What is Globalization? Who are the Biggest Winners and Losers in a Globalized World?
Although globalisation is a common phenomenon in the world, several people had done many researches for it. Based on these researches, this essay will explore different definitions of globalisation, the biggest winners and losers in globalisation and explain why they are the biggest winners and losers.
In practice, there are many different opinions about the globalisation. As Giddens (2001, pp.137-140) stated there are three perspectives on globalisation: sceptics, hyperglobalizers and transformationalists. Transformationalists think that globalisation influences various of different sides of people’s life other than changing the world circumstance, while sceptics focus on the changing in the world and hyperglobalizers argue that globalisation is just for economics and can forecast the ending point (Giddens, 2001, pp.137-140). Compared with these, there are also several definitions about globalisation.
Ohmae (1990) pointed out that “globalization means the onset of the borderless world.” Apparently, this definition is not complicated. It noted the basic points about globalisation, but it ignored many details. However, a better definition including different areas should be “a process of increasing economic, political and cultural integration across the world” (Friends of the Earth). Alternatively, a more detailed definition would reflect the advantages of globalisation. Larsson (2001, p.9) observed that:
Globalization is the process of world shrinkage, of distances getting shorter, things moving closer. It pertains to the increasing ease with which somebody on one side of the world can interact, to mutual benefit, with somebody on the other side of the world.
This essay suggests that the third one should be the most suitable definition. Although it is not useful or acceptable for everyone, it is easier for most people to understand the concept of globalisation. It also mentions the positive aspect of the process of globalisation.
There is no doubt that someone benefits form globalisation and someone loses. During the following sections, this essay will focus on the biggest winners and losers in globalisation. However it is difficult to define who are winners or losers as globalisation has both sides for each group.
Based on analysis, the biggest winners in the process of globalisation are multinational companies. There are three main reasons. Firstly, globalisation reduces tariffs, which means the multination companies can import the goods at a lower price. During the period of 1986 until 2006, the Gross World Product increased by approximately 12 percent because of lower tariffs (Fisher, 2006). Multinational companies benefit more than others as their subsidiaries are in different countries. Low tariffs can decrease their costs. Secondly, multinational companies have more competitive advantages than others. With the globalisation, multinational companies can put their manufacturing factories everywhere in the world. A well-known example is Apple. Its products are designed in California and assembled in other countries like Republic of Ireland, China and Brazil. It has 17 final assembly facilities and more than 200 supplies (Apple, 2013). In this way, Apple can reduce its labour and material costs. Many multinational companies choose this way to extend their business during globalisation.
In addition, multinational companies benefit more as they have more funds than local companies. Therefore, multinational companies have the right to set the price and enter the local market easier and influence it much more than before. For instance, investment banks, like Morgan Stanley, have the opportunities to invest in the world rather than focusing on the capital market in US after globalisation, stated by Jianyong Yue (2012). Moreover, they can also merge and acquire local companies to get their technology, products or brands. For