What is Globalization? - In Support
What is Globalization?
A route through which people, nations, governments, and companies around the globe interact and integrate is known as globalization.This process is aided by information technology and driven by the means of international trade and investment. The process has a vital impact on culture, political systems, environment, entrepreneurship and economy of the country which influences the well-being of the society as a whole. It integrates the cultural, economic and political system of the economy and it is a driving force for the democracy, economic growth and prosperity of a nation. It is a time taking process and it takes centuries to track up the expansion. The globalization in the present era has picked up the pace noticeably in the past 50 years. It is in process since the Second World War resulting chiefly due to planning by economists, politicians and business interests. Its major impact is seen on the following areas:
1. Market of commodities and services
2. Pace of technological development
3. Capital inflow and outflow
4. Labor immigration rate.
These are the basic four factors of an economy, which are affected by globalization and to see the impact in detail let us have a view at the positive aspects of globalization.
Positive aspects of globalization or globalization - a boon
- Impact on industrial areas: the worldwide production of the globe is affected as a whole. As there is no physical barrier the exchange of goods and services becomes easier reason being the world is treated as a global village. No particular global boundaries exist making the trade even more profitable.
2. Change in economic aspect: the economy is affected by globalization to a great extent as it makes a lot of profit, reason being a common ground of exchange of goods and services is provided to them.
3. Effect of globalization of financial markets: a far better outlet is provided to financial institutions in terms of lending and borrowing. They touch sky-scraping heights as they get advantage of being global which is a great benefit for them in terms of profit.
4. Informational aspect of globalization: the inflow and outflow of information has no barriers. Easy and quick access to information is possible when globalization pervades. Satellites, fibre-optic communications, telephony, and internet have a more easy access.
5. Political advantage of globalization: globalization tends to create a world government, which has a much wider scope as compared to local, state or national governments. It gives the citizens social and economic rights which are a result of globalization.
6. Ecological impact of globalization: globalization is a kind of check to natural hazards of environment-pollution, over-fishing, multiplication of invasive species, and cross country water. Numerous restrictions are imposed to industries which globalize as they need to comply with various restrictions regarding the maintenance of ecological balance.
7. Affects of globalization on cultural factors: a strong impact on standard of living, level of consciousness, and behavior pattern is noticed at the time when globalization infuses in a country.
8. Impact of globalization on Inter cultural exchange: globalization brings diversity of culture to a nation, increases revenue through travel and tourism, boosts up cross cultural sports activities, etc. globalization turns the world into a global village.
9. Change in technical scenario due to globalization: improvement in telecommunication techniques, data-flow etc. boosts up with the advent of globalization.
Listed above are the positive aspects of globalization. The term globalization is small but covers a wide area and changes the entire global scenario. It turns the world into a global village where there is no meaning of distances. Although globalization serves as a boon for the world but one must never forget that every painkiller has a side effect, and so does globalization has. It is definitely a boon for the development of the globe but it has a few disadvantages which cannot be ignored. Some of the ill-effects of globalization are listed as under:
1. Amplifies intense competition: although competition is considered as a healthy sign of growth, overindulgence in the same leads to disasters. When a nation becomes a part of globalization its companies automatically enter the cut throat competition prevalent and the entry of new companies even intensifies the competition. This unhealthy market practice leads into inter company and inter national rivalry which creates discords in the world peace.
2. The gap between affluent and underprivileged counties broadens: as an effect of globalization the financial differences between the privileged and underprivileged countries widens. As in the era of globalization the affluent nations adds on to their wealth taking advantage of their existing resources and the poorer nations are left deprived in the race, as they do not have means to expand themselves. The poor nations are merely given an outlet in which the rich countries already exist as strong players.
3. Complicated for tiny enterprises to establish themselves: tiny enterprises have no scope of development in the age of globalization, as they are left far behind in the race with recognized tycoons. The recognized enterprises have resources to expand and advertise themselves which is lacking in the small enterprise and as a result of competition from the renowned brands they perish or hold an insignificant share in the market.
4. Exploitation of work force: when a country enters into global market the physical boundaries are not given any importance and world is regarded as one nation therefore the labor surplus country is always exploited. In a labor surplus country one gets workers at cheap rates and there fore maximum exploitation is done of such countries, they are not given much opportunity to grow and diversify and are often made to do clerical work.
This article gives the reader complete information about the pros and cons of globalization and it is evident from the same that if a nation have enough resources and is full of ideas then no one can stop it from touching the sky-scraping heights of success. Globalization is a process of development and every nation must become a part of it, sooner or later the country benefits from it all what is needed is patience.
Globalization is a very empowering thought. Imagining the implications of global connectivity with regards to education and business has excited many an economist and politician. The Communication Revolution that we are currently amidst has added color to the concept, with distances being covered in seconds. The promise of unified within a single society by global leadership is something that is as appealing as its larger implications are alarming. The preservation and combination of technological and socio-cultural forces can actually nurture international economy through dedicated integration of trade and commerce. With internet technology at our finger-tips, it is not very difficult to envision the subsequent capital flow or migration.
Globalization is not a concept without explicit scope for internal policies protecting respective industries or the implication of diminution of enforced restrictions on exchanges. While crossing borders and integrating a complex system of trade and production seems very attractive, one cannot ignore the 'flattening' effect of the practice. Globalized trade and dedicated outsourcing of resources are bound to result in a conflict between various distinctive political forces. The ideology will of course continue to have an increasing impact on organization of business practices, but not without trade and exchange relations being affected. Globalization creates a broader platform for a range of foreign products and the movement of goods between and within boundaries. This coupled with the scope of increased access to external financing is challenging the financial crunch that is also responsible for the recent period of recession. Market interconnectedness has paved the way for inter-dependency and in turn, an economic collapse.
Globalization is channelized via international institutions that are designed to supervise processes that are related to education, migration, world cultures and heritage and business. This has in turn facilitated advances in technology and reduced the cost of trade negotiations. Free trade is not one that can or will be easily incorporated within developing or under-developed market based economies. International agreements result in reduction of tariffs, transportation costs, capital control and subsidies. The restrictions thus imposed on intellectual property and supranational recognition charge cultural globalization, to add strength to the already powerful and make the struggle even more uphill for those battling market forces.
Use of communication technology to further the interests of homogenization leads to harbored traditional diversity amidst an outward claim of 'retained individuality within international integration'. The signs are all around and clear to see. The flip side of the coin highlights trade disputes, conflicts in bilateral and multilateral agreements on trade and education and barricades that hamper movement.
The growing concern towards the implications of global terrorism is not without base. Global conflicts are inter-woven with the attempts at globalization. The strategy also has a very negative impact on cultures around the world. The influx that is the outcome makes it impossible for a society to check the disregard of what is uniquely their's. Acceptance of imported goods and services do affect national income. Internal and external migration and investment opportunities tip the balance required for nations to enjoy the status of 'developed' or 'developing'.
Bad Effects of Globalization:
Globalization is supposed to fuel and guarantee social, political and economic unification. However, developed and established economies continue to exploit the 'sharing' business to empower their own strong and wealthy economies. Subsequently, in the political arena, the reallocation of power is surfacing in the form of industrial and technological rivalry. On the social front, the world is now at a loss in the attempt to guard and flaunt diversity that is enriching. The random influx of ideology and lifestyles and unmonitored inter-cultural communication has resulted in the creation of a pseudo culture that is common across boundaries.
By Gaynor Borade
Globalization is the tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, allowing them to become interconnected with different markets.
Proponents of globalization say that it helps developing nations "catch up" to industrialized nations much faster through increased employment and technological advances. Asian economies are often highlighted as examples of globalization's success. Critics of globalization say that it weakens national sovereignty and allows rich nations to ship domestic jobs overseas where labor is much cheaper.
What is the real story on globalization? It largely depends on your personal perspective.Click here for a free Forbes Report: Three Best Buy Exchange-Traded Funds for the Current Market.
The View From The Penthouse
For business leaders and members of the economic elite, globalization is good. Cheaper labor overseas enables them to build production facilities in locations where labor and health care costs are low, and then sell the finished goods in locations where wages are high. (For related reading, see " What Is International Trade?")
Profits soar and Wall Street rewards big profit gains with higher stock prices. The CEOs of global companies also get credit for the profits, and are rewarded with generous compensation packages, in which company stock and stock options figure prominently. Institutional investors and wealthy individuals also take home the big gains when stock prices increase.
Special Offer: Globalization creates opportunity in stocks all over the world--from Brazilian airlines to Chinese advertising companies and Swiss drug makers. Click here for the complete "buy" list in the current issue of the Forbes International Investment Report.
The View From the Street
But globalization doesn't only affect CEOs and high-net-worth individuals. Competition for jobs stretches far beyond the immediate area in a global marketplace. From technology call centers in India to automobile manufacturing plants in China, globalization means that workers must compete with job applicants from around the world.
Some of these changes arose as a result of the North American Free Trade Agreement. NAFTA sent the jobs of U.S. autoworkers to Mexico, a developing country, where wages are significantly lower than those in the U.S. A few years later, some of those same jobs were relocated to third-world countries in East Asia, where wages are even lower. In both cases, the auto manufacturers expected U.S. consumers to continue buying those products at U.S. prices.
While critics of globalization decry the loss of jobs that globalization can entail for developed countries, those who support globalization argue that the employment and technology that is brought to developing countries helps those populations toward industrialization and the possibility of increased standards of living.
The View From The Middle Ground
In the globalization battleground, outsourcing is a double-edged sword.
On the one hand, low wages in foreign countries enable retailers to sell clothing, cars and other goods at reduced rates in Western nations where shopping has become an ingrained part of the culture. This allows companies to increase their profit margins.
At the same time, shoppers save money when they buy these goods, causing some supporters of globalization to argue that while sending jobs overseas tends to lower wages, it may also lower prices at the same time.
Lower-income workers also enjoy some of the benefits of stock price appreciation. Many workers have mutual funds holdings, particularly in their 401(k) plans. When companies outsource jobs and get rewarded with rising share prices, mutual funds that hold those shares also increase in value.
The Effects Of Globalization
The ever-increasing flow of cross-border traffic in terms of money, information, people and technology isn't going to stop.
Some argue that it is a classic situation of the rich get richer while the poor get poorer. While global standards of living have risen overall as industrialization takes root in third world countries, they have fallen in developed countries. Today, the gap between rich and poor countries is expanding as is the gap between the rich and poor within these countries.
Homogenization of the world is another result, with the same coffee shop on every corner and the same big-box retailers in seemingly every city in every country. So, while globalization does promote contact and exchange between cultures, it also tends to make them more similar to one another. At the market level, linked global financial markets propel local issues into international problems, such as meltdowns in Southeast Asia to Russian debt defaults.
What Lies Ahead?
Deviation from the status quo on this issue is likely to be minimal. The massive outsourcing of U.S. manufacturing jobs that began decades ago continues today. White collar jobs, such as call center workers, medical technicians and accountants, have also joined the outsource parade, leaving many to argue that those profiting from the arrangement have little incentive to change it, while those most impacted by it are virtually powerless.
Politicians have latched onto the idea of the disappearing middle class as a political issue, but none of their income redistribution schemes are likely to have any immediate substantial impact. (For related reading, see "Losing The Middle Class.")
Public scrutiny of CEO compensation has encouraged business leaders to begin to see that a rising tide doesn't necessarily lift all boats. In many cases low-wage workers get hurt the most because they don't have transferable skills. The concept of retraining workers is on the radar, but it's easier said than done and decades too late for the American manufacturing industry. (To learn more, see " Evaluating Executive Compensation.")
Until a better solution is found, education, flexibility and adaptability are the keys to survival. So far, the only answer that politicians and business leaders agree on is the value of an educated, flexible, adaptable workforce. (At the individual level, you can take action on this issue if you Invest In Yourself With A College Education.)
Send comments and questions to .
Why is globalization bad?
Your question assumes that globalization is bad, and then asks us to justify the negative aspects of globalization. I assume that you meant to ask, "What are the negative aspects of globalization?"
Critics of globalization frequently cite the following:
1. Poorer countries are sometimes at disadvantage: While it is true that globalization encourages free trade among countries, there are also negative consequences because some countries try to save their national markets.
2. Exploitation of foreign impoverished workers: The deterioration of protections for weaker nations by stronger industrialized powers has resulted in the exploitation of the people in those nations to become cheap labor.
3. The shift to outsourcing: The low cost of offshore workers have enticed corporations to move production to foreign countries. The laid off unskilled workers are forced into the service sector where wages and benefits are low, but turnover is high.
4. Weak labor unions: The surplus in cheap labor coupled with an ever growing number of companies in transition has caused a weakening of labor unions in the United States.
The main effect of globalization is a shrinking of the world. A business in India can have just as much influence on your business as a business across the street. Since that business in India will pay different taxes and is subject to different laws, and has different costs, you might be at an extreme disadvantage when attempting to compete with this business. The eventual impact of globalization could be very positive or very negative depending on your viewpoint.