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Does globalization benefit the wealthy and harm the poor? The social, political and economic effects of globalisation have been hotly debated since the term’s emergence. Globalisation is defined as “a process of change which affects all regions of the world in a variety of sectors including the economy, technology, politics, the media, culture and the environment.” (Castles, 2001, p7.) It is characterised by the organisation of business on a global scale, the exchange of huge capital across national borders, a continued improvement in communications, a less exclusive relationship between domestic and foreign policy, (Firth, 1999, p272) and the emergence of a global consumer culture. There are several opinions on whether or not globalisation is unprecedented, how much it undermines the power of the nation state, how governments should respond, and how it effects world living standards and the distribution of wealth. I shall consider these opinions in exploring the notion that globalisation benefits the wealthy and harms the poor. Schools of thought on globalisation include the hyperglobalists, skeptics and tranformalists. Hyperglobalisers believe the integration of relationships internationally lessens the role of the nation-state (some see this as a positive, others a negative). Skeptics deny rises in cross-border transactions, and transformalists think globalisation sees individuals, communities, countries or regions become integrated into “global networks of power and prosperity, while others are excluded and merginalised.” (Castles, 2001, p7.) Although the speed and volume of globalisation of the late 20th century is unparalleled in history, a similar trend was seen in the period between 1870 and 1914. Advancements in transport and communications allowed trade between nations previously isolated. Like today, entrepreneurs moved freely about the globe in search of the highest profits, without the interference of governments. As globalisation skeptics assert, foreign debt investments accounted for nine per cent of global output in 1913- comparable with such investment at the end of the 20th century (Firth, 1999, p272). Perhaps then, the current period of globalisation really began in 1870 (rather than around 1975, as many attest) and was interrupted by two world wars, the depression and the socialist era. Globalisation’s effect on the power of nation-states is debated by experts. Some say national borders are becoming irrelevant to economic activity, some that the world economy is no more integrated now than it was at the end of the 19th century, and that the power of states is unhindered. Stewart Firth (1999, p273) takes a view somewhere between these extremes: “Globalisation… has shifted the balance of power between markets and states in markets’ favor and between capital and labour in capital’s favour.” Because of markets, entrepreneurs can move freely from country to country to where the cheapest labour can be found.
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