Globalization and Child Labour

9 September 2016

A more sustainable form of globalization has to be attained in order to prevent a relapse of globalization’s progress so far (Preble). In this literature review the characteristics and consequences of globalization will be discussed. The protestors’ as well as the proponents’ point of view on the challenges and profits which this phenomenon brings along will be highlighted and key policy recommendations to counter the challenges will be given.

After providing general information on globalization, the paper will go further into one of the factors of globalization discussed by (Gunter & van der Hoeven, 2004) and (Preble, 2010), child labour. Child labour was listed by them as an effect of the globalization process. However, there are many factors that influence the incidence of child labour in a given economy. Child labour therefore cannot be seen as an explicit result of the globalization process, but there are strong links between both.

Globalization and Child Labour Essay Example

Advantages and disadvantages of globalization According to (Preble, 2010), The major challenges of globalization lie in the fields of job losses, income inequality, loss of national sovereignty and cultural identity and environmental degradation. The first point Preble makes is that, according to the detractors of globalization, job dislocations like the relocation of production plants to lower cost foreign locations and massive job losses in manufacturing are caused by trade liberalization and increasing foreign direct investments.

The second point protestors have according to (Preble, 2010) is that globalization leads to income inequality, thus that the gap between the rich and the poor has become bigger. This can be countered by the fact that absolute economic welfare has increased for all groups. Also, globalization has a potential negative impact on national sovereignty as nations become increasingly intertwined economically, politically and socially [ (Preble, 2010) ]. Additionally, national cultures may converge into one global culture as a result of the world becoming one trade market and the spread of global firms.

The last concern that anti-globalists have is about the exploitation and destruction of ecosystems and the natural environment that global capitalism brings along [ (Preble, 2010) ]. There are concerns about air pollution, exploitation of forestry and so on. On the other hand, (Gunter & van der Hoeven, 2004) focus more on the social dimension of globalization. They look at the impact of globalization on the life and work of people and societies. Here there are concerns about employment, working conditions and income, but also on culture and identity.

Especially issues like wages and taxes, poverty, inequality, insecurity, child labour, gender and migration that are impacted by economic globalization are the reason why globalization has so many opponents [ (Gunter & van der Hoeven, 2004) ]. Where globalization has created unemployment, poverty and marginalization according to opponents, proponents argue that globalization has been an instrument for progress. The proponents perceive the wealth, opportunities and entrepreneurship that globalization entails. It is clear that these earlier mentioned issues are debatable.

Globalization indeed was the indirect cause of increased inequality, pressure on wages and job insecurity, but this does also count for the richer segment of the society [ (Gunter & van der Hoeven, 2004) ]. To counter all concerns about globalization, proponents of globalization find that the advantages outweigh the disadvantages. Also, concise and solid recommendations have been made in order to reduce the criticism that globalization provides. One of the most important key policy recommendations (Preble, 2010) gives during the current global recession is currency devaluation as a means to stem job losses.

When an exchange rate falls, export becomes more profitable, getting MNCs to carefully consider the consequences of their outsourcing decisions. With regard to national sovereignty a nation could intensify its standards for foreign direct investments and the negotiating in trade agreements to safeguard what sovereignty remains according to (Preble, 2010). The key recommendation in the field of natural environment and globalization includes more stringent environmental policies and regulations for developing countries and a sustainability focus for MNCs.

Many other recommendations, for example in the fields of globalization and cultural diversity and globalization and free trade, read that proponents of globalization can best persuade the critics on how cultural diversity and wealth are actually enhanced by globalization [ (Preble, 2010) ]. Also (Gunter & van der Hoeven, 2004) argue that anti-globalists only discuss the negative influences of globalization. For example, opponents solely see the increasing amount of child labour that globalization entails. Child labour indeed has become more visible, but better organized with formal wages.

That the focus should lie in the combat against the exploitation of child labour, rather than to exclude it from the market, is something that has to be transmitted to the protestors of globalization [ (Gunter & van der Hoeven, 2004) ]. Furthermore, (Gunter & van der Hoeven, 2004) state that a consensus is emerging that globalization has brought more benefits than disadvantages. However, they find that the inequalities within and between countries that arise and where globalization at least contributes to, need to be reduced.

To do so, (Gunter & van der Hoeven, 2004) indicate that globalization needs to be managed in the right way. Governments need to invest in education and training, adapt core labour standards, provide and improve social protection, contest rising national inequality and make globalization a discussion object. At international level, in its turn, a new development round of trade negotiations and a new financial architecture are supported by many, in an attempt to counter globalization’s concerns [ (Gunter & van der Hoeven, 2004) ]. The conclusion can be made that the impact of globalization is controversial.

Both (Preble, 2010) and (Gunter & van der Hoeven, 2004) discuss the advantages and disadvantages of globalization. They both find that on some aspects of globalization the protestors have to be persuaded by the proponents of the advantages it brings along. For other areas, recommendations are being made and key policies are introduced, where (Gunter & van der Hoeven, 2004) focus more on the social influences of globalization than (Preble, 2010) does. Child labour In the first part of this paper the effects of globalization were discussed.

One of the factors of globalization (Gunter & van der Hoeven, 2004) pay attention to is child labour. However, the study does not provide a solid framework that explains the presence of child labour, which is a much discussed and modern issue in society. In the next part the causes of child labour and the links between globalization and child labour will emerge. Also, recommendations to keep child labour under control will be discussed. Poverty is one of the major reasons why parents let their children work, according to Anker and Edmonds (as cited in Goto, 2011, p. 06) and Estevez (2011, p. 1794). It is not the cause of child labour however, as different factors give rise to child labour. Goto states that inequality, social norms and labour market conditions are the main causes of child labour and studies the relationship between these factors and the amount of child labour in an economy. Albert Hirschman (as cited in Goto, 2011, p. 807) stated that “the decision to send a child to work is partly a matter of social norm“, which indicates that the more child labour occurs in a specific region, the more likely that parents send their children to work.

Wahba (as cited in Goto, 2011, p. 807) adds that parents who were child labourers themselves tend to have their own child work more than others do and that lower wages and high inequality both raise child labour. Adults suffer disutility from sending their children to work as this produces embarrassment. They have to compare this utility drop with an increase in household income that comes along with child labour. When parents expect a lot of child labour in the economy, the utility-drop is naturally smaller (Goto, 2011). (Estevez, 2011) joins Goto’s view on the variables that influence child labour.

He also finds that the parental decision of either sending their child to school or to work and the use of child nutritional efficiency wages, which are wages in the form of meals that are paid to children to improve their performances, help to determine the incidence of child labour in an economy. (Estevez, 2011) comes up with the following policy recommendations that can affect positively both child labour prevalence as unskilled household welfare, after testing the welfare effects of the policies by simulation analysis. Firstly, globalization can affect the incidence of child labour by influencing the parent’s schooling decision.

Due to foreign capital and investment in a country, the marginal product of skilled labour will increase, which will lead to a higher ratio of educated children. Secondly, international trade sanctions, which are also a consequence of globalization, have been recommended by (Estevez, 2011, p. 1797) as they reduce the international demand for a good , consequently the price for this good and thus also the demand for child labour. Next to these effects of globalization on child labour, (Estevez, 2011) gives three domestic policy recommendations to decrease the incidence of child labour.

To start, educational improvements make skilled workers more productive and the incomes of skilled workers and the returns to education will decrease the supply of child labour. Also, migration of high-skilled workers to developed countries will have a similar effect as foreign direct investments have. Lastly, (Estevez, 2011) divides his domestic policy recommendation about subsidies in two parts, where he concludes that both child wage subsidies and educational subsidies decrease the supply of child labour.

When taking all abovementioned policies into consideration, (Estevez, 2011) concludes that five out of six policies will lead to a decrease in the total amount of child labour in an economy (as child wage subsidies lead to both an decreasing supply as an increasing demand, this policy does not certainly decrease the amount of child labour). Next to the decreasing incidence of child labour, these policies will provide an increase in the welfare of unskilled households. The conclusion can be made that there are many variables that influence the incidence of child labour. Due to the difficulty of acquiring data for mpirical studies, economists mainly have examined this issue through use of theoretical models. Where (Goto, 2011) mainly takes the supply side of child labour into account, (Estevez, 2011) also looks to the demand side. It is important to apply the correct models to determine globalization’s impact on child labour. For instance, Edmonds and Pavcnik (as cited in Estevez, 2011, p. 1793) found that globalization led to an increase in the price of rice in Vietnam, which decreased the incidence of child labour even though child labour is used in large amounts in this industry.

Oppositely, Kruger (as cited in Estevez, 2011, p. 1793) found that an increased price of coffee beans in Brazil affected by globalization, increased the total amount of child labour in the coffee sector in Brazil. The conclusion that can be drawn is that globalization does not directly lead to child labour, but serves as an incentive for a diverse variety of factors that influence the incidence of child labour, factors which can have positive or negative effects. Conclusion In conclusion, the impact of globalization is controversial.

Globalization entails many advantages and disadvantages and, therefore, needs to be managed in the right way. Governments need to invest in education and training, adapt core labour standards, provide and improve social protection, contest rising national inequality and make globalization a subject of discussion. Also international developments of trade negotiations and a new financial architecture are supported by many, in an attempt to counter globalization’s concerns. One of these concerns is child labour. This is a major problem in developing countries that seems to be declining.

However, regardless of globalization’s positive and negative influences, as long as parents need their children’s additional income to sustain their families and firms have access to this cheap form of labour, some forms of child labour will always exist. Policies are recommended in order to escape from this cycle of poverty. Higher foreign direct investments could increase the returns to education and lead to a decreasing amount of child labour, according to Dinopoulos and Zhao (as cited in Estevez, 2011, p. 1799). In the long run this increases human capital stock and will lead to higher ustained economic growth of the economy. References Estevez, K. (2011). Nutritional efficiency wages and child labor. Economic Modelling, 28, 1793-1801. Goto, H. (2011). Social norms, inequality and child labor. The Journal of Socio-Economic, 40, 806-814. Gunter, B. G. & van der Hoeven, R. (2004). The social dimension of globalization: A review of the literature. International Labour Review, 143(1-2), 7-43. Preble, J. F. (2010). Towards a Framework for Achieving a Sustainable Globalization. Business and Society Review, 115(3), 329-366.

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