Q. Globalization-‘Pro’ and ‘Anti’ arguments.

According to the Oxford English Dictionary, the word "globalization" was first employed in a publication
entitled “Towards New Education” in 1952, to denote a holistic view of human experience in education.
Thomas L. Friedman has examined the impact of the "flattening" of the world, and argues that globalized
trade, outsourcing, supply-chaining, and political forces have changed the world permanently, for both better
and worse. He also argues that the pace of globalization is quickening and will continue to have a growing
impact on business organization and practice.

What is globalization? Is it the integration of economic, political, and cultural systems across the globe? Or is it
the dominance of developed countries in decision-making, at the expense of poorer, less powerful nations?
Is globalization a force for economic growth, prosperity, and democratic freedom? Or is it a force for
environmental devastation, exploitation of the developing world, and suppression of human rights? Does
globalization only benefit the rich or can the poor take advantage of it to improve their well-being?

Globalisation is the more or less simultaneous marketing and sale of identical goods and services around the
world. The concept was popularised by an American journalist, Thomas Friedman, in his book The World is
Flat. Published in 2005, it reached the top of several bestseller lists with its headline message that the world is
now just one big integrated market. So widespread has the phenomenon become over the past two decades
that no one is surprised any more to find Coca-Cola in rural Vietnam, Accenture in Tashkent and Nike shoes in
Nigeria. The statistic that perhaps best reflects the growth of globalisation is the value of cross-border world
trade expressed as a percentage of total global GDP: it was around 15% in 1990, is some 20% today and is
expected by McKinsey & Company, a consulting firm, to rise to 30% by 2015.

In recent years, debates about globalization have tended to descend into arguments and confusion as
opinions have become increasingly politicized. There is little common ground between proponents and
opponents of globalization. The study by Peer Fiss and Paul Hirsch suggests that the politicization of this
discourse has emerged largely in response to greater US involvement with the international economy. Philip
Gordon, in an article in Yale Global, states that “A clear majority of Europeans believe that globalization can
enrich their lives, while believing the European Union can help them take advantage of globalization’s benefits
while shielding them from its negative effects.” The main opposition consists of left-wing socialists,
environmental groups, and right-wing nationalists. A number of international polls have shown that residents
of developing countries tend to view globalization more favourably than residents of the US or the EU.
However, a recent poll undertaken by the BBC indicates that there is a growing feeling in the Third World that
globalization is proceeding too rapidly. Many in the Third World see globalization as a positive force that lifts
countries out of poverty. The opposition often combines environmental concerns with nationalism.
Governments are often seen as agents of neo-colonialism that open the doors to an invasion of multinational
corporations. A paper presented at the DfID (Department for International Development, London, U.K) Centre
for the Study of the Future State, aptly pointed presented the view:

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 “Managed wisely, the new wealth being created by globalization creates the opportunity to lift
millions of the world’s poorest people out of poverty. Managed badly and it could lead to their further
marginalisation and impoverishment. Neither outcome is predetermined; it depends on the policy choices
adopted by governments, international institutions, the private sector and civil society.” (DfID 2000:15)

During the last few years, the concept of world or ‘global cities’ has provided an intellectual framework that
links urbanization to political economy. Beginning as a ‘hypothesis’ or an ‘agenda for action’ (Friedman and
Wolff 1982; Friedman 1986), the global cities approach rests on a core-periphery model that allows linkages
with world systems theory and the radical critiques of dependency theorists.

Some parts of the state have internationalised more than others and are thereby relatively more subject to the
discipline of global markets. While this has been the case for some time with regard to ministries of trade and
commerce for example, new challenges are created where the traditional welfare functions of states are
subject to global scrutiny and challenge. Structural adjustment programmes, debt relief initiatives and global
accords such as the WTO-GATS agreement (General Agreement on Trade in Services) create the conditions for
such surveillance.

According to Jagdish Bhagwati, a former adviser to the U.N. on globalization, although there are obvious
problems with overly-rapid development, globalization is a very positive force that lifts countries out of
poverty. According to him, it causes a virtuous economic cycle associated with faster economic growth.
Workers in developing countries now have more occupational choices than ever before. Educated workers in
developing countries are able to compete in the global job market for high paying jobs. Production workers in
developing countries are not only able to compete; they have a strong advantage over their counterparts in
the industrialized world. This translates into increased opportunity. Workers have the choice of emigrating and
taking jobs in industrial countries or staying at home to work in outsourced industries. In addition, the global
economy provides a market for the products of cottage industry, providing more opportunities to small-scale
workers too.

Science and technology play their roles in the globalization of cities through innovations in telematics and in
the production process within the spaces that Castells and Hall (1994) have called ‘milieu of innovation’. These
are urban forms evolving since the 19th century where a concentration of research and industrial development
establishments generate next-generation innovations using advanced electronics (Hall and Preston 1988).
These urban spaces become planned or unplanned cities employing thousands of highly paid specialists and
generating thousands more of semi-skilled factory jobs.

George Reisman, a well known economist, in his article entitled Globalization: The Long-Run Big Picture,
provides a first-class defense of the theories behind globalization, saying that it has the potential to raise the
productivity of labour and living standards all across the world to the level of the most advanced countries. He
even makes such utopia seem very reachable by incorporating billions of additional people into the global

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division of labour, and correspondingly increasing the scale on which all branches of production and economic
activity are carried on; globalization makes possible the unprecedented achievement of economies of scale.

Thomas Freidman argues that globalization has replaced the Cold War as the dominant international system.
He writes:

The driving idea behind globalization is free-market capitalism — the more you let market forces rule and
the more you open your economy up to free trade and competition, the more efficient and flourishing your
economy will be. Globalization means the spread of free-market capitalism to virtually every country in the
world. Therefore, globalization also has its own set of economic rules — rules that revolve around opening,
deregulating and privatizing your economy, in order to make it more competitive and attractive to foreign
investment.

Globalization's believers argue free-market capitalism is not always kind or easy, but it is the way to raise the
standard of living for most people. Furthermore, they say, this new international system has given new
economic opportunities to people all over the world. Of course, along with open markets comes an increased
mixing and clashing of different cultures and people. This can also be a good thing because it creates increased
interdependence, which, in theory, reduces conflict. For example, free-market capitalism increases the costs of
war because warring countries lose markets and investors and then their economies plummet.

Joseph Stiglitz, a Nobel Prize winner in economics, gives a long list of the benefits of globalization. He writes:

Opening up to international trade has helped many countries grow far more quickly than they would otherwise
have done...Because of globalization many people in the world now live longer than before and their standard
of living is far better...Globalization has reduced the sense of isolation felt in much of the developing world and
has given many people in the developing countries access to knowledge well beyond the reach of even the
wealthiest in any country a century ago.

Despite what its proponents believe, globalization is not painless. Those who justify globalization too often
overlook its negative impacts. Protestors see globalization in a very different light than the treasury secretary
of the United States, or the finance and trade ministers of most of the advanced industrial countries. The
differences in views are so great that one wonders, are the protestors and the policy makers talking about the
same phenomena?

The protesters centre their criticisms on the World Bank, the WTO and the IMF. Critics argue these institutions
have pushed hypocritical policies that push poor countries to eliminate trade barriers while allowing rich
countries to keep them. Furthermore, critics question whether these policies will, in fact, create prosperity in

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the long run. Stiglitz argues that countries that have opened themselves up to free trade have not received the
promised benefits. He cites statistics from several Latin American countries that show that after opening
themselves up to free trade, their growth rates have fallen to barely more than half of what they were pre-
globalization.

Globalization has generated significant international opposition over concerns that it has increased inequality
and environmental degradation.

State managers are often part of the international elites, which include representatives from international
organisations and key industrialists and financiers, who set the political conditions for the advancement of
globalization and benefit from the access to new goods and the technological time-space compressions that it
delivers. Many of those who are vulnerable to the shocks and crises that globalization inevitably produces are,
on the other hand, not politically powerful and may be further marginalised by processes of global integration.

It is important to recall, the way in which many states have been ‘adjusted’ to the realities of the global
market. Structural Adjustment Policies (SAPs), conditionalities, tied aid and the threat of retaliatory actions
through organisations like the WTO, have been some of the mechanisms by which the developed world has
been able to use its leverage to promote globalization in the developing world. This underscores, once again,
the importance of state strength in determining whether globalization is a menu of policy choices or a
medicine that has to be swallowed in order to be accepted and survive in the contemporary global economy.
Where changes are, to some extent, imposed from above, it becomes difficult to view the state as a buffer for
its people against the unsettling aspects of global change.

Some also view the effect of globalization on culture as a rising concern. Along with globalization of economies
and trade, culture is being imported and exported as well. The concern is that the stronger, bigger countries
such as the United States may overrun the other, smaller countries' cultures, leading to those customs and
values fading away. This process is also sometimes referred to as Americanization or McDonaldization.

A chart that gave the inequality a very visible and comprehensible form, the so-called 'champagne glass' effect,
was contained in the 1992 United Nations Development Program Report, which showed the distribution of
global income to be very uneven, with the richest 20% of the world's population controlling 82.7% of the
world's income.

Distribution of world GDP, 1989

Quintile of Population Income

Richest 20% 82.7%

Second 20% 11.7%

Third 20% 2.3%

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Fourth 20% 2.4%

Poorest 20% 0.2%

(Source: United Nations Development Program. 1992 Human Development Report)

Unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.
Inequality is worse in today’s world than at any point since World War II. Inequality has grown faster in the last
15 years than in the past 50. The series of United Nations Human Development Reports since 1990 establishes
that very clearly. The anti globalists stand in opposition to the unregulated political power of large, multi-
national corporations, as the corporations exercise power through leveraging trade agreements which in some
instances create unemployment, and damage the democratic rights of citizens, the environment particularly
air quality index and rain forests, as well as national government's sovereignty to determine labour rights,
including the right to form a union, and health and safety legislation, or laws as they may otherwise infringe on
cultural practices and traditions of developing countries.

For something to be global it has to be inclusive and encompassing. Oddly enough, the world we call global is
in fact based on exclusion, not inclusion. How does this system include or even need cotton growers in Burkina
Faso? Cane cutters in the Caribbean, fishermen in Bali or for that matter Nova Scotia? Developing countries
have been pushed to liberalize their economies before they were ready, forcing many of their citizens into
poverty.

Stiglitz sums up the globalization conflict when he writes, "Globalization itself is neither good nor bad. It has
the power to do enormous good. But in much of the world it has not brought comparable benefits.”

Globalization is a contested process with outcomes that affect people well beyond the principal decision
making centres of the global economy. This inevitably means that the issue of whether the gains from
globalization can be spread, and the negative effects controlled, will be a question of political organisation and
institutional design and the outcome of conflicts between competing social and economic forces over who sets
the rules and for whom. To reap the potential benefits of globalization, we have to make wise and equitable
decisions for people on all sides of the conflict. This will require constructive debate and a clear understanding
of the conflict processes behind globalization.

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Q. The impact of globalisation on the organisation I work for"

I am Saurabh Dadhichi- and I work for DSM.

DSM is multinational life sciences and material sciences based company. DSM’s global end markets include
food & dietary supplements, personal care, feed, pharmaceuticals, medical devices, automotive, paints,
electrical & electronics, life protection, alternative energy and bio-based materials.

DSM was established in 1902 as a state-owned coal mining company. Through the years company diversified
into fertilizers and other chemicals. After 1965, when the decision was taken to phase out mining operations,
this diversification was accelerated. By the time the last mine closed (in 1973), DSM had transformed into a
chemical company. Let’s go in detail by looking at the growth in DSM during the era of Globalization.

Operating as a State-Owned Coal Company: Early 1900s

Near the turn of the century many Dutch companies had tried and failed to establish operations, or even
purchase an interest in Holland's energy supply. All coal production, including that within the country and that
imported, was held entirely by foreigners. Not only did this leave Holland vulnerable to political and economic
changes in other countries, but there was the fear in Holland itself that the continuing exploitation of the coal
mining concessions by foreigners would lead to destruction of the local agrarian communities. More
experienced in trade than in production and mining, Dutch businesses repeatedly failed to form their own
energy companies. For this reason, the government decided to take measures to rectify the situation.

In 1902 the government established Dutch State Mines, a government owned but competitively operated
company. The company was run by a politically independent managing board of directors and given full
authority to create company objectives based on economic and competitive principles rather than on any state
ideology. The company staffs was not comprised of civil servants, but was given separate status and pay
competitive with that in private industry, enabling the company to attract talented businessmen. The Ministry
of Finance was responsible for the overall expenditures of the company, but profits could be retained by the
company to finance its own operations. Since 1939 the company has paid taxes on those profits, as well as
dividends to the state, the sole shareholder. DSM increased its holdings to include four large mines and two
coking plants operated in Dutch Limburg. Soon afterward, the company's production of anthracite and
bituminous coal grew to 12 million tons per year, about two-thirds of all Dutch output.

The company later formed its own coke and gas production business. When coke oven gas was no longer used
exclusively for the public gas supply, however, DSM moved into other areas. In 1929 the company's nitrogen
works, utilizing the coke oven gas, were established to produce fertilizers. Gradually, DSM began to produce
other chemicals. Yet it was the post war energy shortage that stimulated significant growth for the company
through the coal and coke production facilities. After 1945 a large corporate research laboratory was

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established and the chemical works expanded to include the production of plastics. Up to 1960 DSM remained
small internationally, occasionally adding to its production line items such as yarn and fibre feed stocks.

Opportunity outside the Coal Industry: 1960s-80s

In the 1960s Holland's national government, like many other European governments, was forced to accept the
fact that coal was an outmoded energy source, and that it was time to close the country's collieries and coking
plants. The coal and coke operations had given DSM nearly two-thirds of its total sales and profits. With this
source of its profits gone, however, the company had to expand its chemical works simply to survive.
Therefore, from 1965 to 1979 a major investment program was carried out with two objectives--continuity of
the company and profitability. In 1967 DSM became a Naamloze Vennootschap (an unquoted public limited
company). The company was no longer dependent upon the Ministry of Finance, but would have to continue
operations on investments from the capital markets. DSM also hoped to enter into joint ventures with other
companies, which would not have been easily done if it remained under the Ministry of Finance. The state's
control was reduced to the appointments of the Board of Supervisory Directors, and to the final approval of
company policy.

By 1970 all coal mining operations in The Netherlands had been phased out. During this time, the gas
distribution operations were transferred from DSM to N.V. Nederlandse Gasunie. The company's use of coke
oven gas was replaced by natural gas and petroleum products for chemical production. In the northern part of
Holland there was a supply of naphtha gas, and pipelines were constructed to transport this gas inland from
Antwerp and Rotterdam on the coast. More pipelines were built to exchange ethylene, an important chemical
intermediate, with other companies. In cooperation with a number of Dutch companies, DSM moved into the
production of industrial chemicals, plastics, and resins, while spinning off its European fertilizer businesses into
a wholly owned subsidiary called Unie van Kunstmestfabrieken (UKF).

With European chemical production becoming extremely competitive during the 1960s and 1970s, particularly
in West Germany, DSM concentrated not only on expanding its market share, but on what it could produce
from the basic materials obtained from its own cracking installations. DSM also improved its marketing
organization by acquiring controlling interests in companies that already had captive markets and by creating a
worldwide sales organization. To market its own discoveries from company research laboratories, DSM
established another subsidiary called Stamicarbon. Much of DSM's early expansion occurred in the United
Kingdom, the United States, Mexico, Brazil, Belgium, and West Germany. By 1976 DSM ranked 61st in the
Fortune 500 list of non-U.S. firms, employed 32,000 people, and had achieved sales of nearly 10 billion
guilders.

In the 1980s DSM handled the state's 40 percent interest in the distribution operations of the Dutch natural
gas reserves through its subsidiary DSM-Aardgas B.V. Nevertheless, the national government still had direct
control over the sale and pricing policy of the gas and retained final power of approval on all export contracts.

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During this time period, management at DSM considered that its major investment and expansion programs
were completed and felt that work must begin on streamlining company operations. While continuing to
emphasize the production of bulk chemicals, DSM recognized that sales for these products would grow more
slowly in the future and that the company must increase the number of special and fine chemicals in its
product line. With the fall in oil prices and the low dollar, profits in the mid-1980s were unimpressive but
steady. In 1986 sales dropped by 34 percent in fertilizers, by 25 percent in chemical products, and by 32
percent in plastics. Resins sales did rise by 8 percent, however. DSM's operating profits for the year were Dfl
727 million. With this decline in sales, DSM increased funds for its research and development division. Quite a
number of new polymer blends were developed, as well as new production techniques. In 1989 DSM began its
privatization in one of the largest listings of state-owned shares. The offering was extremely successful, with
shares selling at Dfl 116.

Focusing on Specialty Chemicals: 1990s and Beyond

As a publicly listed company, DSM spent the majority of the 1990s focused on growth and developing products
for the pharmaceutical, food, and automotive industries. The company's strategy continued to bend toward
the specialty and fine chemicals sector--these chemicals generally had profit margins higher than those for
petrochemicals. As such, the firm made several key acquisitions. During 1996 DSM purchased chemical
manufacturers Chemie Linz of Austria and Deretil of Spain. Two years later the firm made a $1.3 billion play for
Royal Gist-brocades NV, a chemicals manufacturer catering to the pharmaceutical and food sectors. As a result
of the deal, DSM gained a leading position in the global antibiotics market and also strengthened its position as
a supplier of ingredients for flavours, beverages, and dairy products. DSM chairman Simon de Bree
commented on the lucrative nature of the union in a 1998 Chemical Market Reporter article: "There are no
other companies which are spread across such a range of clearly-defined technologies, pooled into a single
source. We have the most complete tool box of any company in our target markets of pharma and food
industry."

A third major acquisition took place in 2000 when DSM purchased California-based Catalytica Pharmaceuticals
Inc. for approximately $800 million. The deal gave DSM a foothold in the U.S. fine chemicals manufacturing
market and bolstered its specialty chemicals sales by 31 percent. DSM also gained access to Catalytica's
pipeline of 35 new drugs that were in developmental stages. During this time period, DSM launched its "Vision
2005: Focus and Value" strategy, which was centred on transforming the company into a leading specialty
chemicals firm focused on life science products and performance materials. The company appeared to be
moving in a positive direction. In 2000 DSM reported record financial results--sales of EUR 8 billion and net
profit of EUR 580 million.

DSM's 100th anniversary celebration in 2002 was marked by the sale of its petrochemicals business. The
move--part of the company's Vision 2005 strategy--proved to be a significant milestone in the company's quest
to become a major specialty chemicals concern. The company sold the business to Saudi Basic Industries

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Corporation, the largest petrochemical producer in the Middle East, for nearly $2 billion and planned to use
the proceeds to make further investments in its Vision 2005 strategy. In fact, the firm's next move came in late
2002 when it announced that it planned to purchase Roche Holdings Ltd.'s vitamin and fine chemicals division

for EUR 1.95 billion in order to bolster its life science unit. When complete , the deal would secure DSM as the
leader in the global vitamin market.