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Thursday, March 24, 2011

Globalization of Businesses: Helpful or Harmful?

While business globalization has many positive impacts such as job creation in developing countries, the net effects of globalization on the countries entered can quickly become destructive.

We all remember the haunting picture of the vulture watching the starved, dying Sudanese girl on her way to a food camp that won photographer Kevin Carter the Pulitzer Prize in 1994. We could spend hours debating the causes, forces and string of events that led to this child’s death, but I would like to focus on one argument—the argument that this photo is the result of business globalization. Simply put, Talisman Energy, an oil and gasoline company based in Calgary, Alberta, expanded globally in order to drill for oil in Sudan. The drilling displaced thousands of local citizens. Talisman made profits from the oil and paid large royalties to a corrupt local government who used the money to build its army, rather than benefit its citizens. This in turn caused a larger income disparity in Sudan, which led to greater suffering for the poor. Perhaps this even indirectly sped up the death of this little girl.

Let’s look at an environmental issue related to globalization. A double standard exists for multinational companies operating in developing countries. Large companies may enter developing countries where environmental laws are non-existent, or are not strongly enforced, and take advantage of the relaxed standards. This sort of issue led to one of the worst industrial accidents in history. In 1984, Union Carbide India Limited (UCIL) pesticide manufacturing plant in Bhopal leaked gas that immediately killed at least 3800 people and caused long-term health consequences and premature deaths for thousands more. The incident occurred because UCIL adopted safety standards that were below levels that were acceptable in its home country.

What do these events teach us? Large companies like Talisman have great amounts of resources and power with which they can influence corrupt governments away from using royalties in ways that hurt their countries’ citizens. International standards for environmental safety, preventative strategies, and industrial disaster preparedness in developing countries would help avoid accidents like the Bhopal disaster.  What these events teach us is that research must be done about effects of globalization on the community, laws must be put in place to protect society and the land, and strategic planning must be conducted to help create a net positive effect on countries entered by companies expanding globally.  

GlassFrog blogger, Sherisse

3 comments:

  1. Interesting point you bring up, I think this also ties into the issue of harm caused by sweatshops only to help big name companies such as Nike.

    However, what do you propose as a solution? We can't just outlaw the globalization of businesses. Do you think maybe there should be an international agency put in place (kind of like Amnesty International for human rights) which analyses and decides which business should be allowed to expand into which countries based on the circumstances/situation..

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  2. I think your international agency idea is appropriate for setting international laws about safety standards, amounts of resources that can be exported from these countries for selling purposes, etc.
    But I think it's just up to the businesses themselves to fully analyze the situation before they enter the country because they have the power (money) to influence circumstances in the country, at least to an extent. It's also up to the consumers to pressure the businesses. Consumer protests made Nike look into the child labour issue.

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  3. It certainly is true that consumers have a lot more power than they use. If we complain about the international business practices of particular companies, but then we continue to buy the companies' products, it's little wonder that these companies continue to be exploitative. Increasingly the information about a company's global practices is available on the internet for those who take the time to look for it. There is also enough info to allow us, as educated citizens, to assess the validity of what we read and register our protests when these abuses occur.

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