What Are the Implications of Globalization on Sustainability?—A Comprehensive Study
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sustainability Article What Are the Implications of Globalization on Sustainability?—A Comprehensive Study Sai Tang 1,*, Zhuolin Wang 2, Gengqi Yang 1 and Wenwen Tang 1 1 School of Humanities, Social Science and Law, Harbin Institute of Technology, Harbin 150001, China; [email protected] (G.Y.); [email protected] (W.T.) 2 Department of Accounting, Harbin Finance University, Harbin 150040, China; [email protected] * Correspondence: [email protected] or [email protected]; Tel.: +86-451-82395050 Received: 26 February 2020; Accepted: 3 April 2020; Published: 22 April 2020 Abstract: It is becoming more and more certain that globalization is not just purely an economical phenomenon; it is exhibiting itself on a worldwide level. Amid globalization’s observable appearances, the most obvious are the larger international mobility of goods and services, flows of finance capital, data and information and most importantly people. On top of that, there are technological progresses and more international cultural interactions, which are facilitated by the enhancement of free trade of large quantities of more differentiated goods and also through immigration and tourism. The political changes and ecological concerns play an important part in this regard. In the current study, sustainability Indices are linked with the KOF Globalization Index to understand if more globalized countries are performing better in terms of sustainable development and its dimensions, especially environmental sustainability. Sustainability indices such as Human Development Index (HDI) and Environmental Performance Index (EPI) showed a stronger relation with different levels of globalization while others (Red List Index (RLI), Environment Sustainability Index (ESI)) did not. The results reveal that globalization has a positive implication on sustainability in the overall perspective. Keywords: environmental sustainability; globalization; indicators; sustainable development 1. Introduction One of the great economic and political stories of our time is related to Globalization. For the “post-modern society” it was supposed to be one of the big new ideas [1]. Globalization gave fresh importance to spatial economics along with the significance of financial and monetary layouts. This is because of the longitudinal spread of specific economic activities in different geographical places and the reduction of specific business in others [2–4]. The existing trend of globalization is a mere subdivision of massive operational alterations which are the results of the Schumpeterian progression in the technology, the spatial strength and possibility of connections between many factors at different levels of the economy [5,6]. However, there are a lot of confusion and differences over discussions as the process of globalization has diverse implications to various people [7–9]. Once there were hopes that globalization would provide benefits to everybody universally. With the passage of time, globalization’s disadvantages become more and more apparent [10–12]. It was initially expected, on the basis of neoclassical equilibrium theory, that there would be an inflow of money into developing countries due to the supposed higher rate of return there, resulting from relative scarcity as compared to the developed world. The experience and observation indicates a flow in the opposite direction. Joseph Stiglitz et al. [13] wrote that “Globalization seems to have unified so much of the world against it, perhaps because there appears to be so many losers and so few winners ::: ” Globalization, when well-managed, can provide better results to everyone or most of us. However, this has not Sustainability 2020, 12, 3411; doi:10.3390/su12083411 www.mdpi.com/journal/sustainability Sustainability 2020, 12, 3411 2 of 11 happened. In the present scenario, globalization’s outreach has encompassed more and more nations and people, making it untamable. For example, due to production globalization many millions of Chinese obtained jobs, but there was a less than expected trickle-down effect in their well-being due to uneven distribution of income which continued to be extremely concentrated [14–16]. The sustainability of globalization may or may not flow in a similar way for all countries. Some of them like the United Kingdom and Japan might experience a better local atmosphere due to the globalization process, while others like Bangladesh and Mexico can experience a declining and fading environment. [17]. The same thing is applicable to the economic or social effects of the globalization procedure. Moreover, sustainable development in one of the areas of globalization that may not essentially be connected to sustainable growth in other domains, and what is practical for a nation might not be possible for the international environment [18,19]. Of course, the desired result of globalization for most people is one in which the global environment, society and economic system develops sustainably, and all domestic environments improve including the welfare of all nations. However, globalization is unlikely to achieve all of these objectives simultaneously [20]. This complexity of the globalization procedures hence calls for a truly unified approach, joining social, economic as well as ecological characteristics. Under a globalizing domain, policy-makers should be conscious of the growths that take place all together in different fields, and the growing interconnectedness requires being the initial point for sustainable international policies [21]. If global economic processes and consumerism do have poisoning side-effects, the particular direction these dynamics require to acheive justifiable future needs to be enquired. The long-existing “growth versus environment” tension can be exposed, for which the term “sustainable development” has been invented. The demands for ecological protection and economic growth are supposed to be conflicting [22]. It is claimed to be an everlasting competition by some, whereas, others highlight a potential win-win situation [23,24]. Though there are various ways to define the complexity of the processes related to globalization, the current paper uses an indicator-based approach [25,26]. The definition of globalization we adopt is that of a phenomenon which explains the procedure of generating networks of associations among actors at intra- or multi-continental distances, facilitated through a variety of flows including people, data and concepts, capital, and commodities. It is a process that wears down national borders, assimilates national economies, cultures, technologies and governance, producing complex associations of conjoint interdependence [27]. For answering the questions related to the overall impact of globalization on the countries’ sustainability, as well as to assess the significances of globalization in a rational and scientific manner, the KOF Globalization Index is linked with Sustainable Development, Environmental, Red List and Human Development Indices in this paper, for analyzing if more globalized nations are performing better in relation to sustainable growth and its dimension. 2. The KOF Globalization Index (KOFGI) The KOF Globalization Index (KOFGI) is used in this study as a measure of globalization which is calculated on a yearly basis from 1970 to 2015 [25,27]. The KOF Globalization Index measures the economic, social and political dimension to globalization. It is used in order to monitor changes in the level of globalization of different countries over extended periods of time. The data are normalized implying that each variable is transformed to an index with a scale from one to one hundred, where 100 is assigned to the maximum value of a specific variable over the whole sample of countries and the entire period of time which is the analogue to a transformation of the series according to the percentiles of its original distribution. The procedure is called panel normalization which is different to annual normalization where data are normalized across all countries in the same year only. The resulting data are well-behaved in terms of sensitivity to outliers. Principal components analysis is performed on a 10-year rolling window of data to determine time varying weights for the individual variables which mean observations for t-10 until t-1 are used to compute the weights for time t. The weights for the years 1970 to 1979 are set equal to the weights of the year 1980 given the shorter time window. Principal components analysis partitions the variance of the variables used in Sustainability 2020, 12, 3411 3 of 11 each sub-group and the weights are determined in a way that maximizes the variation of the resulting principal component. The weights are calculated using the entire sample of countries at the same time. With the time-varying weights for the variables, the weighting procedure has the possibility to adapt to changes in the relevance of certain variables to capture globalization over time. While the weights of individual variables can change over the years, the weights of the sub-indices are held fixed over the time horizon. While de facto globalization measures actual flows and activities, de jure globalization measures policies, resources, conditions and institutions that, in principle, enable or facilitate actual flows and activities. Most globalization indices focus on de facto globalization. Economic globalization is composed of trade globalization and financial globalization, of which each gets a weight of 50 per cent within the economic dimension.