Globalisation is the increased economic integration of the world: this includes trade, culture, ideas and innovation. The globalisation of trade has been occurring for nigh-on a century now, and now free markets exist in most countries of the world. While this free market has enabled out recent high levels of consumerism, it comes at a cost.
FDI has helped developing nations turn into emerging nations - for example, in India, where FDI was at $80 million in 1980, but is now at $50 billion, or almost 2% of their entire GDP. 2% of their GDP being FDI means that there is a deal of trust in India’s economy to achieve growth, and this investment money has helped projects in India to be built and become large employers, creating a positive multiplier effect. While this is a benefit, it poses challenges upon the Indian government when trying to implement new laws and regulations - a firm can now easily move its money elsewhere if it runs into difficulties in its original location, and this means that political autonomy in creating better environmental quality or living standards is diminished. This is already presenting issues, and will continue to, therefore making this a problem within the globalisation of trade.
Economic liberalisation has allowed TNCs to offshore their production and manufacturing to other countries which may have a competitive edge for cheap labour. This creates a plethora of employment possibilities in these developing countries, but there are large problems associated with this. While domestic production (in GDP) may be high, national spending money (GNI) may be lower, as profits from an offshoring TNC will often go back to the source country. Since there is global cooperation on free trade, but not on environmental regulations, this offshoring can bring about a great deal of environmental issues. For example, the Plachimada CocaCola struggle, in which water and soil was polluted by an American TNC operating in India. It is almost a given that this type of environmental negligence would not have stood in the USA, even though it is the same environment that is being protected. As such, it should be a global effort to standardise environmental regulations across trade blocs and the world. However, many countries (particularly South-East Asian ones) would be reluctant to accept this, as it would force a loss of some of their competitive edge.
In conclusion, while globalisation and continued economic integration of trade has had plentiful benefits in terms of raising global living standards, the environment and individual nation states are losers, thanks to arguably exploitative practices, policies and pressures by the ultimate winners: TNCs.
Knowt
Note
Studied by 11 people
