GLOBALIZATION IN WORLD ECONOMY

Introduction

The term 'globalization' is frequently used in todays world but seldom defined. For many years it was quite a dormant topic, with select few publications. Only in the 1990s the name was more integrated into a vocabulary of numerous languages (Osterhammel et.al, 2005, p2). It is a process of transformation whereby an organization extends its arms to people from different countries to get them more connected to form a unified community and making its activities, like ease in flow of money and information and communication, in both local and regional areas to go global. It should be seen as a historical process, a system and conditions, as well as an ideology.

As Among stated that There is no one globalization, but globalizations. The strong reverberating effects of globalization can be felt through a wide spectrum of overwhelming yet life changing events. They include mind boggling growth, expansion of media and the broad array of information conveyed to us, the spread of western culture and effects of this to our cultures. In summary, globalization is a wide spectrum of experiences shared by many people. It can be seen clearly through the images of the poor getting poorer and the rich immersing in and accumulating their wealth with every higher step.

Globalization in World Economy

Globalization has been occurring for the past few centuries, but in the past decade or so, its acceleration has become a hot topic. This has something to do with the achievement of the free trade and investment ideology after the collapse of the communist countries, especially China to the open market economy (ed. Kelly, 2006, pg 10). However, technological progress is another factor which must be taken into account. In the past century, progress in technology has made travel, cargo transportation and international communication much cheaper and faster, but the arrival of Internet technology marked the revolution (Kuniro, 2004, p90).

When traditional economies are perturbed, millions of workers lose out in a global economy which weakens the governments capacity to assist them. They are usually forced to drift; working for mere amounts of money, sacrificing their children and personal health to common epidemics.

In globalisation, the problems associated with them cannot be analysed either at local, national or regional levels but in terms of global processes.

The International Forum on Globalization (IFG, 1999) reported that the World Trade Organisation (WTO), being one of the humankinds most powerful international bodies is rapidly becoming a global government, with representatives in 134 nations; including the U.S. The WTO has two different types of rules with regards to economic globalisation. The central operating principal of the WTO is that commercial interests should supersede all others. Any obstacles in the path of operations and expansion of global business enterprise must be subordinated. These obstacles are policies that can affect working people, culture and national sovereignty. According to Siddharthan (1999), the introduction of the WTO regime will have far reaching consequences on knowledge and technology transfer. It will affect the nature, mode and the quantum of technology transfer.

Globalization in Asia

Globalization is most easily understood in connection with international trade and investment. In these areas, there are no barriers to the movement of goods and capital across National borders. (Kunio, 2004) An example is when a Japanese bank is able to lend cash as a form of capital to a businessman in Malaysia and goods in return, being exported to Japan.

Asia has attracted the worlds attention for trade and investment, especially due to the dynamism and potential of the economies countries like China and India. With more than half of the worlds population is located in Asia and accompanied by its rapid economic growth. (Mohd Najib Abdul Razak, 2006)

Globalization is not only restricted to trade and investment, but its effects are also felt in relation to money, labour markets, law and languages. Globalization of trade and investment requires people who can communicate globally, thus requiring a global language. The language of international business is predominantly English at that moment (ed. Kunio, 2004)

The spread of English promotes an English-speaking mass media, which is today dominated by American companies and therefore carries the American culture. Since the American mass media is often more interesting and informative than the national language mass media, people often accept it as a positive aspect of globalization. But the problem is that in some of their cultural messages, American mass media tend to weaken their cultures if it goes beyond control. This is objectionable to the many people who would want to have cultural diversity in the world. (ed, Among, 2004, p89)

Due to the influence of the American culture, with the use of media, English is now becoming a widely accepted global language and even Asians too take it as their primary language. As businesses expand globally, one cannot confine to its nations boundaries and the use of a standard culture, language and law is becoming a necessity.

Globalization in Singapore

'Creative destruction' is the catchphrase in Singapore; it is a process that can be initiated with relative ease in a spatially limited area that is governed by a unified and well-resourced government (Olds et. al, 2004). The goal of this policy is to create interactive economic relations so that Singapore can benefit from an extraterritorial terrain.

Figure 1 Postage stamp from Singapore Source:

Infocommunication Development Authority of Singapore (IDA).

(Olds et. al, 2004)

The stamp in Figure 1 is read as a symbol of a developmental city-state in a globalizing era. This terrain is the globe pictured in the stamp that evolves and changes over time. The hands represent social intention to establish this terrain, and the dominant role of the state in guiding the relational transformational process. Finally, the cables, satellites and wires represent the technologies that Singaporeans will have to increasingly rely upon to establish, maintain and reshape this terrain. The fact that city-states are globalising (both inwards and outwards) is not new, as will be detailed further (Olds et. al, 2004).

As Dawn (2003) stated that, for the average Singaporean, the clearest symbols of globalisation are the large foreign Multi-National Corporations (MNCs) which first stimulated our growth in the 1970s, and still continue to be important players today. But, these are the firms which would relocate quickly to lower-cost countries during recessions. Thus, Singapore needs to grow her own MNCs, which would make Singaporean companies be able to reap the advantages of lower-cost production and large markets. Entrepreneurial spirit can also be promoted to boost the performance of local companies.

According to Dawn (2003), the trends of globalisation are a double-edged sword. In order to wield it well, Singapore has to grit her teeth and tackle the issues headlong.

As the country responds to globalisation, some of the problems have already surfaced; increased competition in the global labour market due to huge inflow of skilled workers leading to falling wages for the lower skilled workers. The shifts in technology over the next few decades would soon denounce certain skill-sets to be obsolete, leaving many low-skilled workers to be jobless.

A marked increase for labour demand in younger workers indicates that with increased capital processes, would start to require even more highly skilled workers. Firms would start to hire younger workers as they are more technologically savvy than compared to the accumulated experience of older workers.

Stereotyping/globalisation affecting culture

To combat structural unemployment, stereotypes, such as domestic help or eldercare being the preserve of foreign maids, or construction work being the domain of foreign labourers, must be exposed. To achieve this, some of these industries should reinvent their policies to make it more attractive to Singaporeans. For example, in the construction industry, locally trained labour could be reimbursed better than the foreign trained ones. The wages should also be reviewed to make it more attractive especially, in the smaller industries.

Globalisation benefited Singapore with its open economy and also widened its income gap. Only the top earners are still able to enjoy First World wages, but low earners are affected due to competition from lower-cost countries, e.g. China and India. Even when China, India and east Europe joined the race to develop their economies, the problem was aggravated by new technologies, making many jobs redundant or exported to even lower-cost countries. This causes incomes to be stretched with the highly skilled benefiting rapidly but slower increases for the middle-income with the lower bottom suffering the most with declining incomes. Indeed, the lowest 20% of households have seen their incomes per capita decline from 2000 to 2005 (Lai-To, 2000).

This is a universal problem, but Singapore is in a better position than most to deal with it. The country's strong financial position enables it to give income support to the neediest. With the introduction of the Workfare Income Supplement an outright cash payment to the older, low-income workers, Singaporeans get a share of the pie through schemes like CPF top-ups and growth dividends.

Conclusion

Globalisation has allowed all of us to be much more accessible to the world and making the world available to us (Abdul Razak, 2006). It cannot be easily quantified but only be able to put in limited degrees; more or less. It can pose a number of challenges, especially to small open economies. The community needs to recognise that the forces driving globalisation are irreversible and countries cannot afford to turn away from global market integration. The challenge is therefore to maximise the benefits and minimise the costs of globalisation. This will require greater understanding of the tensions generated by globalisation and how to respond and grab the opportunities that come with it.

This term is also propagated by people harbouring a variety of visions and strategies. Within the community, economic and social policies as well as institutions must be coherent, targeted, and complementary and geared towards reaping the maximum gains from the global marketplace. As written by Osterhammel (2003), in future, globalisation will take its place alongside industrialization or urbanization. This does not mean that globalization will become less controversial but still be able to maintain its influence on everyday world and people.

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