Positive Influence of Globalization Towards the Growth of World Business

Running head: ECONOMICS
ECONOMICS
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ECONOMICS1
Introduction
Globalisation came into the limelight because of its positive influence towards the
growth of world business. In addition to this, globalisation aims at integrating cultures and
people of different regions, in order to increase world welfare. However, the most valuable
agenda of globalisation is to increase free trade between economies. Free trade comes with
the notion of fair distribution of price and independent actions as well as operation of
producers (Boatwright, Darren and Patrick).
Other than these two aspects, the principles of free trade monitors and influences
producers actions towards environment, work safety and culture, basic labour rights, child
labour and women rights. However, evidence suggests that fair trade has helped in
flourishing the growth of the developed economies at the cost of the emerging and
undeveloped countries. The product such as coffee tends to be affected by the negative
effects of free trade (Pieterse). The coffee growers are affected by a low price being offered
to them.
Fair trade coffee and its implications
Peter Giuliano has worked with the Specialty Coffee Association of America and has
quality relationship with coffee producing framers (Nelson et al.). Fair trade aims to attain
greater equity in international trading by providing an above market price to the exporters for
meeting environmental, labor and product. Different commodities are traded in fair trade
systems where fair trade coffee is certified by trading standards which promotes sustainable
development by giving a better conditions to coffee bean farmers.
According to Giuliano, fair trade coffee is not helping to lower the poverty. Data
from American standards, Fair trade USA and FLO shows no positive impact on growers
although, the market for fair trade coffee has grown remarkably. Fair trade is not profitable

ECONOMICS2
for poor farmers as the benefits are extracted by the skilled labours. Coffee is produced in the
poorest countries and consumed by the developed economies. If market price remains above
the equilibrium price, then it leads to excess supply of the product that lowers the overall
coffee price in the global market which reduces economic profits (Ratcliffe). Moreover,
farmers are unable to access the premium price directly paid by the customers in free trade
systems.
Clothing sweatshops in the US
Sweat shops has been a significant part of the US economy, although the apparel
manufacturing industry has shrunk. California based retailer. Fashion Nova provided designer
clothes that were worn by celebrity at high prices. US Department of Labour found that
factories in Los Angeles made clothes of Fashion Nova at a low rate of 2.77 dollar an hour to
the sewers. This is much lower than the minimum wage rate in California which is about 12
dollars an hour for employers with 26 employees (Bain).
Workers worked in dirty conditions to earn an average amount of 270 dollars each
week. Fashion Nova mentioned in an email statement to Quartz, agreements for paying the
employees were made in accordance to California labour laws such that they are not
underpaying anyone. Likely, there are several factories in Los Angeles that pays a low wage
to the workers. The labor department found that most of the workers did not have a legal
document that could be used against the authorities when they are cheated on pay.
Many a times, retailers contract a middleman to design the clothes, who then hires a
factory workers to produce them (Naylor). The system enables retailers to focus on
distribution and marketing by protecting it from the federal law. Millions of cases of penalties
and back wages were observed in the garment business of Los Angeles, although the Times