Impacts Of Globalisation On The Economy Politics Essay

Globalization is driven by a combination of economic, technological, socio-cultural, political, and biological factors, integrating worldwide government policies and financial markets through trade and exchange of ideas. Several Factors has fuelled the pace of globalisation; technology, especially communications technology, transportation, deregulation and liberalisation of economic policies, free trade, removal of capital exchange controls, change in consumer awareness and wants and emerging markets in developing countries (MOHAMMED).

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The world is undergoing a continual transitional process as numerous people, societies, institutions and organisations of varying interests across the globe partake in this expansion. (Mohammed R). Also, whilst economic, social, political and cultural systems across societies become increasingly interdependent and complex, the old world order of managing economies and international relations is being rendered inadequate (Mohamed R). In this transitional flux, the future of the world society appears far from stable (Wallerstein).


The ever growing dependence between global economies resulting from international trade of goods, services, finances and technological development paved the way for a global economy. Economic globalisation refers to the continual growth and reciprocated integration of world markets and is an unalterable trend which has been developing at an unprecedented rate since the turn of the twentieth century. Rapid technological development, particularly in areas of information and communication, are the two main forces that have fuelled economic globalisation (Gao). Further the expansion of science and technology has substantially reduced the cost of transportation and communication, making economic globalisation a smoother process (Gao). Centralised economies shifted focus to market economies and market oriented reform through world bodies like GATT, WTO, IMF and World Bank galvanised this process. Many countries have steadily reduced their tariff and other blockades whilst implement flexible financial policies (Gao). The development of the financial sector to serve the needs of international trade and investment actions has come to be the most influential aspect of economic globalisation.

As the main ambassadors of globalisation, Multinational Corporations (MNC), like McDonald, Coca Cola and Levi amongst others are organising production and allocating resources worldwide with a view to maximising profit. Their global developments are altering and restructuring macro-economic systems across global economies.(Gao)

The expansion of economic globalisation also resulted in the reshaping and restructuring of global industrial structures and activities. In recent years, developed western countries and the US, whilst taking advantage of the knowledge economy, have shifted many of their labour intensive industries with poor global competitiveness, to developing countries. Conversely, due to the existence of productivity surplus since the dismantling of the Soviet Union, international competition has intensified amongst enterprises from different countries. In order to leverage their international competitiveness, enterprises are resorting to swift mergers and acquisitions, resulting in a wave of industrial reorganization. Similarly, developed countries, taking advantage of the low wage structure in developing nations, set up factories there. However, if the labour laws are altered or stricter rules introduced to govern the manufacturing process, then these factories are closed down and relocated to other countries with more ‘favourable policies.(shanta Sharma). With better access to technology and liberalising of policies, developed countries are capable of producing higher quality goods at lower prices. This gives them the advantage of favourable balance of trade and thus a greater control over global financial resources and wider markets.

As the biggest benefactors of economic globalisation, the United States and other Western countries have wielded considerable economic and cultural power by taking advantage of their control over international economic and financial organisations to encourage and determine the development of globalisation.(Wallerstein)

Developing countries have been playing a central role in the process of economic globalisation and this is mirrored in the fact that they establish the regulations for international economic exchanges. Whilst the globalisation process has enabled developing economies to strengthen their market position by, initiating better technologies, introducing foreign capital and management experience, they also face enormous risks. Several reports indicate that globalisation has increased rather than reduced the gap between the developed and developing countries. Secondly, these countries also face the threat of being unfavourably impacted by external factors. Under open market situations, the difference between the realisation of outside economic stability and internal economic stability puts a substantial limit on their macro-economies, weakening their control and regulation.(Gao)

According to a recent United Nations Development Report (1996), whilst globalisation has been a catalyst in reducing poverty and enhancing the quality of life worldwide, for e.g. since the 1970’s significant developments in China and India have played a major role in reduction of world poverty, the fact remains that economic growth is not balanced across the globe.(Shanta Sharma)

The world today is so interconnected that the collapse of the subprime mortgage market in the U.S. has led to a global financial crisis and recession on a scale not seen since the Great Depression. Government deregulation and failed regulation of Wall Street’s investment banks were important contributors to the crises.(Shanta Sharma)

Globalisation in itself cannot bring about an equitable and rational new international economic order and an expansion in which developing countries are unable to evade the boomerang effects of globalisation or fully enjoy its benefits. (Wallerstein).

(ii) Social

As a consequence of the continual process of globalisation a diverse world in transition is surfacing, with significant de-localisation in social and economic changes (Mohamed R). It’s one where change in socio-economic conditions is rendered by impersonal, non-institutional and non-ideological forces. Whilst the last quarter of the twentieth century has seen significant increase in communications, there is considerable decrease in person to person contact (Mohamed R). Many of the activities that involved face to face dealings are now conducted over larger distances. Activities and dealings have been displaced from local origins and cultures increasingly causing people to deal with distant systems. Banking and retailing for instance have implemented new technologies that entail less person to person interaction..(infed – globalization)

As a social and cultural process, globalization is increasingly exposing people to different ways of thinking, cultural values and family norms. (Jorg & Grahm). Globalization is a phenomenon created through human activity and that in turn constantly changes human behavior and activity and has helped shape online communities. This has led to the evolution of new identities for people and a new phase of acculturation; new ideas, new methods of work, life and governance are being shared worldwide.

Now more than ever, not only societal, but intra-familial issues are also being influenced by globalization (Jorg & Graham). Globalization’s most profound effect is on changing gender roles and the empowerment of women.

Global proliferation of communication carries ideas and currents across continents, sensitizing people in remote areas to similar agendas and promoting mutual programs, promoting greater social justice and equality. One such example is the global campaign against brand names that exploit child labor.

Whilst universal equality was the fundamental social and cultural value of traditional internationalism, contemporary globalization’s only commitment is in perfecting the market it turns, including all cultural products into commodities. Whilst selling is universal, production is always local. In a social context, the basic ideology of globalization is not equality, but difference. Globalization unites the markets and divides individuals, as humans can be best used for purposes of global marketing if they act as individual consumers (shanta Sharma). Religion, region, language, caste, nationality and ethnicity are used to dismantle working class solidarities or to prevent them from emerging at the work place or residential communities. (Shanta Sharma). Whilst the current social order pretends to be an active one, increasingly headed towards a growing similarity of living conditions in all countries, it cannot counteract the fact that several thousands are still deprived of the basic necessities of a decent life.

Racial unrest in Europe today is also a direct result of unrestricted legal and illegal immigration of people of different values, particularly those from North Africa and Asia. Whilst immigration has caused a sense of loss of their identity, they refuse to integrate into the host society to hold on to their allegiances. (Maddock)

(iii) Cultural

Cultural globalization refers to an increase in the exchange of cultural practices between countries and peoples involving the movement of ideas, information, images and people. Although practiced for thousands of years, economic and political globalization has contributed to a spurt in cultural globalization in recent decades. Giant strides in technology and communications, particularly the internet has been the single most important factor in breaking cultural boundaries across the globe facilitating immediate communication between people of varying lifestyles and cultures.(infed) . Additionally, new technologies and their utilization like commercial air travel, satellite television and mass communications and the internet have created a world where billions now consume and share identical cultural products – sports, music, lifestyles, languages, entertainment as not evidenced before, determining a new global culture(Fabian global forum – global know- gloablisation).

In recent decades, there is a growing shift in power away from the nation state toward multinational corporations with the rise and globalization of brands like Coca Cola and McDonald. Employing a market strategy to establish their brands as an essential part of the way people see themselves they have captured a large global market, particularly the younger generation.(infed).

With rapid strides in technology and communication, a new modern wave is emerging from the West and America; something that is defined as a popular culture. This new cultural globalization has easily transcended borders, reaching poor and rich countries alike, making no distinction. In developing countries it can be witnessed in a western style of dressing, use of cellular phones and popular usage of the English language among other things, bring about deep-seated changes in conventional local cultures, values and traditions (Louis de Lamare)

Rising as a tributary to economic globalization, cultural globalization is slowly replacing the traditional nation-state and homogenizing cultures and conversely a loss of individual, national and ethnic cultural identities. Whilst cultural globalization can be a profoundly enriching process, opening minds to new ideas, experiences and strengthening the finest universal values of humanity, it also brings intrusions into the local norms, cultures and traditions of individual countries. Many cultures, particularly indigenous people, treasure their culture as their richest heritage, without which they have no roots or soul. Their culture cannot be quantified. (Levin). Many believe that such rampant exposure to foreign culture is undermining their own cultural identity. Whilst capitalism favors a fast paced environment and consumer culture, it’s a matter of conflict for other socialist societies are used to a different lifestyle and want to preserve their traditions.(lous Lamare) . Violent reactions against the West by elements within Islamic society can be seen in this light.(Levin).

Asian values are described as those embodying the ideals of respect, hard word, thrift and the belief of the importance of the community over the individual. These are coupled with preferences for economic, social and cultural rights, rather than political ones..(Mohamed R)

In doing so, they have been able to protect and nurture their traditions in the face of utilitarian modernity, slack morals and globalization (Mohamed R)

Another dimension to the negative aspects of cultural globalization is the imposing of one nation’s culture on another. The early 1990s attempts by the United States to dolphin ban sanctions against Mexico lead to heated governmental confrontations between the two countries. The issue was not that dolphins were endangered or even threatened species, but simply American cultural mores against the killing of these animals. The Japanese whaling issue has also come under a similar cultural scanner.(Levin)

Conversely, many researchers also believe that globalization has a positive impact on the homogenizing effect of national cultures. Large television networks in India have given people a wider exposure and understanding of cultures in their own nation, reaffirming their own local traditions.

(iv) Political

Political globalization refers to an increasing trend toward multilateralism, in which the United Nations plays a key role, toward an emerging ‘transnational state,’ and toward the emergence of national and international nongovernmental organizations that act as guardians over governments.

Far reaching political changes have arisen from increased economic and social globalization, with developing or newly developed economics becoming even more dependent on the activities of developed economies such as the US where there is a centralization of capital and technical expertise.(Mohamed R) . The policies of national governments in capitalist countries are mainly determined by two important dynamics: the first is the state of the national process of capital accumulation and its relative international strength; the second is the balance of class forces both nationally and internationally.(Mohamed R)

As a result, globalization has reduced of power of national governments to direct and influence their economies. Shift in economic activities in Japan or US are impacted all over the globe. The internationalization of financial markets, of technology and of some manufacturing and services bring with them a new set of limitations upon the freedom of action of nation states.(Mohamed R). To survive this market drive political globalization, it is deemed necessary for governments to handle the pressures of trans-national market forces as well as domestic economies. Whilst the influence of the nation states may have diminished as a part of the globalization process, it has not all together disappeared. The nation state remains as pivotal institution in creating conditions for effective national governance (Mohamed R).

On a political map, whilst national boundaries are well demarcated, those indicating financial and industrial activity have largely overlapped or disappeared. Globalization has undermined the nation state, not only by shrinking resources under the national control for shaping economic and social outcomes, but it has reduced government legitimacy and control in the eyes of the public. (Mohamed R).

The decline in national power and sovereignty in globalization is attributable to two important factors. One reflects the magnitude and velocity of international economic exchanges eroding the state’s capabilities and the other is the extent to which market relations across borders is diminishing the citizen’s attachment to national authority, reducing the state’s legitimacy. Citizens increasingly understand the relative economic strengths and weakness of their countries as products of specific national political arrangements and of different national cultures and not as the result of diverse national advantages. Contemporary politics in developed nations shows an increasing distrust of elected representatives. Unregulated flow of capital, labor, information from outside their country, resulting in unemployment delocalization of industry, immigrants, infiltration of undesirable material through the net are all attributed to poor government policies in allowing such lapses. Paradoxically, this one outcome of globalization is assisting governments to refocus political attention on the role of the state on the boundaries of national territory. In many advanced countries a new political camp has emerged to reinforce national control at the frontiers. (Mohamed R).


Globalisation involves the diffusion of ideas, practices and technologies and the increase of worldwide social relations which link distant localities, significantly impacting on the economic, social, cultural and political dimensions of nations and its peoples. Globalization, however, is not a new phenomenon. It has existed in at various levels since the development of agriculture (Mohamed R). While it saw a spurt in the late nineteenth century, it slowed down during the period from the First World War until the third quarter of the twentieth century (Shanta Sharma). This slowdown can be attributed to the inward-looking policies pursued by a number of countries in order to protect their respective industries. However, it was with the dismantling of the Soviet Union and destruction of the Berlin Wall that contemporary globalisation commenced, giving rise to a transitional world society.

The recent recession has seen corporations and institutions from developed nations moving their focus to developing countries, particularly in the East. Cheap labour, relaxed industrial norms and the capacity to shift base at short notice to countries with more favourable policies have all significantly impacted on economic globalisation. The import of raw materials from developing nations is another advantage. Multinational corporations have shifted power away from the nation state with their ‘brand’ globalization. However, whilst research does indicate that globalisation has been able to alleviate global poverty, it has in many respects deepened the gap between the rich and poor nations.

Economic globalisation has brought in its wake significant and far reaching changes in socio-cultural activities as well as politics. With an increase in the exchange of cultural practices, attributable largely to the internet, there is on one hand a homogenization of cultures and the transgression and loss of national ethnicity and cultures.

Further, globalization has undermined the nation state, not only by shrinking resources under the national control for shaping economic and social outcomes, but it by reducing governmental legitimacy. There is an increasing trend toward multilateralism, in which the United Nations plays a main part, toward an emerging ‘transnational state’.

In this constant state of flux, it is difficult to say whether an equilibrium state of world society can be achieved.