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Impact of Globalisation
and technology. Globalisation has largely resulted due to the advancements in transportation and
globalisation;2 they are large companies with extensive operations outside their home country; their
survival is based upon the sourcing of raw materials, services, production and labour. Multinational
corporations have greatly helped promote the global economy, allowing local economies to grow at
the same time. While the emergence of MNCs has brought several economic advantages, such as
the creation of more jobs, poverty alleviation and an increase in standards of living, its operations
have also had negative effects on societies and the environment. Furthermore, MNCs have been
heavily scrutinised for operating in third world, developing countries with few human right laws
and environmental standards, leading to poor labour conditions, often exploitation and
environmental degradation. Nike is one large, renowned multinational corporation that has come
under criticism for outsourcing to producers that have been guilty of labour exploitation. Nikes
factories in Pakistan have found to be using child labour, violating a major human rights law.
Hence, this essay aims to explore the impact of globalisation, using the case study of Nike and how
1 https://www.boundless.com/management/textbooks/boundless-management-textbook/introduction-to-management-1/
current-challenges-in-management-21/the-challenge-of-globalization-133-10568/
because, while globalisation brings several positive effects for a countrys economy, its negative
effects are greatly alarming. Multinational corporations foster growth and provide many economic
opportunities for the host country. However, due to the high vulnerability of developing countries,
often resources, such as labourers are exploited. Child labour is a pressing issue and a major
violation of human rights; The International Labour Organisation (ILO) defines child labour as
work that deprives children of their childhood, their potential and their dignity, and that is harmful
to the physical and mental development.3 it is an infringement of the ILO (Article 32, Convention
Rights of the Child).4 According to the ILO, there are an estimate of 168 million child labourers5.
While the numbers have decreased in the past decade, the issue still remains crucial. Child labour
interferes with education and the personal development of children. Many of these children are
forced to work in hazardous conditions, harming their physical and mental well-being. Human
Hence, the issue of child labour suggests that children are failing to acquire an education, disabling
them to break out of the poverty cycle. Child labour is hidden but most commonly occurs in the
primary and secondary sectors of the economy, such as agriculture and manufacturing.
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Nike is a American multinational firm that designs, develops and manufactures footwear,
apparel, equipment and accessories. They are famously known for their sports footwear and
equipment. In 2000, Nike became a victim of negative publicity; they were heavily scrutinised by
several international NGOs for using child labour in Pakistan for the manufacturing of footballs.6
Sialkot is a rural, industrial area in Pakistan that became the common ground of the manufacturing
5 http://www.ilo.org/global/topics/child-labour/lang--en/index.htm
6 http://www.commondreams.org/headlines01/1020-01.htm
of sports equipments, such as footballs. According to the ILO, 7,000 children under the age of 14
were employed, making Nike footballs. While Nike wasnt directly involved, its subcontractors and
suppliers hired young children, paying them very little. These sweatshops in Sialkot were found to
have been making children work up to 80 hours in a week, under poor conditions, such as
darkness.7 In 2003, images of young children in Pakistan stitching footballs with their hands were
released on the internet, adversely affecting Nikes image. The most labour-intensive processes,
were outsourced to families in villages around Sialkot. Families were paid around 25 to 30 rupees
(50 - 75 cents) for each ball. Young girls aged six and seven were also found making holes in pieces
of leather and stitching the balls. This had put Nike under a lot of pressure to maintain its brand
image, hence they denied the allegations. MNCs are largely focused on making profits and this
then leads to negligence about ethical issues such as the treatment of workers; MNCs should be
very much responsible about the conditions of the workers who make their products.
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There are several forces that drive globalisation and ultimately the activities of
multinational corporations. Due to globalisation, there has been increased demand for imported
goods. MNCs are able to operate in many different countries, making their products accessible in
many different markets around the world. Furthermore, the changes in regulations in trade barriers
have made it easy for countries to produce and export goods without having to pay high duties. In
addition, multinational firms have greatly benefitted from embracing forward vertical integration,
where they are able to establish production platforms in low cost countries and have products be
into finished goods at low costs.8 Additionally, labour costs in western countries are much higher
than in developing countries in Africa, and the Asia-Pacific and hence, cheaper labour costs allows
7 http://www.economist.com/node/300468
8 http://www.tutor2u.net/business/blog/qa-what-are-the-main-factors-driving-globalisation
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Nike benefits from outsourcing production to countries like Pakistan, China, and Vietnam as
labour costs are minimised. However, there are key factors that lead to the exploitation of labourers
in developing countries. The biggest factor is perhaps poverty; poverty makes the poor vulnerable
to exploitation. Rural areas like Sialkot in Pakistan are largely underdeveloped; there is lack of
access to educational facilities, healthcare and poor infrastructure; most families live in poverty,
struggling to fulfil their basic needs. Therefore, when families are provided with any form of
opportunity to earn income, they take it, even though working conditions may be harsh. In many
cases children are forced to work to support their families9. Additionally, the lack of schools further
pushes children into employment10. Also many employers prefer children over adult labourers as
they can be paid lower wages, which then helps them cut costs and maximise their earnings. Not
only that, workers are exploited also because they have little awareness about their rights and the
government provides minimal support and protection to them. The child labor pool is massive and
endless; this is partly due to high birth rate and an education system that can accommodate only
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Despite that, over the decades, multinational firms have indeed help create plenty of
employment opportunities for the locals; with the creation of jobs, the poor have been able to have a
source of income, helping to alleviate levels of extreme poverty in areas such as Sialkot.12
Multinational corporations have both positive and negative effects on their host, in this case,
developing countries. The creation of jobs reduces levels of unemployment and social issues such
9 https://www.unicef.org/policyanalysis/pakistan_68289.html
10http://siteresources.worldbank.org/EDUCATION/Resources/
278200-1099079877269/547664-1099079934475/547667-1135281552767/Child_Labor_issues.pdf
11 http://www.theatlantic.com/magazine/archive/1996/02/child-labor-in-pakistan/304660/
12 http://www.spiegel.de/international/world/globalization-in-pakistan-the-football-stitchers-of-sialkot-a-683873.html
as crime, violence, suicide, associated with it. Sialkot earns a 1,000 euros a year, double the national
average for the area, because of the sports goods industry there. The factories in Sialkot supply 40
million footballs a year, and up to 60 million during the World Cup year.13 Forces of globalisation
pull MNCs to developing countries, which brings foreign direct investments in these countries,
helping to build infrastructure and advance technology. This helps foster economic growth,
increasing the productive output of the country; Pakistan has witnessed an significant increase in its
GDP due to increases in FDI and MNCs. Furthermore, MNCs pay taxes and rent to the
government, bring more income. However, the negative consequences of MNCs are severe.
Exploitation of labour leads to pressing issues such as child labour. Furthermore, resources of the
host country are capitalised on14. MNCs have immense power due to their extensive scale of
operation; many are monopolies of their industries and hence are heavily profit-driven; their
dominance in developing countries adversely affects local business and discourages local
entrepreneurship, simply because small businesses are unable to compete with their influence in the
market. This is a huge disadvantage because local business actually contribute to a countrys GDP
and GNI; whereas multinational corporations exploit resources of developing countries and take
their profits back to their home countries. It is arguable weather MNCs help foster growth and
development.
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In addition, child labour has also greatly negative consequences. Young children are
deprived of education as poverty forces them to find work. However, the lack of proper working
conditions is detrimental to these childrens well-being - physical and mental development. Young
children are made to work often for very long, in the dark, small rooms. Physical injuries are also
very common as children are made to work with hazardous machines and tools. This also leads to
13 http://www.spiegel.de/international/world/globalization-in-pakistan-the-football-stitchers-of-sialkot-a-683873.html
14 http://www.economicshelp.org/blog/538/economics/multinational-corporations-good-or-bad/
several health problems such as respiratory diseases and cancers as they often have to deal with
toxic chemical substances. It is hard to escape from this viscous cycle and once anyone falls into
this cycle, its difficult to break out of it. Also, the economy and growth of the country are hindered
if children are not properly educated. Children who starts working at early stage have little parent
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Child labour is an issue that has been worked to resolve for decades; while progress has
been made, it hasnt been completely solved. Development actors such as international agencies
like the United Nations Childrens Fund and the International Labour Organisation, have played a
pivotal role in combatting this problem. However, the biggest challenge comes with policy
interventions. Often a lack of policies regarding child labour allows young children to be exploited
by sweatshops and factories in rural, underdeveloped areas; in many cases, in Pakistan, if policies
have been pursued, a lack of implementation and enforcement has resulted in the violation of laws
and regulations. However, it is also important to note that the issue of child labour is deeply rooted
in poverty. There are several factors that cause poverty; those are complex and hence, difficult to
address effectively. Organisations like UNICEF have a holistic approach to preventing and
responding to child labour; this involves providing access to basic services, strengthening national
child protection systems and promoting social change.16 Local NGOs like Rozan in Pakistan are
also working to protect children from being exploited as workers. The high vulnerability of children
in extreme poverty is perhaps the great obstacle that prevents child labour from being completely
eradicated.
15 http://mydailyalerts.com/negative-effects-child-labor
16 https://www.unicef.org/media/media_70610.html
While child labour is a complex and difficult issue to address, there are solutions that can
effectively combat the issue. In 2011, the UNICEFs Pakistan representative state in an interview,
Safe, accessible and high-quality education is the best way to encourage families to send their
children to school and to prevent children from engaging in the worst forms of labour. In Pakistan,
UNICEF, ILO and the government are working together to implement national programmes that
aim to increase school enrolment and access to education, supporting disadvantaged children and
their families.17 However, government organisations and MNCs should be pressured to act in a
socially responsible manner in order to end to child labour or work to provide children with better
UNESCO, 5.5 million children are out of school in Pakistan.18 The numbers tend to be higher in
rural areas of Pakistan where this is simply lack of schools and educational facilities. The
government needs to play a more empowering role with the provision of basic educational facilities;
more schools need to be built and more government teachers need to be trained. Education is what
helps keep children away from being forced into child labour and it ultimately helps them break out
of poverty. Additionally, there needs to be greater enforcement of labour laws; the government
needs to take strict action against subcontractors and factory owners who employ young children, or
these children will continue to be exploited. International stakeholders play an influential role as
regulatory agencies to monitor child labour standards. ILO needs to further increase their advocacy
for labour rights and hence should take more rigorous actions towards MNCs and their activities in
developing countries. Multinational corporations also have a large role to play in preventing their
brands arent associated to such unethical practices. Consumers have also been greatly inclined to
buying products that are ethically produced. When MNCs are associated to such practices, it only
17 https://www.unicef.org/pakistan/media_7071.html
18 http://tribune.com.pk/story/666285/5-5-million-children-out-of-school-in-pakistan-unesco-report/
ruins their brand prestige and decreases consumer loyalty, affecting the profitability of the company
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Ultimately, the effect of globalisation and MNCs on societies is immense; among all critical
issues, child labour is of major concern in the effects that globalisation is having, in which MNCs
also play a large role. It is argued that the hunt for cheap labour of MNCs pushes more children into
workforces, but at the same time, foreign direct investments boost the economy, provide
employment opportunities, thereby reducing the need for child labour. Investment in human capital
is essential for economic development in countries like Pakistan. Therefore, governments need to
take more active actions in promoting education and providing access to the necessary facilities for
communities in the rural areas. With strict enforcement of labour laws, governments can protect its
people from being exploited. Lastly, multinational corporations need to make efforts to ensure their
practices are ethical. Their influence on the public is large and therefore, MNCs should strictly
abide by laws and endorse their corporate social responsibility agendas when operating in
developing countries. If MNCs comply by the human rights standards, labour standards and be
responsible for activities conducted by its subcontractors and suppliers, then the negative effects of
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