Essay: Convergence and Divergence in the Context of Globalization

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Convergence Divergence

Labor Divergence/Convergence

Agriculture Divergence/Convergence

Voice Divergence/Convergence

Economic and Democratic Divergence/Convergence

Consumerism Divergence/Convergence

Import/Export Divergence/Convergence

Three varied economic views on globalization as they represent the core of the debate regarding globalization, as each camp stresses its take on the negative and/or positive outcomes of the increasingly globalized economy. Convergence and divergence in many areas of the global economy are discussed.

This work discusses the three varied economic views on globalization as they represent the core of the debate regarding globalization, as each camp stresses its take on the negative and/or positive outcomes of the increasingly globalized economy. Convergence and divergence in many areas of the global economy are discussed. In a more general sense "convergence is inevitable in the context of globalization." Meaning that convergence of the systems of the economy are taking place, while the disparities of income divergence still seems to rule the day, as the poor get poorer the rich richer and the size of the former grows and encompasses many whom at one time would have been considered the middle class. Convergence then seems to be a situation that is secondary to income, as the institutions and systems merge while incomes continue to elicit and even grow disparities among nations and individuals.

Introduction

Within the rhetoric of globalization and the economic theory surrounding it is a sense that many experts believe and espouse that income convergence is a logical outcome of globalized markets. In other words that income disparities on and individual and national level will begin to converge, along with the development of convergence of economies in a more general sense, leaving an international economic system where most nations and individuals share in the positive economic impact of increased trade between nations. Yet, many other experts contest that globalization is not creating convergence but is instead creating divergence, or greater disparities between developed and least developed nations and therefore the peoples who reside within them. It is likely that the moderate economist would be able to find examples in the current global market where both are taking place, while those who believe in the early positive predictions of convergence stress that any divergence seen currently is simply a necessary but temporary evil. While those who observe divergence stress that there is simply no incentive for those who have to begin to share profits with those who have not and that the situation will likely get worse, with regard to income and voice divergence.

In a sense these three varied economic views on globalization represent the core of the debate regarding globalization, as each camp stresses its take on the negative and/or positive outcomes of the increasingly globalized economy. In a more general sense "convergence is inevitable in the context of globalization." Meaning that convergence of the systems of the economy are taking place, while the disparities of income divergence still seems to rule the day, as the poor get poorer the rich richer and the size of the former grows and encompasses many whom at one time would have been considered the middle class. Convergence then seems to be a situation that is secondary to income, as the institutions and systems merge while incomes continue to elicit and even grow disparities among nations and individuals.

Labor Divergence/Convergence

By now most people have heard of the very public breakdowns at prominent World Trade Organization events, the riots in Seattle, U.S. (1999), the early breakdown of talks in Cancun, Mexico (2003). Some people might have even have a broad concept of the concerns voiced by those in opposition of the WTO and the "free trade" movement in general. The main line of which is that those who have been most effected by world trade, globalization have been negatively affected and have little voice to resolve the issues that surround changes. This work will address the issue of convergence as apposed to divergence in the global economy, looking for evidence of both but mainly it will discuss why are some individuals and groups are protesting/resisting "free trade," if it is the kind of trade that has been touted as the savior of the undeveloped nation in the global market? The greatest difficulty regarding globalization has been the severely limited voice of the nations that globalization is said to be the greatest future asset for:

in past events, trade negotiations were heavily dominated by the U.S., Europe and Japan. Developing countries, comprising four-fifths of the WTO's membership, were expected to take a backseat. The wealthy nations frequently used a "carrot and stick" approach by offering enhanced trade opportunities and debt relief to persuade poor nations to accept their distorted agendas. (Siddiqui, 2003, p. 64)

In part protests of world trade are linked to the indifference that has been shown developing nations, with regard to policy development and agenda. Yet, the opponents of free trade have a broader list of complaints that have to do with overall economic dominance and divergence associated with the globalization movement by the developed nations. The fears of the opposition are that trade, in this venue will further tax, rather than assist poorer countries, due to its aggressive emphasis on the bottom line. The globalization movement may allow new markets to open in these previously isolated economies but at what cost and for how long will the cost of income and voice divergence negatively effect these nations and peoples?

The historic global business emphasis on using the bottom line as the solitary guiding force behind international business is questioned, yet not by those who set standards and develop agendas. Seeking cheep labor the developed nations invest in markets that might provide jobs to poorer nation's people but they are not jobs that pay enough for these people to climb out of poverty, in fact they are jobs that keep them away from home and family for very long hours, for very little pay. While the developed nation's labor forces may be willing, to a certain degree to absorb the 12-hour 7 day work week, they do so at a price, demanding wages that are not responsive to the bottom line. The resolution then by emerging global markets is to seek labor in places where wage labor can be contained at very low rates.

Agriculture Divergence/Convergence

This brings to mind a documentary I recently watched, where thousands of women in Ethiopia were sitting around long lighted tables for 12-hour shifts meticulously sorting and grading coffee beans, for dollars a day "Black Gold" (2005). These scenes of "work" were juxtaposed by scenes of American's and Europeans snuggly sitting in up scale coffee shops, shops where their cup of coffee cost upwards of 5 dollars but where the sorter, grower, harvester and organization that supplied the coffee they were drinking made a disturbingly small amount on the bushel of coffee bought by the multi-national business selling it. Coffee, then is a great place to start when looking at globalization, as it is a commodity that can be grown only in limited locations in the world and must then be processed to some degree there.

Coffee is one of the most highly traded commodities in the world, second only to oil. The trade of coffee generates $80 billion every year in the global market, and that amount is growing. In 2001, coffee prices on the global market hit a 30-year low, and a humanitarian crisis ensued for the 25 million coffee farmers and families around the world, including many in Ethiopia. The fall in revenue has affected the income small farmers earned for the 'fruit of their labor" as a result, the farmer are unable to send their children to school and could not afford to pay for their basic needs. (Assefa and Degefa, ND, online at (http://www.hmbasha.net/Starbucks_Ethiopia.htm)

The coffee market then is a perfect example of divergence, in that previously growers and commodity processors had some limited controls and were able to earn a living on the product. The product requires significant time commitment, as the growing of plant to fruit is a significant commitment, once made is a commitment that many are not willing to simply give up on, plow under and grow a new crop. So, as a group these growers must weather the storm of the economy, even when its shifts to such a degree that they are no longer making enough money on the crop to survive, but where global retailers are in short siphoning the profit off the top from the finished product.

However, from the retail sides demand for coffee has risen and the coffee industry has shown remarkable profit. For example, Starbucks, an 8 billion dollar a year company, was able to sell Ethiopian Harar coffee for $26.00 per pound, whereas the farmer only received between $0.60 and $1.10 per pound and only 3 cents goes to coffee farmers for every cup cappuccino Starbucks coffee sales for $3.00. Coffee prices have risen a little recently, but hard working coffee farmers continue to work relentlessly, receiving minimal profits for their crop,… [END OF PREVIEW]

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