audrey’s Weblog

This topic of work and trade deals with the issue of free trade, international division of labour, and the different international institutions, as mentioned in the lecture. The country very much involved is the United States of America (USA). Since the golden age of capitalism, the US has been willing to take up the leadership role in international negotiations which helped determine the shape of the world’s economic system. Hence I chose to focus my discussion on the role US has been playing in this global world of work and trade!

From the beginning, the US took the initiative in forming the UN and the Bretton Woods institutions to ward off a renewal of economic warfare of the interwar period. These institutions included the International Monetary Fund (IMF), the World Bank and the General Agreements on Tariffs and Trade (GATT) – World Trade Organization (WTO). They believed a more open economy would link the economic activity of other countries into a satellite relationship with the US. The US had several objectives in the Bretton Woods institutions. They wanted to increase US exports by extending monetary loans through the IMF and World Bank, and a worldwide trend towards free trade. The role of the US was in fact more central than expected.

How then did this role affect the developing countries?

The institutions mentioned above were aimed to assist developing countries, but the US taking the leadership role, reaped many benefits too. The World Bank, for example, provided long term loans to countries for individual capital projects. This access to funds could be said to have ‘strings attached’ as it created a backflow to the US, when they imported US exports. However this created niche industries and over specialization in the developing countries. This affected them especially when demand patterns changed and the industries, abandoned.

The US multinational companies (MNCs) have played a major role in the transfer of technology. They were a major instrument through which the US was more closely integrated with other countries, transferring US technology, management and capital. As a result, the industrial world had access to American capital. There was international division of labour, which resulted in an increase in output of the global economy. However this had a negative impact on developing countries. Factories were built in these countries because of their cheap labour. It created over dependency on technology, where the MNCs benefited the most, as they became the new imperialists. They now had the power to dictate economic development.  The developing countries were hence at the losing end. There was dominance of the interests of the big players such as the US as compared to the smaller players, who were ‘under their control’.

The increased integration of the US economy has also presented challenges to the US. The increased foreign competition has resulted in people being forced to adjust or move overseas. Only those able to cope with this competition can reap the benefits.  [1] Some people feel that the free trade policies in the US have resulted in declining wages and a growing income disparity within the US too.

The US has been playing a pivotal role in the global economy, especially in the second half of the 20^th century. This superpower has been willing to take up the leadership role in international negotiations, and other countries recognized the need for US engagement. They had their objectives and reaped the benefits, sometimes at the expense of the less developed countries. However it still was and is an important facilitator, influencing the system of work and trade in the global economy!

The world is filled with inequality.

This was the thought that first came to my mind when the lecture topic was revealed.  A utopian society is impossible to achieve, hence imperfection and inequality are inevitable. The extent differs, though. Rich and poor people exist in both rich and poor countries, though in many of the poorer countries the extent of inequality is greater.

With inequality, there is the issue of poverty. In fact, half the world – nearly three billion people, live on less than US$2 a day. [1] Many people living in comfortable homes in developed countries are not aware of this acute problem of poverty, so rampant in developing countries and their own countries. No country is immune to poverty; even the wealthiest of nations have a large gap between the rich and the poor. This was in fact one of the reasons for the introduction of communism in the early 20^th century. They believed in equality and that a large gap between the rich and the poor should not exist. This was one of the driving factors for Mao, the leader of the Chinese Communist Party in China, to unleash the Cultural Revolution in China in the 1950s. He wanted to create a utopian society, and failed. The issue of poverty and its eliminating strategies is one of the toughest development challenges facing the world today.

With all the poverty and suffering, we wonder why there is so much inequality in the world. People work hard, but still remain poor?

One reason is the access to education. With better technology, there is a higher demand for higher skilled workers, resulting in an increase in the wages of such workers. People who lack the opportunity to attain an education or a higher education end up doing lower skilled jobs, with a lower pay. This creates a vicious circle, making it difficult to break out of this poverty cycle to attain a proper education. This creates inequality.

People’s abilities and their drive to succeed can also play a part. This is a factor that is more critical in the more developed countries. People with a certain set of skills or intellectual ability are in greater demand, hence command a higher pay. People with disabilities or are ‘less intellectually developed’ end up depending on other people or organizations. Once again, creating a vicious circle of poverty and inequality.

In Sernau’s book on Global Problems, he highlighted two schools of thought: modernization theory and dependency theory, as to why poor nations are poor. I agree with the idea that the economies of the poor countries are structured to serve the needs of wealthy foreigners and maybe small internal elite, as described in the dependency theory. [2] Developing countries provide cheaper labour, resulting in MNCs choosing to set up factories in these countries, creating employment. This benefits these countries, but creates a form of imperialism, and these countries have to play by the rules set by the MNCs. Unless the poorer countries find a way to not rely as much on imperialism, developing their own technology and local companies, the inequality cycle will still remain!

It is a major challenge to overcome this problem of poverty.  Totally eradicating poverty is impossible, with its deep seeded problems beyond our control. However we still have to continue with our attempts to minimize its effects. A utopian society is impossible to achieve. After all, people were never made equal. 

When I approached this topic, the first question that had to be answered was – what constitutes a social problem?

An online dictionary defines social problems as situations affecting a significant number of people, that are believed to be sources of difficulty or threaten the stability of the community, and that require programs of amelioration. [1]

The impact of social problems in a global context is sometimes hard to fathom, especially for people who are not directly involved. Such problems include environmental degradation, wealth vs. poverty and domestic violence, which were mentioned in Prof Amir’s lecture. Increased globalization, brought about by the increased dependence on IT, has brought about problems as well. With greater interconnectedness and interdependence, globalization can be said to spread global problems.

One social problem that immediately comes to mind is that of the spread of diseases, an issue I believe is very much related to globalization.

The ease of communication has brought about connectedness throughout the world. The concept of viewing human capital in the global sense has brought about unprecedented movement of people around the world. This increase in human traffic across the world, in turn has led to the spread of diseases. An example of this would be the SARS episode that caught Singapore off guard in 2003. The epidemic started in the Guangdong province in China, and spread to Hong Kong and Singapore, as well as many countries such as Canada, Taiwan and Vietnam. This spread was a result of human traffic and the convenience of travel in this day and time. AIDS is another example of a disease, which was rapidly transmitted around the world as a result of modern travel. The global nature of food handling and trade may have also led to this increase in the spread of infectious diseases around the world. Trade is conducted faster than ever before, and so has the spread of diseases.

To be optimistic, globalization has actually led in the trend towards finding solutions to this problem of the spread of diseases. One such platform is the World Health Organization (WHO), in providing leadership on global health matters. Globalization has also led to the spread in medical advances, and facilitated the movement of doctors and members of medical teams to the more rural parts of the world. Now, even the most rural nations have access to medication and medical technology, with the help of globalization and modern travel!

However, aid distribution still remains a big problem. Despite the interconnectedness promised by globalization, in many situations, aid provided does not reach people who need it most. Myanmar is just one example. When cyclone Nargis struck, the government had total control over the aid provided by other nations and other charitable organizations. Much of the aid did not reach the people, who were in dire need of medical care, food, water and lodging. A lot of the aid only reached the people much later.  

Just by opening our eyes and being more aware of the happenings in the world, we will be able to see the seriousness of social problems happening all around us. To end this, I definitely believe in the benefits of globalization as it brings countries together in an attempt to solve these global social problems. Without forgetting how it encourages economic and technological advancements, of course. However, this connectivity also brings about the spread of other things, such as the spread of infectious diseases. The world must now try to cope with these problems, in the best way possible. Technology is a major factor in leading to the spread of infectious diseases, with its connectivity and convenience. I do hope it can minimize and eventually stop the spread of infectious diseases in time to come!

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