“Latin America has benefited from the process of globalisation.”
Critically analyse this statement.
INTRODUCTION
North America and Europe transformed dramatically at the start of the Industrial Revolution. By the late 19th century, whole economic systems had completed a metamorphosis from the feudal system to bustling capitalist societies. Trade replaced gentry as the new social elite, and whole countries were reshaped with the advent of such technological breakthroughs as the assembly line and the subsequent impact the aforementioned had on market organization and distribution throughout the world. Unfortunately for North America and Europe, industry monopolized the natural resources necessary to maintain industrialisation’s requisites, and fiscal eyes shifted their focus onto the Third World. For Europe, this initially meant the colonization of Asia, Africa, and Latin America. Following the end of the Imperial Age and the emergence of the United States (US) as the world’s last superpower, the new colonialism became globalisation and the redistribution of the Third World’s resources to the wealthy, industrialised West. It soon became evident that the industrialisation of Third World nations such as those in Latin America would more highly profit Europe and the US, as shipment of finished products was far more lucrative than the transport of raw materials. The sudden changes and economic developments resulting from globalisation benefited Latin America marginally; it seemed as though Central and South America were bestowed with industrialisation overnight, achieving what took America and Europe almost a century to develop. However, unparalleled growth brought to Latin America unrivalled corruption, pollution, and a socio-economic stasis that was so fragile it toppled governments and destroyed the developing post-colonial societies left in Europe’s wake.
Countries with unique, fragile environments such as Brazil faced massive deforestation and the slashing of thousands of acres of Amazonian rainforest on a daily basis in order to meet the burgeoning requests of Europe and North America. Globalisation’s advent cost Brazil the massive industrialisation of its people, and like its Spanish-speaking Latin American counterparts, the push to industrialisation destroyed the agrarian and trade-skill economic system it enjoyed prior to the 1950s. Though all formerly-Spanish, Argentina, Costa Rica, and Mexico faced similar economic fates as Brazil; all four suffered heightened gaps between rich and poor, the converse of the Industrial Revolution in Europe. Ironically, what Europe and North America imposed on Latin America could only be absorbed through corrupt regimes and the influence of a select few with whom the West was conducting business. Unlike Europe and America, which experienced a change in the gentry’s ranks, Latin America’s social elite only became stronger and more powerful, changing the course of globalisation from industrial change to the dramatic heightening of the bourgeoisie’s hold over the proletariat.
THE BENEFITS ANDPOSITIVE ASPECTS OF GLOBALISATION
Though an overwhelmingly negative agent in Latin America and the rest of the Third World, globalisation yields some positive corollaries. In his In Defense of Globalization, Jagdish Bhagwati discusses the ever-controversial issue of economic globalisation, which “embraces diverse forms of international integration, including foreign trade, multinational direct foreign investment, movements of short-term portfolio funds, technological diffusion, and cross-border migration”; though he mentions the “socially destructive globalization” and the “rapaciousness of multinational corporations which [globalisation’s detractors] believe are the principal beneficiaries,” he supports it as a means of “enlarging the [economic] pie” (Bhagwati 2004, p. ix). Bhagwati is firm in his support of globalisation as a means for humankind to reduce such socially crippling conditions such as child labour, poverty, destruction of the environment, and the deprecation of women’s rights. He simultaneously advocates globalisation’s spread of democracy and capitalism, citing the “nearly 150 prime ministers and presidents of the world’s nations [converging] in September 2000 for the UN’s Millennium Summit” and their noble charge of halving ‘by the year 2015 the proportion of the world’s people whose income is less than one dollar a day” (Bhagwati 2004, p. 51). Despite such noble intentions, Bhagwati neglects to mention the stark similarities between globalisation and colonisation. It is said that the benefactors of resolution are those who make the policy, and globalisation’s tendencies throughout the past half century indicate nothing entirely different. As imperialism so clearly taught the world, the main benefactors of an internationally-branching economy are the ones who promote it-in this case, the United States and Europe. It is the former and the latter that have the power to spread globalisation, and it will be the mentioned two that will be the first to benefit in the purported spreading of wealth that globalisation would theoretically promote. Bhagwati counters this claim, stating that “globalization [sic], in the specific form of freer trade (and inward direct foreign investment” implies a “a closer integration in to the world economy,” that the problem with globalisation today is the policy behind it, not the intent or purpose of its ideals (Bhagwati 2004, p. 52). He continues in his addressing of the “critics of multinational [companies]” who believe the said corporations are guilty of “accentuating the divide between those who are fortunate and those who are not,” and who claim the same companies “cause harm where they go, exploiting the host countries and their workers” (Bhagwati 2004, p. 162). Globalisation’s potential, according to Bhagwati, has not been realised and is still in its conceptualised form. With proper regulation and international vigilance by necessary bodies of authority, Bhagwati believes that globalisation can bring industrialisation and heightened production to the Third World, enhancing the economy but in doing so improving the human situation in the fiscally-deficient, economically-ravaged areas of the world. Circumventing the argument behind globalisation’s corruption, Bhagwati asserts that the Third World regimes will have to play the “game of attracting investment,” in doing so forcibly “providing [its] people with “political stability and economic advantages such as cheap labor [sic] or exploitable natural resources” (Bhagwati 2004, p. 162). Bhagwati, like many proponents of globalisation, assert that countries involved will initially face a period of economic drought in order to establish a line of assured future growth. In the advocacy of globalisation, however, Bhagwati’s arguments concede that certain nations “are going to lose simply because they lack” the attributes necessary to sustain this line of growth, namely, the assets vital in the “game of attracting investment” (Bhagwati 2004, p. 162). Even in Bhagwati’s support of globalisation, evidence of a margin of exploitation exists; impoverished nations would have to put an extreme amount of power and good faith into the West, actions that have cost the populous dearly in the past and even today.
GLOBALISATION’S NEGATIVE EFFECTS
Latin America may have benefited slightly from the process of globalisation. Various nations in Central and South America have globalised their economies and societies. Among the nations introduced-Brazil, Argentina, Costa Rica, and Mexico-there is a common trend of self-deprecation in each nation’s advocacy of globalisation. All five nations represent different economies, people, histories, problems, and geographical spheres. Despite these differences, all five nations have suffered great detractions since their ventures in globalisation started.
Brazil
Most of South America’s largest nation is covered by Amazonian rainforest, the source of much of modern Brazil’s well-being since the dawn of Europe’s Colonial Age. It is estimated that “forests cover more than 65 percent (5.51 million km) of the country’s total lands area of 8.5 million square kilometres” (Husain 2000, p. 7). Despite its millions of acres of forest, Brazil has done little to benefit from its own destructive, mass de-forestation. With its fragile ecosystem dying slowly every day, Brazil finds itself slashing thousands of acres to export to multinational corporations. Syed Asif Husain’s Brazil: Conservation and Development chronicles the deforestation and modernisation of Brazil’s economy. According to Husain and the World Bank’s records, Brazil became “a larger consumer of timber than all of Western Europe, with much of the timber going to the manufacturing sector”; by 1997, “Brazil was the largest consumer of tropical wood in the world” (Husain 2000, p. 13).
This statistic is counterintuitive, almost as alarming as the fact that the “forest sector is only 6.9 percent of Brazil’s gross national product (GDP)” (Husain 2000, p. 13). If Brazil is covered by so much rainforest, why does it feel the need to purchase more lumber than all of Western Europe as Husain purports? The billions of dollars generated by lumber purchase would surely be put to better use solving the 11.5% unemployment rate and bringing the 22% of its population from below the poverty line (CIA 2005, “Brazil”). According to Husain, Brazil’s “rapid trade liberalization [sic]” saw the removal of “almost all non-tariff barriers” (Husain 2000, p. 14). The subsequent flood of international attention to Amazonian lumber resulted in a monopoly of Brazilian lumber to private firms; the arrested financial development that resulted ended in Brazilian companies being forced to purchase lumber from foreign companies cut from the Brazilian Amazon. This disparity could not be rectified, as doing so would require the continued deforestation of Brazilian land. International, “globalised” environmental regulations dictate that rainforest preservation takes precedence over Brazilian economic development. Brazil’s former environment minister, “Jose Sarney Filho, has made bold moves against” the Brazilian common man’s attempt at financial recovery, “sending military units to patrol the Amazon” in order to “slowly [integrate] forest management into development policies” (Husain 2000, p. 77). As a result, the Brazilian consumer is forced to oblige by international prices despite the availability of wood literally growing on his/her own land.
Pollution ravages the country as it does throughout the rest of the Latin nations; globalisation has seen fit to bring a plethora of problems related to the deforestation of the Amazon. Globalisation and the increased levels of deforestation have been a detriment to the Brazilian economy despite international attempts at curbing the damage. Deforestation is not, after all, simply caused by logging for timber. Husain writes that “unsustainable logging practices within forests also contribute to net forest loss”; construction of roads “from major highways to small, unimproved logging” routes necessary for business “development and settlement also dramatically extend the negative effects of deforestation (Husain 2000, p. 17). To say that Brazil has benefited from globalisation is optimistic at best; the deforestation and forced economic development have grossly accentuated the disparity between rich and poor, while the environment the poor would erstwhile use to sustain a semblance of a livelihood is over-logged and deforested, leaving the proletariat at a significant loss with no choice but to comply with a new lifestyle imposed on them by their government.
From an economic standpoint, Brazil became “particularly vulnerable” to worldwide economic trends “because it had pursued economic [practices such as] maintaining high interest rates to attract capital in order to defend a fixed exchange rate tied to the dollar”; “the result was a massive inflow of volatile capital, increasing Brazil’s risk of rapid capital flight in the event of external financial problems” (Bouvier 2002, p. 182). In order to maintain a high level of development, Brazil essentially transformed its financial base into one large, high-risk junk bond. What ensued was its coercion to “give up efforts to shore up its currency, allowing it to fluctuate against the dollar, leading to a drop in value of almost 36 percent” (Bouvier 2002, p. 182). This set off a chain reaction, affecting its neighbours such as Argentina and nearby Guyana. Ironically, it seems as though globalisation is a danger if exported even to one country in the area, let alone the most prosperous and populous.
Argentina
Neighbouring Argentina is dramatically different in climate, terrain, and population from the 186 million people that comprise Brazil to the north. Paul Lewis’ The Crisis of Argentine Capitalism details what Lewis refers to as Argentina’s “descent into economic chaos” and the role foreign capital played, citing a “shift from labor-intensive [sic] to capital-intensive methods of production” (Lewis 1992, p. 298). Like Brazil, labourers such as those in agriculture were soon replaced by industrialisation; while this shift sponsored considerable economic development and a rise in the nation’s gross domestic product (GDP), what ensued was a misappropriation of wealth and political power to the hands of those who facilitated the shift. As Lewis notes, “the average individual enterprise became larger,” a statement that connotes the growth of the wealthy (Lewis 1992, p. 298). If industrialisation encouraged the growth of “average individual enterprise” as Lewis puts it, the implied concept is that the wealthy became wealthier. It follows logically by Bhagwati’s model of financial attraction that those in any Latin American (and other Third World nation, for that matter) nation would be required to present political stability, exploitable natural resources, and cheap labour in order to attract foreign capital. In an agrarian and craft society such as Argentina, it would be the gentry, not the labouring class that would be empowered to the extent necessary to showcase the said attractions to foreign investors. Landowners, not farmers, would become the beneficiaries, while farmers, who were erstwhile surviving off a portion of their own keep, would be required to make a living in a financial and not labour-productive world.
Globalisation has not managed to raise Argentina’s GDP since its advent; prior to the influx of European and American investors in the post-Peron Age (after 1960), Argentina had succeeded in creating labour unions and universal social security. By 1964, private international firms had grown their “portion of the total industrial labor [sic] force” from “29 percent to 40 percent [of the] total value of industrial production” (Lewis 1992, p. 298). The diminishment of the human wage that ensued was a direct effect of the economy struggling to meet the strict demands of foreign investment to raise Argentina’s GDP. Lewis writes that “top priority was given to increasing the production of oil and natural gas, without which heavy industry would not be possible”; secondary priorities were “the steel industry, electrical energy, machine building, industrial chemicals, cement paper, and cellulose sectors,” all to be funded by “foreign investment” and “sizable foreign loans” (Lewis 1992, p. 302). What ensued was a slight decline in the Argentine peso, a plateau in unemployment rates (14.8% in 2004) but an extremely high percentage of the population, 44.3% in 2004, living below the poverty line (CIA 2005, “Argentina”). These numbers are close to an inverse of the Brazilian economy, connoting a steady rate of the proletariat gainfully employed but failing to make enough money to rise above poverty. The implication here is a significant portion of the economy limited to industry, the majority of the populace not enjoying the profits they work to attain.
Though historically speaking Argentina’s economy was more stable and internationalised than Brazil’s industrialisation has nevertheless taken a toll, with child labour still on the rise in 2005. Globalisation could not possibly benefit Latin America in the Argentine example specifically because of the facets Bhagwati so lambastes in his criticisms of globalisations opponents; the debt incurred in globalisation’s dealings ravaged the Argentine economy to the point that it no longer had financial prospects to attract future business, even if only to alleviate its troubled times.
Costa Rica
Jose Itzigsohn examines another focal point regarding the negative aspects of Latin America and globalisation. In his Developing Poverty: The State, Labor Market Deregulation, and the Informal Market in Costa Rica and the Dominican Republic, he details the rise of underemployment and the expansion of social security coverage. Contrary to Bhagwati’s assertions of living wages and the growing middle class, Itzigsohn describes in great length what he refers to as “the presence of invisible underemployment,” or “those people who work during the legal working week but receive less than the minimum wage [and] the scope of social security coverage” (Itzigsohn 2000, p. 77). More alarming than the rate of living wages were Itzigsohn’s findings regarding jobs in the industrialised workforce, in particular his discovery that “the underemployed encompassed 42.5 percent of those working in manufacturing, 62.0 percent in retailing, and 63.8 percent in services,” all sectors affected by globalisation and foreign investment by multinational companies (Itzigsohn 2000, p. 78). Itzigsohn continues to describe the 1980s, an era when “formal labor [sic] relations were predominant in San Jose,” most prominently among foreign entities; Itzigsohn writes about the “clear rise in precarious forms of work in the city and in urban Costa Rica (Itzigsohn 2000, p. 79). According to Itzigsohn:
“…invisible underemployment grew from 6.6 percent in 1980 to 9.3 percent in
1987. [In] the urban areas of the country, underemployment grew from 17.6 percent
of total employment in 1980 to 25.6 percent in 1991, and part-time work grew from
8.8 percent to 14.2 percent” (Itzigsohn 2000, p. 79).
If Bhagwati’s assertions are true and globalisation’s negative aspects can be countered with a matter of policy shift, why is there such a consistency in the Costa Rican model? Of the Central American countries, Costa Rica certainly is among the most politically stable. That industrialisation’s jobs affected the urban areas of Costa Rica is an indication of the exploitation of labour, a classic attraction Bhagwati lists in his works. However, where are the Costa Rican standards? With such a large percentage working under the national minimum wage, a sound indication might be a general lack of employment and poverty. The converse is true; while the numbers of underemployed individuals raised, Costa Rica’s unemployment has actually steadily decreased, holding at 6.6% in 2004 (CIA 2005, “Costa Rica”). If Bhagwati’s assertions were correct and the globalisation had in fact benefited Latin America, would the excuse of policy disparities be enough to distract globalisation’s detractors from the thinly veiled exploitation of Costa Rican labourers?
The only good Bhagwati would be able to identify to defend his argument for globalisation is the rate of social security in Costa Rica, which grew from “67.9 percent of the [San Jose] labor force in 1980″ to “99 percent of public-sector workers” in 1989 (Itzigsohn 2000, p. 80).Though globalisation expanded the amount of workers underemployed, their work was more attractive and more steady than public-sector work in Costa Rica, causing a decline in public-sector employment as Costa Ricans flocked to private firms. The success of globalisation in Costa Rica and the relative benefits the country exceeded, however, might be attributed to “the higher level of development” of Costa Rica than its Latin American counterparts. Unlike Brazil, whose newly formed economy and system could not sustain labour absorption, Costa Rica’s successes were due to an advanced infrastructure seemingly primed for globalisation and the transition to a modern, industrial, international era.
Mexico
Perhaps the most involved Latin American nation in globalisation, “trade relations, commodity prices, and investor panic” have adversely affected Mexico; “faced with negative economic growth and weak currencies,” Mexico and her counterparts are concerned with “depressing world commodity prices,” especially in today’s globalisation environment (Bouvier 2002, p. 181). In her Free Trade? Informal Economies at the U.S.-Mexico Border, Kathleen Staudt describes the great lengths to which Mexicans go to circumvent the same policies Bhagwati describes. In order to avoid globalisation’s economic windfalls, Staudt recalls how Mexican labourers travelling from Mexico illegally to the US work “informally,” that is, perform undeclared jobs with no steady, government-regulated payroll.
Bhagwati’s support for globalisation borrows heavily from the phenomena of migrant workers. It is currently estimated that more than 1.5 million illegal immigrants cross the U.S.-Mexico border annually, the vast majority of them migrant workers who “invest considerable informal labor in sustaining themselves and their families” (Staudt 1998, p. 58). The phenomena present is that migrant workers of Mexican descent who land in the United States continue to “participate in informal work”, or work that is paid for in cash and remains undeclared on either side of the border (Staudt 1998, p. 58). If what Bhagwati says is true, and globalisation has indeed benefited Latin America, why do the Mexican workers abdicate their opportunities in their own country for jobs in America? If many continue to work informally, it means that a move to the US does not afford them legal jobs, or even different jobs. It means the jobs migrant workers get are better on the American side; globalisation has driven millions of workers from Mexico to the US. Exploitation of cheap labour has, in Mexico, backfired to a degree. Staudt points out that “Mexico has more poverty than the United States, in both absolute and proportional terms”; “one might expect more informality on the Mexican side of the border” (Staudt 1998, p. 60). However, the identical rates Staudt observes point to the globalisation of problems, not just industry; economic pitfalls felt in American industry would naturally mirror those felt in a globalised Mexican correspondent, but due to the exchange rate and value of the American dollar, such pitfalls would be felt in Mexico to an exponentially more significant degree. Workers in the United States and Mexico, working in the same industries, are circumventing the law and working informally because the work is more stable; there is no alternative for the industrial worker as globalisation has narrowed the market to the point of no economic escape. If tragedy befalls one company, its woes would be experienced throughout Latin America but with no safety net to compensate for the Third World fiscal losses.
CONCLUSION
Though it has the potential to benefit Latin America, globalisation is still a concept designed by those in power to exert a level of financial control that would erstwhile be unacceptable and deemed as a form of imperialism. Latin America has been affected negatively by globalisation because its governments will do most anything to raise the standard of living (not to mention their own GDP’s). What most scholars such as Bouvier and her contemporaries discovered is that globalisation was not as malignant as its detractors claimed. Rather, it is a concept that Latin America is not ready to accept financially or culturally. Globalisation can only positively affect those countries whose political and economic infrastructures are geared towards change. The successive collapses of Eastern European nations as well as the imperial ventures Great Britain undertook in order to sustain itself should be a testament to the negative effects of rapid growth. Globalisation, after all, is almost an unchecked, unnatural growth that when released upon a nation usurps its existing infrastructure and in a foolhardy fashion installs another. Unlike Bhagwati asserts, globalisation is not the way for Latin America or the Third World; there cannot and should not be advanced industrialisation without a basic leading, constantly evolving system first in place.
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BIBLIOGRAPHY
Bhagwati, Jagdish N. (2004) In Defense of Globalization. New York: Oxford U P.
Bouvier, Virginia Marie. (2002) The Globalization of U.S.-Latin American Relations: Democracy, Intervention and Human Rights. Westport, Connecticut: Greenwood Publishing Group.
Central Intelligence Agency. (2005) “Argentina” [online resource] Taken from: http://www.cia.gov/cia/publications/factbook/geos/ar.html.
Central Intelligence Agency. (2005) “Brazil.” [online resource] Taken from: http://www.cia.gov/cia/publications/factbook/geos/br.html.
Central Intelligence Agency. (2005) “Costa Rica.” [online resource] Taken from: http://www.cia.gov/cia/publications/factbook/geos/cs.html.
Central Intelligence Agency. (2005) “Dominican Republic.” [online resource] Taken from: http://www.cia.gov/cia/publications/factbook/geos/dr.html.
Central Intelligence Agency. (2005) “Mexico.” [online resource] Taken from: http://www.cia.gov/cia/publications/factbook/geos/dr.html.
Husain, Syed Arif. (2000) Brazil: Conservation and Development. Washington, DC: World Bank Publications.
Itzigsohn, Jose. (2000) Developing Poverty: The State, Labor Market Deregulation, and the Informal Economy in Costa Rica and the Dominican Republic. University Park: Pennsylvania State U P.
Lewis, Paul H. (1992) The Crisis of Argentine Capitalism. Chapel Hill: U of North Carolina P.
Lustig, Nora. (1998) Mexico: The Remaking of an Economy. Washington, D.C.: Brookings Institution P.
Staudt, Kathleen A. (1998) Free Trade? Informal Economies At the U.S.-Mexico Border. Philadelphia: Temple U P.