Worries About Exploitation of Labor, Essay Example

One of the biggest criticisms against globalization is that under globalization developing countries are becoming more competitive by exploiting their labor. Critics argue that as a result of globalization multinational corporations and developed economies are taking undue advantage of labor of developing countries. But this is not true and hence this argument cannot be supported.

One of the explanations behind this argument is that labor of developing countries is paid an amount that those from developing countries find as very low wages. They are arguing that miserable condition of labor of developed countries is caused by multinationals. With globalization multinationals began to invest in developing countries and this has provided more opportunities for workers. Employment in developing countries has increased and most of them are working under better conditions than before. But for those from developed economies find this as exploitation and one of the reasons might be increasing the competing power of labors from developing economies. As Wolf points out that Philippe Legrain reported that a senior American Trade Union Leader told him that “we don’t give a damn about workers in the Third World. We just want to protect our member’s interest” (185).

In reality labors of developing country has gained from globalization. Globalization has helped developing countries to grow rapidly and this has resulted in the creation of more work opportunities. Many people were able to escape from desperate poverty much faster than ever before (185). Though it is argued that labor of China are paid less it is a fact that more people are getting job opportunities in China. Industries employ more laborers than they would have in developed economies for the same amount of production (186). This is because of less wages, but for those people who were not having any income this amount makes a considerable difference in their life. Hence it is not right to say that the people of developing countries are exploited by multinationals on behalf of globalization.

Absurdity of localization

Another idea that critics propagation is of localization. According to them “wherever economic production, labor, and markets can be local, they should be, and rules should help achieve that” (194). But the concept itself is against concept of globalization. Globalization provides the facility to make investment at any place an organization wish, but complying with some rules and regulations. With this concept of localization will result in fragmentation of market from international level to regional level and from there to national level and then local level (195). Such a system will result in restricting trades across territories. It will also reduce trade subsidies and will impose more restrictions at local level. It will in fact result in the formation of a closed economy where people will have to depend on limited number of products.

This method will also necessitate that performance of companies to be assessed on behalf of environmental or social characteristics. Another issue is that this will have large impact on environment. Industries will become localized and when more industries begin to operate at a specific location it will increase environmental pollution. This will also have a negative effect on efficiency. This is due to reduced competition (196). This system will reduce markets and hence units of products will also reduce in number resulting in lack of choice for consumer. Exports will be affected by large extent and this will have huge economic consequence. Many facilities requiring huge investment like highly sophisticated pharmaceutical products and medicines (197) will not be available to developing and underdeveloped economies. It will also devastate developing countries who are mainly depending on manufacturing business that are meant for exporting (198). If this system is implemented it will result in another era of colonization and slavery.

Hypocrisy of the rich: Though globalization is beneficial for developing economies, it is a fact that developed economies exploit developing countries in various ways. They are forcing developing countries to adjust to market forces (212). Labor intensive products like agricultural products are to give high tariffs than manufactured products (213). It can be seen that developed countries always import more products from other developed countries and that too at less tariffs. Developing countries that have exports as main income will have to pay higher tariff for exporting their commodity (212). Non-tariff barriers and product standards are also acting as barriers to developing countries (214). Though globalization aims to increase trade relations between countries it can be seen that trade relations are more between developed countries than between developed and developing countries. Such discriminations affect least developed economies like that of Bangladesh who will be excluded from all forms of trade arrangements.

Further developed economies provide several subsidies to each other while it is not so with developing and under developed economies (215). Agriculture is the most affected area. European Union is exporting skimmed milk powder for half cost that is incurred on production. This dumping is in one way good for developing countries. But it is in reality bad for farmers in developing countries who form a majority of the poor population (216). They will get very less amount for their products in the home market for alternatives are available at lower costs. Most farmers in developing countries do not form a majority of the population but majority of the poor are farmers. Thus there are three main barriers to developing countries in global trade and they are cost penalty which will affect the efficiency of economy, increase of price resulting in a monopoly of developed countries and barriers that are imposed on cross border trade.

Corporations è “Corporations are more powerful than countries” on page 221, “Transnational corporations exploit poor countries and workers” on 230 (week 10)

Corporations are more powerful than countries

With globalization some critics argue that corporations have become more powerful than nations and according to Sarah Anderson and John Cavenaugh “fifty one of the world’s biggest economies are corporations” (221). But this cannot be true for many reasons. One of the reasons that made them think like this might be because they were not able to distinguish between GDP and gross sales (221). The wolf is of the opinion that they might have calculated sales of the companies and not value added. The value added of the company will be a very small amount than that of a sale. If the calculation is made on the basis of value added only a limited number of companies will be corporations (222). Another criticism is that with globalization corporations were able to increase their income by a large amount (223). But this cannot be considered as true. This is because a rise on GDP of corporations over a span of ten years from 1990 to 2000 was only 0.8%. At the same time it is also noted that the biggest companies of the world have fallen by a little from 0.9 percent to 1 percent (223). But at the same time it is also true that corporate profits of companies have grown after the introduction of globalization and liberalization. Thus it cannot be argued that companies have outgrown countries in globalization.

Another fact is that it is not a good habit to compare companies with countries. Companies and countries are two different entities and one cannot perform the task of another. Companies however large they may be, they will not have a persuading power of people unless they are maintaining a strong monopoly position. At the same time companies succeed by depending on their customers and pays for their suppliers from the income they gain from consumer. Countries on the other side are having control over their territories and that too coercive in form (223). They have the power to impose actions on people even if people are not interested to do that. Companies are relying on competition for survival while countries are relying on coercion. Thus there is no meaning in saying that corporations are more powerful than countries.

Transnational corporations exploit poor countries and workers

Though not all transnational corporations are exploiting poor countries and workers completely there is some amount of exploitation of poor economies by such companies. Transnational companies are using resources of developing or poor countries at cheaper rates to make gains (230). Though the fact of exploitation can be said to be true to some extent it cannot be completely agreed with. This is because these multinationals are also provided with opportunities of growth in these countries and their economies. Further, most companies are not able to exploit the opportunity to fullest (230).

Most multinationals comes to poor countries in search of valuable assets like organizational capacity, skilled labor etc. Poor economies are facing several restrictions to trade like high tariff. Under such conditions attracting inward investment is highly risky for they will not be able to import their products (232). But when transnational corporations are making investment in such economies there are no such issues and it will also help the economy to flourish.

World Bank reports that those countries with high rate of direct foreign investment were receiving increased share of total FDI during 1990’s (233). But it is a fact that largest share of direct investment is going to countries with strict regulatory regimes and higher labor cost and especially if regulations on environmental issues are least. Even among developing countries corporations are attracted by highly developed skills, personal security, political stability, excellent institutions and large markets like Indian and China. During 2001 net position of developed countries was negative because investment in their own economy was not even half the investment made in developing economies (233).

Demand of an economy depends on its size and “magnitude of inward investment” (234). Inwards stock of investment in the year 2000 in comparison to GDP was 30.9% in developing countries but only 17.1 percent for developed countries. Another argument is that investment in developing countries is meant to exploit poor. This is also wrong for transnational companies are providing better opportunities and treatment to workers (235). Though, this is to exploit their know how with such better opportunities and treatment people of these countries are also prospering. Thus transnational economies are providing better living facilities and economic growth to poor economies.

Reference

Wolf, Martin. Why globalization works. United States of America: Yale books, 2005.