Labor Issues Warning on Privation: Labor Issues Warning on PrivationIn 2003, the World Bank called for the disposal of some 220 publicly owned enterprises in the paper, food, and textile sectors in order to free up state funds for socioeconomic development and poverty alleviation. Meanwhile, the IMF pledged some $500 million in aid over the next three years to help the government implement a state divestiture program that targets some 100 companies for sale by 2005. In mid-September 2003, 11 unions organized a one-day nationwide stoppage to protest the government’s privatization plans.
If fully implemented, the program could result in the loss of as many as 150,000 jobs, and it is this prospect that prompted action by the unions. However, the finance ministry contends that inefficient state-owned enterprises cost the government more than $500 million each year, and the government appears to be committed to moving forward with privatization.
How can the process of restructuring and privatisation be better managed in order to minimize the social and economic costs to workers and the economy as a whole? What can be done to assist SOE workers for whom job alternatives are few and social security is inadequate? In what way could labour management relations become a positive factor for more socially responsive restructuring? There are enterprises that have undertaken steps to improve industrial relations and consultations between employers-management and workers; these could be the basis for more pro-active ways of managing the social and labour issues of restructuring and privatization.
Textiles and clothing industry together account for more than 76 per cent of the country’s total export earnings as can be seen from figure 3.
Figure 3. Export Sector Performance of BANGLADESH (2001-02)
Source: Ali Md Hossain, BANGLADESH Country Paper on RMG Industry of BANGLADESH, 10.
The exports are destined mostly for the United States of America (USA) and European Union markets, to which up to recent time BANGLADESH had privileged access by the Multi Fibered Agreement (MFA) and Generalized System of Preferences (GSP). This private sector of BANGLADESH is now facing challenges that need to overcome to maintain growth. The Textile and Clothing industry is encountering challenges from mainly two areas as described subsequently.
MFA is in the process of phasing out since 2004. After it is completely phased out, BANGLADESH is likely to face greater competition in the world market from other garment exporting countries. Now, raw cotton producing and self-sufficient backward linkage countries will compel BANGLADESH to compete on a more level playing field. For BANGLADESH, the abolition of MFA has far reaching implications in terms of loss of jobs and reduction in foreign exchange earnings in the Ready Made Garments (RMG) sector. The jobs and working conditions of the RMG and textile workers are most likely to worsen due to competitive pressures arising from other countries participating in globalization. This pressure may force the entrepreneurs to cut costs in the form of either lower wages or retrenchment of workers. Thus, not only worker’s employment will be at stake but also the working conditions are not expected to improve38. Weak market strategy, absence of backward linkage industries, lack of FDI and incoherent infrastructural facilities have further contributed concern over the future of the RMG industry. The cost of business is also increasing primarily due to port problems, bureaucratic tangles in custom department and no improvement in lead-time. In contrast, an increasing number of countries are offering low-cost products. Competing countries like Vietnam, China, and Thailand are entering the global market with products that BANGLADESH is exporting and as a result intensifying competition and dipping prices.
United States Trade Development Act (USTDA) 2000
Enactments of USTDA 2000 will also challenge the RMG sector. The USTDA 2000 provides duty and quota-free access to 48 countries of Africa and 24 countries of the CaribbeanBasin for exporting textile and apparel products to the USA market. The CaribbeanBasin countries are BANGLADESH’s direct competitors in the USA apparel market. USTDA 2000 is expected to cause trade diversion from BANGLADESH in favour of Caribbean Basin Initiative (CBI) countries. The value per Square Meter Equivalent (SME) of apparel exports to the USA from BANGLADESH already have the lowest value compared to three other major exporter as can be seen from figure 4. It has been estimated that BANGLADESHi manufacturers will need to reduce production costs by some 15-20 per cent in order to overcome their tariff disadvantage relative to CBI countries. Further lowering of prices is likely to have a telling effect on the RMG industry. Thus, although the garment industry does lead BANGLADESH to steady economic growth but it requires being flexible and adaptive to continue to do so.
Figure 4. Value per SME for Selected CBI Countries and BANGLADESH to United States
Source: Azim M Tahlin and Nasir Uddin, “Challenges for Garments Sector in BANGLADESH After 2004: Avenues for Survival and Growth,” BANGLADESH Institute of International and Strategic Studies Journal 24, no. l (January 2003): 64.
Trade Policy of BANGLADESH BANGLADESH joined the WTO in 1995 to avail the advantages of an open and liberal trading system. In BANGLADESH, the trade liberalization process started in the mid 1980s. Export diversification and import liberalization received the highest priority in early years. Towards the end of the 1980s, import liberalization leapt forward. The government took a number of bold steps, which include liberalization of the trade and foreign investment, strengthening the financial sectors, closing and privatizing some loss-making State-Owned Enterprises (SOE) and taking steps to improve governance.
In the 1990s, the liberalization process was accelerated by progressive reduction of tariff and non-tariff barriers. A major thrust of change in early 1990s was the substitution of the multiple-rate sales tax by a 15 per cent Value Added Tax (VAT). In addition to the dismantling of non-tariff restrictions, there had also been a drastic cut in nominal protection rates over the years. Figure 1 and 2 shows the reduction in tariff barriers as a result of the liberalization process.Figure 1. Trends in Reduction of Customs Duty Rate Source: World Trade Organization, Trade Policy Review: BANGLADESH, May 2000, 11.
Figure 2. Trends in Reduction of Number of Tariff Rates Source: World Trade Organization, Trade Policy Review: BANGLADESH, May 2000, 10. The customs tariff is the main instrument of BANGLADESH's trade policy. It is also the government's principal source of revenue, accounting for nearly one third of total taxes. BANGLADESH has made considerable efforts to simplify and rationalize the tariff structure by reducing the number of tariff bands from 15 in 1992/93 to 5 in 1999/2000, and lowering the maximum tariff rate from 300 to 37.5 per cent during the same period. Direct subsidies are provided to exporters of textiles and clothing, and were recently extended to exporters of some other products. BANGLADESH has further opened up many of the state-dominated sectors to private investment such as telecommunications, power generation, and transport. In an effort to encourage investment, the government offers a wide range of open-ended tax incentives, notably tax holidays and accelerated depreciation.
Removing Restrictions on Foreign Investment in ASHIA
Understanding the concept that development comes from increasing resources and more efficient utilization of on hand resources is essential to understanding that, short of going to war, foreign direct investment is now the best way to obtain new resources. In this regard one of the largest problems in ASHIA is the underdeveloped infrastructure. This section will outline a few of the key areas that most extra-national, and many ASHIAi, corporations are interested in as a basic infrastructure to support efficient and effective business practices. Both information and logistic infrastructure of ASHIA will be analyzed to discern whether ASHIA has the requisite capacity to offer advantages to multinational enterprises bringing in foreign direct investment into country and creating greater economic growth potential. “Investors coming in ASHIA find a lot of difficulties in organizing their security and expenses. I mean investment in ASHIA looks good, but very difficult in practicing it. There are too many obstacles, especially, in obtaining telephone line, transportation and so on.” This remark by the Italian Ambassador in response to a press question asking how more Italian investment could be directed to ASHIA sets the tone for this passage. More than 1000 firms recently indicated that power (electricity), ports; telecommunications and business regulations constrain the investment climate.Clearly, the lines of communication within ASHIA need to improve to attract more globalization.
Information Infrastructure in ASHIA:
Information technology has produced significant changes in the interactions between nation-states and global markets. Globalization, or investment by foreign firms, can gain much in a networked ‘global village’ and global marketplace. The more ASHIA becomes networked the more advantages it can offer to external sources of funding. Potential for dramatic improvements in the communication of information, as well as the facilitation of faster and more effective communication opens up possibilities for ASHIAi businesses to connect with more moneyed sources outside the country and the opportunity to create partnerships with those firms. Indeed, globalization can provide many opportunities for new experiments and relationships. Present day technology makes globalization more feasible through increased electronic transactions and increased trade liberalization allows for greater social and economic stability.
Poorer countries suffering disadvantages: While it is true that globalization encourages free trade among countries, there are also negative consequences because some countries try to save their national markets. The main export of poorer countries is usually agricultural goods. Larger countries often subsidies their farmers (like the EUCommon Agricultural Policy), which lowers the market price for the poor farmer's crops compared to what it would be under free trade.
The exploitation of foreign impoverished workers: The deterioration of protections for weaker nations by stronger industrialized powers has resulted in the exploitation of the people in those nations to become cheap labor. Due to the lack of protections, companies from powerful industrialized nations are able to offer workers enough salary to entice them to endure extremely long hours and unsafe working conditions, though economists question if consenting workers in a competitive employers' market can be decried as "exploited". It is true that the workers are free to leave their jobs, but in many poorer countries, this would mean starvation for the worker, and possible even his/her family if their previous jobs were unavailable.
The shift to outsourcing: The low cost of offshore workers have enticed corporations to buy goods and services from foreign countries. The laid off manufacturing sector workers are forced into the service sector where wages and benefits are low, but turnover is high . This has contributed to the deterioration of the middle class which is a major factor in the increasing economic inequality in the United States. Families that were once part of the middle class are forced into lower positions by massive layoffs and outsourcing to another country. This also means that people in the lower class have a much harder time climbing out of poverty because of the absence of the middle class as a stepping stone.
Weak labor unions: The surplus in cheap labor coupled with an ever growing number of companies in transition has caused a weakening of labor unions in the United States. Unions lose their effectiveness when their membership begins to decline. As a result unions hold less power over corporations that are able to easily replace workers, often for lower wages, and have the option to not offer unionized jobs anymore.
An increase in exploitation of child labor: for example, a country that experiencing increases in labor demand because of globalization and an increase the demand for goods produced by children, will experience greater a demand for child labor. This can be "hazardous" or "exploitive", e.g., quarrying, salvage, cash cropping but also includes the trafficking of children, children in bondage or forced labor, prostitution, pornography and other illicit activities.
In December 2007, World Bank economist Branko Milanovic has called much previous empirical research on global poverty and inequality into question because, according to him, improved estimates of purchasing power parity indicate that developing countries are worse off than previously believed. Milanovic remarks that "literally hundreds of scholarly papers on convergence or divergence of countries’ incomes have been published in the last decade based on what we know now were faulty numbers." With the new data, possibly economists will revise calculations, and he also believed that there are considerable implications estimates of global inequality and poverty levels. Global inequality was estimated at around 65 Gini points, whereas the new numbers indicate global inequality to be at 70 on the Gini scale.
The critics of globalization typically emphasize that globalization is a process that is mediated according to corporate interests, and typically raise the possibility of alternative global institutions and policies, which they believe address the moral claims of poor and working classes throughout the globe, as well as environmental concerns in a more equitable way.
The movement is very broad, including church groups, national liberation factions, peasant unionists, intellectuals, artists, protectionists, anarchists, those in support of relocalization and others. Some are reformist, (arguing for a more moderate form of capitalism) while others are more revolutionary (arguing for what they believe is a more humane system than capitalism) and others are reactionary, believing globalization destroys national industry and jobs.
One of the key points made by critics of recent economic globalization is that income inequality, both between and within nations, is increasing as a result of these processes. One article from 2001 found that significantly, in 7 out of 8 metrics, income inequality has increased in the twenty years ending 2001. Also, "incomes in the lower deciles of world income distribution have probably fallen absolutely since the 1980s". Furthermore, the World Bank's figures on absolute poverty were challenged. The article was skeptical of the World Bank's claim that the number of people living on less than $1 a day has held steady at 1.2 billion from 1987 to 1998, because of biased methodology.
A chart that gave the inequality a very visible and comprehensible form, the so-called 'champagne glass' effect, was contained in the 1992 United Nations Development Program Report, which showed the distribution of global income to be very uneven, with the richest 20% of the world's population controlling 82.7% of the world's income.
Distribution of world GDP, 1989
Quintile of Population
Income
Richest 20%
82.7%
Second 20%
11.7%
Third 20%
2.3%
Fourth 20%
2.4%
Poorest 20%
0.2%
Source: United Nations Development Program. 1992 Human Development Report
Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.
Americanization related to a period of high political American clout and of significant growth of America's shops, markets and object being brought into other countries. So globalization, a much more diversified phenomenon, relates to a multilateral political world and to the increase of objects, markets and so on into each others countries.
Critics of globalization talk of Westernization. A 2005 UNESCO report showed that cultural exchange is becoming more frequent from Eastern Asia but Western countries are still the main exporters of cultural goods. In 2002, China was the third largest exporter of cultural goods, after the UK and US. Between 1994 and 2002, both North America's and the European Union's shares of cultural exports declined, while Asia's cultural exports grew to surpass North America. Related factors are the fact that Asia's population and area are several times that of North America.
Some opponents of globalization see the phenomenon as the promotion of corporatist interests. They also claim that the increasing autonomy and strength of corporate entities shapes the political policy of countries.
The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug trade generates more than $320 billion a year in revenues. Worldwide, the UN estimates there are more than 50 million regular users of heroin, cocaine and synthetic drugs. The international trade of endangered species is second only to drug trafficking. Traditional Chinese medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. The use of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws) has created controversy and resulted in a black market of poachers who hunt restricted animals. In 2003, 29% of open sea fisheries were in a state of collapse.
THE NEGATIVE IMPACT OF GLOBALIZATION: See also: Alter-globalization, Participatory economics, and Global Justice Movement
Globalization has been one of the most hotly debated topics in international economics over the past few years. Globalization has also generated significant international opposition over concerns that it has increased inequality and environmental degradation. In the Midwestern United States, globalization has eaten away at its competitive edge in industry and agriculture, lowering the quality of life in locations that lack the opportunity to adapt to the change.Sweatshops
A maquila in Mexico from its own soil, large corporations see an opportunity to take advantage of the "export Itcan be said that globalization is the door that opens up an otherwise resource-poor country to the international market. Where a country has little material or physical product harvested or mined economic globalization are recorded as being the expansion of businesses and corporate growth, in many poorer nations globalization is actually the result of the foreign businesses investing in the country to take advantage of the lower wage rate: even though investing, by increasing the Capital Stock of the country, increases their wage rate.poverty" of such a nation. Where the majority of the earliest occurrences of
A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United States, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in recent decades. However, Chinese textile and clothing exports have recently encountered criticism from Europe, the United States and some African countries. In South Africa, some 300,000 textile workers have lost their jobs due to the influx of Chinese goods. The increasing U.S. trade deficit with China has cost 2.4 million American jobs between 2001 and 2008, according to a study by the Economic Policy Institute (EPI).[ A total of 3.2 million – one in six U.S. factory jobs – have disappeared between 2000 and 2007.
Brain drain
Opportunities in richer countries drive talent away from poorer countries, leading to brain drains. Brain drain has cost the African continent over $4.1 billion in the employment of 150,000 expatriate professionals annually. Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion annually.
Environmental degradation
Burning forest in Brazil. The removal of forest to make way for cattle ranching was the leading cause of deforestation in the Brazilian Amazon from the mid 1960s. Recently, soybeans have become one of the most important contributors to deforestation in the Brazilian Amazon.
The World watch Institute said the booming economies of China and India are planetary powers that are shaping the global biosphere. In 2007, China overtook the United States as the world's biggest producer of CO2. At present rates, tropical rainforests in Indonesia would be logged out in 10 years, Papua New Guinea in 13 to 16 years. A major source of deforestation is the logging industry, driven spectacularly by China and Japan. Thriving economies such as China and India are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996–2006. Crude oil prices in the last several years have steadily risen from about $25 a barrel in August 2003 to over $140 a barrel in July 2008. State of the World 2006 report said the two countries' high economic growth hid a reality of severe pollution. The report states:
The world's ecological capacity is simply insufficient to satisfy the ambitions of China, India, Japan, Europe and the United States as well as the aspirations of the rest of the world in a sustainable way
Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out by 2017, and terbium could be gone before 2012. It is said that if China and India were to consume as much resources per capita as United States or Japan in 2030 together they would require a full planet Earth to meet their needs. In the long-term these effects can lead to increased conflict over dwindling resources and in the worst case a Malthusian catastrophe.
Food security
The head of the International Food Policy Research Institute, stated in 2008 that the gradual change in diet among newly prosperous populations is the most important factor underpinning the rise in global food prices. From 1950 to 1984, as the Green Revolution transformed agriculture around the world, grain production increased by over 250%. The world population has grown by about 4 billion since the beginning of the Green Revolution and most believe that, without the Revolution, there would be greater famine and malnutrition than the UN presently documents (approximately 850 million people suffering from chronic malnutrition in 2005).
It is becoming increasingly difficult to maintain food security in a world beset by a confluence of "peak" phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish. Growing populations, falling energy sources and food shortages will create the "perfect storm" by 2030, according to the UK government chief scientist. He said food reserves are at a 50-year low but the world requires 50% more energy, food and water by 2030. The world will have to produce 70% more food by 2050 to feed a projected extra 2.3 billion people and as incomes rise, the United Nations' Food and Agriculture Organization (FAO) warned. Social scientists have warned of the possibility that global civilization is due for a period of contraction and economic re-localization, due to the decline in fossil fuels and resulting crisis in transportation and food production. One paper even suggested that the future might even bring about a restoration of sustainable local economic activities based on hunting and gathering, shifting horticulture, and pastoralist
Disease
Globalization, the flow of information, goods, capital and people across political and geographic boundaries, has also helped to spread some of the deadliest infectious diseases known to humans. Starting in Asia, the Black Death killed at least one-third of Europe's population in the 14th century.] Even worse devastation was inflicted on the American super continent by Europe. For instance 90% of the populations of the civilizations of the "New World" such as the Aztec, Maya, and Inca were killed by small pox brought by European colonization. Modern modes of transportation allow more people and products to travel around the world at a faster pace, they also open the airways to the transcontinental movement of infectious disease vectors. One example of this occurring is AIDS/HIV. Approximately 1.1 million persons are living with HIV/AIDS in the United States, and AIDS remains the leading cause of death among African American women between ages 25 and 34. Due to immigration, approximately 500,000 people in the United States are believed to be infected with Chagas disease. In 2006, the tuberculosis (TB) rate among foreign-born persons in the United States was 9.5 times that of U.S.-born persons.
Globalization has various aspects which affect the world in several different ways such as:
Industrial - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. China's trade with Africa rose sevenfold during 2000-07 alone.
Financial - emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. As these worldwide structures grew more quickly than any transnational regulatory regime, the instability of the global financial infrastructure dramatically increased, as evidenced by the Financial crisis of 2007–2010.
Economic - realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however, meant that an economic collapse in any one given country could not be contained.
Almost all notable worldwide IT companies are now present in India. Four Indians were among the world's top 10 richest in 2008, worth a combined $160 billion. In 2007, China had 415,000 millionaires and India 123,000.
Health Policy - On the global scale, health becomes a commodity. In developing nations under the demands of Structural Adjustment Programs, health systems are fragmented and privatized. Global health policy makers have shifted during the 1990s from United Nations players to financial institutions. The result of this power transition is an increase in privatization in the health sector. This privatization fragments health policy by crowding it with many players with many private interests. These fragmented policy players emphasize partnerships, specific interventions to combat specific problems (as opposed to comprehensive health strategies). Influenced by global trade and global economy, health policy is directed by technological advances and innovative medical trade. Global priorities, in this situation, are sometimes at odds with national priorities where increased health infrastructure and basic primary care are of more value to the public than privatized care for the wealthy.
Political - some use "globalization" to mean the creation of a world government which regulates the relationships among governments and guarantees the rights arising from social and economic globalization. Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of The United States’ own economy, the People's Republic of China has experienced some tremendous growth within the past decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United States for the position of leading world power.
Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fibre optic communications, satellites, and increased availability of telephone and Internet.
Language - the most popular language is Mandarin (845 million speakers) followed by Spanish (329 million speakers) and English (328 million speakers).
·About 35% of the world's mail, telexes, and cables are in English.
·Approximately 40% of the world's radio programs are in English.
·About 50% of all Internet traffic uses English.
Competition - Survival in the new global business market calls for improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skillfully in order to face increased competition.
Ecological- the advent of global environmental challenges that might be solved with international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Since many factories are built in developing countries with less environmental regulation, globalism and free trade may increase pollution. On the other hand, economic development historically required a "dirty" industrial stage, and it is argued that developing countries should not, via regulation, be prohibited from increasing their standard of living.
Britain is a country of rich diversity. As of 2008, 40% of London's total population was from an ethnic minority group. The latest official figures show that in 2008, 590,000 people arrived to live in the UK whilst 427,000 left, meaning that net inward migration was 163,000.
Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one's standard of living and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". Some bemoan the resulting consumerism and loss of languages. Also see Transformation of culture.
Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood). Some consider such "imported" culture a danger, since it may supplant the local culture, causing reduction in diversity or even assimilation. Others consider multiculturalism to promote peace and understanding between people. A third position that gained popularity is the notion that multiculturalism to a new form of monoculture in which no distinctions exist and everyone just shift between various lifestyles in terms of music, cloth and other aspects once more firmly attached to a single culture. Thus not mere cultural assimilation as mentioned above but the obliteration of culture as we know it today.In reality, as it happens in countries like the United Kingdom, Canada, Australia or New Zealand, people who allways lived in their native countries maintain their cultures without feeling forced by any reason to accept another and are proud of it even when they're acceptive of immigrants, while people who are newly arrived simply keep their own culture or part of it despite some minimum ammount of assimilation, although aspects of their culture often become a curiosity and a daily aspect of the lives of the people of the welcoming countries.
·Greater international travel and tourism. WHO estimates that up to 500,000 people are on planes at any one time. In 2008, there were over 922 million international tourist arrivals, with a growth of 1.9% as compared to 2007.
·Greater immigration, including illegal immigration. The IOM estimates there are more than 200 million migrants around the world today. Newly available data show that remittance flows to developing countries reached $328 billion in 2008.
·Spread of local consumer products (e.g., food) to other countries (often adapted to their culture).
The construction of continental hotels is a major consequence of globalization process in affiliation with tourism and travel industry, Dariush Grand Hotel, Kish, Iran.
·Incorporation of multinational corporations into new media. As the sponsors of the All-Blacks rugby team, Adidas had created a parallel website with a downloadable interactive rugby game for its fans to play and compete.
Social - development of the system of non-governmental organisations as main agents of global public policy, including humanitarian aid and developmental efforts.
·The spread and increased interrelations of various religious groups, ideas, and practices and their ideas of the meanings and values of particular spaces.
