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Pros And Cons Of Increasing Globalization: Evidence From Japan

2102 words - 9 pages

Globalization can be traced back to hundreds of years ago, when European sovereign seek new trade routes with voyages in 15th century, and expanded in the coming years as colony for trade purpose (OSLAND, 2003). Morrison (2011) defines globalization as a mixture driving process in production and markets, by which products, services, people, companies, capital and technology are able to flow quickly worldwide. In spite of its colonization root, there is no doubt that globalization has tremendously changed the world and changed ways we live (Hamilton & Webster, 2012). Increasing globalization has dramatically stimulated the world economy growth, and consequently aroused many ...view middle of the document...

As for developed countries, globalization open foreign markets to their business and give their business access to cheaper supplies of goods, components raw materials in developing countries which contributes to their lower cost and more competitiveness (Hamilton & Webster, 2012), and thus globalization account for job creation to developing countries as well.

Despite the theoretical comparative advantage overview which is mainly based on economic growth, Adesina (2012) argue that it is still controversial whether in practice globalization benefits all or serves the interest of just a few nations or individuals in the world. “Some critics believe that the structure of the global economy favors developed countries over lesser developed countries” (OSLAND, 2003). While Bigman (2002) discovers that labor-abundant developing countries also have reaped significant gains from export-oriented international trade through an empirical study of GDP per capita of 152 both developing and developed countries who have involved in globalization process in the past two decades, and also reflected some conflicts such as avoiding domestic market development. Therefore critics focus on its destroying environment in developing countries, widening wealth gap between developed and developing countries (Sachs, 2005; Bhagwati, 2004; Wolf 2005 and 2010; Stiglitz, 2002; Chang, 2008 and 2010; Chua, 2003; Hamilton & Webster, 2012) and destroying local economies by contagious economic turbulence because of interdependence of countries, such as the global financial crisis in 2008.

Batterson and Weidenbaum (2001) claims that globalization destroy manufacturing sector in developed countries since most manufacturing has been shifting to lower-cost developing countries. Prempeh (2013) states that globalization has diminished labor’s bargaining Power, level of domestic labor-protective regulations and deteriorated labor’s political power since globalization may compel companies to seek cheaper labor around the world

Some even claims that globalization makes the rich richer, and the poor is poorer since inequality of wealth distribution because manufacturing takes just a small share in the global value chain. To modelling impacts of globalization on inequality between developed countries and developing countries, Elmawazini & Nwankwo (2013) introduce three approaches, neoclassic theory (which predicts productivity and technology gaps between developed and developing countries will converge over time), new (endogenous) growth theory (shows that income gaps between developed and developing countries will be widen due to innovation activities and technology), 'dependency theory' and "world systems theory', supports the second approach that the growing gap between developing and developed countries is mainly due to increasing globalization.

Just as Tony Schirato and Jan Webb (2003; Adesina, 2012) define, “globalization is a process integrating not just the economy but, culture,...

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