Saturday, 31 December 2011

Effects of Global Economy

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Global economy is affecting work in the Unites States and worldwide. In a sense, the U.S. economy has always been international because world trade has always linked United States to other countries. The globalization of the economy affects much more than trade however. The concept of global economy acknowledges that all dimensions of the economy now cross national borders, including investment, production, management, markets, labor, information, and technology. Economic events in one nation now can have major reverberations throughout the world, so when the economy in Brazil, Japan, China, or Russia is unstable, the effects are felt worldwide. This all leads to global stratification, in which I will be discussing in this paper. Global stratification is a very important topic in society that raises several negative questions that vary from morality to economic problems and economic power over the world.

Global stratification is a system of inequality of the distribution of resources and opportunities between countries. A particular country’s position is determined by its relationship to other countries in the world and its position in the world market and power over it. The distribution of wealth, and thus power, among nations is extremely unequal. We still have a tendency to call those with the least in terms of economic resources and power the “Third World,” a term first applied to them when they were not formally aligned with either of the two great industrialized blocs of nations. The First World, i.e., the western industrial democracies including US, Canada, Japan, and Western Europe, and the Second World, i.e., the communist industrial nations including the former Soviet Union and the nations of Eastern Europe. The Third World was third in rank order of its degree of industrial and technological development and it used to be a third political block in addition to Western-style democracies and communist nations. The nations of this so-called Third World are primarily agrarian countries with relatively little industrialization. Most of the people in them are poor--extremely so by our standards, generally with per capita incomes of less than $1000 per year. Some of these societies, indeed most of them, were largely hunter-gatherer societies until quite recently. Most were colonies of First World nations during most of the nineteenth and twentieth centuries.

I want to discuss just briefly two major theories of global stratification. The two main theories the text covers are modernization theory and dependency theory. Modernization theory, rather predictably, rests on the assumption that newer and highly sophisticated technologies are better than older and simpler technologies. It is, without question, the kind of theory that people in First World nations are more likely to create than people in less well developed countries. Modernization theory asserts that pre-industrial societies are in a traditional stage--traditional being a sort of shorthand term for a whole host of features including reliance on kinship and other non-contractual bonds for authority and support, reliance on traditional modes of adaptation such as migration as mechanisms for dealing with environmental problems causing lack of food production, etc.

These societies, through exposure to Western technologies, are then said to enter a take-off stage in which they begin to develop national, rather than local or regional economies and basic industries, such as a steel industry, which produce products from which other products can be made. Ideally this would begin a drive to technological maturity during which more and more of the economy becomes technology-driven and begins to produce a wide variety of consumer goods. As more and more of the work force are employed in industry, the population becomes more urban and also begins to consume more and more manufactured products. This theory assumes that rich modern nations help the under-developed nations with controlling fast-growing populations, increasing their food production through modernization of agriculture, and increasing their productivity by introducing industrial technology, etc. The major mechanisms for such help are the foreign aid programs sponsored by the wealthier nations.

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The other theory, dependency theory, is more Marxist in its interpretations. It assumes that rich nations got rich for the most part by exploiting the resources of their colonies, most of whom were prevented, while they were colonies, from developing their own industries at their own pace when those industries would have competed with the industries of the mother country. Dependency theory further assumes that profit-seeking multi-national corporations of the rich nations continued that pattern of economic exploitation by using their economic influence to get the leaders of governments to keep their nations economies from diversifying and producing goods for the consumers in their own countries. What the multi-national corporations want is for the leaders of Third World countries to focus their nations economic development plans on producing products for export, generally raw materials for export to countries which would turn them into finished goods. There is evidence that some Third World leaders have personally profited from doing what the multinationals wanted. Neocolonialism is a term that applies to the economic relationship between these poor nations, which export raw materials, and the rich nations with their multi-national corporations. The problem essentially is that the raw materials exported are worth less than the manufactured goods imported, thus giving the poor nation a negative balance of trade, that is, a net outflow of money. The only way for these nations to cover the difference is to borrow money from the banks of the rich nations. But this soon leads to high national debts, and a large portion of the poor nations budget then goes to pay the interest on the debt rather than being spent on the internal development of the poor nations building, maintaining roads and railroads, building schools and hospitals, etc. As dependency theorists see it, wealthy people in rich nations profit from this arrangement in two ways, by getting cheaper raw materials for the multi-national corporations they own and by making money on the loans their banks make to the poor nations. The people of the poor nations are the losers in this arrangement.

The simplest way to explain what causes global stratification is money. Everyone wants a piece of it but there isn’t enough to go around, and those [countries] who have control over the economy will get most of it. Money is what makes the rich countries richer and makes the poor countries poorer. People will do what ever they can to obtain it. Money is proportionally related to power; power comes to those with the most money in their possession. In this case its not people, rather countries. Richer countries exploit poor countries and the ones who suffer are the people in the poor countries. Up to this day, global stratification is still increasing at an alarming rate and living conditions for poor countries are getting worse than ever, while people in wealthy countries are enjoying the high life at their expense.

Global stratification comes with its consequences however. Richer countries are well better off in every way possible than the poorer countries. Third world countries experience much higher birthrates and mortality rates than first and second world countries. In third world countries, women have an average of five children throughout their lifetime. Because of this, the populations of the poor countries are growing at a much faster rate than the population of the wealthy countries, most of which are rural. Most of the people in wealthy countries have clean water and access to adequate sanitation. People born in these countries are expected to live an average of seventy-seven years. In the poorest countries the situation is completely different in a negative aspect. Many children die within the first five years of life, people live significantly shorter lives, and fewer people have clean water and access to adequate sanitation.

Education varies extremely between wealthy and poor countries. In wealthy nations education is expected and necessary for a person to do well in life. Literacy and school enrollment are now largely taken for granted in high-income nations. Those who are not well educated stand little chance of success. People in poor nations lack a good education. They only learn what’s necessary for them to live day by day in their technology-lacking society. The disadvantage of this informal and traditional education is that, although it prepares people for their traditional lives, it often does not give them the skills and knowledge needed to operate in the modern world. Therefore, as these poor countries and the people within them are confronted by the developing world, they often do not have the skills and knowledge to survive in these new environments. As a result, their low educational level limits their ability to adjust to changing world situations, particularly in an increasingly technological world, and it perpetuates their underdeveloped status. However, education is improving greatly in the world, even in the poor areas. Only six percent of the nations report a school enrollment rate below fifty percent.

In some areas of the world, particularly East Asia, but also in Latin America, many countries have shown rapid growth and have emerged as developed countries. These countries are the newly industrialized countries (NICs), which include Korea, Malaysia, Taiwan, Singapore, and Thailand. In these countries, individuals have saved and invested, and the governments have invested in social and economic development. However, other countries appear to be taking a dive into poverty and position in the global stratification system. In some of these cases, their governments have collapsed or are functioning only at minimal levels, the economy is bankrupted, the standard of living has plunged, and people are starving. I wish I could believe that all of these countries are going to pull it off and make and economic progress soon, but we all have to be realistic about this situation. It is near impossible to have every single nation above the poverty line and have a technology-driven economy. I believe that while the wealthy nations will soon realize that there are countries that aren’t making it, they will try to help them build up their economy, but there is only so much we can do. We have to face reality and realize that a perfect world is not possible, only the strong survive and those not strong enough simply weren’t cut for it, unless everyone does drastic changes in this world and fast.

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