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David Guillen

Professor Rex

POLS&203

29 May 2022

Globalization and Its Effects on World Politics

This paper will demonstrate that globalization is a negative force in world politics for the

following reasons: Firstly, globalization has affected state sovereignty through the rise of

non-state actors. Secondly, globalization has increased domestic and global inequality. Lastly,

globalization has corroded environmental security.

One of the most notable observations seen under globalization is the decrease of state

sovereignty brought by the action of non-state actors, such as MNCs. Notably, MNCs have

existed before globalization, but due to the liberalization of the global economy and an

embracing of free-market policies, this has greatly empowered MNCs, which is specifically seen

in the article, “Are Multinational Corporations Undermining Freedom In Poor Countries?”. The

author points out that MNCs use tools such as “investor-state dispute settlement” to “sue

countries through independent arbitration courts” (Gebelhoff, para. 3). While this tool was

originally meant to protect companies from unfair regulations the reality is that the cost of these

lawsuits is used as economic leverage against the sued state (Gebelhoff, para. 4). In short, this

means underdeveloped countries must abide by the demands of MNCs to avoid economic crises,

even if it defies their sovereignty. IOs, such as the IMF, are also responsible. Once again, the

IMF’s creation was not brought about by globalization, but due to the status quo of free-market

policies, many states have had to depend on the IMF to function properly in the globalization era.

For states to qualify for loans, they must agree to certain conditions including “austerity
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measures such as tax increases … budget reductions in … infrastructure, research, and

education; … reducing trade restrictions; privatization of state-run corporations; … and

reduction of price regulations and unions” (Chen, para. 5). Adding on, these austerity measures

increase the power of MNCs and other companies. “Privatization does generally beget greater

economic efficiency and profit for business owners, multinational corporations, and foreign

investors” (Chen, para. 9). In hindsight, this means that MNCs have the disposal to more freely

dictate economic policy due to these measures, such as imposing the mentioned investor-state

dispute settlements. Overall, even though the acceptance of MNC operations or the acceptance of

loans can be defined as “voluntary”, the reality is many states have no other option but to accept

such changes if they wish to reap the fruits of globalization.

Consequently, the economic policies surrounding globalization have led to an increase in

inequality between and within states. When it comes to inequality between states, according to

the book, “Globalization, Poverty, and Income Inequality”, the author points out that income

inequality between states has increased between states in absolute terms in the age of

globalization (Barichello et al., 19). It is worth mentioning that states such as China have

dropped income inequality between states when it comes to weighting countries by population,

but considering global inequality in the age of globalization, “the distribution of income across

the world’s population including China - remains very high” (Barichello et al., 19). This effect is

felt in even the most economically dominant state in the world, the US. According to “Using

Standard Models to Benchmark The Costs of Globalization for American Workers Without a

College Degree”, due to increases in trade brought in by globalization, “wages … lowered in

2011 by 5.5 percent—or by roughly $1,800—for a full-time, full-year worker earning the

average wage for workers without a four-year college degree” (Bivens, para. 5). From a more
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global perspective, according to the journal, “Does Economic Globalisation Affect Income

Inequality?”, researchers found that all aspects of economic globalization increase income

inequality rather than reduce it, “The precision-weighted average of the globalization–inequality

effect is 0.074 … Considering the total population of estimates, we, therefore, find evidence for a

small-to-moderate inequality-increasing impact of globalization” (Heimberger, 7). Overall, it is

clear that globalization favors the already economically well-off and harms the working class

more than benefits it.

In an interconnected world where trade is commonplace, transportation and global

production are bound to increase substantially. However, this has severe economic effects.

According to the journal, “The Impact of Economic Globalization on CO2 Emissions”, as the

economic globalization index goes up, CO2 emissions are bound to go up as well as energy

consumption, which is specifically seen in NAFTA countries (Kalaycı and Hayaloğlu, 5).

Additionally, “increase in trade openness in NAFTA countries also leads to an increase in CO2

emissions” (Kalaycı and Hayaloğlu, 5). CO2 emission increase isn’t the only environmental

drawback of globalization, however. In the journal, “The Effects of Globalization on Ecological

Footprints”, the author points out that “more globalized countries have higher EFs and therefore

put higher pressures on ecosystems” (Figge et al., 8). In general, this means that to keep up with

the demands of the global economy, we are further straining our ecological systems and limiting

our natural resources (i.e. food, water, etc). The author estimates that “a one-point increase in

globalization corresponds with a 1% increase of the EF of consumption” (Figge et al., 8). One of

the indirect effects of these events is the strain on ecological footprints and the increase in

pollution caused by economic globalization are being felt in developing countries. According to

the article, “World’s Top Economies Responsible For Millions of Pollution Deaths”, about 2
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million of the 4 million premature deaths caused by particle pollution can be attributed to goods

sent to and consumed by G20 countries (Patel, para. 3). Adding on, when evaluating G20

countries’ environmental footprints using a consumer-based approach, harmful pollutants are

released into the air when creating the products and goods being shipped across the world, which

is responsible for millions of deaths in underdeveloped countries (Patel, para. 6-7). In short,

globalization in the environmental sense is not only one that dangers our environmental security,

but it can also be seen as a zero-sum game. Developed countries reap the rewards while

developing countries are stricken with unwarranted pollution.

One of the arguments that globalization advocates make is that due to the increased

interdependence among states, the whole world has shared common economic growth.

According to the report, “The rise and rise of the global balance sheets”, the global balance sheet

and net worth “more than tripled between 2000 and 2020. Assets grew from $440 trillion in 2000

to $1,540 trillion in 2020, while net worth grew from $160 trillion to $510 trillion” (Woetzel et

al., para. 11). There is much to celebrate surrounding this feat, but one of the problems that arise

from such deep interdependence is the fragility that these connections produce. Essentially, a

hardship that a country may be facing may also affect multiple countries. Although not as

economically recognizable, Thailand’s financial crisis in 1997 affected many countries. The

pulling back of foreign investment in Thailand led to a domino effect where other foreign

investors in countries to close proximity to Thailand began pulling back as well, which had

effects in countries as far as Russia and Brazil (Hale and Klein, para. 4). The Asian economic

crises essentially led to the 1998 collapse of a large hedge-fund which provoked the US Treasury

and New York Federal Reserve Bank to step in to avoid possible contagion (Hale and Klein,

para. 4). More recently, due to the recession associated with the COVID-19 pandemic,
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developing countries have taken a hard hit through “reduced financial flows … temporary

reduction in the values of commodity exports, remittances, and tourism” (Hale and Klein, para.

4). Adding on, this not only affects states but affects consumers as well. Due to globalization,

consumers have been able to enjoy low product prices. Despite this, consumers also depend on

states running smoothly to enjoy their luxuries, but any event can alter this. Take the War on

Ukraine as an example. Due to the war, the IMF predicts “the U.S. inflation rate will reach 7.7%

this year and 5.3% in the eurozone” (Ellyat, para. 5). Inflation has already affected important

goods such as gas, “Brent crude topped $130 a barrel in early March … gasoline prices recently

hit a record $4.331 a gallon … more than 15% from where they stood a month earlier” (Goldfarb

and Patterson, para. 7). In short, while globalization has brought tremendous benefits for both

consumers and states alike, the reality is these benefits come at a cost. Global stability and

cooperation are needed to ensure luxuries are maintained, but the anarchic environment of world

politics can offset these benefits at any time.

In closing, globalization can be seen as a negative force in world politics for a wide

variety of reasons. There is no doubt that globalization has benefits for both consumers and

nation-states alike, but is globalization the best form of international cooperation we can come

up with? Our over-reliance on free trade and the liberalization of the economy has essentially

embraced a capitalist lifestyle where we are creating global hierarchies that benefit the rich while

disadvantaging the poor. Perhaps, a better form of internationality should include one that

ensures economic prosperity regardless of the adoption of liberal economics. A form of

internationality that respects the diversity and complexity of each nation-state, but encourages

cooperation that in a way benefits all classes in a healthy and regulated manner.
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1528 Words.

Works Cited

Barichello, Richard, et al. “Globalization and Inequality.” Globalization, Poverty, and Income

Inequality: Insights from Indonesia, UNIV OF BRIT COLUMBIA PR, S.l., British

Columbia, 2021, pp. 19–20.

Bivens, Josh. “Using Standard Models to Benchmark the Costs of Globalization for American

Workers Without a College Degree.” Economic Policy Institute, 22 Mar. 2013,

https://www.epi.org/publication/standard-models-benchmark-costs-globalization/.

Chen, Joyce. “Neocolonialism and the IMF.” Harvard Political Review, 21 Oct. 2021,

https://harvardpolitics.com/neocolonialism-imf/.

Ellyatt, Holly. “From Soaring Food Prices to Social Unrest, The Fallout From The

Russia-Ukraine War Could Be Immense.” CNBC, CNBC, 21 Apr. 2022,

https://www.cnbc.com/2022/04/21/from-food-to-inflation-the-russia-ukraine-war-has-a-gl

obal-impact.html.

Figge, Lukas, et al. “The Effects of Globalization on Ecological Footprints: An Empirical

Analysis.” Environment, Development and Sustainability, vol. 19, no. 3, 2 Mar. 2016, pp.

863–876., https://doi.org/10.1007/s10668-016-9769-8.

Gebelhoff, Robert. “Opinion | Are Multinational Corporations Undermining Freedom In Poor

Countries?” The Washington Post, WP Company, 13 Sept. 2016,

https://www.washingtonpost.com/news/in-theory/wp/2016/09/13/are-multinational-corpo

rations-undermining-freedom-in-poor-countries/.
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Hale, Galina, and Michael Klein. “How Economic Crises Spread Abroad.” Econofact, 24 Sept.

2021, https://econofact.org/how-economic-crises-spread-abroad.

Heimberger, Philipp. “Does Economic Globalisation Affect Income Inequality? A

Meta‐Analysis.” The World Economy, vol. 43, no. 11, 9 Aug. 2020, pp. 2960–2982.,

https://doi.org/10.1111/twec.13007.

Kalaycı, Cemalettin, and Pınar Hayaloğlu. “The Impact of Economic Globalization on CO2

Emissions: The Case of NAFTA Countries.” International Journal of Energy Economics

and Policy, vol. 9, no. 1, Jan. 2019, pp. 356–360.,

https://doi.org/https://doi.org/10.32479/ijeep.7233.

Patel, Kasha. “World's Top Economies Responsible For Millions of Pollution Deaths, Mostly In

Poor Countries.” The Washington Post, WP Company, 2 Nov. 2021,

https://www.washingtonpost.com/weather/2021/11/02/world-economies-supply-pollution

-deaths/.

Goldfarb, Sam, and Scott Patterson. “Why Are Gasoline Prices So High? Ukraine-Russia War

Sparks Increases Across U.S.” The Wall Street Journal, Dow Jones & Company, 1 Apr.

2022, https://www.wsj.com/articles/why-gas-prices-expensive-11646767172.

Woetzel, Jonathan, et al. “The Rise and Rise of the Global Balance Sheet: How Productively Are

We Using Our Wealth?” McKinsey & Company, McKinsey & Company, 15

Nov. 2021,

https://www.mckinsey.com/industries/financial-services/our-insights/the-rise-and-rise-of-
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the-global-balance-sheet-how-productively-are-we-using-our-wealth#:~:text=The%20wo

rld%20has%20never%20been,%24160%20trillion%20to%20%24510%20trillion.
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