Section : Module 4 - Features and Impact of Globalization
 
Objectives
  1. To examine the main features and drivers of globalization
  2. To assess the impact of globalization on Caribbean countries as well as on the workers in those countries.

4.1 Main features and drivers of globalization

Much of the discussion to this point has centred on the economic aspects of globalization. This module widens the scope of the discussions away from the framework, to look at features and major characteristics of globalization.

Intellectual

Globalization is a creature of the thinkers, entrepreneurs, manufacturers and policymakers of the dominant countries of the world. Much effort has been extended in developing a paradigm shift, in forcing the mass of people into observing the reality of their existence from an alternative viewpoint. Few now see socialism as a path for human development, and most are convinced that the market is the mechanism for man’s advancement. Underdevelopment in former colonial territories can no longer be blamed on the colonial masters but must be seen as the fault of the colonials, who no longer require aid and assistance. Greed and the desire for maximizing profits must not be restrained by consideration of threats to the environment.

The proponents of globalization have been very successful in stifling the voices of the South, which up to the 1990s, could be heard proposing alternative pathways to development and criticizing the greed of those whose main aim was the extraction of profit and the exploitation of labour.

The ideological underpinning of globalization is that the exploiter and the exploited, the capitalist and the worker share the same world views, and share the opinion that the market is the best mechanism to advance the interest of all concerned.

Economic

  1. The major economic feature of globalization is the dominance of the Transnational Corporation, and the international division of labour in which the world economy can be organized as a global assembly line. An example is given in the following illustration of how a Pontiac Le Mans motor car is produced:
    1. South Korea is responsible for the assembly operations.
    2. Japan makes the advanced components, engines and electronics.
    3. Germany provides the style and design.
    4. Taiwan and Singapore make the small components.
    5. English firms advertise and market the product.
    6. Barbados and Ireland handle the data processing.
    7. Detroit is the seat of legal and banking facilities.
  2. The world economy has been reorganized so that high tech and knowledge-based industries are located in the developed centre, particularly in the G- 7, while the developing world provides low tech, low wage production processes.
  3. There is the rapid integration of financial markets, and capital is free to move over the globe with minimal restrictions. Foreign Direct Investment flows determine the development of countries. Uncontrolled financial movements can damage an entire region and pollute other economic markets.
  4. Where access to natural resources, such as land and raw materials was the basis of the wealth of countries, financial wealth can now be disconnected from natural resources.
  5. The development of mega-blocs and regional trade groupings and increased trade between the countries of the regions lead to large companies being formed.
  6. The services sector is one of the fastest growing areas in the global economy, along with growth in the high tech information and telecommunications area. Electronic commerce is gaining steady ground and momentum for those countries which have been able to twin technology with commercial activity .
  7. There is an intensifying of competition on the world scale as all countries are competing for the same consumer. Global elites, global middle classes, and global teenagers are the market for leading ‘brands’ from all over the world. Workers are competing with their colleagues all over the world to gain shares in the market for the output of their labour.

Technological

An information technology-driven, knowledge-based revolution is a major driver of globalization. The fastest growing area of trade relates to high tech products and services. Furthermore, access to new technology, creates opportunities to change work processes, and to modify the very nature of work.

Organizational

Globalization is characterized by corporate reorganization on a massive scale. Organizations are being flattened, some are being downsized, strategic corporate alliances are formed, mergers and acquisitions are the order of the day and franchises are expanding at a rapid rate.

The spread of negatives

The impact of the Asian Crisis of 1997 across the world, the terrorist activities in the United States of America on September 11, 2001, and the anthrax scare all tell a story of how much the world has become a global village. This negative story can be embellished by reference to the spread of drugs and gun-related crimes worldwide within recent times.

Political

The threat to the nation state is real as they surrender to the hegemonic power contained in framework agreements such as the WTO. Within nation states, the power of the state is diminishing under globalization. This is leading to the privatization of state-owned entities as states accept a minimalist role in economic activities.

Social

The most important social feature of globalization is the growing disparity between the rich and the poor. The ratio of the income of the top 20% in the world to that of the poorest 20% rose from 30:1 to 84:1 in 1995.

4.2 The impact of globalization on the Caribbean

Right wing economists and others speak glowingly of the positive impacts which globalization can bring to the Caribbean and to the workers of the region. They speak of the impressive foreign direct investment flows which countries such as Trinidad and Tobago and Barbados have gained in the manufacturing plant and tourism infrastructure, respectively.

The reality is that globalization has not witnessed any rapid growth in investment in most Caribbean countries, nor has it resulted in Caribbean states being able to expand their trade significantly by expanding exports to any of the regions controlled by the triad. Indeed the result has been that Caribbean markets have been more exposed to imports from the developed countries. Where jobs have been created in areas such as informatics and data processing, they have tended to be low-waged and to have attracted females and white collar workers.

The Caribbean is witnessing privatization of state enterprises, the development of atypical forms of employment contracts, attempts by employers to contract and curtail benefits gained over the years, and attempts at bolstering productivity by flexibilization of various types.

Footloose investors have been attracted to the region in search of low wages. Any attempt at organizing their employees into trade unions is met by a rebuttal which can take the form of challenging the country’ s industrial relations system or may lead to an abandonment of the investment and moving on to a more compliant location.

For many, globalization is seen as the enemy of the trade union which is considered to be an institution which prohibits the free utilization of capital, and which tries to restrict the rights of management to determine work practices unilaterally.

There is an acceptance that general living standards have declined in some areas of the Caribbean in the 1970s and 1980s, and the existence of poverty is at an uncomfortable level in some countries.

In recent times, the penetration of large and powerful American transnationals in the distributive sector, such as K-mart and Price Smart, has had negative effects on the performance of the indigenous business class. There is a widespread fear that local businesses will be supplanted by these powerful retailers who will then exercise monopoly power in the territories. They have also introduced their employment practices in their operations.

Caribbean countries are characterized by small size, dependency, openness to external stocks and the ravages of nature. They will have to learn to manoeuvre carefully in a globalized world controlled by the wealthy and powerful.

The major threats to the worker in globalization include reduced job security, having to compete for jobs worldwide, and the danger of having their wages and salaries driven down.

Exercise

  1. In what ways has globalization shown a negative impact in your country?
  2. What steps are being taken in your country to combat the negative influences of globalization, and to position your ountry to face the challenges?