This paper attempts to make sense of globalisation from a social and business perspective. Initially I will talk briefly about globalisation within our community and the different stand points those communities and individuals have taken; for and against globalisation. I will then talk about the multinational companies that have made the phenomenon of globalisation possible and these companies various impacts on societies and local communities around the world.
The topic is further analysed by using multinational food retailing companies in Latin America as a case study. Displayed to the reader through this case will be a clear indication of how local communities and in particular their farmers are affected by globalisation and multinational companies. There are many different views on globalisation; and those against it oppose many different aspects of it.
One of the countless reasons why there are anti-globalisation activists is due to the following: Multinational food retailing companies, the backbone of what is known as ‘globalisation’ within the supermarket industry, have in many cases entered small farming communities around the globe and destroyed a way of life for many of the farmers and labourers around them. Within Latin America these farmers have been forced to flee their homes to find refuge within the slums of the urban sprawls within their cities or even to cross borders into the USA.
Introduction to Globalisation Definition: Globalisation can be defined as ‘ the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa’ (Giddens 1990). It has also been described as ‘ process which embodies a transformation in the spatial organisation of social relations and transactions – assessed in terms of their extensity, intensity, velocity and impact – generating transcontinental or inter-regional flows and networks of activity’. (Held, et al 1999)
In relation to Latin America (the major area of discussion of this paper) globalisation can be defined as a practice or system that has affected several of the continents most persistent problems. Such problems would be the diverse extent of economic exploitation and social disparity that has branded Latin America ever since it’s European colonisation in the sixteenth century. (Harris & Halebsky 1995) Pro-globalisation: Free trade fosters prosperity and has an extremely important characteristic that affects our way of life. This characteristic is actually it’s tendency to be able to prevent war.
Extensive research has shown that trade promotes peace both directly, by reducing the danger of military divergence, and indirectly, by promoting prosperity and democracy (Weede 2004). Globalisation and free trade in the 20th century and beyond can be compared with the 19th Century expansion of empires (like the British Empire). These empires built an infrastructure in developing countries; railways, ports and beautifully constructed colonial buildings were just some of the benefits these developing countries could take advantage of.
Even though these commodities weren’t built for the benefit of the developing country (they were built for British trade) they still ultimately increased these countries abilities to trade and to become technologically independent. In the 20th Century infrastructure, technology, health and education systems implemented by the world powers, in developing and developed countries, has improved the overall quality of life for people worldwide, this does not include Africa. The average GDP for all countries except Africa has gone up; however the downside is; the difference between the rich and poor countries has also increased.
The reason for this is that the countries introducing themselves to the developing countries are actually gaining a much more significant benefit. Anti-globalisation: This term is more commonly attributed to the political standpoint of certain people, groups and organisations that are in opposition to certain facets of globalisation. Those in resistance often oppose large multi-national company’s dominance of global trade agreements and trade-governing bodies like WTO (the World Trade Organisation) (Graeber 2002).
Otherwise known as a social movement, anti-globalisation represents its participants in their opposition to large corporations who endeavour to attain and ‘have’ attained political power. Political power can be put into effect via international trade agreements, anti globalisation activists scrutinize these agreements, stating that they quite often undermine ‘the environment, labour rights, national sovereignty, the third world, and other various aspects of our everyday lives as human beings’ (Graeber 2002).
It is common knowledge that globalisation and free trade can affect developing countries negatively, however, the worlds most developed countries and the people who live within them are also affected negatively. Globalisation forces job opportunities from these developed countries to other countries around the world and low skilled workers in developed countries lose their jobs. This increases the difference between the rich populace and poorer populace in that country. The following quote, from the United Nations, backs this statement up and shows us why there are anti-globalisation activists.
‘The richest fifth of the world have 80% of the world’s income and the poorest fifth have 1%; this gap has doubled between 1960 and 2000’ (United Nations 1999) largely due to the impacts of globalisation. As displayed above, multi-national corporations play a substantial role within the theory and practice of globalisation, these corporations are powerful by nature and currently account for over 33 per cent of world output, and 66 per cent of world trade (Gray 1999). These organisations even though considered to be global companies are still heavily ‘nationally embedded’ in terms of their business activity (Hirst and Thompson 1996).
Despite this; multinational corporations still have considerable economic and cultural power. The next section of this paper will talk about these companies, their branding and how they affect communities around the world. Globalisation & Multinational Companies Social Impact (How do they impact our local communities? ) Branding: The main driving force for the growth of multi-national companies and the globalisation of their impact is in their brand (Klein 2001). In the mid-1980s a management theorists came up with a seemingly harmless idea that successful corporations must primarily produce brands, as opposed to products.
This idea led to the exorbitant expansion of wealth and cultural influence we see in multinational companies today and over the past fifteen years (Klein 2001). ‘Brand builders are the new primary producers in our so-called knowledge economy’ (Klein 2001). Modern multinational companies have used a strait to the point yet brutally honest approach to branding over the past fifteen years. This approach is that companies should not disburse their limited capital on factories that will require physical maintenance, on equipment that will decay or on workers who will undoubtedly age and perish.
As an alternative, they should focus that capital in the processes used to build their brands (Smith & Smith 2002). Multinationals: Multinational corporations are in actuality weak and vague organisations that generally display the corrosion of everyday values that afflict practically all late contemporary social institutions (Gray 1999). Diverse communities around the world are impacted and exploited by these multinational companies. They continually create or contract business in countries where they can profit from cheaper wages and assets.
As discussed earlier this ‘can’ mean added wealth and infrastructure for that community. However, it quite often means increased levels of unemployment in the city/country where the industry was located beforehand. Not to mention that the wages payed and work environment in the communities where the operations are implemented are usually relatively poor (Smith & Smith 2002). Below are a few examples that articulate this situation perfectly: * ‘The numbers of people living on less than $2 per day has risen by almost 50% since 1980, to 2. 8 billion-almost half the world’s population.
And this is precisely the period that has been most heavily liberalized’ (World Bank 2000). * ‘The world’s poorest countries’ share of world trade has declined by more than 40 per cent since 1980 to a mere 0. 4 per cent’ (UNCTAD 1999). This has been precisely the period in which the majority of multinational companies have grown exponentially, and is obviously a large factor resulting from their growth. Multinationals apart from affecting whole economic systems of countries and communities also attempt to create new markets within these communities.
They search for new markets which have not yet been exploited in order to increase sales; it is typically carried out by creating new desires among target groups. The easiest target market for multinational companies to create new desires for is the child and youth market. Prized not only for the influence they have over adult spending but also for their own escalating spending power, the youth of today are one of the most profitable and influential markets (Kenway and Bullen 2001). Despite all this negative hype about multinational companies; they ‘have’ played a very significant role in the growth of globalisation.
Around the world individuals and communities are linked much closer to each other and information and money flow quicker than ever before. Globalisation and it’s creation of multinationals has resulted in making goods and services in one part of the world increasingly available in ‘all’ parts of the world. International travel and communication is also much more frequent. In all globalisation has made life easier for those who can actually afford the luxuries of travel and international business. (Sourcewatch 2006).