Globalization. Globalization In Economic - Research Paper Example

Module Globalization Globalization is a widely discussed topic in the contemporary world. It is a term that gained popularity inthe 1980s and refers to the increased mobility of people and goods across national and international borders that result to improved cohesion across the globe (Lynch 7). Although globalization is largely viewed as an economic process, it is has been known to have numerous political and social effects as well (Pew Research Center). With regards to the political and economic aspects, globalization is described as the process of decentralization of markets and legal systems (Lynch 6). In relation to businesses, it can be explained as a process in which companies venture into the emerging global markets. Furthermore, entities are taking advantage of the internet to launch their virtual presence in the worldwide marketplace. In most cases globalization is linked to modernization whereby there is transformation of developing nations into developed ones. Internationally, globalization is analyzed in terms of the challenges to the global economy and economic issues in general. There have heated discussions of globalization and its advantages and disadvantages. There have been numerous benefits accruing from the process such as increased trade among nations and dissemination of information world over (Knickerbocker 45). On the flip side there have been drawbacks associated with the process including exploitation of the poor nations, erosion of traditional cultures through modernization and the rising levels of global terrorism. In a nutshell, the process has positive and negative implications on countries world over. This essay addresses the complex concept of globalization and focuses on its economic aspect. It can be noted that global economic activities have become more integrated and economically oriented over the recent past. It takes the form of increased trade among nations, an increase in imports and exports, an overall growth of foreign investments and foreign loans. This is due to the existence of better policies and a friendlier economic environment (Knickerbocker 76). In fact, most modern economies argue that it is meaningless to form one’s thinking on national economies as international trade has become the backbone of most domestic economies in most countries. This has been the trend in most countries that have adopted uniform business environments and legal systems that govern the operations of global markets. This has had both negative and positive implications on the global economy. The first advantage linked to globalization development of the industrial economies that are under the Organization of Cooperation and Development (OECD). It is clear that international trading activities contribute to a significant proportion of the economic production or GDP in most countries (Knickerbocker 77). This is because economies tend to specialize in the areas where they have the highest comparative advantage. For example, if a country is best suited to produce steel, it concentrates on its production and outsources other products that may be expensive to produce in the country. Through specialization, countries are able to make optimum profits from their production activities. Globalization has resulted to intensified trade in the national economies. This is due to the increased flow of goods, services and capital in the global market. This is due to the abolition of trade barriers among nations and uniform regulations on importation and exportation. This simplifies trading among nations and there increasing trading activities in the global economy (Lynch 10). This is facilitated by international trading organizations such as the International Monetary Fund (IMF) and the World Trade Organization (WTO) that make laws and regulations concerning the operations in the global economy. Regionally, bodies such as the European Union (EU), North America Free Trade Association (NAFTA), Common Markets for East and Central Africa (COMESA) and association of South East Asian Nations (ASEAN) focus on economic integration in their respective areas. Globalization has resulted to the creation of a larger market for the goods and services produced in a given economy (Lynch 11). This is owing to the fact that there is a wider market base hence more goods are sold. This results to generation of higher profits which in turn leads to greater economic activities. In relation to consumers’ welfare since goods and services are available at competitive prices. Additionally, globalization leads to the availability of diverse goods and services. The consumers can access goods at cheaper prices and get the value for their money. Companies are able to achieve lower costs due the reduced production costs owing to the availability of cheap raw materials in the global market. The world has become a global village thanks to the advancement of technology. As a matter of fact, people across borders are able to communicate with each other through technology in a manner that they would have if they were in the same country. Different countries are able to exchange ideas across borders and hence form partnerships that help them and their mother countries. The global economic system is interconnected among countries and ensures each of these countries benefit (Pew Research Center). Google, Facebook and twitter are some of the companies that have enhanced technological knowhow in the globe. These companies that have been known to generate million of money are themselves a product of globalization and technological knowhow. Globalisation can thus be said to enhance technological growth where the technologically advanced countries for example Japan can share their products with the incapacitated countries like Zimbabwe. Economists consider economic globalization as having numerous impacts such as facilitating economic activities in the global market and increasing economic operations and the world GDP. However, the process has been facing continuous criticism from sceptics all over the world. The process is viewed as having unequal benefits to various economies for example, economies of Europe, North America and East Asia have profited immensely in comparison to other non- industrial nations of South America, Africa and parts of Asia (Knickerbocker 77). These non- industrial countries have been experiencing economic recessions instead of growth and development. This is caused by global restructuring that has helped the Northern economies increase their activities while slowing down economic growth in the Southern economies. The other concern is that globalization has a negative impact the employment levels in some countries (Chatterji and Gangopadhyay 65). This is common in industrialized countries as companies shift their production plants to areas where they can access cheaper labour and accessibility to raw materials. In addition to unemployment, globalization leads to a rising environmental problems. Companies are likely to establish their factories in other countries with lenient environmental regulations. Third world countries are likely to over exploit their natural resources so as to supply raw materials to the industrialized countries. In other words, globalization leads to increased levels of environmental pollution. It may also result to the rapid spread of disease for people, animals and plants. This may be promoted by the movement of people and transportation of goods. Globalization has been blamed for the financial problems in the global economy. Economies of developing countries are exposed to the effects of international financial crisis such as recessions (Cavanagh and Mander 15). Furthermore, unfavourable economic conditions in one country can spread the same effect on other economies. Therefore, uncontrolled globalization is said to be one of the causes of under development in the less developed countries. It has been observed that some of the least developed countries in the world have got poorer with regards to the provision of basic goods and technological advancements. This also has an adverse effect on young companies that lack adequate resources to compete at the global level. Conclusively, globalization is considered to be a necessary evil that if properly managed will lead to general economic growth and development. There is need for the practice of a new kind of globalization, one that ensures that all countries gain from globalization by ensuring promotion of technology and access to basic goods and services. International organizations such including WTO and IMF should develop a framework that regulates the process of globalization. All the world leaders should meet to discuss the global economic problems and come up with practical solutions. This is referred to as the G8 Summit. Finally, the process of globalization should be used to promote economic growth and development in all the economies. Works Cited Cavanagh, John & Mander, Jerry. Alternatives to Economic Globalization. Berrett-Koehler Publishers. 2004. Print. Chatterji, Manas & Gangopadhyay, Partha. Economic Globalization in Asia. Ashgate Publishing, 2005. Print. Knickerbocker, Brad. If Poor Get Richer Does World See Progress?The Christian Science Monitor. 2004. Print. Lynch, Katherine L. The Forces of Economic Globalization: Challenges to the Regime of International Commerical Arbitration. Kluwer Law International. 2003. Print. Pew Research Center. World Publics Welcome Global Trade- but not Immigration. Web. 28 Apr. 2013. Read More