This article illustrates the variety of impacts and significance of globalization for the daily lives of individuals throughout the world. It also briefly examines the challenges the phenomenon presents, in order to highlight the ways that governance reforms may help public officials develop more sustainable forms of democratic political and economic development.
Sparke (2014) has argued that globalization may be viewed as both a set of interconnections among economic, political and social factors, and as a buzz word. The first perspective suggests that globalization is a set of ties that are currently getting stronger and more influential in such domains as finance, transport and health. The second description suggests that although globalization consists of many relationships, it is also now used broadly rhetorically simply to suggest the reach and power of businesses and markets.
With these descriptions in mind, one may define globalization as the extension, intensification and acceleration of consequential international connections. According to Sparke (2014), this definition implies that individuals throughout the world are tied to globalization as citizens, workers, consumers, managers or shareholders involved directly or indirectly with transnational corporations, international institution or governments.
Sparke (2014) has argued that globalization began in earnest with the advent of neoliberalism, today’s dominant public philosophy that advocates assigning as large a role as possible to markets in social decision-making and all segments of the political economy. Austrian economist and philosopher Friedrich Von Hayek and American President Ronald Reagan (1981-1989) and British Prime Minister Margaret Thatcher (1979-1990) aggressively advocated and popularized this view. As it has been adopted ever more fully in the U.S., Europe and beyond, neoliberalism has resulted in dramatic changes in virtually all dimensions of democratic governance as well as in family and community life.
Although individuals throughout the world may be touched by globalization’s impacts directly or indirectly, Park (2013) has contended that the analytic challenge is to identify how those ties, and the public policies aimed at regulating them, affect those they touch. According to Sparke (2014), globalization is influencing people’s everyday experiences by its direct application in different sectors, including:
• Reshaping the organization of how goods and services are consumed, produced and exchanged throughout the world, especially by globalizing production and consumption of many goods and services.
• Revolutionizing financial arrangements tied to global trade agreements.
• Reconfiguring the roles of government and governance by changing how policy is imagined and by creating global interconnections that often constitute forms of political and economic control that influence and shape citizens’ lives.
• Restructuring global health due to the effects of climate change and international economic growth.
Although globalization affects the daily lives of individuals in nations throughout the world, how countries respond to it as a phenomenon remains a challenge. Indeed, some analysts have suggested that the ongoing globalization of travel and commerce will ultimately result in the erosion of national sovereignty itself by accelerating economic inequality and threatening genuine representation of citizen views.
Globalization and its Challenges
The fact that globalization ultimately is a negotiation in which some players are more powerful and influential than others (Heshmati, 2004), makes it harder to understand how to approach international free trade agreements objectively without being influenced by the interests of the most dominant actors in the domain. Given these realities, Sparke (2014) has argued that it is essential that national and local governments focus on efforts to ensure opportunities for the exercise of democratic voice by means of guaranteeing affected populations’ their human rights.
Additionally, since globalization generates profits (which usually go overseas) for multinational corporations (MNCs), it is important that developing nation governments ensure that those firms are fairly taxed on the earnings they obtain from operations in their countries. This step ensures a more equal distribution of income while acknowledging the value created by the labor of those working for the corporations in affected nations. Park (2013) has argued similarly that a share of the profits of MNCs should be redirected via taxation to the populations helping to create them.
Haskel et al. (2012) have likewise noted that famed economist John Maynard Keynes, and later, financier and philanthropist, George Soros, have both highlighted the fact that although globalization can provide cities and countries opportunities, it can also create and increase income and wealth inequality within their populations as some profit from firm activities and others do not.
Schuftan (2003) has illustrated how economic globalization is contributing to growth in income inequality in the United States with the following example: Multi-national corporations shift their production to other countries to take advantage of lower land acquisition prices and pollution standards as well as wages, resulting in significant cost savings and higher profits. However, this trend has reduced the relative number of such manufacturing positions available in the U.S. labor force, resulting in economic hardship for those individuals directly touched and ripple effects for all living in the affected communities.
According to Heshmati (2004) globalization directly benefits those corporations that can pursue it by way of the profits it generates for their managers and shareholders. Meanwhile, competing firms with less capital may be driven out of business and whole communities severely negatively affected by off-shoring decisions. Sheng (2015) has argued that this cycle is a primary cause of the significant and growing revenue and profitability gap between large transnational corporations and businesses unable to operate globally. Many manufacturing MNCs have been able to increase their profits while their line workers have either lost their employment or have faced increased competition from other production sites abroad (Azzimonti & Quaduni, 2014).
As Haskel et al. (2012) have observed, another illustration of globalization’s often adverse income equality effects is the difference between the compensation that CEOs of America’s largest corporations are paid on average versus the wages of their firms’ typical employees. Thirty years ago that gap was a multiple of 20 while today that product is more than 400 times higher. As Sheng (2015) has contended, current wealth disparities across nations do not necessarily mean that individuals within them are earning less money, but that the salaries they earn are being distributed differently. This is a brief for sustained efforts to include and/or expand human rights and social justice in local and national policy agendas.
What is Next?
As globalization continues to grow and large transnational corporations expand and earn higher profits, inequality in national populations is also likely to rise unless steps to stop it from doing so are undertaken. Although these trends are alarming, they may be viewed as an opportunity to develop appropriate policies that support economic growth without creating such vast economic inequalities among citizens.
While globalization has many complex layers, its ill effects are neither inevitable nor unstoppable. Developing nation governments must recognize that without efforts to promote adequate political representation and equitable wealth distribution within their countries, the current global economic structure will continue to create and deepen wealth and income disparities while eroding national sovereignty.
Azzimonti, M, Quadrini, V. (2014). “Financial Globalization, Inequality, and the Rising Public Debt,” American Economic Review, 104(8), pp. 2267-2302.
Haskel, J., Lawrence, R., Leamer, E. & Slaughter, M. (2012). “Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts,” Journal of Economic Perspectives. 26(2), pp. 119-140.
Heshmati, A. (2004). “The Relationship between Income Inequality, Poverty and Globalization”. Zunkunft der Arbeit Institute for the study of labor.
Park, H. (2013).“Economic Globalization and Income Inequality in the United States.” International Research Journal of Applied Finance,” 4(1), pp. 15-34.
Schuftan, C. (2003). “Poverty and Inequity in the Era of Globalization: Our Need to Change and to Re-conceptualize,” International Journal for Equity in Health, Vietnam.
Sheng, L. (2003). “Theorizing Income Inequality in the Face of Financial Globalization,” The Social Science Journal 52(3), pp. 415–424.
Sparke, M. (2014). “Introduction to Globalization: Globalization and You [Video],” University of Washington. Retrieved from:
Vanessa is a doctoral student in the Planning and Environmental Design program at the College of Architecture and Urban Studies at Virginia Tech. Her research interests include: sustainable development, city planning, slums clearance, transportation, urban renewal and public space. She earned a master of Urban Planning at the University of Melbourne-Australia and a bachelor in Architecture at USFQ University in Quito-Ecuador. Prior to Virginia Tech, Vanessa participated with the University of Melbourne in the project “How Sustainable Transport Networks Build Great Cities” at Munich and Zurich; taught at USFQ University in Quito, and co-founded LIGNUM in Quito, an architecture and urbanism firm. She is currently researching Quito’s urban form and the existing disconnection between peripheral areas and the inner city, as well as investigating transport interventions as potential contributions to poverty reduction.