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Is globalization a myth?
The debate over whether globalization actually exists still continues. 
Rugman and Collinson (2006) claim that many multinational companies 
are not making their profits from trade with LDCs, but rather from countries 
that are already affluent. Much of the argument depends on the definition 
of a global business. Rugman maintains that this is ‘generally accepted as a 
firm with major operations (at least 20 per cent of its total sales) in each of 
the three regions of the broad “triad” of [the] EU, North America and Asia’ 
(Rugman and Collinson, 2006: 80).
Much therefore depends on the definition itself. There is strong evidence 
that there has been a significant growth in trade within the three regions 
mentioned above. This fits the definition of regional business, where a firm 
has the majority of its sales inside one of the three triad regions, usually the 
home region. In practice, the debate between globalization and regionaliza-
tion is really one of degree.
LDCs in a number of cases have been marginalized, receiving a declining 
share of trade and investment, and suffering from a high rate of debt and 
debt servicing. The net result is that there is still unequal distribution of 
income and an increasing gap between the rich and the poor.
The failure of the Doha Conference to gain full consensus for a free trade 
agreement and the pressure on Western Europe, the USA and China to 
consider at least a limited return to protectionist policies during the global 
recession have been a cause for concern. In his State of the Union address 
in January 2012, President Obama warned of the need for further measures 
to encourage US companies to reverse the shift of manufacturing off- shore 
because of the loss of jobs and the stagnation of wages in the USA.
The reaction to globalization
The downside of globalization is the outsourcing of manufacturing from 
the West, where factories have been forced to close as multinationals 
have found cheaper sources of production, in particular with significantly 
reduced labour costs, and raw materials in LDCs.
There is concern that global inequality is growing, with the result that 
in many countries there is increasing political instability and the widening 

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Globalization and its Effect on Culture 215
of the gap in incomes between the minority privileged elite and the rest of 
the population. This trend is compounded by lower wages, poor health 
and safety in the workplace and corrupt business practices. These all con-
tribute to a feeling of resentment and envy. The demonstrators against 
globalization, such as the Occupy movement, are part of a protest that sees 
globalization concerned more with making profits at the expense of social 
concerns and doing little to remove inequality. They maintain that they are 
forced to act outside legitimate politics because mainstream politicians do 
not appear to recognize the root causes of their dissatisfaction.
There are two very different ways of analysing the effects of globalization. 
One approach is to see the working of the market economy bringing about 
a world in which the gap between rich and poor increases. The second (and 
more optimistic) view is that a market economy will enable countries to 
converge towards a more equal state of prosperity as global trade liberalizes 
the world economy. If poverty persists, it will be because we have failed to 
allow the market to operate freely.
Workers, factory owners and those involved in the setting- up and financ-
ing of international operations gain in terms of wages. The transportation 
of the products is a further source of economic advantage to the countries 
concerned. Their finances in general benefit from the increased spending 
power of those employed as well as the psychological advantages to workers 
of having a job. Even where working conditions are relatively poor and 
the wages are low, many would say this is preferable to being unemployed 
without any source of income.
In Globalization and its Discontents (2002), Joseph Stiglitz, former Chief 
Economist of the World Bank and a noted academic economist, was a strong 
critic of globalization because its benefits are spread unevenly throughout 
the world. This is particularly the case in LDCs, where many people remain 
in poverty, notably in Africa, mainly because of a lack of resources in educa-
tion to take advantage of the new technologies that have begun to make 
a difference to living standards in India and China. Stiglitz (2007) also con-
tends that market reforms have been pushed forward too quickly, whereas 
individual countries should be free to experiment with alternatives and 
develop ways that are best suited to their cultures and their needs. He does, 
however, contend that globalization has some benefits: ‘Opening up inter-
national trade has helped many countries grow far more quickly than they 
would otherwise have done … Because of globalization, many people in the 
world live longer than before and their standard of living is far better.’
Writing in The Times on 19 February 2007, Stiglitz maintained that India 
and China have taken full advantage of the globalization of knowledge and 
markets to move hundreds of millions out of poverty, but in other parts of 
the world, the gap between rich and poor nations has increased, mainly 
due to the large subsidies in the North, which have depressed the incomes 
of those in the South and have increased their levels of poverty. He sounds 

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216 Cross-Cultural Communication
a warning that unless globalization has ‘more winners and fewer losers, there 
can be a backlash against globalization’.
Tony Blair, the former British Prime Minister, stated that: ‘If globalisation 
only works for the benefit of the few, it will fail. The West must follow the 
principles that power, wealth and opportunity must be in the hands of the 
many, not the few. The global economy must be a force for good and an 
international movement’ (The Times, 2 October 2001). In the foreword to 
a report on globalization for the Institute of Public Policy Research in January 
2012, Peter Mandelson reiterates this view: ‘There is growing evidence that 
global economic integration brings rising inequality within economies if 
the balance between those who benefit from globalization and those who 
bear the burden of the adaptation is not actively addressed.’ This was a view 
that Professor Samuel Huntington had already expressed in his The Clash of 
Civilizations in 1993, when he emphasized that: ‘The new global civilization 
is in fact a very narrow one, consisting only of the assumptions and values 
held by most people in the West, but worldwide this culture is shared by very 
few outside the West.’ He went on to argue that because the world is moder-
nizing its way of doing business and its communication systems, it does 
not necessarily mean that it is becoming more Westernized: ‘The impact 
of urbanization and the mass communication, coupled with poverty and 
ethnic divisions, will not lead to people everywhere thinking as we do.’
However, despite Huntington’s prediction, the
so- called ‘triad of the 
rich’, namely North America, Western Europe and Japan, is now being 
increasingly challenged by the growing spending power of an affluent class 
emerging in the BRICs.