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Introduction to Sociology 2e

18.2 Globalization and the Economy

Introduction to Sociology 2e18.2 Globalization and the Economy
  1. Preface
  2. 1 An Introduction to Sociology
    1. Introduction to Sociology
    2. 1.1 What Is Sociology?
    3. 1.2 The History of Sociology
    4. 1.3 Theoretical Perspectives
    5. 1.4 Why Study Sociology?
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  3. 2 Sociological Research
    1. Introduction to Sociological Research
    2. 2.1 Approaches to Sociological Research
    3. 2.2 Research Methods
    4. 2.3 Ethical Concerns
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  4. 3 Culture
    1. Introduction to Culture
    2. 3.1 What Is Culture?
    3. 3.2 Elements of Culture
    4. 3.3 Pop Culture, Subculture, and Cultural Change
    5. 3.4 Theoretical Perspectives on Culture
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  5. 4 Society and Social Interaction
    1. Introduction to Society and Social Interaction
    2. 4.1 Types of Societies
    3. 4.2 Theoretical Perspectives on Society
    4. 4.3 Social Constructions of Reality
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  6. 5 Socialization
    1. Introduction to Socialization
    2. 5.1 Theories of Self-Development
    3. 5.2 Why Socialization Matters
    4. 5.3 Agents of Socialization
    5. 5.4 Socialization Across the Life Course
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  7. 6 Groups and Organization
    1. Introduction to Groups and Organizations
    2. 6.1 Types of Groups
    3. 6.2 Group Size and Structure
    4. 6.3 Formal Organizations
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  8. 7 Deviance, Crime, and Social Control
    1. Introduction to Deviance, Crime, and Social Control
    2. 7.1 Deviance and Control
    3. 7.2 Theoretical Perspectives on Deviance
    4. 7.3 Crime and the Law
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  9. 8 Media and Technology
    1. Introduction to Media and Technology
    2. 8.1 Technology Today
    3. 8.2 Media and Technology in Society
    4. 8.3 Global Implications of Media and Technology
    5. 8.4 Theoretical Perspectives on Media and Technology
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  10. 9 Social Stratification in the United States
    1. Introduction to Social Stratification in the United States
    2. 9.1 What Is Social Stratification?
    3. 9.2 Social Stratification and Mobility in the United States
    4. 9.3 Global Stratification and Inequality
    5. 9.4 Theoretical Perspectives on Social Stratification
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  11. 10 Global Inequality
    1. Introduction to Global Inequality
    2. 10.1 Global Stratification and Classification
    3. 10.2 Global Wealth and Poverty
    4. 10.3 Theoretical Perspectives on Global Stratification
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  12. 11 Race and Ethnicity
    1. Introduction to Race and Ethnicity
    2. 11.1 Racial, Ethnic, and Minority Groups
    3. 11.2 Stereotypes, Prejudice, and Discrimination
    4. 11.3 Theories of Race and Ethnicity
    5. 11.4 Intergroup Relationships
    6. 11.5 Race and Ethnicity in the United States
    7. Key Terms
    8. Section Summary
    9. Section Quiz
    10. Short Answer
    11. Further Research
    12. References
  13. 12 Gender, Sex, and Sexuality
    1. Introduction to Gender, Sex, and Sexuality
    2. 12.1 Sex and Gender
    3. 12.2 Gender
    4. 12.3 Sex and Sexuality
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  14. 13 Aging and the Elderly
    1. Introduction to Aging and the Elderly
    2. 13.1 Who Are the Elderly? Aging in Society
    3. 13.2 The Process of Aging
    4. 13.3 Challenges Facing the Elderly
    5. 13.4 Theoretical Perspectives on Aging
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  15. 14 Marriage and Family
    1. Introduction to Marriage and Family
    2. 14.1 What Is Marriage? What Is a Family?
    3. 14.2 Variations in Family Life
    4. 14.3 Challenges Families Face
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  16. 15 Religion
    1. Introduction to Religion
    2. 15.1 The Sociological Approach to Religion
    3. 15.2 World Religions
    4. 15.3 Religion in the United States
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  17. 16 Education
    1. Introduction to Education
    2. 16.1 Education around the World
    3. 16.2 Theoretical Perspectives on Education
    4. 16.3 Issues in Education
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  18. 17 Government and Politics
    1. Introduction to Government and Politics
    2. 17.1 Power and Authority
    3. 17.2 Forms of Government
    4. 17.3 Politics in the United States
    5. 17.4 Theoretical Perspectives on Government and Power
    6. Key Terms
    7. Section Summary
    8. Section Quiz
    9. Short Answer
    10. Further Research
    11. References
  19. 18 Work and the Economy
    1. Introduction to Work and the Economy
    2. 18.1 Economic Systems
    3. 18.2 Globalization and the Economy
    4. 18.3 Work in the United States
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  20. 19 Health and Medicine
    1. Introduction to Health and Medicine
    2. 19.1 The Social Construction of Health
    3. 19.2 Global Health
    4. 19.3 Health in the United States
    5. 19.4 Comparative Health and Medicine
    6. 19.5 Theoretical Perspectives on Health and Medicine
    7. Key Terms
    8. Section Summary
    9. Section Quiz
    10. Short Answer
    11. Further Research
    12. References
  21. 20 Population, Urbanization, and the Environment
    1. Introduction to Population, Urbanization, and the Environment
    2. 20.1 Demography and Population
    3. 20.2 Urbanization
    4. 20.3 The Environment and Society
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. Further Research
    10. References
  22. 21 Social Movements and Social Change
    1. Introduction to Social Movements and Social Change
    2. 21.1 Collective Behavior
    3. 21.2 Social Movements
    4. 21.3 Social Change
    5. Key Terms
    6. Section Summary
    7. Section Quiz
    8. Short Answer
    9. References
  23. Index
A city skyline is shown here.
Figure 18.9 Instant communications have allowed many international corporations to move parts of their businesses to countries such as India, where their costs are lowest. (Photo courtesy of Wikimedia Commons)

What Is Globalization?

Globalization refers to the process of integrating governments, cultures, and financial markets through international trade into a single world market. Often, the process begins with a single motive, such as market expansion (on the part of a corporation) or increased access to healthcare (on the part of a nonprofit organization). But usually there is a snowball effect, and globalization becomes a mixed bag of economic, philanthropic, entrepreneurial, and cultural efforts. Sometimes the efforts have obvious benefits, even for those who worry about cultural colonialism, such as campaigns to bring clean-water technology to rural areas that do not have access to safe drinking water.

Other globalization efforts, however, are more complex. Let us look, for example, at the North American Free Trade Agreement (NAFTA). The agreement is among the countries of North America, including Canada, the United States, and Mexico and allows much freer trade opportunities without the kind of tariffs (taxes) and import laws that restrict international trade. Often, trade opportunities are misrepresented by politicians and economists, who sometimes offer them up as a panacea to economic woes. For example, trade can lead to both increases and decreases in job opportunities. This is because while easier, more lax export laws mean there is the potential for job growth in the United States, imports can mean the exact opposite. As the United States import more goods from outside the country, jobs typically decrease, as more and more products are made overseas.

Many prominent economists believed that when NAFTA was created in 1994 it would lead to major gains in jobs. But by 2010, the evidence showed an opposite impact; the data showed 682,900 U.S. jobs lost across all states (Parks 2011). While NAFTA did increase the flow of goods and capital across the northern and southern U.S. borders, it also increased unemployment in Mexico, which spurred greater amounts of illegal immigration motivated by a search for work.

There are several forces driving globalization, including the global economy and multinational corporations that control assets, sales, production, and employment (United Nations 1973). Characteristics of multinational corporations include the following: A large share of their capital is collected from a variety of different nations, their business is conducted without regard to national borders, they concentrate wealth in the hands of core nations and already wealthy individuals, and they play a key role in the global economy.

We see the emergence of global assembly lines, where products are assembled over the course of several international transactions. For instance, Apple designs its next-generation Mac prototype in the United States, components are made in various peripheral nations, they are then shipped to another peripheral nation such as Malaysia for assembly, and tech support is outsourced to India.

Globalization has also led to the development of global commodity chains, where internationally integrated economic links connect workers and corporations for the purpose of manufacture and marketing (Plahe 2005). For example, in maquiladoras, mostly found in northern Mexico, workers may sew imported precut pieces of fabric into garments.

Globalization also brings an international division of labor, in which comparatively wealthy workers from core nations compete with the low-wage labor pool of peripheral and semi-peripheral nations. This can lead to a sense of xenophobia, which is an illogical fear and even hatred of foreigners and foreign goods. Corporations trying to maximize their profits in the United States are conscious of this risk and attempt to “Americanize” their products, selling shirts printed with U.S. flags that were nevertheless made in Mexico.

Aspects of Globalization

Globalized trade is nothing new. Societies in ancient Greece and Rome traded with other societies in Africa, the Middle East, India, and China. Trade expanded further during the Islamic Golden Age and after the rise of the Mongol Empire. The establishment of colonial empires after the voyages of discovery by European countries meant that trade was going on all over the world. In the nineteenth century, the Industrial Revolution led to even more trade of ever-increasing amounts of goods. However, the advance of technology, especially communications, after World War II and the Cold War triggered the explosive acceleration in the process occurring today.

One way to look at the similarities and differences that exist among the economies of different nations is to compare their standards of living. The statistic most commonly used to do this is the domestic process per capita. This is the gross domestic product, or GDP, of a country divided by its population. The table below compares the top 11 countries with the bottom 11 out of the 228 countries listed in the CIA World Factbook.

Rank Country GDP - per capita
(PPP)
1 Qatar $102,100
2 Liechtenstein $89,400
3 Macau $88,700
4 Bermuda $86,000
5 Monaco $85,500
6 Luxembourg $77,900
7 Singapore $62,400
8 Jersey $57,000
9 Norway $55,400
10 Falkland Islands (Islas Malvinas) $55,400
11 Switzerland $54,800
218 Guinea $1,100
219 Tokelau $1,000
220 Madagascar $1,000
221 Malawi $900
222 Niger $800
223 Liberia $700
224 Central African Republic $700
225 Burundi $600
226 Somalia $600
227 Zimbabwe $600
228 Congo, Democratic Republic of the $400
Table 18.1 Gross Domestic Product Per Capita Not every country is benefitting from globalization. The GDP per capita of the poorest country is 255 times less than that of the wealthiest country. (Table courtesy of the CIA, World Factbook 2014)

There are benefits and drawbacks to globalization. Some of the benefits include the exponentially accelerated progress of development, the creation of international awareness and empowerment, and the potential for increased wealth (Abedian 2002). However, experience has shown that countries can also be weakened by globalization. Some critics of globalization worry about the growing influence of enormous international financial and industrial corporations that benefit the most from free trade and unrestricted markets. They fear these corporations can use their vast wealth and resources to control governments to act in their interest rather than that of the local population (Bakan 2004). Indeed, when looking at the countries at the bottom of the list above, we are looking at places where the primary benefactors of mineral exploitation are major corporations and a few key political figures.

Other critics oppose globalization for what they see as negative impacts on the environment and local economies. Rapid industrialization, often a key component of globalization, can lead to widespread economic damage due to the lack of regulatory environment (Speth 2003). Further, as there are often no social institutions in place to protect workers in countries where jobs are scarce, some critics state that globalization leads to weak labor movements (Boswell and Stevis 1997). Finally, critics are concerned that wealthy countries can force economically weaker nations to open their markets while protecting their own local products from competition (Wallerstein 1974). This can be particularly true of agricultural products, which are often one of the main exports of poor and developing countries (Koroma 2007). In a 2007 article for the United Nations, Koroma discusses the difficulties faced by “least developed countries” (LDCs) that seek to participate in globalization efforts. These countries typically lack the infrastructure to be flexible and nimble in their production and trade, and therefore are vulnerable to everything from unfavorable weather conditions to international price volatility. In short, rather than offering them more opportunities, the increased competition and fast pace of a globalized market can make it more challenging than ever for LDCs to move forward (Koroma 2007).

The increasing use of outsourcing of manufacturing and service-industry jobs to developing countries has caused increased unemployment in some developed countries. Countries that do not develop new jobs to replace those that move, and train their labor force to do them, will find support for globalization weakening.

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