weakening of bonds within the wider family, rising urban unemployment, and the fragmentation of the country’s current economic structure, and as a result, many ‘underdeveloped’ nations may see modernity in an adverse manner. Modernisation theory’s core argument is that with economic growth and development, any country can become advanced, industrialised and follow the footsteps of Western democratic countries in their goals. There is a strong focus on internal factors within the modernisation theory so much so that they do not consider external influences as a reason for the failure or success of a certain country’s economic progress. Although this theory focuses a lot on a single country, the understanding of this through the lens of globalisation is that modernisation expects developed countries to aid other countries in reaching their economic goals to bring them closer to a modernised society.
Although there is ample debate on the modernisation theory, there is one commonality between the arguments for and the critique against it. Both sides use Japan as an example. Some regard it as proof that a totally contemporary way of life is possible in a non-Western civilization. Others claim that as a result of modernisation, Japan has grown noticeably more Western.
Dependency theory was developed in response to modernization theory, and it employs the concept of Core and Periphery nations from the World-systems theory to examine disparities between countries. Essentially, it is the belief that the poorer periphery or third world nations export raw resources to the rich core or first world countries. This occurs not because they are at a lower stage of development, but because they have been absorbed into the global system as an underdeveloped country. They have their unique structures and traits that are not found in industrialised countries, and they will not become a “core” nation at a rapid pace no matter the amount of external aid received. They are, more often than not, in an undesirable economic situation, which implies they have little potential to progress or develop. The Dependency theorists maintain that underdeveloped nations, if this model continues, will remain poor and dependent on wealthier nations.
Initially, dependency theory was connected mostly with Latin American countries that were embedded in the capitalist system. Resources tend to move from the periphery, or impoverished and undeveloped countries, to the core, or prosperous Western world. This is due to the fact that poorer nations on the periphery tend to offer natural resources and inexpensive labour for items created and sold by corporations in the wealthier, core countries. As time passes there have been various hegemonic cores that have emerged, like the US or previously Britain and before that the Netherlands which then for a period dominated the capitalist system. It’s not necessary that rich countries exploit poorer ones but capitalists exploit workers. For both dependency theorists and world systems theorists, wealth disparity is caused by the global capitalist system as a whole, and the answer for all structuralist thinkers is some kind of communism. Beyond that, import substitute industrialisation or ISI is an example of a suggestion to end dependency between nations. This term translates to something like the ‘Make in India’ movement that is gaining traction today.
The Philippines embodies the same fundamental reality as other Third World countries. This is the reality of dependent and uneven development, which enriches global corporations and their local partners while impoverishing the poorest people. The omnipresent MNCs, or multinational companies, are the best example of this form of growth.
Benefits and Drawbacks of globalisation
These are just a few theories of globalisation. There are numerous interpretations and perspectives surrounding this process and through these, there are always an increasing number of benefits and/or drawbacks that are realised.
Benefits of globalisation:
- Increased efficiency in the use of resources
- Makes goods and services more accessible
- Promotes collaborations which boost the rate of modernisation
- Enhances Foreign Direct Investments (FDIs) which allows for increased development
- Assists in bringing populations above the poverty line
- Makes people aware of cultures and traditions from other part of the world
- Enables free flow of trade removing all restrictions and barriers
- Sharing of scientific and technological advances is made easier
Drawbacks of globalisation:
- Outsourcing labour reduces employment in the host country
- In countries with large human resources, machinery acquired through globalisation will cause large-scale unemployment
- Ill effects on the environment due to increased travel/traffic and overload of factories
- Processes of Globalisation might not have the same effect on all countries, resulting in economic inequalities
- Labour and Human rights are not kept in focus
- Cultural issues can arise when one culture dominates the other
- Allows Multinational Corporations (MNCs) too much power and liberty
The growing economic disparity between high-income and low-income nations is a cause for concern. And the amount of people living in abject poverty throughout the world is very concerning. However, it is incorrect to conclude that globalisation is to blame for the gap or that nothing can be done to alleviate the situation. On the contrary, low-income nations have taken longer to integrate into the global economy than others, partly due to their policies and partly due to causes beyond their control. Efforts are to be made to prevent globalisation from unfairly aiding the development and prosperity of advanced nations alone either by reevaluating the guidelines for international trade or by simply forcing core countries to foster development in underdeveloped nations.