read the online synopsis, “What is Globalization?” Throughout the synopsis, click on each of the highlighted blue words to read into further depth about these key terms and topics:http://www.globalization101.org/what-is-globalization/What is globalization?Globalization is a process of interaction and integration among people of all different backgrounds. It is driven by international trade, investment and aided by information technology. Follow the links and read about these forces: International Trade: http://www.globalization101.org/category/issues-in-depth/trade/International Trade: http://www.worldbank.org/en/topic/trade/overview#3Investment: http://www.globalization101.org/category/issues-in-depth/investment/Effect of Globalization on International Investments: http://www.investopedia.com/ask/answers/022615/what-effect-has-globalization-had-international-investments.aspInformation Technology: http://www.globalization101.org/category/issues-in-depth/technology/NOTE: if the Globalization101.org website is not working, you can access an archived version of the site here: https://web.archive.org/web/20160830223212/http:/www.globalization101.org/ Globalization is deeply controversial.Three primary theories for how globalization was developed are provided. They are:https://web.archive.org/web/20130529201438/http://sociology.emory.edu:80/faculty/globalization/theories01.htmlWorld Polity TheoryWorld Culture TheoryDebates over the meaning and merits of globalization: Kharas, H, & McArthur, J. (2016, October 5). Can globalization be rescued from itself? Brookings. Retrieved from https://www.brookings.edu/research/can-globalization-be-rescued-from-itself/ Collins, M. (2015, May 6). The pros and cons of globalization. Forbes. Retrieved from https://www.forbes.com/sites/mikecollins/2015/05/06/the-pros-and-cons-of-globalization/#7abebc55ccceCultural globalization. (n.d.). InternationalRelations.org. Retrieved from http://internationalrelations.org/cultural-globalization/Brown, S. Globalization Theories. Khan Academy. Retrieved from: https://www.khanacademy.org/test-prep/mcat/society-and-culture/demographics/v/globalization-theoriesIntroduction to Sociology. (2016, April 4). Globalization and culture [Video file].Explainity Channel. (2013, Jul 11). Globalization Easily Explained. [Video File]Part 1Various theories on globalization exist. Choose two from the readings and describe each—one you agree with and one you disagree with—briefly describe each theory, and explain your reasons for agreement and disagreement.Be sure to cite any resources that you use in APA format. Direct quotes should not be used in discussions.Part 2For this Learning Journal, you will choose a case study from the four available in the following resource:United Nations Association. (2014). The Global Citizen Student Reader: Globalization. Retrieved from: www.unausa.org. The cases are as follows:1) Mexican Government Advises Migrants (page 9)2) Liberian Plantation Workers Allege Poor Conditions (page 10)3) Charities Hijacked by Terrorism? (page 11)4) Call Center Jobs, Once Offshored to India, Now Offshored from India (page 12)After you choose and carefully read through the case study, answer the following questions:How did globalization change some people’s lives? How did the changes lead to a conflict?What was the proposed solution(s) to the conflict? How satisfactory was the solution to each party?Can you imagine a way to avoid or resolve similar conflicts in the future, even if rapid globalization continues?Over the years, in what ways has your region become more globalized?How can you see the results of this today? If you cannot see the results of this today, why?The journal entry should be about a page in length. If applicable, be sure to cite any resources you use to support your learning journal.
read the online synopsis, “What is Globalization?” Throughout the synopsis, click on each of the highlighted blue words to read into further depth about these key terms and topics: http://www.globaliz
[ The Economics of Globalization Series ] THE GLOBAL CITIZEN Issue 2: Globalization THE GLOBAL CITIZEN Student Reader: Globalization Copyright © 2014 by UNA-Education A Program of the United Nations Association of the United States of America Written and edited by Daniel Pier Kristin Cox Mehling Rebecca Zerzan Tara Friedman, PwC Amy Auguston, United Nations Association Troy Wolfe, United Nations Association United Nations simulations written by Rebecca Corcoran, United Nations Association of Greater Boston Design Rachel da Silva Special Thanks to Daniel Laender, United Nations Foundation Eileen Buckley, PwC Special Thanks to PwC The United Nations Association of the United States of America 801 Second Avenue New York, NY 10017 Phone: (212) 697-3315 Fax: (212) 697-3316 www.unausa.org Letter from the publisher Globalization: The Accelerating Movement of People, Capital, and Ideas IN THIS ISSUE 1 3 6 10 15 How the World Connects The World Inside Your Shirt Finance Snapshots Case Studies from Around the World Feature Article The Rise of the Global Justice Movement Globalization A Brief History 16 Facts and Figures Globalization, Poverty and Inequality: The “Bottom Line” The Global Citizen LETTER FROM THE PUBLISHER Globalization: The Accelerating Movement of People, Capital, and Ideas Use with Lesson 2.02 of the UNA-Education Economics of Globalization Curriculum Dear Readers, Imagine a teenager in Zurich, Switzerland, choosing a t-shir t at a store. Does she realize that the cotton for that shir t was grown in the United States, the t-shir t was sewn in China, from where it made its way to Zurich, and that af ter she discards it, the t-shir t may make its way to Italy and Senegal? This kind of world travel is getting more and more common, and not just for t-shirts. This increase in the movement of products—and people, money, and ideas— around the world is called globalization . Globalization is not new; it has been happening throughout human histor y. But today many obser vers believe the pace of globalization is accelerating. Rapid improvement in technologies used for communication and transportation has made this acceleration possible, and countries’ policies have intensified the effect. People move across borders for many reasons. Some flee to escape violence or famine. Some migrate in search of a new job or better opportunities. Some vacation in a foreign country. Some choose to work temporarily or attend school outside of their own country. Some even call more than one country “home.” In today ’s era of globalization, we interact with people from other countries more often than ever before in history. Wealth in the form of money or proper t y is called capital , and globalization has meant that capital investments now move across borders more easily than ever before. Because of modern technology, a company in one country can sell its products to people in another countr y half way around the world. This international movement of goods and ser vices has profoundly af fected people’s lives. Companies and individuals can invest in commodities, currencies, and enterprises no matter where they are located. Multinational corporations (MNCs) can build factories and stores outside their countr y of origin and have employees and facilities all over the world. They of ten consider not only whether their actions will make them more money, but how those actions affect people and the environment. Ideas cross borders in the era of globalization as well. Social theories, cultural beliefs, and religious and political ideologies spread rapidly around the world due to improvements in information and communication technolo – gies (IC Ts). Whether information takes the form of the latest Holly wood or Bolly wood f ilm, an academic work, or a political controversy, it becomes available around the world almost instantly to those with access to mass media and communication technologies. Access to information can change the way people live, work, and think. However, people without access to tools like telephones and computers, and those without basic skills like the abilit y to read, may be lef t behind. Some argue that the path of globalization should be changed to benef it more people. In this unit, you will explore how and why globalization is happening, who is af fected, and the debates about how people, companies, govern – ments, and global institutions should manage globalization. We hope you enjoy it. Sincerely, The UNA-Education Te a m 1 The Economics of Globalization | Globalization 2 The Global Citizen HOW THE WORLD CONNECTS The World Inside Your Shirt Use with Lesson 2.02 of the UNA-Education Economics of Globalization Curriculum T-shirts don’t come from just one factory in one country; they are created from materials and with labor from all over the world and travel from one country to another to another in the process. Each of these steps has a story, and each story tells us something about the interconnectedness of the world. Cotton is grown by farmers in the American town of Lubbock, Texas. Texas cotton is produced with the world’s most advanced cotton-growing technolog y. Chemical fer tilizers and pesticides cause the cotton to grow at astonishing rates. The cotton is machine-picked, allowing just a handful of laborers to har vest massive amounts of cotton in a shor t time. The US government gives money (called subsidies) to Texas cotton-growers, which helps Texans sell their cotton at a ver y low price. Some developing countries including Senegal and Mali also grow cotton. Labor is plentiful in these countries; workers spend hours in the hot sun, har vesting cotton and removing insects by hand. But farmers in these African countries do not receive government subsidies and cannot afford high-tech machiner y or pesticides, so they cannot sell their cotton at competitively low prices in international markets. From Texas, the cotton is shipped to a textile factory in Shanghai, China, where it is made into a t-shirt . Young women in a textile factor y work long hours weaving raw cotton into cloth. With these factor y jobs, textile workers—who of ten migrate from poor rural communities — can take care of themselves and send much-needed money to their families. And because these workers are paid much less than those in America, Britain or Germany, Chinese companies can sell t-shir ts at a ver y low price. Many Asian textile factories have been accused of running “sweatshops,” where employ ees must work long hours in unsafe conditions for ver y little pay. Today, many multinational corporations (MNCs) that make products in developing countries have codes of conduct requiring that employees be treated humanely and paid fairly. Some consumers in developed countries have star ted to play a bigger role in enforcing these standards by refusing to buy products that are manufactured irresponsibly. Still, critics argue that poor labor standards remain all too common, especially in the developing world, though cases of abuse have also been revealed in richer countries. 1 2 3 1 The Economics of Globalization | Globalization During the 1990s and 2000s, many textile factories in places like Germany and the United States closed down because they could not compete with the low prices of fered by companies in places like China, India, and Mexico. When each factor y closed down, hundreds or thousands of workers lost their jobs. And af ter working at these factories for many years, many workers did not have the skills to find new jobs. However, some in developed countr y textile industries are hopeful that a new trend is taking hold. Some companies are moving production back to developed countr y facto- ries filled with ef ficient new technolog y. Fewer workers are needed, so employment levels are not expected to return any where near their 1990 levels, but the trend has leveled of f since 2009. 3 4 The finished shirts are shipped to a store in Zurich, Switzerland. Here, the t-shir t sells for about 40% less than the t-shir ts from Germany sold in the same store. Consumers in the store are likely to consider price and quality as they choose among the t-shir ts available. Some may also consider the t-shir ts’ origin and travels, as environmental and labor rights advocates of ten urge consumers to be aware of the impact of a globalized supply chain , or the series of com- panies that produce, handle, and/or distribute a specific produc t. When the shir t is out of fashion or no longer needed, it is not simply discarded. Environmental groups and charities encourage consumers to donate their un – wanted clothes. When these shir ts are donated to charitable organizations, they are sold to textile recycling centers. Charities make money from this transaction and use the earnings to suppor t local causes, such as providing shelter to the poor. 4 Our t-shirt is donated to a Swiss charity, which sells the shirt to a recycling center in Venice, Italy. The recycling center sor ts clothes by quality. Clothes in bad condition are sold as furniture padding or cleaning rags. Clothes in good condition are expor ted to countries in South America, Eastern Eu – rope, and Africa. Clothes in the best condition are sold to local second-hand clothing stores. Recycling textiles benefits the environment because fewer natural resources are spent creating new clothes, and because unwanted garments are used rather than accumulating in landfills. This par tic – ular recycling company benefits the local community, too. It makes an effor t to hire disadvantaged people, such as the physically disabled and people affected by AIDS. 2222 4 3 5 Second-hand clothes are impor ted at ver y low prices, so Senegalese traders can af ford to buy them in great quantities. 6,000 to 8,000 tons of second-hand clothes are impor ted to Senegal ever y year. These traders then sell second-hand clothes to local market vendors, of ten increasing the price by several hundred percent. Even with such a large price increase, the used t-shir ts are still far cheaper than new clothes. Local market vendors purchase used clothes in bulk. They take these clothes to the local bazaar, where there are many people selling t-shir ts. Because there is so much competi- tion, consumers can negotiate which t-shir ts are wor th more and which are wor th less. Many economists praise this arrangement — the direct negotiations between buyers and sellers — as a free market in its purest form. 5 The Global Citizen 5 In Senegal, thousands of jobs have been cre – ated by the second-hand clothing industr y. Used clothes must be cleaned, tailored and traded, all of which create jobs for locals. But Senegal’s own textile industr y — a focus of the countr y ’s economic development strategy — has been in a state of decline. Second-hand clothes have reduced demand for locally produced clothes. Thousands of jobs at these local clothing companies have been lost. Our t-shir t’s journey makes it clear that a glo bal- ized economy has far-reaching effects. Next time you put on your favorite t-shir t — or shoes or hat or pants — ask yourself where it has been and how many people were affected along the way. The t-shirt is exported to a second-hand clothes trader in Dakar, Senegal. GLOBALIZATION SNAPSHOTS that one third of the decline is due to greater enforcement, with the rest owing to a strug- gling US economy; believing that fewer jobs are available, fewer immigrants are enticed to cross illegally. It seems that while arrest and danger are deterrents, the prospect of a better life most determines who will attempt the crossing. 6 “If you cross the desert, try to walk during hours when the heat is not so intense,” advised a pamphlet released by the Mexican government in 2005. The pamphlet warned Mexicans of the dangers of illegally immigrating to the United States. Crit- ics in the US said the pamphlet was an endorse- ment of illegal immigration. It discouraged Mex- icans from entering the US illegally, but offered tips on how to penetrate the border safely if they must and explained their rights once in the US. Mexico had reason to encourage illegal immi- gration, critics argued. Mexicans working in the US send home billions of dollars in remittanc- es —money sent to their families in Mexico. In 2004, Mexico received $15 billion in remittances, the country’s second largest source of foreign revenue (by 2012, it was $22 billion). 1 Mexico insisted that the pamphlet was neces- sary. “Just last year, over 300 Mexicans died in their attempt to enter the United States, the vast majority if not all of them in search of a job,” said Gerónimo Gutiérrez, a Mexican official. “The Mexican government obviously has an obligation to take all actions possible in order to avoid the loss of life.” With increased border security, the danger is likely even greater today. However, border crossings are down, with 356,000 immigrants detained in 2012, compared to 1.5 million in 1999. The Council on Foreign Relations estimates Mexican Government Advises Migrants THE AMERICAS DISPLACED PERSONS IN CENTRAL AMERICA – UN PHOTO 1 Diverging Markets Case Studies from Around the World Use with Lesson 2.04 in the UNA-Education Economics of Globalization Curriculum Twelve adults and 23 children from Liberia sued the Firestone tire company in 2005, claiming that Firestone was forcing them to work in a “gulag of misery.” The plaintiffs, who work on Firestone’s rubber plantations, said the com- pany was using child labor, depriving workers of sanitary living conditions, and dumping toxic chemicals into a river used by locals to drink, bathe, and fish. Firestone officials said the lawsuit was unfound- ed and that their corporation has been extreme- ly generous. They said the company operates health clinics for its workers and runs schools for workers’ children. Furthermore, during Liberia’s bloody civil war, Firestone offered safe haven to 50,000 people. The accusations of exploitation were false, Firestone officials com- plained. But workers responded that only lucky children attended school. Workers’ daily quotas—the number of trees that must be tapped for rubber every day—were impossible to reach without the help of children in the fields. In a country with an 85 percent unemployment rate, Firestone offers one of the few opportuni- ties for citizens to earn a decent living, company officials said. But workers argued that it was pre- cisely this lack of alternatives that was enabling Firestone to exploit its employees. “Workers cannot freely oppose the company and must continue to work without appealing anything,” the lawsuit said. In 2011, a US circuit appeals court ruled that, while the workers had the right to sue Firestone in a US court, 2 the plaintiffs had not proven that Firestone had violated international law. 3 Firestone states that it continues to employ more than 6,000 Liberians. Liberian Plantation Workers Allege Poor Conditions AFRICA 2 Reuters3 The New York Times 7 YOUTH FARMING IN CENTRAL LIBERIA – UN PHOTO BOY AT RUBBISH DUMP IN MONROVIA, LIBERIA – UN PHOTO The same year Russia passed its strict charity law, Chechen police killed a rebel fighter in a PIN building. The rebel had been using the building as a hideout and had filled the basement with weapons. But PIN officials say that operating in areas of political conflict make it impossible to be completely separate from controversy. The Chechen PIN office employed 180 local workers. In a small community, where everyone’s lives are touched by conflict, it is only natural that local employees have connections to rebel fighters, officials say. The rebel killed at the PIN building had been the brother of an employee. The local PIN office had distributed food to 30,000 people per month, and had run 10 schools for Chechen refugees. But by the end of 2005, the office was forced to shut down. People In Need (PIN) is a charity that aids refu- gees in some of the most dangerous places in the world. In 2005, PIN lost its ability to operate in one of these dangerous areas, Chechnya, where separatist rebels had been waging war with Russian forces for decades. PIN wasn’t forced out because of the terrible violence, but because the Russian government suspected PIN of aiding rebel terrorists. In 2005, the Russian parliament passed strict laws making it very difficult for charities to oper- ate in the country. The laws require foreign and domestic nonprofit organizations to register with the government and to prove that their work and spending do not undermine Russia’s national, social, or cultural interests. Many activists are appalled at the scope of control the government exerts over charities. They say that charities must now struggle to comply with ambiguous rules, and that they can be shut down for any reason. Supporters say the laws help the government shut down charities that support terrorism. It can be hard to imagine that charities, which aid the poor and raise money for noble causes, could play a role in terrorism. But charities were once the world’s largest source of terrorist fund- ing. For years, charities in Saudi Arabia were the most important source of funding for al-Qaeda, an infamous terrorist group in the Middle East. Today terrorist groups get most of their money from drug trafficking, 4 but charities still provide a large source of their revenue. Governments around the world investigate char- ities’ finances — where donations come from, where they are sent to, how they are invested. Many charities have been shut down for alleged ties to terrorism. But determining which charities are good and which secretly finance terrorism is extremely difficult. Governments have been criticized for carelessly closing down good char- ities and for not cracking down on bad charities quickly enough. Charities Hijacked by Terrorism? EUROPE 4 Middle East Forum AID PROVISIONS FOR REFUGEES – UN PHOTO 8 So many Western companies opened call centers in India that, in 2010, American television network NBC created a weekly show about the phenom- enon. Technology made it possible for Indian operators to cheaply and efficiently fix computer problems for American clients and sell insurance to customers in Britain, all over the phone. In the early 2000s, Western companies began offshoring call centers; they eliminated local jobs and instead hired people in India. The companies could benefit by hiring English-speaking Indians for less than they would pay Americans or Brits. This also benefits workers in India because call center jobs provide a relatively high income. But workers in the US and Britain got upset because they believed offshoring was taking vital jobs away from citizens in their countries. Also, callers often recognize operators’ Indian accent. This can lead to rude, or racist, reactions by West- ern customers. “Some people don’t want to talk to Indians,” said an Indian operator. “I’ve had peo- ple ask me if I am sitting on an elephant… Others say they don’t want to talk to terrorists.” Companies began sending their Indian operators to “accent neutralization schools” and Western pop-culture classes. Operators learned to speak with American accents and watched Oprah. Soon, though, American companies began mov- ing call centers to the Philippines, where wages are slightly higher than in India, but people learn English in school at a younger age and watch more American television. In 2011, the Philip- pines surpassed India with 400,000 call center employees; 5 by late 2012, that number was esti- mated at 600,000, 6 with many of the jobs having been moved from India. In just a decade, thanks to technology and global competition, many Indian workers felt both the highs and lows of globalization. ASIA AND THE MIDDLE EAST Call Center Jobs, Once Offshored to India, Now Offshored from India UN PHOTO AN INDIAN CALL CENTER 9 5 The New York Times6 Politicus USA THE RISE OF THE GLOBAL JUSTICE MOVEMENT Use with Lesson 2.05 in the UNA-Education Economics of Globalization Curriculum In 1999, laidback Seattle, Washington, was best known for coffee houses, its grunge rock scene, lush evergreen trees, and cool, rainy weather. But its relaxed reputation changed during that wet autumn. From November 29 to December 3, 1999, Seattle felt more like a far-away war zone than like the progres- sive, easy-going city that many Seattleites were used to. For five days, Seattle became a flashpoint in the struggle to control the phenomenon of globalization. Tens of thousands of men, women and children took to the streets. There were workshops and teach-ins held throughout the city. Many wore colorful costumes or masks. Some performed dances, sang songs, or led chants. They carried lively signs and chanted slogans like “Whose world? Our world!” and “Don’t trade our future!” These farmers, workers, students, activists, and concerned citizens from every walk of life had at least one thing in common: a concern that globalization had taken the wrong path and that the World Trade Orga- nization (WTO) was partly to blame. FEATURED ARTICLE UN PHOTO DANIEL SHEEHAN, GETTY IMAGES The Global Citizen Meanwhile, inside Seattle’s convention center, the nations of the world were attempting to negotiate new rules and structures for trade among nations. The protests and other issues led the Seattle meet- ings of the WTO to end in failure, but two years later in Doha, Qatar, the 143 (now 160) member nations agreed to the Doha Development Agenda, an am- bitious plan designed to ease trade among nations, make globalization more inclusive, and help the world’s poor. Opponents argue that those shaping the future of globalization, including the WTO, do not go far enough on the last two points. The ‘Battle in Seattle’ helped the backlash against globalization burst on to the world stage, grabbing headlines around the globe. Similar scenes played out in places far and wide over the following years. In response to the World Economic Forum (WEF)’s annual meetings in Davos, Switzerland, to the privat- ization of Bolivia’s water system, to meetings of the World Bank and International Monetary Fund (IMF), and more, people staged acts of civil disobedience, protest, and even violence in opposition to globaliza- tion. What prompted this response? As commerce be- came more global, many different groups and orga- nizations wanted a say in determining the rules of trade. Corporations wanted rules that would make it possible for them to do business all over the world. Governments wanted rules that would allow them to protect and grow their economies. Citizens wanted rules that would help create jobs but also protect the environment, their cultures, and their rights as workers. These groups continue to make their voices heard as heated debates about the path of global- ization continue today. There are a wide variety of perspectives represent- ed among the so-called “anti-globalization” activists. In fact, many say they are not against globalization at all, but feel that global trade must be fairer and more inclusive of all people. They often prefer the term “alter-globalization” to “anti-globalization” and many identify themselves as part of the “global jus- tice movement”. The movement is extremely diverse. Its members come from both developing and developed countries. They are farmers, activists, workers, anarchists, stu- dents, and professionals, both young and old. What they have in common is a concern about the impact of globalization on their own lives and those of people around the world. Many fear that globalization as it is currently practiced gives multinational corporations more power and influence, allowing them to behave unethically. Some worry about the challenges associ- ated with international competition, such as job losses and offshoring. Others focus their attention on the policies of international trade and financial institutions such as the WTO, the IMF, the WEF, and the World Bank. The shape of the conflict has changed since the volatile days in Seattle. At a recent meeting of the WTO in Bali, Indonesia, the Bali Daily documented the presence of about 750 protesters — significant, but a far cry from the Seattle throngs. Much of the global justice movement’s energy now goes into less sensa- tional activities such as the World Social Forum, an annual meeting of groups that promote alternatives to the trade policies embraced by the WEF and WTO. What in the World is Wrong with Globalization? “We are told that trade can provide a ladder to a bet- ter life and deliver us from poverty and despair… Sad- ly, the reality of the international trading system today does not match the rhetoric,” said former UN Secre- tary-General Kofi Annan in a speech to the member states at the 2003 ministerial meeting of the WTO. 7 Indeed, during the current wave of globalization that began around 1980, the world economy has grown rapidly and poverty rates have been cut drastically. The global justice movement shares Annan’s concern, however, that this growth does not deliver benefits to all of the world’s people. Here are just a few of the many issues related to globalization about which the movement has sought to raise awareness: THE ENVIRONMENT As international trade increases, environmental con- cerns multiply. When trade is local and goods travel only a short distance, environmental costs are low. But when trade is international and goods must travel across the globe, more energy is required. This means 11 7 United Nations The Economics of Globalization | Globalization more fossil fuels are burned and more carbon diox- ide and other pollutants are released into the atmo- sphere. Most scientists believe that burning fossil fuels contributes to global climate change, such as a gradual rise in the temperatures on earth, and poses a danger to the planet’s health. Growing economies also create more industrial waste and air pollution. In addition, some activists worry that globalization enables corporations to act irresponsibly and pollute the environment or endanger certain species of animals, particularly when they extract resources from developing countries whose governments have limited ability to enforce environmental laws and standards. The policies of the international economic organiza- tions are also a source of concern. A number of the protesters in Seattle dressed up as sea turtles to promote awareness of a WTO ruling that they felt endangered the animals. This controversial ruling said that countries may not restrict the sale of a product based upon the method used to produce it. In other words, even if a product is manufactured in another country in a way that hurts marine animals, countries must allow it to be imported or face sanc- tions (penalties). Supporters of globalization argue that, while envi- ronmental harm does increase as developing coun- tries industrialize, or move to an economy based on industrial processes such as manufacturing rather than farming, the same countries eventually reduce their pollution levels as they begin to afford cleaner technologies. FAIR TRADE Although globalization has been a source of growth for many developing economies, there are still con- cerns that small companies and individuals in the developing world are being left out. One reason that some developing countries are at a disadvantage when it comes to global trade is that they often have commodity-based economies. Commodities are raw materials such as agricultural products, timber, and metals. Commodities are sold to more developed countries at very low prices. After the manufacturing process turns them into final goods such as a loaf of bread, furniture, or a piece of jewelry, they are sold at higher prices. Much of the profit goes to more developed countries where manufacturing takes place. Many activists focus on providing farmers in developing countries with fair prices for their coffee beans, cocoa, and other products. This practice is known as fair trade. 12 UN PHOTO The Global Citizen Both critics and supporters of free trade policies complain that the current system is not really free trade at all. They accuse wealthy countries in the North of hypocrisy. The North claims it is trying eliminate barriers to trade, but it maintains its own subsidies while asking poor countries to end theirs. Many developing countries choose to protect their industries using tariffs that keep imports out of their domestic markets and allow them to sell their goods locally. When these countries are forced to “liberal- ize” trade, these tariffs must be eliminated. Farmers and other businesses then face new competition from abroad. At the same time, farms and other firms in the European Union, the United States, and Japan still benefit from subsidies. This is in part because the governments of rich countries are in a stronger position during the negotiation process. Also, these rich nations are sometimes able to violate the WTO’s rules because they can afford the cost of any trade sanctions placed upon them. For example, the United States ignored a 2005 WTO ruling against its cotton subsidies despite the resulting sanctions. The issue of agricultural subsidies remains one of the primary concerns in world trade negotiations, unresolved by a 2013 agreement reached by all WTO members.WORKERS’ RIGHTS Many globalization protesters believe that the current system encourages corporations to keep wages low and even set up sweatshops—factories where work- ers are paid very little and work under dangerous con- ditions. These workers often cannot join unions and in some cases are exploited by their bosses, who make them work long hours without breaks and sometimes even physically or sexually abuse them. The 2013 c ol- lapse of a Bangladesh building housing five garment factories trained worldwide attention on this issue. After factory owners required workers to return to work despite evidence that the building was damaged, more than 1,000 workers were killed in the event. 8 When trade is global, corporations often choose to set up their businesses in countries where their labor costs are lowest. In developing countries, where wag- es are lowest, there are often few labor laws designed to protect workers. Even when such laws exist, some corporations can afford to ignore them because they are poorly enforced. Protesters point out that although many corporations insist they do not use sweatshops, they continue to contract out work to local companies that do use exploited labor. Actors who espouse globalization respond that even a sweatshop job is preferable to the alternatives available to many poor people, such as subsistence agriculture, and that increasing income will eventually allow workers in poor countries to push for better working conditions. DEMOCRACY AND GOVERNANCE The increasing connections among countries, com- panies, and individuals from all over the world lead to the question, “Who is in charge?” There is no world government to make rules on the international level, 8 The New York Times 13 The Economics of Globalization | Globalization so countries work together in treaty-based orga- nizations such as the United Nations (UN) to make international laws and agreements. However, most of the institutions that have been most instrumental in the expansion of economic globalization—the WTO, IMF, World Bank, and World Economic Forum, to name a few—are not democrat- ically elected. Moreover, many of the negotiations that take place in these organizations are not acces- sible to the public. Protesters often express concern about this arrangement because they believe it undermines democracy. For example, when the World Bank asked Bolivia to privatize its water system in 2000, the policy was not approved by Bolivia’s people. Bolivia’s government felt it had little choice other than to comply with the Bank because it risked losing valuable loans. Riots occurred as citizens sought to regain control over the policies in their country. The WTO is also accused of being undemocratic; crit- ics decry the fact that the WTO allows sanctions to be placed on countries whose laws are considered a barrier to trade. The WTO notes in response that all member countries must agree on WTO rules and that disputes are decided based on those rules. 9 While these are all serious issues, supporters of glo- balization believe they can be resolved as globaliza- tion moves forward. Moreover, they say, protesters aren’t focusing on the bottom line. As one business- man puts it, “Ask a few hundred million Indians and Chinese what it feels like to have a job and a real income and the protesters get way out-voted.” 14 9 World Trade Organization UN SECRETARY-GENERAL MEETS WTO DIRECTOR-GENERAL – UN PHOTO Many historians argue that globalization is not really new. For thousands of years, adventuresome people have journeyed from their native lands in search of exotic goods or a better life. But is globalization today different? Will it continue indefinitely into the future? 70,000 – 80,000 years ago: Homo sapiens, modern humans, first move out of Africa Ancient Globalization Around 200 BC: The Silk Road forms. The Silk Road was a trading route of interconnected pathways connecting China with Western Europe through a series of trading posts in what are now Afghanistan, Iran, and Southern Europe. Traders traveled by ship and caravan to buy and sell goods and helped to facilitate the movement of people and ideas as well. This exchange proved essential to the formation of many of history’s great civilizations, in places like China, Egypt, Persia, and Rome. 1500s – 1700s: During the age of exploration, traders traveled the globe in search of gold and spices. Begin- ning in the 1500s, the Atlantic slave trade brought mil- lions of Africans against their will to North and Central America to work as slaves. This had a dramatic effect on the world economy of the 1700s, which was char- acterized by “triangle trade.” Triangle trade was the pattern of cross-Atlantic trade in slaves and raw mate- rials. Africans were kidnapped, transported to North America, and sold into slavery. Then the raw materials the slaves harvested, like sugar, tobacco, and cotton, were sold in European markets. Finally, Europe would sell manufactured goods like textiles and rum back to Africa. Mid-1800s – 1914: Age of Imperialism, or colonialism, also contributed to globalization. European countries colonized North and South America, Africa, and much of Asia and the Middle East, taking political and eco- nomic control over these territories and their peoples. Colonizers exploited the natural resources of these lands as well as the labor of those who lived there. In the early 1900s, a currency agreement among Great Britain, the US, Germany, and France led to increased international trade. Movement of people, capital and goods began to rise dramatically and continued to increase until just before World War I. Modern Globalization: The First Wave 1500 1600 1700 1800 1900 1925 1950 1975 2000 Third Wave Around 1980 – today: This wave of globalization is characterized by a rapid advance in information and communication technologies (ICTs) as well as a marked change in countries’ policies. Many nations liberalized trade and investment to take advantage of the opportu- nities presented by the global economy. Some negotiat- ed free trade agreements, such as the North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico, and the South Asia Free Trade Agreement (SAFTA) among India, Pakistan, and five other South- Asian nations.1914 – 1945: During the interwar period (between the start of World War I and the end of World War II), countries called for self-sustainability and national autonomy, and a retreat from the global economy. The United States, in particular, turned to isolation- ism – political and economic withdrawal from the international realm – in an effort to avoid becoming involved in another war in Europe. Nations also devoloped protectionist policies, like tariffs, which were designed to shield domestic businesses by limit- ing the flow of goods from abroad. The Great Depres- sion took hold in the 1930s. This severe economic downturn contributed to isolationism as countries drew inward in an effort to handle the economic hardship, and international trade sharply declined. Second Wave 1945 – 1970s: World War II brought increased demand for weapons and agricultural products. When the war eneded, the economy was sound, and countires adopt- ed a more global outlook. Global flows of people and capital increased; global flows of goods skyrocketed. The UN system also paved the way for more globaliza- tion by creating organizations including the Internation- al Monetary Fund and the International Bank of Recon- struction and Development (IBRD). A Reversal Globalization: A Brief History U se with Lesson 2.07 in the UNA-Education Economics of Globalization Curriculum The Economics of Globalization | Globalization Globalization, Poverty, and Inequality: The “Bottom Line” Use with Lesson 2.07 in the UNA-Education Economics of Globalization Curriculum FACTS AND FIGURES Globalization and Poverty The World Bank defines poverty as living on less than US $2 per day, while people who live on less than US $1.25 per day are said to be living in ex- treme poverty. Because globalization accelerates the exchange of goods, services, and capital across borders, it can help economies grow. Economic growth often means new jobs and opportunities are created, which can provide people in developing countries with the means to escape poverty. Globalization provides new opportunities for many industries, firms, and individuals, but how does it affect development overall, es – pecially in poor countries? Development re – fers to improvements in the quality of human life, usually made by reducing poverty and therefore expanding the choices and oppor – tunities available to people. Many economists and development experts have committed themselves to understanding globalization’s “bottom line.” They want to know, is the world experiencing a net gain in development? Is globalization improving the lives of people everywhere? As illustrated in “The Rise of the Global Justice Movement,” many people are concerned that globalization’s benefits do not reach everyone. In contrast, a journalist for Forbes Magazine declared, “The numbers are in: The protesters and do-gooders are just plain wrong. It turns out globalization is good — and not just for the rich, but especially for the poor.” 10 To understand whether globalization leaves the world better off, experts often ask t wo questions: First, does globalization help reduce poverty? Second, does globalization make people’s incomes more equal or less equal? Indeed, in the past century, more people have escaped poverty than ever before in human history. Real (meaning adjusted for inflation) average income has more than quintupled since the early 1900s, even as population has increased from 1.6 billion to well over 7 billion people. 11 Most experts agree that a large portion of this improvement has happened as a result of modern economic globalization. There are two ways to calculate changes in poverty. The first way is to look at the total number of people living in poverty. 16 10 Forbes Magazine11 Worldometers The Global Citizen The table in Figure 1 shows the num- ber of people living in extreme poverty in each of six regions at various points during a 23-year time frame. In all of the regions but one, poverty decreased over that period of time. In Sub-Saha- ran Africa, the number of poor people increased. Overall, by 2010, there was a decrease of about 550 million (0.55 billion) in the total, or absolute, number of people living in extreme poverty. We can also look at the percentage, or proportion, of people in each region that live in poverty. Because world population continues to increase, if the total number of people living in pover- ty remains the same, then we actually experience a decrease in the percent- age of people living in poverty. In fact, the share of the population in poverty decreased in every region, including in Sub-Saharan Africa, over the 1987 to 2010 period.These numbers indicate that millions of people have managed to escape extreme poverty. Other positive signs include an increase in average life expectancy, a de- crease in the infant mortality rate, and an increase in people’s general standard of living. All of these are important statistical measures of societal well-being. Globalization supporters note that the increase in trade across borders has helped spur this major reduction in poverty. Critics of globalization contend that although many people have escaped poverty, there are still more than one billion people living on less than $1.25 a day, and many more live just above the poverty line. They may still lack the opportuni ties enjoyed by those in higher classes be- cause, although more jobs are available in poor countries, many of them are low-wage jobs with little opportunity to move far above the extreme poverty line, and life is still difficult at that income level. Further, they argue, non-economic measures affected by globalization, such as environmental and social well-be- ing, show troubling trends; for example, world fossil fuel consumption, a contributor to global climate change, is on the rise, 12 while many workers toil in dangerous jobs to fuel global consumption. 17 Figure 1: Millions of people living on $1.25 a day or less. This table s hows the total number of people living in poverty during several years from 1987 through 2010, a period which saw an un- precedented level of globalization. Most regions of the world experience d large decreases in the number of people living in poverty, while sub-Saharan Africa experienced an increase. Outcomes differed partly depending on how well regions were able to take advantage of the global economy. Figure 2. Percentage of people living on $1.25 a day or less. This chart shows that in all regions, includ- ing Sub-Saharan Africa, the percentage of people living in extreme pover ty has dropped. The United Nations says extreme poverty rates have been cut in half. 12 United States Energy Information Administration The Economics of Globalization | Globalization Globalization supporters, on the other hand, note that even low-wage jobs are far preferable to other options available—such as picking through garbage dumps to sell recyclable scraps–to the extremely poor. “Talk to these families in the dump,” wrote journalist Nicholas Kristof, “and a job in a sweatshop is a cherished dream, an escalator out of poverty.” 13 In fact, supporters say, many developing countries have begun to experience economic growth because of global commerce, and we should worry more about the countries that are not involved in it. In particular, we should be concerned about the Least Developed Countries (LDCs), which have been al- most entirely excluded from globalization. LDCs are faring the worst in the global marketplace: in 2011, their share in global trade was just 1.12 percent, 14 despite being home to about 12 percent of the world’s people. 15 Globalization supporters call for better governance in these countries and for policies that give these countries more access to internation- al markets; WTO members, indeed, agreed to pro- vide more such access in a December 2013 global trade agreement. Supporters of globalization point out that, general- ly, when a country gets better off, its poor people get better off, too. The line in Figure 3 shows that there is, on average, about a one-to-one relationship between overall growth in a country and higher in- comes for the poor. However, development experts remind us that many different factors affect poverty besides economic growth. The spread in the dots on Figure 3 illustrates this point—two countries with the same amount of growth might experience very different effects on poverty. Globalization and inequality Sure, some critics say, global commerce creates economic growth, but that growth creates opportu- nities for only some people while others fall farther behind. In fact, they argue, globalization is widening the gap between rich and poor. There are several ways to look at equality—by comparing countries, by comparing people worldwide, or by comparing people to others in their own country. Statistics show that the gap between the richest and poorest countries is widening significantly. Figure 4 shows that the gap between high income countries and low income countries has more than tripled over the past 40 years. This graph illustrates the per-person Gross National Product (GNP), an often-used measure of a country’s economy, of the highest- and lowest-income countries. But when inequality is measured instead by using average income per capita, or per person, statistics- show that inequality is improving. Figure 5 uses a number called the Gini Coefficient to show the level of inequality. Development experts use a complicat- ed equation to calculate the Gini Coefficient, but it simply shows the amount of inequality in a range of incomes. The “By Country” line confirms that the gap between rich and poor countries is increasing. But the “Population Weighted” line shows that inequality is decreasing when we look at average income per capita. Why are the two measures different? Two countries account for most of this discrepancy: China and In- dia. Because they have had rapid economic growth, their average income per capita has also increased. And since they have very large populations, these 13 The New York Times 14 World Trade Organization 15 UN Office of the High Representative for the Least Devel – oped Countries, Landlocked Developing Countries and Small Island Developing States 18 Figure 3: Relationship between Average Income Growth and Income Growth of the PoorThis scatter graph shows that income of the poor grows roughl y one-for-one with average income. Source: Dollar and Kraay / World Bank The Global Citizen numbers have a large effect on the statistics. These two countries are considered by many to be global- ization “success stories.” China and India are the two most populous countries in the world. An increase in the standard of living in those countries is truly significant because of the huge number of people affected. But globalization skeptics respond that inequali- ty within both of these countries has actually in- creased.In other words, when Indians are compared with other Indians, inequality is rising. So what does all this mean? As early as 2000, the World Bank summed up the “bottom line” as follows: “There is compelling evidence that globalization has played an important catalytic role in accelerating growth and reducing poverty in developing coun- tries.” However, the Bank also warned that the re- sults are mixed when it comes to inequality: “Global inequality has been reduced because of the inclu- sion of the most populous developing countries in the benefits of globalization, but many countries are still falling behind and there has been some increase in inequality within countries.” 16 Have these trends changed? Do you think the num- bers suggest that poverty is falling, while reducing inequality remains a more elusive goal? If poverty is falling and economic growth is occurring, how im- portant it is that inequality also be reduced? Though the facts and figures offer insights, the debate is like- ly to continue and the globalization of the economy will continue to change lives. Figure 4. GNP per capita, high income and low income countries Figure 5: This graph shows that, when weighted for population, inequalit y decreased from 1960 to 2000. 16 World Bank 19 THE GLOBAL CITIZEN Through 33 suggested lessons, student readers, and primary source readin gs, The Economics of Globalization helps teachers and students engage in the human story of globalization. Each unit of interactive lessons cul- minates in a Model UN mini-simulation. Mini-simulations take the best of Model UN and may be implement- ed in one or two class periods. In Model UN, participants role-play as ambassadors from UN member states , researching their country’s position on a host of global issues. Student “delegates” write pos ition papers, negotiate with others, address committees through speeches and caucusing, and navigate the UN’ s rules of procedure. With innovative curricular materials, up-to-date online and print resour ces, and mini-simulations for all, UNA-USA brings the Model UN experience to the Economics of Globalization curriculum and seeks to support teachers in meeting national, state, and local standards for glo bal citizenship and college and career readiness. The United Nations Association of the United States of America (UNA-USA ) is a membership organiza- tion dedicated to inform, inspire, and mobilize the American people to s upport the ideals and vital work of the United Nations. For 70 years UNA-USA has worked to accomplish its mission through its national network of Chapters, youth engagement, advocacy efforts, education progr ams, and public events. UNA- USA is a program of the United Nations Foundation. UNA-USA and its siste r organization the Better World Campaign represent the single largest network of advocates and supporter s of the United Nations in the world. Learn more about UNA-USA’s programs and initiatives at www.una usa.org. Copyright © 2014 by UNA-Education, A Program of the United Nations Association of the United States of Amer ica 801 Second Avenue New York, NY 10017 Phone: (212) 697-3315 Fax: (212) 697-3316 www.unausa.org
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