Impact of Globalization

Topics: International Monetary Fund, World Bank, Globalization Pages: 10 (2968 words) Published: October 5, 2014
INTRODUCTION

Latin America has been the go-to destination for non-renewable natural resources in recent years and is continuing to attract Canadian-based mining companies more than ever. Latin America currently attracts “25% of global expenditure on mining exploration, with six countries leading the way in the region – Mexico, Chile, Peru, Brazil, Colombia and Argentina.”(Earls, 2013) The World Bank and International Monetary Fund have continued to encourage Latin America to sustain an extractive industry as a strategy for growth in development. This paper will examine the effects of globalization and the impact Canada has had on Latin America. It will also include issues regarding the World Bank and IMF, as well as my thoughts and analysis. GLOBALIZATION: CANADIAN IMPACT ON LATIN AMERICA

Globalization is the trend towards greater economic, cultural, political, and technological interdependence (greater interdependence= greater flow of goods and service, money, people, and ideas) among national institutions and economies. The two main forces that drive globalization are falling barriers to trade and investments, and technological innovation. The falling barrier started in 1947, when 23 nations created the General Agreement on Tariffs and Trade (GATT) to promote free trade by reducing tariffs and non-tariffs barriers to international trade. An effort to launch the International Trade Organization (ITO) to regulate trade was “rejected by the United States in the 1950 because of concerns that conservatives and corporation would lead to an infringement of national sovereignty and excessive regulation.” (Stiglitz, 2007) The World Trade Organization (WTO) was later formed in January 1995 to help enforce the rules of international trading. Technological innovation in areas of information technology, the internet, and advancements in transportation has help drive down the cost of global communication. A.T. Kearney produced a comprehensive index on globalization, noting that “72 nations account for 97% of the world’s GDP and 88% of its population. The index measures 12 variables, which are grouped into four "baskets": economic integration, personal contact, technological connectivity, and political engagement.” Globalization has undoubtedly provided hundreds of millions of people the opportunity to escape the grasp of poverty and furthermore, creating new economic powers. However, there are also adverse effects to good things; Dominique Strauss-Kahn from the IMF states that there is a “growing chasm between rich and poor—especially within countries. An inequitable distribution of wealth can wear down the social fabric.” Globalization impacts negatively on labour standards because it lowers global labour standards and creates a race to the bottom environment conditions and poor regulations.

Now, how has Canada taken advantage of Globalization? According to the World Bank’s Doing Business 2014 report, several Latin American countries elevated from last year’s list and ranked some of the best countries to do business in because of fewer requirements and a shorter waiting period. This takes account of a laid-back tax system, ease of registering for a business, and construction permits. “Canadian mining investment is surging in Latin America, accounting for more than 60 per cent of total mining investment in the region in 2010 and for more than half of all Canadian mining investment worldwide.” (Blundell, 2013) Vancouver is home to over 800 mining firms and includes one of the major mining companies, Goldcorp. These firms are mainly service companies that comprise of business administration, finance, management, engineering, environmental consulting, and geological research. “Canada is home to nearly 1,300 mining companies and establishes 75% of all mining companies in the world. Canadian companies now operate 80 mining projects in the region and have 48 more at the development or feasibility stage. Accompanying that,...

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