IMPACT OF GLOBALIZATION

Critically Analyse the Impact of Globalization upon Capital, Labour And Economic Governance

Critically Analyse the Impact of Globalization upon Capital, Labour And Economic Governance

Globalization has to do with the free international trade in products and services, and the free circulation of labor, the major source of value added to economic production, as well as capital, the money invested in the process of production, money chasing profits, i.e., put up at the outset to generate a return in the form of profit for the investors. In theory, the idea is that the free market—a free movement of production, trade, capital, and labor—is the best or most efficient means of deciding who gets what in terms of wealth and income (the global marketed social product) and that attempts by governments to restrict international trade or the movement of capital and labor, the basic factors of production (land, natural resources, and technology being others), would distort the proper workings of the laws of the market, generating all sorts of problems such as the lack of robust economic growth (increase in the national output or the GNP), the informalization of labor, unemployment, and poverty (Boyd,. 2009).

Economic globalization has raised the scale and the complexity of international transactions, thereby feeding the growth of top-level multinational headquarter functions and the growth of services for firms, particularly advanced corporate services. It is important to note that even though globalization raises the scale and complexity of these central functions, these trends are also evident at smaller geographic scales and lower orders of complexity, as would be the case with firms that operate regionally or nationally; central functions also become more complex in these firms as they run increasingly dispersed operations, even though not global, notably setting up chains (often by buying up the traditional single-owner shops) to sell flowers, food, and fuel, or to run chains of hotels and a growing range of service facilities. Although operating in simpler contexts, these firms also need to centralize their control, management, and specialized servicing functions. National and regional market firms need not negotiate the complexities of international borders and the regulations and accounting rules of different countries, but they do create a growing demand for corporate services of all kinds, feeding economic growth in second-order cities (Boyd,. 2009).

The second process we need to consider, and one that has received little if any attention from urban sociology, is the growing service intensity in the organization of all industries (see Sassen [1991] 2001, chap. 5; for a comprehensive overview, see Bryson and Daniels 2006). While it partly overlaps with the first process, it is important to recognize that this development has contributed to a massive growth in the demand for services by firms in all industries, from mining and manufacturing to finance and consumer services. Cities are key sites for the production of services for firms. Hence, the increase in service intensity in the organization of all industries has had a significant growth effect on cities beginning in the ...