Globalisation : Resistance?

"You cannot stop globalisation. It is something that happens", so said the US Secretary of State Madeleine Albright. Yes, globalisation is a phenomenon which has gathered pace over recent years. This is mainly due to the fact that many ex-communist countries have ditched their centrally-planned, communist economies in favour of laissez-faire, free-market economies. They have become more investment-friendly, fostered predominantly by the governments of those countries.

More importantly, it is due to the relative poverty (as compared to other countries) and abysmal standard of living. Their labour force's wages are only a fraction of what is demanded in the industrialised, developed economies in those firms in the West. Thus firms, in a bid to cut down on production costs, would choose to relocate to these places so as to ultimately maintain or increase their own individual competitiveness with rival firms.

But should globalisation be resisted? I think it would be better not to resist it. It will be in the interests of the world at large to see globalisation steaming ahead, and most countries are still in their development stages, especially some countries in Asia, Africa and South America. There are also reasons like the multiplier effect of globalisation, which could potentially solve a whole host of economic problems for these countries.

Firstly, the transfer of capital into all these developing countries would definitely be a huge help to their economies. The unemployment rate would most likely decrease and stay low due to all the foreign manufacturing companies needing an abundance of labour in all these countries to assemble their products. There would be a gigantic cheap labour force for these companies to tap into. With jobs, the population will also have an opportunity to break out of the poverty cycle and thereby secure a much brighter future for themselves and their families and next generation.

Secondly, globalisation could also translate into a higher standard of living for those living in poverty. With stable jobs and wages, families can make ends meet due to their increased income. They would thus be more tempted to spoil themselves by spending more on consumer products. The producers of these goods and their workers would also be able to cash in on all these through bonuses and wage increments. Thus, the Gross Domestic and National Product would be raised.

In this way, the governments of these countries can demonstrate that they are efficient and hardworking. This may also be a huge aid when attempting to convince people to vote for them in subsequent elections and ensure they stay as the incumbent government for the foreseeable future. In addition, if their coffers are boosted, then the government officials would stand to gain by implementing policies to increase wages and raise the standards of living even more. Globalisation thus becomes the turbine which is the main driving force in generating development throughout the country.

Thirdly, the world at large also stands to benefit as prices of consumer goods would be pushed down drastically by the influx of all these various types of goods into the market. For instance, Chinese goods are more price competitive compared to American or Western European goods, as they were mostly produced at only a small fraction of the western goods. Consumers will mostly choose the cheaper option, especially if the quality is not compromised.

One good example is where China-produced clothes have basically snatched away the world markets of western textile manufacturers. This is why a trade war is looming as China would refuse to cut down on production while the western countries demand them to as that their own manufacturers can stay afloat.

Of course, developed economies like the US and Western Europe would want to curb or at least stem the leakage of income out of their countries as they would be faced with a whole bunch of seemingly-insoluble economic problems like rising unemployment and recession. As factories in these nations shut down operations so as to set up their factories in other low-cost countries, the labour force left behind would lose their jobs. Unemployment rate becomes higher, consumer spending would decrease and the whole country would go into a recession. This would reflect badly on the governments, thus naturally they will not support globalisation.

Another reason to resist globalisation is the fact that the income gap between the rich and the poor would surge, as not everybody in these countries has equal access to proper educational facilities. Youngsters living in large developed cities would definitely have much easier access to proper education channels. This allows them to attain higher education and with it, a ticket to a better job. Unfortunately, those staying in the minor cities and villages would have no access to proper education. As a result, those better-educated ones would always find better jobs and those not as educated would be lucky enough to get any job.

This widening of income gap may then lead to social unrest as the lower-class would harbour more discontent towards those upper-class, so riots and rising crime rates may occur as a result. Investors will also not wish to place their capital in a country where there is so much social unrest. The governments' efforts in setting up an investor-friendly environment would thus torpedo and backfire. If the problem is not solved, the government may find that they would lose the support of their people and everybody end up as losers.

Despite all these, globalisation is a good phenomenon and should be supported as it is high time that the Asian and Eastern European nations start to get more developed as they have been constant for numerous decades, mostly stuck in the economic doldrums of communism or socialism or major political unrest. It is up to the governments of developing countries to maintain their competitiveness to investors, and they should not prevent the development of others even if it is disastrous to their economies.