Who is pulling the Strings ?
Ian | 11.07.2004 10:42 | G8 2005 | Globalisation
Globalisation is basically a process of trading in countries all over the world.
The official definition of a global company is one which trades at least in three continents.
Scotland has four companies which meet these criteria - America has basically the rest.
(Not quite true, but most companies operating globally have their origins, or are based, in America.)
One of the things which has allowed this process to develop and grow is the liberalisation of trade. This basically means there are fewer barriers put on companies who want to export goods and services. The result for the consumer is increased competition, pushing prices down.
Globalisation has opened up new markets and investment opportunities all over the world but it has its down side which none of us is immune to. A case in point is the insecurity created by the mobility of capital (money and industry moving in and out of countries).
The recent problems in the car industry and the textile industries reveal this.
For example, a decline in the sales of clothing in Marks and Spencer means that they can no longer afford to buy "British". Established orders to British textile and garment manufacturers are terminated and suddenly factories in the Borders are closing.
Garments are still being made, but they are being made in Bangladesh, the Philippines, Malaysia.
But this is not straightforward. Increased investment in factories in Bangladesh often means jobs for desperately poor Bangladeshi women.
At the other end of the spectrum poor farmers in Mexico or the Philippines have seen their livelihoods destroyed by competition from imports, and millions of Indonesians have seen human development gains made over a generation wiped out by the instability in capital markets.
One example of the complexity of globalisation and its varying impacts was the recent issue about bananas.
For years banana exports from the Windward Island, the Dominican Republic, have been protected by trade agreements set up by post-colonial British governments. Most of the bananas coming into Britiain have come the Windward Islands. Banana production in the Windward Islands is commonly based around small producers, small scale farmers who feed into a quota system currently supported by the European Union.
However, the Big Three banana producers, all American backed companies have estimated that they have lost $500m in profits from this protectionist arrangement between Europe and the Windward Islands, and have got American government support for their stand.
America has brought this to the attention of the World Trade organisation which has demanded changes to the European Union legislation.
This was two years ago and the changes have not yet been made.
America now has permission from the World Trade Organisation to run equal protection against european Union imports to America.
It's worth knowing however, that the working conditions on the plantations of the Big Three are appallling. people are using massive pesticides, they are paid less than poverty wages and are tied to their employers through housing and education for their children - little short of slavery in fact.
The knock on effect to Scotland was that the Scottish cashmere industry and their workers became under threat. Cashmere is one of the luxury industries America has decided to target for tariff protection. This basically means that for every cashmere garment sold in America they will impose a 100 % tax on that garment. The implications of this are that the American market, which is a great source of sales to Scottish companies, will dry up as Cashmere becomes unaffordable.
Waiting in the wings to steal that market is the Chinese Cashmere industry - much lower costs, good investment pote3ntial and cheaper products. The down side?
Chinese workers are paid much lower wages and Scottish jobs are once more under threat.
Northern governments have tended to stress the enormous potential of globalisation. They have also promoted the spread of global markets, not least through the World trade Organisation, the World Bank and the IMF.
The potential gains are real, but they are not automatic - and in many cases the policies promoted in the name of globalisation have not adressed human development problems.
Joseph Stiglitz, the former Chief Economist at the World Bank, acknowledged that the received wisdom took "privatisation and liberalisation as ends in themselves, rather than the means to more democratic growth".
We saw this ourselves in 20 years of conservative government in the UK.
Although the free market was being promoted as a good thing no-one seemed to question who it was good for. The privatisation of basic service provisions - railways, local government services, utilities like gas and electricity, means that profit has become the principle motive for action rather than service.
Now, undoubtedly, efficiency in some of these sectors was a huge issue, but the current
practice of many companies, particularly when it comes to dealing with people who are poor, leaves much to be desired.
It is this process, whether it be in the UK, Africa or Latin America, that is failing poor people. The end result of globalisation is a process that is redistributing wealth and opportunity in the wrong direction, from the poor to the rich.
As the United Nations Human Development Report says: "Globalisation proceeds at breakneck speed but without map ot compass" - and it produces winners and losers around the world.
Statics from the 1997 United Nations Human Development Report clearly illustrate global trends of poverty and inequality - trends that we are likely to live with well into the 21 st century. In 1960, the share of global income of the poorest 20% of the world's poorest people was 2.3%, in 1991 bit was down to 1.4% and now it stands at miserable 1.1% and continues to shrink.
And the ratio of the income of the top 20% worldwide to that of the poorest 20% rose from 30:1 in 1960 to 61:1 in 1991, and to a startling new high of 78:1 in 1994.
The rules of globalisation have neglected the needs of those least equipped to benefit from new opportunities. In fact, they have been written by rich countries and powerful transnational companies primarily with a view to their own advantage. The consequences are reflected in the ever more obscene income gap seperating rich and poor countries - and in growing income inequalities within countries.
The official definition of a global company is one which trades at least in three continents.
Scotland has four companies which meet these criteria - America has basically the rest.
(Not quite true, but most companies operating globally have their origins, or are based, in America.)
One of the things which has allowed this process to develop and grow is the liberalisation of trade. This basically means there are fewer barriers put on companies who want to export goods and services. The result for the consumer is increased competition, pushing prices down.
Globalisation has opened up new markets and investment opportunities all over the world but it has its down side which none of us is immune to. A case in point is the insecurity created by the mobility of capital (money and industry moving in and out of countries).
The recent problems in the car industry and the textile industries reveal this.
For example, a decline in the sales of clothing in Marks and Spencer means that they can no longer afford to buy "British". Established orders to British textile and garment manufacturers are terminated and suddenly factories in the Borders are closing.
Garments are still being made, but they are being made in Bangladesh, the Philippines, Malaysia.
But this is not straightforward. Increased investment in factories in Bangladesh often means jobs for desperately poor Bangladeshi women.
At the other end of the spectrum poor farmers in Mexico or the Philippines have seen their livelihoods destroyed by competition from imports, and millions of Indonesians have seen human development gains made over a generation wiped out by the instability in capital markets.
One example of the complexity of globalisation and its varying impacts was the recent issue about bananas.
For years banana exports from the Windward Island, the Dominican Republic, have been protected by trade agreements set up by post-colonial British governments. Most of the bananas coming into Britiain have come the Windward Islands. Banana production in the Windward Islands is commonly based around small producers, small scale farmers who feed into a quota system currently supported by the European Union.
However, the Big Three banana producers, all American backed companies have estimated that they have lost $500m in profits from this protectionist arrangement between Europe and the Windward Islands, and have got American government support for their stand.
America has brought this to the attention of the World Trade organisation which has demanded changes to the European Union legislation.
This was two years ago and the changes have not yet been made.
America now has permission from the World Trade Organisation to run equal protection against european Union imports to America.
It's worth knowing however, that the working conditions on the plantations of the Big Three are appallling. people are using massive pesticides, they are paid less than poverty wages and are tied to their employers through housing and education for their children - little short of slavery in fact.
The knock on effect to Scotland was that the Scottish cashmere industry and their workers became under threat. Cashmere is one of the luxury industries America has decided to target for tariff protection. This basically means that for every cashmere garment sold in America they will impose a 100 % tax on that garment. The implications of this are that the American market, which is a great source of sales to Scottish companies, will dry up as Cashmere becomes unaffordable.
Waiting in the wings to steal that market is the Chinese Cashmere industry - much lower costs, good investment pote3ntial and cheaper products. The down side?
Chinese workers are paid much lower wages and Scottish jobs are once more under threat.
Northern governments have tended to stress the enormous potential of globalisation. They have also promoted the spread of global markets, not least through the World trade Organisation, the World Bank and the IMF.
The potential gains are real, but they are not automatic - and in many cases the policies promoted in the name of globalisation have not adressed human development problems.
Joseph Stiglitz, the former Chief Economist at the World Bank, acknowledged that the received wisdom took "privatisation and liberalisation as ends in themselves, rather than the means to more democratic growth".
We saw this ourselves in 20 years of conservative government in the UK.
Although the free market was being promoted as a good thing no-one seemed to question who it was good for. The privatisation of basic service provisions - railways, local government services, utilities like gas and electricity, means that profit has become the principle motive for action rather than service.
Now, undoubtedly, efficiency in some of these sectors was a huge issue, but the current
practice of many companies, particularly when it comes to dealing with people who are poor, leaves much to be desired.
It is this process, whether it be in the UK, Africa or Latin America, that is failing poor people. The end result of globalisation is a process that is redistributing wealth and opportunity in the wrong direction, from the poor to the rich.
As the United Nations Human Development Report says: "Globalisation proceeds at breakneck speed but without map ot compass" - and it produces winners and losers around the world.
Statics from the 1997 United Nations Human Development Report clearly illustrate global trends of poverty and inequality - trends that we are likely to live with well into the 21 st century. In 1960, the share of global income of the poorest 20% of the world's poorest people was 2.3%, in 1991 bit was down to 1.4% and now it stands at miserable 1.1% and continues to shrink.
And the ratio of the income of the top 20% worldwide to that of the poorest 20% rose from 30:1 in 1960 to 61:1 in 1991, and to a startling new high of 78:1 in 1994.
The rules of globalisation have neglected the needs of those least equipped to benefit from new opportunities. In fact, they have been written by rich countries and powerful transnational companies primarily with a view to their own advantage. The consequences are reflected in the ever more obscene income gap seperating rich and poor countries - and in growing income inequalities within countries.
Ian
