Effects of Globalization - Essay Example

Effects of Globalization Introduction Globalization is the process whereby nations, businesses and funds go beyond the national and the domestic markets, to other markets across the world; so as to expand the interconnection between the diverse markets. Globalization leads to the interchange of ideas, global views, products and cultures. The effects of globalization has had mixed reactions due their impact on different nations. Nations which have experienced tremendous globalization effects include the Western and the Middle East countries. Globalization in the Western Countries According to the International Monetary Fund (IMF) globalization has been brought about by four aspects. They include: the movements and migrations of people, trading and transactions, investments and capital and lastly knowledge dissemination. In the early 19th century; industrialization especially in these counties lead to the realization of globalization. Industrialization led to the standardization of products due to economies of scale (Boudreaux 34). In Boudreaux 67 during this period there was a massive increase in populations which led to increase in demand of products. Furthermore, the introduction of steamships minimized the international transportation costs while the railroads made the inland transportation costs cheaper. At this period, many countries embraced the effects of international trade. Most significantly, globalization in these countries was solely made possible through Asia and Africa imperializations. The inventions in shipping containers promoted commerce across the globe. After the end of the Second World War there were agreements between the nations to formulate policies regarding finance and commerce plus the international monetary systems in order to promote their economic growths. The economic agreements led to lowering of the trade barriers so as to facilitate the economic movement of goods and services (Boudreaux 105). World Trade Organization was thereafter formulated which monitored international trade negotiations as well disputes resolutions mechanisms between nations. However, Doha round agreement failure, led nations to split from the trading agreement. Thereafter, there was the formulation of smaller or bilateral agreements between nations. In 2011, it led to the formulation of the free trade agreements most notably the USA South Korea agreement. In most western countries, air transportation became affordable even to middle class people. This was because of lower cost carriers and the formulation of open skies policy which enhanced competition between the aviation companies. The periods of 1990s led to the creation lower communication networks which tremendously minimized communication costs across nations. Computer use then gained much importance due to location limitless advantage to promote trade between nations (Weinstein 110). Particularly it performed much work which further assisted business operations like accounting functions, development of soft-wares and design engineering. Moreover, the late 19th century led to the interconnection of cultures and the rapid integration of global economies. Global integration in the western countries was propelled by the liberalization of many countries across the globe. Globalization was further heightened through the movements and migrations of diverse people across these nations. Most of the immigrants were from the developing and the least developing nations. Based on Weinstein 178 the internet also promoted the connection of people across the globe. However, in the end of the 2000s period, there was a recession which was mostly associated with low and negative growth caused by trade and the usage of cross border phone calls. With communication and transportation improvements, International trade grew exponentially. International business promoted multinational enterprises (MNE) which have global production or operations in multiple countries. It has been noted that survival of the multinational companies relies sourcing of their raw materials including labor from overseas, so as to cope with technological advances caused by competition (Boudreaux 201). However, there have been negative impacts form the developed nations especially Europe which has stagnated the economic developments of developing nations. The European Union policies have been argued by economists to be changed so as to prevent negative trade deficits and account imbalances in the developing nations (Weinstein 155). Globalization is exploiting the developing countries which economists believe that the solution is for Europe to terminate importation of products from developed countries experiencing poor labor policies. The economists depict that Europe should quit from importing products from countries employing child labor or underpayments of the workers. Most of the countries sought for cheap labor include Vietnam, India, China and the African nations. The economists believe that Europe should take preventive measures in enhancing better humanitarian initiatives. Weinstein 234 states that there are approximately 260 million underage workers ranging from 5 to 14 years old worldwide. Most of the children are employed by their families to work on their farms and subsequently, EU imposes high taxes in agriculture products. EU has led to the collapse of many nations’ economic machineries for example the collapse of the Bangladesh Garment factory which took over 1000 lives. Economists evaluate that Europe can quit importing goods from developing nations or implement better industrial safety programs so as to prevent deterioration in developing nations. Globalization in Middle East Globalization in the Arab countries has had a huge impact regarding their economic, political and social environments. It has promoted their integration globally and realized different consequences. Although it has enhanced their transfer of education and knowledge from across the globe, it has led to negative implications on their civilization as well as cultures. The most affected is their treasured cultures (Stetter 45). Many of the Arab cultural trustees and nationalists have condemned the effects of globalization in their nations. The Arab fundamentalists and the conservative nationalists have argued that the globalization is incompatible with the globalized concepts. They believe that globalization has the effect of degrading their culture so as their culture can take a submissive position (Stetter 67). Based on Stetter 125 the Arabic specialists explain that technological advances like the social media, satellites and internet mostly contain the Western culture regardless of their variances, which enormously affect their way of life. Globalization critics ascertain that the cultural invasion would lead to their disintegration of their culture and identity. On the contrary, opposing scholars explain that the cultural decline poses a sign of advanced communications, acts as a measure of society’s interconnection and a move towards civilization. The satellite communications and worldwide media networks have enabled the global outreach. Technological expansion has led to the benefit of cultural diffusion which creates universal appeal. It is argued that it has both a positive and negative effect on Arab’s cultures (Stetter 156). Despite the Arab countries having a common heritage, they have varied per capita incomes. The countries dependence on oil wealth and central planning, have hugely empowered the Middle East nations. Stetter 188 states that the expansions of investments and oil exportation from other countries have promoted the countries capital flow and trade. The formation of gross capital was realized through high rates which stimulated the expansion of GDP rates and improved their citizens living conditions. Huge financial investments were received abroad making the national savings exceed investments due to the advantage of oil. Stetter 198 explains that during the early 19th century there was deterioration in economic condition due to pressure caused by economic reforms conducted by many countries during this period. The reforms were fiscal in nature which led to the introduction of VATs (value added tax), removal of subsidies and the improvement of public expenditures. Monetary policies strengthened through the formulation of indirect policy instruments. Furthermore, liberalizations of trade unions and the foreign direct investments were highly encouraged leading to flexibility of exchange rates. Countries like Morocco, Egypt, Tunisia and Mauritania enjoyed the exponential growth rates. However, other macroeconomic determinants remained constant in much of the economies. Inflation for example, during this period, declined even more than the developing nations. In 2002, the MENA regions had varied incomes most notably their per capita incomes. The per capita income ranged from $37,600 in Qatar to a low of $930 in Yemen. The per capita incomes were measured using PPP (purchasing power parity) rates which enable cross country price differences (Stetter 202) .The 6 oil wealthy nations in the GCC (gulf cooperation council) experienced the highest per capita incomes. In some of the MENA regions, they underperformed as compared to the developing nations. At the periods of 1970s, some of the countries did not achieve globalization and integration full benefits. The difference was caused by the developing nations having quick adaptability to grow than to sustain the development. Stetter 278 confirms growth in oil producing regions was low compared to the non-producing regions due to this fact. Even after economic improvement in the 20th century in these oil producing regions, the average growth rate was minimal at 1.3% as compared to their annual growth rate of 4%. The cause was propelled by high unemployment which was majorly contributed by high population growth rates. Globalization rate in the MENA regions is low due to weak integration with the global economy. Conclusion Globalization in the Western countries: USA and Europe, has had significant improvements in communication developments, infrastructure, transportation and their economic stabilities. However, globalization has led to integration of cultures leading to diffusion. In the Middle East countries, it is argued that cultural diffusion has led to mere extinction of their cultures. Furthermore, globalization has greatly hindered the improvements of some developing Middle East countries due to integration of colliding economic variables. Hence, globalization has mostly favored the Western countries but greatly hindered the developing nations in the Middle East. Works cited Boudreaux, Donald J. Globalization. Westport, Conn: Greenwood Press, 2008. Print. Weinstein, Michael M. Globalization: Whats New. New York: Columbia University Press, 2005. Print. Stetter, Stephan. The Middle East and Globalization: Encounters and Horizons. Basingstoke: Palgrave Macmillan, 2013. Print. Read More