International Business: Costs of Globalization

International Business: Costs of Globalization
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International Business: Costs of Globalization
Business in the modern world is conducted both locally and globally with goods and services being exchanged. Technologies, knowledge and capital are also exchanged in this trade. In particular, technology has aided the commercialization of activities around the world in a manner that people had not foreseen years ago. The geographical boundaries and limitations have been dealt with and enabled people to access world markets and transact both at the local and international levels. These business transactions carried out at an international level have led to massive benefits especially with trade liberalization. However, the process has not been without its own costs. Weak industries in developing countries, environmental degradation, brain drain, tax avoidance, less cultural diversity and general inequality are the costs associated with globalization. The costs have resulted into a need to address all the challenges posed by international trade in a way that enable countries to enjoy the benefits of the trade while minimizing its negative effects.
Despite having many benefits, globalization has its own costs. To begin with, developing economies are adversely affected through free trade. Evidently, trade liberalization only tends to benefit mainly the developed countries and a few of the developing ones due to the fact that a majority of the developing economies have no means of using the free trade to their advantage (Fletcher, 2011, N.p). Considering that this free trade exposes these countries to the global market that is very competitive, it means that they gain so little because they do not have much to sell as compared to developed countries. Furthermore, their levels and quality of production has not been enhanced as some of the technologies used in the production processes have not been acquired by a majority of these developing countries. With such weak industries that cannot compete on an international level, the benefits of free trade to developing countries are close to none.
Globalization also has its environmental costs. As Pettinger (2017, N.p) notes the use of non-renewable resources has been on the rise with globalization. The consequences of this can be seen in global warming that is currently an issue of concern in the world, and massive pollution. Concerning energy sources, non-renewable ones such as gasoline have been strained beyond measure due to increased transportation that is necessary in the transfer of products from one area to another or from country to country. The increasing global warming can be attributed to the continued ozone layer depletion, which is as a result of emission of harmful gasses from aircrafts used in transportation. Moreover, the increased industrialization due to globalization has led to a lot of industrial effluents being dumped in water bodies the result of which is massive loss of aquatic life and contamination of these waters. Nigeria is a good example of a case where globalization has not considered the effects on the environment. As Isola and Mesagan (2014, p4) note, oil flaring is a common practice in Nigeria. This is done without considering the effects of the practice on the local people who suffer health-wise. The practice is also noted to cause massive environment degradation along with causing the Nigerian economy great losses. Majority of the countries that are expanding in the industrialization do it mainly with the focus of achieving economic growth and pay less attention to the other factors such as environmental degradation. Without doubt, the environmental costs of globalization are quite many. However, individual countries have the responsibility to put in place environmental measures and standards that can help overcome this.
Labor drain or skill migration is another cost associated with globalization. In developing countries, it is uncommon to see most of those individuals considered highly skilled migrate to the developed countries in search of greener pastures. With workers having the freedom to move from one country to another through globalization, most of their home countries are left suffering from a shortage of this same labor, which affects economic development. These are sentiments echoed by Clemens (2015, p1) who acknowledges that skilled migration is indeed a challenge but disagrees on its effects on the development of a country. Nevertheless, on a logical level, the free movement of workers places some countries at a great disadvantage since their low wages are not usually enough to make their skilled workers to stay within the country. With the obvious challenge of retaining skilled workers, the economies of these developing countries may suffer massively. Poland is a good example of this case where about two million of its population is believed to have shifted to various parts of Ireland, UK, and Germany in search of better working conditions and wages (Luiza, 2014, p17). As a result the most viable and educated workforce is taken from Poland to the benefit of the developed countries they emigrate to thus leaving Poland with the problem of shortage of workers. Other dangers of free trade or liberalization include the problem of congestion in developed countries, depression of wages of ordinary citizens, increase in terrorist activities due to the easily accessible boarders, among others. Apart from the mentioned, tax costs are also associated with globalization mainly in form of tax competition and tax avoidance. The later happens when multinational companies take advantage of the low corporation tax rates in certain countries and choose to invest there (Petting, 2017, N.p). In the end, they get major profits while having spent less on taxes. This is a tax avoidance move that is only made possible through globalization and since domestic business firms cannot use the same, it presents an unfair competition for such firms. In addition, there is reason to believe that a lot of money is lost in form of revenue due to tax avoidance, thus there is a need to address the issue if at all benefits have to be reaped from globalization. Another cost of globalization that cannot be ignored is its effect on cultural diversity. Evidently, globalization has led to less cultural diversity and instead promoted the idea of having one global culture that is determined mainly by the developing nations. This has practically killed the beauty and benefits that were previously associated with interacting with people from different cultures in the workplace. A study by Ugbam, Chukwu, and Ogbo (2014, p63) acknowledged that homogenization and Americanization are issues of concern as they are believed to be as a result of globalization. According to the study, losing one`s culture is compared to losing an identity which in turn means globalization has led to this great loss. Most African countries and particularly Nigeria, globalization is viewed as modern day colonization whereby the European nations use it to spread their culture all over the world (Ugbam, Chukwu, & Ogbo, 2014, 65). Moreover, this negative effect on African culture is further perceived as an attempt by the developed nations to dominate and control the developing countries. With such negative notions about globalization and its effect on culture, it is no surprise that a majority of countries especially developing ones negatively view the whole idea of international trade. On the overall and as determined from the factors above, globalizations has increased inequality among nations...