GE3235 Geographies of Development

Title: Are Sweatshops the dream?

Globalization is good for LDCs

A)   Introduction

According to Allen (1995), Globalization is a worldwide phenomenon that affects our economic, social as well as our political lives as there is the intensification of global interconnectedness. It is a dual process of global convergence and global divergence. Neo-liberal argument claim that globalization will result in a uniform world and aid in the development of poorer countries (Potter, 2004). Yet there are views of anti-globalization asserting that world poverty and inequality have been rising, not falling (Wade, 2004).

The focus of the essay will be on Transnational Corporations (TNCs) as they represent the most significant factor in driving global shifts and changes in how production are organize. In 2000, “the top 100 TNCs had assets of $2 trillion” (Orock, 2013). TNCs account for approximately two-thirds of the world exports of goods and services. However, in the process, there is marginalization. Investments channeled are spatially uneven with 49 least developed countries (LDCs) receiving only 0.3% of Foreign Direct Investment (FDI) in 2000 (Potter, 2004). One of the most contentious aspects of FDI through the dependency theories would be the location of factories, as the TNCs can easily relocate to exploit low cost without promoting national development (Kiely, 2008). Sweatshops that are factories which do not adhere to “safety standards, minimum wage laws and legislated working conditions, etc” (Chartier, 2008) set up by TNCs are distinct representations of globalization forces oppressing the poor and harming local economies (Meredith & Hoppough, 2007).

The issue that revolves around globalization is often its positive and negative effects on the world. Yet, it is pointless to argue for a verdict on globalization as effects are differentiated across the world (Basu, 2006). Similar to Basu, this essay will be from the standpoint that Globalization is potentially beneficial for all. Firstly, I contend that globalization is potentially good for LDCs even though they are marginalized in the recent years by exploring the benefits of globalization with the concept of place.  Next, I will be investigating the necessities of sweatshops and the positive effects of sweatshops to show that TNCs can be good for LDCs.

B)   TNCs are potentially good for LDCs.

Many governments and world organizations like the World Bank, International Monetary Fund and World Trade Organization support globalization as they see the role of globalization in enhancing global development (Potter, 2004). The World Bank studies claim that more globalized countries had faster economic growth, higher poverty decline rates and more equality. This assertion is base on countries like China, South Korea, Hong Kong and Taiwan who benefit significantly by adopting free trade and plugging themselves into the world economy (Wade, 2004).  Yet, globalization could lead to increase in marginalization and exploitations of LDCs. This is evident as the Africa is sidelined in the “corporate-led globalization” as amongst the 100 largest TNCs in 2000, none are own by African countries. Also, the total wealth of top 5 TNCs was more than 46 poorest countries where majority are located in Africa (Orock, 2013).

A geographical lens is useful in the analysis of the failure of TNCs to bring about benefits to LDCs. The “crux of geography is that it deals with the spatial manifestations of a phenomenon”. The developing world is divided into the Newly industrialized economies called the Asian tigers as well as the LDCs whom seem to not benefit from the increasingly connected world economy. The concern of geography would be the “uniqueness of place” (Yeboah, 2007). One of the reasons behind the spatial variation of successes would be the unique state interventions by the Asian Tigers. The success of the Asian Tigers cannot be wholly attributed to the opening of their economies.  In fact, they were able to reap the benefits of globalization due to protectionist stance in early years, which helped them grow their domestic businesses before they were exposed to foreign competition. They only begin to liberalize trade when they economies started to grow (Wade, 2004).

Through this example of the Asian Tigers, we see the possibilities of globalization having the potential to do good for LDCs. I agree with Orock (2013)’s opinion that we should not make judgment of globalization as it “promises nothing to poorer countries or richer countries unless actors involved conduct themselves in ways that will deliver on expectations.” This view also coincides with Basu (2006) and Kiesly (2008) that there is a need for strategies to “convert potential benefits to actual benefits”.  Thus, TNCs can bring benefits to LDCs even though the benefits are unevenly distributed.

Moving on, it is pertinent to address the concerns of Sweatshops, a form of FDI channeled into LDCs to exploit lower cost. They are common features of TNCs in the manufacturing sectors of LDCs and the core of todays’ dispute on globalization concerning global labor practices.

C)   Sweatshops as the next best alternative

There is a divided view on the benefits of sweatshops. On one side of the argument, supporters of sweatshops like Harvard economist Jeffrey Sachs claimed that “there is too few sweatshops” and Paul Krugman from MIT claimed that the “overwhelming mainstream view among economist” is that such employment are beneficial for LDCs (Levinson, 1997). On the flipside, due to the dangerous conditions and the exploitation of workers with the denial of human rights in the factories, many have campaigned against sweatshops. Defenders of sweatshops like Kristof (2009), condemns the banning of sweatshops, as it destroyed the next best livelihood of the poor people in LDCs. He argues that even though conditions are bad in sweatshops, people still hope to have a chance to work in one of those factories, as it is comparatively better than living off rubbish scavenged from dumps. According to Zwolinski (2007), the wages paid by sweatshops are higher than wages paid by other local firms in LDCs. Moreover, sweatshop wages are “three to seven times as high as the national income in Dominican Republic, Haiti, Honduras, and Nicaragua”.  Such evidences suggest that sweatshops might not be considered as exploitation as it is beneficial for both sweatshop workers and TNCs as conditions in domestic factories tend to be worse then TNCs operated ones (Chatier, 2008). Thus, the blame on TNCs for harming workers may not be justifiable as at least they improving the lives of the workers but just not to the extend that people expect it should be (Zwolinski, 2009).

D)   Development as Freedom:

Sen’s notion of development as freedom coincides with the benefits of sweatshops. Fundamentally, his definition of freedom is more than the gross domestic product of a nation but should be measured by other means like gender inequality, political freedom, economic opportunities, etc. Also, according the United Nation Developmental report, the measure of human development is more than national income instead it should include creating an environment that people can perform autonomy where “development is about expanding the choices of people have to lead the lives they value” (Potter, 2004).  All these aspects of development mentioned can be achieved through sweatshops

Zwolinski(2007) argue that the choice made to work and accept the conditions in a sweatshop is “morally significant” as it is an “exercise of their autonomy and as an expression of their preferences”. The availability of sweatshops enable people to make respectful choices whereby taking up the job enables them to survive, earn enough to provide education for their children and even escape poverty. Thus sweatshops provide opportunities for the people in LDCs to have the freedom to have a choice out of poverty and improve their lives. If such opportunities were stripped off due to the ban on sweatshops, the next best income could be returning to dumps or farms where the pay is much lesser. Even though by the developed countries standards, it is considered immoral for labor exploitation yet critics fail to consider what alternative opportunities can be created apart form sweatshop work (Chatier, 2008). Thus, when we look at sweatshops it is important to not overlook its significance in the lives of the poorest people

Apart from gaining economic freedom, gender equality is also achieved through sweatshops. In Bangladesh, many Muslims believed that single women should not work which result in the unfreedom of Muslim women. However, TNCs played an important role in liberalizing women into the workforce where now “95% of the 1.4 million garment sector employees are women” in Bangladesh. TNCs’ influence on gender equality is also evident in Asia, Latin America and Mexico where working have shown to help women “gain control over their lives”, and give them more power in the patriarchal societies (Moran, 2002). Apart from empowering women, Moran also highlighted the trickle-down effects of the increase in income onto the women’s family, which improves standard of living. There would be more disposable income for “ health, nutrition and education” which can help break the intergenerational poverty cycle. As a result, we should see sweatshops and TNCs in a new light, even though they may seem exploitative, various freedoms are achieved through their activities which is good for LDCs.

E)    Temporality of sweatshops

Interestingly, Kristof assures that sweatshop work is transitory. He claims that all countries have to go through “sweatshop phase” during industrial growth (Rothstein, 2005). Many mainstream economists suggest that the dreadful working conditions around the world is “unavoidable” due to the nature of the global economy (Chatier, 2008). Most importantly, many nations have managed to move up the production chain to higher profit and higher skilled production hence increasing income of workers. For example, China was once a sweatshop nation where TNCs have built thousands of factories (Meredith & Hoppough, 2007) to exploit the comparative advantages of China since its economic reforms in 1978. The workers in China were also exploited and receive low wages as evident from the example from Forbes where one of the interviewee only earned $2/ month while working in a steel mill. However, as the country continue industrializing and with the government’s continual efforts to develop the nation, per capita income increase from a mere $16/ year in 1978 to approximately $2000 recently. Admittedly, sweatshops are exploitative and immoral, but it is an inevitable phase for LDCs and there are benefits as mentioned previously. I agree with Kristof (2009) argument that sweatshops are symptoms of poverty and not the cause of poverty. With the freedoms that can be achieve, the country will develop more than just economically but also socially. As the people from LDCs are empowered and the society progress, there would be stricter regulations and more emphasis on human rights. Power will then no long be from a top-down approach where the power is within the state and TNCs. Instead, power would be diffused where individuals whom have benefitted from their country’s development will have a voice like the developed nations today.

F)    Conclusion

In all, I feel that we should consider our positionality when we look at the case of TNCs and in particularly the issue of sweatshops and reflect critically if our judgments are justifiable. Using the first world’s perspective to analyze the effects TNCs and sweatshops can be misleading and blind us from their benefits.  I pointed that the effects of globalization is differentiated throughout the world and that benefits do exist I sweatshops. However like Zwolinski (2007), I would like to emphasize that it does not mean that TNCs as operators of sweatshops are “morally praiseworthy” but comparatively at least they improving the lives of the workers.

G)   References

Basu, K. (2006). Globalization, poverty, and inequality: what is the relationship? what can be done?. World Development , 34(8), 1361-1373. doi: 10.1016/j.worlddev.2005.10.009

Chartier , G. (2008). Sweatshops, labor rights, and competitive advantage. Oregon Review of Int'l Law, 10, 149-188.

Kiely, R. (2008). Global shift: Industrialisation and development In V. Desai & R. B. Potter (Eds.), The companion to development studies (2 ed., pp. 183-186). London: Hodder Education.

Kristoff, N. D. (2009, Jan 14). Where sweatshops are a dream. New York Times Op-Ed column. Retrieved from http://www.nytimes.com/2009/01/15/opinion/15kristof.html?_r=0

Levinson, M. (1997). Economists and sweatshops. Dissent, 44(4), 11-13. Retrieved from http://libproxy1.nus.edu.sg/login?url=http://search.proquest.com.libproxy1.nus.edu.sg/docview/227277200?accountid=13876

Meredith, R. & Hoppough, S. (2007, April 16). Why globalisation is good. Forbes global 2000,

Moran, T. H. (2002). Beyond sweatshops: foreign direct investment and globalisation in developing countries. (1 ed.). Washington: The Brookings Instituition.

Orock, R. (2013). Less-told stories about corporate globalisation: Transnational corporations and CSR as the politics of (ir)responsibilities in Africa. Dialect Anthropol, 37, 27-50.

Potter, R. B. (2004). Globalisation, development and underdevelopment In R. Potter (Ed.), Geographies of development (2 ed., pp. 128-180). Harlow: Prentice-Hall.

Rothstein, R. (2005). Defending sweatshops. Dissent, 52(2), 41-47. Retrieved from http://libproxy1.nus.edu.sg/login?url=http://search.proquest.com.libproxy1.nus.edu.sg/docview/227257410?accountid=13876

Wade, R. H. (2004). Is globalization reducing poverty and inequality?. World Development , 32(4), 567-589. doi: 10.1016/j.worlddev.2003.10.007

Yeboah, E. A. (2007). Hiv/aids and the construction of sub-saharan africa: Heuristic lessons from the social sciences for policy. Social science and medicine, 64(5), 1128–1150. doi: 10.1016/j.socscimed.2006.10.003

Zwolinski, M. (2007). Sweatshops, choice, and exploitation. Business Ethics Quarterly, 17(4), 689-727. Retrieved from http://www.jstor.org.libproxy1.nus.edu.sg/stable/27673206