Globalization: Good for the Home or Host Country?

Introduction

            Globalization is defined as “…a process that, based on international strategies, aims to expand business operations on a worldwide level…” (Pologeorgis, 2019). This is an age-old process that began centuries ago when people began marketing products overseas in the newly discovered continents. For example, a shoemaker could send hundreds of shoes overseas and sell them at a higher rate due to the supply/demand principle since there was not enough shoes for all of the settlers and the next shipment took months to arrive. As the shoemaker gained more profit, he would then be able to establish a business in the new world. All he would need is to ship materials or buy them locally in the new world. This would create a new market for this entrepreneur, and he was potentially selling shoes on two continents to two different markets. This is known as diversification and it helps business owners stabilize their income using two markets with varying catalysts. Although globalization creates jobs in foreign countries, the harmful effects such as economic dependence, and political control outweigh the benefits for the host country.

History

            Fast-forwarding to 2021, globalization has taken a more aggressive approach on foreign policy. According to its core definition, globalization promotes democracy. Because a freely operational business will not pay the same fees to a foreign government, globalization promotes competition and a free market which is a major attribute of a democratic system. According to International Economics, the number of electoral democracies around the world has increased over the last 40 years from “roughly 30 to 120 nations, so that over half of the independent states around the world are now democratic.” (Torelli, 2017). Globalization promotes democracy and according to economists and political scientists, “…all OECD countries are democratic and wealthy…” (Torelli, 2017).

            In some ways this concept still works with the benefit of the business in mind, but it comes with a heavier price in the 21stcentury. For example, economic analysts have developed indexes to identify the rate at which globalization is increasing or decreasing. One of these indexes, known as the DHL Global Connectedness Index, measures factors like trade, information, and border crossings. According to Harvard Business Review, “In 2017, strong growth across most of the world propelled the DHL Global Connectedness Index to a record high. The proportions of trade, capital, information, and people flows crossing national borders all increased significantly.” (Ghemawat & Altman, 2019). This would suggest that globalization has increased at a staggering rate compared to the past.

Opposition

            A popular argument for globalization is that it creates jobs for the unskilled workers of that country. Jobs are important in underdeveloped countries because many of those unskilled positions can be filled at a lower cost that in the home country. This saves money for the business and the profits from sales mostly return to the home country. Furthermore, the business can save money on working conditions, shipping costs for materials, and even taxes. These are valid arguments and according to International Economics globalization can “stimulate economic growth, increase domestic labor demand, and drive wage growth.” (Torelli, 2017). Also, for these workers, the working conditions “may be unpleasant, yet they are no worse — and often better — than the alternative local work options.” (Torelli, 2017).

            Globalization is known to deliver technology to foreign countries to support the logistical networks of the home country’s investments. Technology like satellite dishes, radio/cell towers, running water, and power plants are just a few examples of how an international business can affect a third-world country. These advancements are created and ideally maintained by the local businesses which helps the economy. Technology connects people to the world and fosters education capabilities. (Torelli, 2017).

Reasons and Evidence

Economic Dependence

            A major drawback to globalization is the imposed economic dependence the host country will ultimately succumb to. As global economies grow at rapid rates, those businesses will seek expansion to diversify their target markets (Pologeorgis, 2019). Diversification presents as globalization for international businesses and with enough foreign investment in an unstable economy, the host country usually becomes dependent of the home country’s businesses. In fact, some analysts believe that international peace can be made with “representative democracy, international organizations, and economic dependence.” (Torelli, 2017). Economic dependence presents in a few ways. The workers become accustomed to earning certain wages working for foreign businesses, the tax revenue for the country increases, and local businesses being contracted by the foreign companies all thrive from this. The problem arrives when the home country decides to withdraw international investments or tightens regulations because it can cripple the host country’s economy by decreasing revenue and laying off workers (Awad, 2019). An economic collapse like in the Middle East post-Gulf War creates a power vacuum for wealthier countries to step-in and assume control of the struggling host country. Government aside, it is too often the people of the “Western World” learn about atrocities around the globe and feel it is their obligation to contribute financially to the problem (Heilgendorff, 2018).

Political Control

            The second major drawback to globalization is the political control over the host country. In a third-world country where someone like the U.S. could build a textile manufacturing plant (i.e., Nike) where thousands of jobs would be created, and millions of dollars would be paid in taxes to the host country. Such a massive impact on the local economy encourages the continuation of outside investment opportunities. Like economic dependence, representative democracy was believed to be one of the pillars of peace around the world (Torelli, 2017). In a foreshadowing of events, every third-world country would eventually be absorbed by the larger growing powers along their borders. Globalization is necessary for them to compete on the global scale, but studies have shown that such agreements will ultimately lead to a collapse from the inability to support these advancements (Ahmed, 2021). At this point, the home country can consider the host country a territory by controlling and/or defending them since they can no longer support their own people. Political control can be a potential side-effect of globalization but one that has been used, nonetheless. Every time the U.S. raises tariffs on importing goods, the exporting country loses millions or sometimes billions of dollars, like when Former President Trump imposed a higher tariff each week against China until they met his policy terms. Trade is a powerful tool that is used in the political arena and should not be underestimated. Political control is not a solution to peace, it’s a solution to make money. In short, the capitalist society that fosters globalization will ultimately foster political control.

Conclusion

            Globalization seems like a good idea in theory, but it has its dark drawbacks that go unnoticed except by economic analysts. Globalization presents with a smiling face and open arms like it’s ready to benefit the host country to it’s fullest. Truthfully, private businesses seeking expansion on an international market are only seeking a broader market base. There may be benefits to the host country like jobs and technology advancements, but the businesses are self-serving. On the political scale, these types of investments give the home country political power and foster economic dependence. The scale of globalization reaches far beyond safety hazards and low wages. Businesses are not allowed to operate in other countries because they want everyone to wear GAP t-shirts, they’re allowed to go to influence capitalism. And let’s not get big corporations and the home country itself confused. International business is exercising it’s freedom to work across borders with the approval of the home country. They are an extension of U.S. politics and there is no difference regardless of the true interest of the business. The fact they are granted tax breaks or allowed to run on sub-par safety standards are all benefits the home country has given them in order to spur a faster return on their investment and get that money back to the home country. The two terms are synonymous. The home country is the bigger winner here but it’s okay, they’ll be the same country one day.

References

Ahmed, X, Shang, B., & Cary, M.  (2021). Linking economic globalization, economic growth, financial development, and ecological footprint: evident from symmetric and asymmetric ARDL.  Ecological Indications 121.https://doi.org/10.1016/j.ecolind.2020.107060Links to an external site.

Awad, A. (2019). Economic globalization and youth unemployment–evidence from African countries. International Economic Journal33(2). https://doi-org.ezproxy.neu.edu/10.1080/10168737.2019.1604787Links to an external site.

Ghemawat, P., Altman, S. A. (2019). The state of globalization in 2019, and what it means for strategists. Harvard Business Reviewhttps://hbr.org/2019/02/the-state-of-globalization-in-2019-and-what-it-means-for-strategistsLinks to an external site.

Heilgendorff, F. (2018). Conceptualizing Capitalist Globalization. Philosophy of Globalization (pp. 47-62). Berlin/Boston: De Gruyter. http://www.jstor.org/stable/j.ctvbkk12k.7Links to an external site.

Pologeorgis, N. (2019). How globalization affects developed countries. Investopediahttps://www.investopedia.com/articles/economics/10/globalization-developed-countries.aspLinks to an external site.

Torelli, P. Understanding the Forces of Globalization for Managers. International Economics. Second Edition. Business Expert Press (2017). https://ebookcentral.proquest.com/lib/northeastern-ebooks/detail.action?docID=4880211

ESSAY 2:

Implications of Private vs. Public Funding on Space Exploration and Its Accomplishments

            It is clear that space exploration helps the human race push boundaries of scientific and technical limits. But space exploration also has indirect benefits to our economy, future inspiration, and interactions the United States has with other countries. There are various sectors dedicated to this positive spread of knowledge and influence space exploration has. Currently, exploration and launches are mainly led by the National Aeronautics and Space Administration (NASA), a government funded agency and SpaceX, a private for-profit sector owned by Elon Musk. It is important to understand where the funding for these organizations go and how much they are receiving. This ensures the most successful space exploration programs are being supported. Funding a private organization to advance space explorations such as SpaceX may initially seem more beneficial. In reality, funding government organizations like NASA is more advantageous because unlike other private sectors, NASAs investments are not directly linked to financial gain, they also stimulate the economy and have congressional oversight to ensure legitimacy, which is why current and future space endeavors should remain a primarily government funded pursuit.

            Space exploration is driven by the innate human drive to explore and discover. By pushing the boundaries of technical and scientific limits it allows for the human race to become more inspired with what space has to offer. Exploring space is also motivating for nations to gain more prestige and unity. Space exploration began in the late 1950s when the Soviet Union launched Sputnik, an artificial satellite to orbit earth and NASA launched Project Mercury to explore human life in space. This was a government run endeavor. For decades prior to the 1980’s, the public sector was relied upon to provide services. Governments employed means of public authority in order to give back to communities in a structured way. President Reagan then suggested to “undo something” which heavily influenced the privatization of previously nationalized industries in the United States. It was not until the 21st century that individual companies began creating and operating spacecrafts (Goodman, 2014).

            In general, private sectors have many advantages over public organizations. Three main conclusions summarize the impact that privatization has. The first being that nether public nor private managers will always act in the best interest of their shareholders and that private sectors are only ever effective if the private managers have incentives to act in public interest. Second being that profits and the public interest overlap best when privatized services are in a competitive market. And lastly, when conditions are not met, government involvement is still present and the potential transfer from private sectors to public does not affect said service (Goodman, 2014). Considering the points above, it may be more beneficial short term to support private space exploration sectors, but where is the line drawn for this risk vs reward regarding our financial investments?

            NASAs investments are not intended to create financial gain, unlike SpaceX, a for-profit company (Planetary, 2020). In a capitalist economy the motivation of private enterprises is to please shareholders and make profit, whereas government organizations have a motive of providing a low cost, nonprofit service funded by tax dollars. This contrast can be directly observed while considering a government funded organization such as NASA compared to a private sector like SpaceX. Private sectors are for-profit and are often owned by one person. SpaceX is owned by Elon Musk, the richest man in the world with a net worth of more than 185 billion U.S dollars (Frank, 2021). His privately owned company SpaceX is worth over 74 billion as of February 19 (Sheetz, 2021). Inversely, NASA is a United States government agency funded by taxpayers (Planetary, 2020). Essentially by funding private space exploration companies like SpaceX, people like Elon Musk gain more profit whereas when NASA is funded via tax dollars depending on the budget passed by congress. This is a guarantee while mainly funding NASA, but an uncertainty while funding SpaceX. Robert Frost, Group Lead and Flight Operations Directorate of NASA states the fact that, “private companies can’t invest the kind of resources needed to build, launch, and operate spacecraft with hope that they’ll find ways to profit later” (Frost, 2017). This reinforces the idea that funding a government program is more viable for this endeavor. Funding NASA directly is a more stable means of supporting current and future space exploration. By funding more directly to NASA opposed to private sectors, financial distribution can also be benefiting the economy, create new jobs, and be an inspiration for future generations.

            NASAs investments not only provide further observations in space, scientific and technical advancements, but their outlay is also beneficial for the United States economy. It must be remembered that NASA uses technology, engineering, and manufacturing platforms which stimulates the economy as a whole. Most of these manufacturing platforms are based in the United States which stimulates the country’s economy further. NASA released an agency wide economic report in 2019 that showed that they generated 64.3 billion dollars in total economic output, supported more then 312,000 jobs nationwide, and generated 7 billion dollars in local, state, and federal taxes throughout the United States (Northon, 2020). Stated most directly in a recent interview, Jim Bridenstine, NASA Administrator said, “In this new era of human spaceflight, NASA is contributing to economies locally and nationally, fueling growth in industries that will define the future, and supporting tens of thousands of new jobs in America” (Northon, 2021). Contrastingly, SpaceX can be used as an example and should be noted they are a parent company to Tesla and are also owned by Elon Musk. SpaceX is actively funded by contracts via the United States government as well as revenue generated by Tesla.  The company Tesla has reportedly been accused of using child labor in developing countries to reduce manufacturing costs (Togoh, 2019). While this has yet to be proven in an international court, privately owned for-profit organizations have used child labor in impoverished nations to cut manufacturing costs. Since the main goal of a private company is to generate a profit, a company may choose to outsource manufacturing to reduce production and labor costs. This harms the U.S economy and means that quality goods are not a priority due to their cost. By actively supporting the funding of government organizations for space exploration, the economy of the United States can be stimulated in an ethical manner. Government run organizations like NASA are also mandated by the government and held to certain standards financially and morally in order to avoid adverse situations.

            Government run organizations like NASA are a part of the government which means they have congressional oversight. Congressional oversight means that the United States Congress legislatively authorizes NASA’s budget. This ensures that money is being ethically allocated aligning with the best intentions stated by the collective rather than an individual. Since NASA is a government organization, its space pursuits must abide by the United States Constitution and laws to improve economic, efficient, and effectivity of the organization’s objectives (Grassley, 2018). The Freedom of Information Act passed by congress in 1966 requires any governmental organization to release information to the public upon request (The Freedom, 2019). This same law does not apply to private entities, and therefore governmental organizations have more accountability. The original intentions of NASA should also be known and are noted according to the Journal of Economic Perspectives and NASA Administrator James L. Webb, “national space policy should not be turned over to private firms. [NASA] It is the government acting in public interest that determines what should be done, when it should be done, and for how much money” (Weinzierl, 2018). In a private company such as SpaceX, the decision on what to spend, how much, and when to spend it is left entirely up to a few or one wealthy individuals whose own motives are often profit based. It is clear that NASA’s motives are to only benefit the public, but SpaceX and other private sectors motives can become more muddled.

            In order to proceed with viable and successful means of space exploration, it is important to reflect on where funding is going to. It is also important to reflect on the notion of funding a private vs a public sector as this dictates the goals for which the money is used for. Funding government led organizations is more advantageous while considering successful space endeavors. This is because the government has legislative rights and guidance to hold programs like NASA accountable for their actions. With an industry as important as space exploration, it is imperative that an organization with public accountability is funded. Government led organizations are also beneficial for the economy by utilizing technology, engineering, and manufacturing companies. Funding government organizations ensures successful space exploration pursuits. Unlike private sectors, NASA’s investments are directly related to accomplishing the goals of the general public, they improve the economic value of the United States, and they are held accountable by law and Congress. Future and current space exploration should be a government funded action.

References

Anderson, R. (2015, February 23). Nine good reasons for space exploration. Advancing Earth and Space.Retrieved March 14, 2021, from https://blogs.agu.org/martianchronicles/2008/04/16/nine-good-reasons-for-space-exploration/Links to an external site.

Dunk, F. G. (2012, June 13). The integrated approach-regulating private human spaceflight as space activity, aircraft operation, and high-risk adventure tourism. Science Direct. Retrieved March 04, 2021, from https://www.sciencedirect.com/science/article/pii/S0094576512002111Links to an external site.

Frank, R. (2021, January 07). Elon Musk is Now the Richest Person in the World, Passing Jeff Bezos. Consumer News and Business Channel. Retrieved March 21, 2021, from https://www.cnbc.com/2021/01/07/elon-musk-is-now-the-richest-person-in-the-world-passing-jeff-bezos-.htmlLinks to an external site.

Frost, R. (2017, April 04). The pros and cons of privatizing space exploration. Forbes. Retrieved March 04, 2021, from https://www.forbes.com/sites/quora/2017/04/04/the-pros-and-cons-of-privatizing-space-exploration/?sh=3d4c38473319Links to an external site.

Genta, G. (2014, April 16). Private space exploration: A new way for starting a spacefaring society? Science Direct. Retrieved March 04, 2021, from https://www.sciencedirect.com/science/article/pii/S0094576514001337Links to an external site.

Goodman, J. B., & Loveman, G. W. (2014, August 01). Does privatization serve the public interest? Harvard Business Review. Retrieved March 14, 2021, from https://hbr.org/1991/11/does-privatization-serve-the-public-interest#:~:text=1.,is%20not%20limited%20to%2C%20efficiencyLinks to an external site..

Grassley, C. (2018, June 25). The importance and responsibility of congressional oversight. The Heritage Foundation. Retrieved March 21, 2021, from https://www.heritage.org/event/the-importance-and-responsibility-congressional-oversightLinks to an external site.

Markovich, S. J. (2021, February 23). Space exploration and U.S. competitiveness. Council of Foreign Relations.Retrieved March 14, 2021, from https://www.cfr.org/backgrounder/space-exploration-and-us-competitivenessLinks to an external site.

Northon, K. (2021, January 4). NASA report details how Agency significantly benefits US Economy. National Aeronautic Space Administration. Retrieved March 21, 2021, from https://www.nasa.gov/press-release/nasa-report-details-how-agency-significantly-benefits-us-economyLinks to an external site.

Pettinger, T. (2019, November 19). Advantages and problems of privatization. EconomicsHelp.org. Retrieved March 14, 2021, from https://www.economicshelp.org/blog/501/economics/advantages-of-privatisation/Links to an external site.

Sheetz, M. (2021, February 19). What’s behind SpaceX’s $74 billion Valuation: Elon musk’s two ‘Manhattan Projects’. Consumer News and Business Channel. Retrieved March 21, 2021, from https://www.cnbc.com/2021/02/19/spacex-valuation-driven-by-elon-musks-starship-and-starlink-projects.htmlLinks to an external site.

Steinberg, A. (2011,Nov.). Space policy Responsiveness: The relationship between public opinion and NASA funding. Space Policy. 27 (14). Retrieved March 05, 2021, from https://www.sciencedirect.com/science/article/pii/S0265964611000725Links to an external site.

T. (2020, November 12). Why do we need NASA when we have SpaceX? Planetary Society. Retrieved March 04, 2021, from https://www.planetary.org/articles/nasa-versus-spacexLinks to an external site.

The Freedom of Information ACT, 5 U.S.C. § 552. (2019, July 19). The United States Department of Justice.Retrieved March 21, 2021, from https://www.justice.gov/oip/freedom-information-act-5-usc-552Links to an external site.

Togoh, I. (2019, December 18). Apple and Tesla Among Tech Giants Being Sued Over the Deaths and Injuries of Child Cobalt Miners In DRC. Forbes. Retrieved March 21, 2021, from https://www.forbes.com/sites/isabeltogoh/2019/12/17/apple-and-tesla-among-tech-giants-being-sued-over-the-deaths-and-injuries-of-child-cobalt-miners-in-drc/?sh=6629880e3107Links to an external site.

Weinzierl, M. (2018). Space, the Final Economic Frontier. The Journal of Economic Perspectives, 32(2), 173-192. Retrieved March 4, 2021, from http://www.jstor.org/stable/26409430

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