Essay Preview: Mr.Report this essayGLOBALISATION AND ITS IMPACT TO THE CONSTRUCTION INDUSTRY OF DEVELOPING COUNTRIESDoni AfilaMSc Engineering Project Management ProgrammeSchool of Civil Engineering, University of LeedsE-mail: [email protected]. INTRODUCTIONThe reach of globalisation, through free trade, world-wide production and capital investment, generates different implications to different industries, in different regions. Its influence to the global economy and the macro-economy condition of countries impacts the industries within. It has raised issues on investment, market entry (and competition), and also technology development.
Particularly in the construction industry of developing countries, globalisation remains a big question. Benefits to the industry in that respective group of countries are still far from clear. The study of Raftery et.al. (1998) on construction industry in Asia suggested that although three positive trends (i.e. larger private sector participation, increasing vertical integration and increased foreign participation) present, there is short term concern regarding the growth of imported construction services at the expense of the indigenous sectors of the developing countries.
How globalisation influences the construction industry in the developing countries is furthermore explored in this study. The following sections try to answer either globalisation represents the biggest opportunity or the greatest threat to it.
2. THE MEANING OF GLOBALISATIONGlobalisation means the production and distribution of products and / or services of a homogenous type of quality on a world-wide basis (Fernandez Jilberto and Mommen, 1998). It may have different meanings and implications to different countries or regions. Globalisation may also be defined in economic terms, that is, in terms of trade liberalization, including the breaking down of tariff and non-tariff barriers, and the freer flow of capital, technology, finance, goods and services across national boundaries (Bhalla, 1998). Fernandez Jilberto and Mommen (1998) explained that globalisation refers to the multiplicity of linkages and interconnections between states and societies which make the present world, and represents two distinct phenomena: scope (or stretching) and intensity (or deepening).
The process of globalisation has been allowing countries to extend their outreach through trade and production activities, and it has been accelerated as a result of various factors such as technological developments, but especially the policies of liberalization that have swept across the world (Khor, 2001). It might then provide benefits to one party, but also exposes disadvantages to another. Mucchielli et.al. (1998) advised that, for countries and firms, globalisation is characterized by openness of economies and a global market in which firms’ strategies focus on efficient resource seeking along with synergies and standardization in market offerings. Globalisation reflects the disappearance of trade barriers and state regulation (Fernandez Jilberto and Mommen, 1998). It is furthermore suggested that the most important aspects of economic globalisation are the breaking down of national economic barriers, the international spread of trade, financial and production activities, and the growing power of transnational corporations and international financial institutions in these processes (Khor, 2001).
The globalisation model fundamentally underpins that liberalizing trade and investment and unfettered competition in the global economy lead to growth, prosperity, and democracy (Cavanagh et. al., 2002). Globalisation often described as the result of economic and technological forces that have simply evolved over centuries to their present form. The model of globalisation has been interpreted into several forms, namely the General Agreement on Tariffs and Trade (which later gave birth to the World Trade Organisation), NAFTA, the Maastricht Agreement, the Free Trade Area of the Americas Agreement, and a few others. These instruments of economic globalisation are arguably to bring the most fundamental redesign of social, economic, and political arrangements (Mander, 2001). Cavanagh et. al. (2002) explained that the globalisation model is based on the following assumptions:
Hyper-growth (the achievement of even more rapid and never ending economic growth) is good and essential.Privatization and commodification should be encouraged.Economic and cultural homogenization worldwide is necessary to create efficiency.Export-oriented trade and investment is best (especially in regard to Third World countries).Corporate activities should not be regulated and capital should enjoy unrestricted movement across nation-state borders.Increased corporate concentration is “a good thing”.Most public health, social, and environmental programs already in place should be dismantled and privatized.Traditional powers of democratic nation-states and local communities should be replaced by global corporate bureaucracies.The rise of globalisation is affected by a number of structural drivers of change. It is depicted in Figure 1, and described below (Johnson and Scholes, 2002):
The problem here is that, unlike other advanced economies, most developed economies have an integrated labour market – which means, as Johnson and Scholes have shown, the ability to invest in new means of production, in new modes of production, new social relations, new services, new forms of employment, etc. This integration between labor markets (socialism etc) and labour power (democracy/human rights etc) is a great example of an advanced capitalism (see the following graph with the corresponding line at the top of Figure 1 for discussion). Indeed, the “golden age” of capitalism in the United States coincided with an integrated labour market in its various components (see Figure 2).In the U.S., there was a large increase in investment in goods and services; the U.S. government had invested an astounding $20 billion in the 1980-81 tax period, but by the time of the tax legislation’s last passage in 1993, it was almost completely privatized. With the formation of the WTO in 1996, international trade relations in the United States fell from its pre-existing state-to-state equilibrium into a market-free system called “post-trade.” These free trade agreements came to be referred to as a post-trade system, since each exchange was designed to reduce costs relative to other goods and services by creating jobs by providing trade credits. For a period of only about 20 years, post-trade trade was the predominant social and political process in the world – while economic policy and the state’s role in it were largely unaffected. As U.S.-educated and middle-aged American workers, we were often expected to compete with multinational corporations on equal terms, while foreign-born and lower-wage workers and workers in low-skilled labour markets took to jobs abroad. As labor productivity declines, however, so too do opportunities for new workers gain in this “post-trade” system. In a sense, U.S.-educated workers in low-skill production (in other words, low-skilled US workers are usually US wage slaves) have some advantages over American high-skilled workers. They are able to employ the majority of US high-tech workers, in areas such as telecommunications, engineering, food processing, food service, accounting, etc., and their companies have a strong position in many US industries (see the following graph with the corresponding line at the top of Figure 2 for discussion).The combination of these benefits – combined with a low-emission energy consumption, a weak export-oriented economy, the growth of a very fast consumer-production economy, and an increasing number of low-wage jobs – leads to unprecedented rapid growth in the industrial age (Figure 3). These factors are all well-known because both have, in turn, impacted the wages of American middle-class and upper-middle class families.While most countries in the world do not need to make such large advances (and in many of them very rapid increases in both incomes and wealth), large improvements that the U.S. can make are already being made, while others are much slower to come. The U.S. has created an enormous amount of labor force potential, but there was a period in America’s history when the economy was in equilibrium — when America was producing enough labor. This is what today’s top four industrialized countries are doing. While the U.S. has created more high-wage jobs in manufacturing than in other advanced economies, it has not created as many low-wage jobs. While this is no accident, it is a reflection of the fact that the economy is in a
A first step toward a new era of public services, such as healthcare, should be to empower all citizenry within the economy in a participatory society, with the goal of promoting an informed public in its capacity as a “participist citizen,” a political actor and the voice of a government or institution in the economy. The citizenry of the globalized world will have the power to express its interests in the democratic marketplace.It would be a step forward for the global economy and a step backward for democracy, democracy where all citizens are treated as citizens with equal political rights (Johnson and Scholes, 2001). As noted above, the need in the West for universal self-determination was not universal in this world.In America, there is widespread recognition that the U.S. Constitution, which has become a central source of U.S.-based constitutional democracy, has not been a natural part of democratic society. This realization was necessary when the U.S. Supreme Court declared that Article I of the Constitution does not provide sufficient guarantees, but “it does provide the basis for a government, with its own institutions, that would serve all people. An expanded American government should serve all people, and, therefore, the United States of America with its elected representatives in Congress, the President, Senators and Representatives of State Legislatures.” (Johnson and Scholes, 2002).In the US, in many respects, a strong democracy has not been possible since the Declaration of Independence. In our countries, both democratic and non-democracy are inherently based on a democratic concept. In the Middle Ages, King Charles I, the king of the Franks, was highly critical of the separation of Church and State. He saw religion as an oppressive institution that was in some ways an infringement of man’s spiritual potential, and called on his countrymen to take steps to prevent or at least to improve on this. During the Civil War, many Americans considered the separation of church and state sacred and an act of warring nations. In our times, religious freedom was promoted in the U.S. constitution and has never been restricted in this country. In general, religious fundamentalists recognize that religion cannot be trusted unless it is based on a legitimate religious position. In this regard, we have a number of recent examples.• We are witnessing a global political and economic dynamic in which the globalization of commercial and financial institutions (through new media and globalization) is transforming public services (like education and jobs) from the traditional to the digital age and from a service-oriented democracy to a corporate one.• The globalized economy will affect all of society. The economy of today is already transforming, and its changes will be irreversible. The rise of globalization will further shape our society and negatively impact our ability to live in a pluralized society (Sellman 2011). And the emergence of corporativism has already impacted both our political and political leaders, who continue to use their power to enrich themselves and corporations in order to increase profits.• In the late 19th century, the United States was a great example of a democracy based on social equality (Sellman 2011). • We need to realize and take to heart more broadly the basic precept underlying democratic economic systems, which are based on the idea of social responsibility, and the concept of governance, which reflects the belief that human conduct in one country can be transformed into legislation and regulation in a multitude of countries. Democracy may yet be eroded, as it will be at least a few decades away from being an institutional form of community-based government (Sellman 2011).• We shall see what
A first step toward a new era of public services, such as healthcare, should be to empower all citizenry within the economy in a participatory society, with the goal of promoting an informed public in its capacity as a “participist citizen,” a political actor and the voice of a government or institution in the economy. The citizenry of the globalized world will have the power to express its interests in the democratic marketplace.It would be a step forward for the global economy and a step backward for democracy, democracy where all citizens are treated as citizens with equal political rights (Johnson and Scholes, 2001). As noted above, the need in the West for universal self-determination was not universal in this world.In America, there is widespread recognition that the U.S. Constitution, which has become a central source of U.S.-based constitutional democracy, has not been a natural part of democratic society. This realization was necessary when the U.S. Supreme Court declared that Article I of the Constitution does not provide sufficient guarantees, but “it does provide the basis for a government, with its own institutions, that would serve all people. An expanded American government should serve all people, and, therefore, the United States of America with its elected representatives in Congress, the President, Senators and Representatives of State Legislatures.” (Johnson and Scholes, 2002).In the US, in many respects, a strong democracy has not been possible since the Declaration of Independence. In our countries, both democratic and non-democracy are inherently based on a democratic concept. In the Middle Ages, King Charles I, the king of the Franks, was highly critical of the separation of Church and State. He saw religion as an oppressive institution that was in some ways an infringement of man’s spiritual potential, and called on his countrymen to take steps to prevent or at least to improve on this. During the Civil War, many Americans considered the separation of church and state sacred and an act of warring nations. In our times, religious freedom was promoted in the U.S. constitution and has never been restricted in this country. In general, religious fundamentalists recognize that religion cannot be trusted unless it is based on a legitimate religious position. In this regard, we have a number of recent examples.• We are witnessing a global political and economic dynamic in which the globalization of commercial and financial institutions (through new media and globalization) is transforming public services (like education and jobs) from the traditional to the digital age and from a service-oriented democracy to a corporate one.• The globalized economy will affect all of society. The economy of today is already transforming, and its changes will be irreversible. The rise of globalization will further shape our society and negatively impact our ability to live in a pluralized society (Sellman 2011). And the emergence of corporativism has already impacted both our political and political leaders, who continue to use their power to enrich themselves and corporations in order to increase profits.• In the late 19th century, the United States was a great example of a democracy based on social equality (Sellman 2011). • We need to realize and take to heart more broadly the basic precept underlying democratic economic systems, which are based on the idea of social responsibility, and the concept of governance, which reflects the belief that human conduct in one country can be transformed into legislation and regulation in a multitude of countries. Democracy may yet be eroded, as it will be at least a few decades away from being an institutional form of community-based government (Sellman 2011).• We shall see what
A first step toward a new era of public services, such as healthcare, should be to empower all citizenry within the economy in a participatory society, with the goal of promoting an informed public in its capacity as a “participist citizen,” a political actor and the voice of a government or institution in the economy. The citizenry of the globalized world will have the power to express its interests in the democratic marketplace.It would be a step forward for the global economy and a step backward for democracy, democracy where all citizens are treated as citizens with equal political rights (Johnson and Scholes, 2001). As noted above, the need in the West for universal self-determination was not universal in this world.In America, there is widespread recognition that the U.S. Constitution, which has become a central source of U.S.-based constitutional democracy, has not been a natural part of democratic society. This realization was necessary when the U.S. Supreme Court declared that Article I of the Constitution does not provide sufficient guarantees, but “it does provide the basis for a government, with its own institutions, that would serve all people. An expanded American government should serve all people, and, therefore, the United States of America with its elected representatives in Congress, the President, Senators and Representatives of State Legislatures.” (Johnson and Scholes, 2002).In the US, in many respects, a strong democracy has not been possible since the Declaration of Independence. In our countries, both democratic and non-democracy are inherently based on a democratic concept. In the Middle Ages, King Charles I, the king of the Franks, was highly critical of the separation of Church and State. He saw religion as an oppressive institution that was in some ways an infringement of man’s spiritual potential, and called on his countrymen to take steps to prevent or at least to improve on this. During the Civil War, many Americans considered the separation of church and state sacred and an act of warring nations. In our times, religious freedom was promoted in the U.S. constitution and has never been restricted in this country. In general, religious fundamentalists recognize that religion cannot be trusted unless it is based on a legitimate religious position. In this regard, we have a number of recent examples.• We are witnessing a global political and economic dynamic in which the globalization of commercial and financial institutions (through new media and globalization) is transforming public services (like education and jobs) from the traditional to the digital age and from a service-oriented democracy to a corporate one.• The globalized economy will affect all of society. The economy of today is already transforming, and its changes will be irreversible. The rise of globalization will further shape our society and negatively impact our ability to live in a pluralized society (Sellman 2011). And the emergence of corporativism has already impacted both our political and political leaders, who continue to use their power to enrich themselves and corporations in order to increase profits.• In the late 19th century, the United States was a great example of a democracy based on social equality (Sellman 2011). • We need to realize and take to heart more broadly the basic precept underlying democratic economic systems, which are based on the idea of social responsibility, and the concept of governance, which reflects the belief that human conduct in one country can be transformed into legislation and regulation in a multitude of countries. Democracy may yet be eroded, as it will be at least a few decades away from being an institutional form of community-based government (Sellman 2011).• We shall see what
Increasing convergence of markets: Customer needs and preferences are becoming more similar.Cost advantages of global operations: This might be achieved in industries in which large volume and standardized production is required for optimum economies of scale, and by central sourcing efficiencies from lowest-cost suppliers across the world.
Activities and policies of governments: Almost all trading nations function with market-based economies and their trade policies have been tended to encourage free market between nations.
Global competition: If the levels of exports and imports between countries are high, it increases interaction between competitors on a more global scale.
Figure 1. Drivers of GlobalisationSource: Johnson and Scholes, 2002Yip (1989) furthermore explained that drivers of industry globalisation, which is