This module 3 will focus on the context of Globalization.
This will explain the Globalization
phenomenon in a certain country and it will give insights on how globalization works across
the world.
How does globalization work?
In simple terms, globalization is the process by which people and goods move easily across
borders. Principally, it's an economic concept – the integration of markets, trade, and
investments with few barriers to slow the flow of products and services between nations.
There is also a cultural element, as ideas and traditions are traded and assimilated.
Globalization has brought many benefits to many people. But not to everyone.
Storm in a coffee cup
To help explain the economic side of globalization, let's take a look at the well-known coffee
chain Starbucks.
The first Starbucks outlet opened its doors in 1971 in the city of Seattle. Today it has 15,000
stores in 50 countries. These days you can find a Starbucks anywhere, whether Australia,
Cambodia, Chile or Dubai. It's what you might call a truly globalized company.
And for many suppliers and jobseekers, not to mention coffee-drinkers, this was a good thing.
The company was purchasing 247 million kilograms of unroasted coffee from 29 countries.
Through its stores and purchases, it provided jobs and income for hundreds of thousands of
people all over the world.
Image: REUTERS/Enrique Castro-Mendivil
But then disaster struck. In 2012, Starbucks made headlines after a Reuters investigation
showed that the chain hadn't paid much tax to the UK government, despite having almost a
thousand coffee shops in the country and earning millions of pounds in profit there.
As a multinational company, Starbucks was able to use complex accounting rules that enabled
it to have profit earned in one country taxed in another. Because the latter country had a
lower tax rate, Starbucks benefited. Ultimately, the British public missed out, as the
government was raising less tax to spend on improving their well-being.
How did globalization happen?
We might think of globalization as a relatively new phenomenon, but it’s been around for
centuries.
One example is the Silk Road when trade spread rapidly between China and Europe via an
overland route. Merchants carried goods for a trade back and forth, trading silk as well as
gems and spices and, of course, coffee. (In fact, the habit of drinking coffee in a social setting
originates from a Turkish custom, an example of how globalization can spread culture across
borders.)
What drives it?
Globalization has speeded up enormously over the last half-century, thanks to great leaps in
technology.
The internet has revolutionized connectivity and communication and helped people share
their ideas much more widely, just as the invention of the printing press did in the 15th
century. The advent of email made communication faster than ever.
The invention of enormous container ships helped too. In fact, improvements in transport
generally – faster ships, trains, and airplanes – have allowed us to move around the globe
much more easily.
What's good about it?
Globalization has led to many millions of people being lifted out of poverty.
For example, when a company like Starbucks buys coffee from farmers in Rwanda, it is
providing a livelihood and a benefit to the community as a whole. A multinational company's
presence overseas contributes to those local economies because the company will invest in
local resources, products and services. Socially responsible corporations may even invest in
medical and educational facilities.
Image: REUTERS/David Gray
Globalization has not only allowed nations to trade with each other, but also to cooperate with
each other as never before. Take the Paris Agreement on Climate Change, for instance, where
195 countries all agreed to work towards reducing their carbon emissions for the greater
global good.
This chart, however, shows that global attitudes towards globalizing forces aren't all that good.
It shows that, in fact, in all but a couple of countries polled, people believe life was better in
the old days.
What's bad about it?
While some areas have flourished, others have floundered as jobs and commerce move
elsewhere. Steel companies in the UK, for example, once thrived, providing work for hundreds
of thousands of people. But when China began producing cheaper steel, steel plants in the UK
closed down and thousands of jobs were lost.
Every step forward in technology brings with it new dangers. Computers have vastly improved
our lives, but cyber criminals steal millions of pounds a year. Global wealth has skyrocketed,
but so has global warming.
While many have been lifted out of poverty, not everybody has benefited. Many argue that
globalization operates mostly in the interests of the richest countries, with most of the world's
collective profits flowing back to them and into the pockets of those who already own the
most.
Although globalization is helping to create more wealth in developing countries, it is not
helping to close the gap between the world's poorest and richest nations. Leading charity
Oxfam says that when corporations such as Starbucks can legally avoid paying tax, the global
inequality crisis worsens.
Basically, done wisely (in the words of the International Monetary Fund) globalization could
lead to "unparalleled peace and prosperity". Done poorly, "to disaster".
The Impact of Globalization of Communication
As more people cross borders because of Globalization, more language contact happens,
making communication more challenging.
Here are some of the effects of globalization on a global communication:
Manners, body language, and non-verbal gestures are consumed differently in different
cultures.
The world becomes more accessible and equitable.
Information is not being restricted and it allows the opportunity not only to receive
information but to enter information into academic spaces and contribute to it.
There is a need for cultural awareness in body language.
Time differences.
One should get used to the dynamics of cross-cultural communication.
The etiquette to establish and the proper use of technology to communication with
people on the other side of the globe matters.
Virtual communication must be introduced.
