Tag: globalization and it’s effects

Globalization it's importance and it's effects

 Globalization and it’s effects

Globalization is the free movement of goods, services and people across the world in a seamless and integrated manner .

 Globalization can be thought of to be the result of the opening up of the global economy and the concomitant increase in trade between nations. In other words, when countries that were hitherto closed to trade and foreign investment open up their economies and go global, the result is an increasing interconnectedness and integration of the economies of the world. This is a brief introduction to globalization.

Further, globalization can also mean that countries liberalise  their import protocols and welcome foreign investment into sectors that are the mainstays of its economy. What this means is that countries become magnets for attracting global capital by opening up their economies to multinational corporations.

Further, globalization also means that countries liberalise their visa rules and procedures so as to permit the free flow of people from country to country. Moreover, globalization results in freeing up the unproductive sectors to investment and the productive sectors to export related activities resulting in a win-win situation for the economies of the world.

Importance of globalisation 

Globalization changes the way nations, businesses and people interact. Specifically, it changes the nature of economic activity among nations, expanding trade, opening global supply chains and providing access to natural resources and labor markets.
Changing the way trade and financial exchange and interaction occurs among nations also promotes the cultural exchange of ideas. It removes the barriers set by geographic constraints, political boundaries and political economies.
For example, globalization enables businesses in one nation to access another nation’s resources. More open access changes the way products are developed, supply chains are managed and organizations communicate. Businesses find cheaper raw materials and parts, less expensive or more skilled labor and more efficient ways to develop products.
With fewer restrictions on trade, globalization creates opportunities to expand. Increased trade promotes international competition. This, in turn, spurs innovation and, in some cases, the exchange of ideas and knowhow. In addition, people coming from other nations to do business and work bring with them their own cultures, which influence and mix with other cultures.
The many types of exchange that globalization facilitates can have positive and negative effects. For instance, the exchange of people and goods across borders can bring fresh ideas and help business. However, this movement can also heighten the spread of disease and promote ideas that might destabilize political economies.

Effect of globalisation 

The effects of globalization can be felt locally and globally, touching the lives of individuals as well as the broader society in the following ways:

1. Individuals – Here, a variety of international influences affect ordinary people. Globalization affects their access to goods, the prices they pay and their ability to travel to or even move to other countries.

2. Communities – This level encompasses the impact of globalization on local or regional organizations, businesses and economies. It affects who lives in communities, where they work, who they work for, their ability to move out of their community and into one in another country, among other things. Globalization also changes the way local cultures develop within communities.

3. Institutions – Multinational corporations, national governments and other organizations such as colleges and universities are all affected by their country’s approach to and acceptance of globalization. Globalization affects the ability of companies to grow and expand, a university’s ability to diversify and grow its student body and a government’s ability to pursue specific economic policies.

While the effects of globalization can be observed, analyzing the net impact is more complex. Proponents often see specific results as positive and critics of globalization view the same results as negative. A relationship that benefits one entity may damage another, and whether globalization benefits the world at large remains a point of contention.

Globalization and it's effects

 Globalization 

Globalization refers to the spread of the flow of financial products, goods, technology, information, and jobs across national borders and cultures. In economic terms, it describes an interdependence of nations around the globe fostered through free trade .
Globalization is always important for any of the country because every country need to grow financially as well as in other matters also . Now people are aware of this process and tend to increase their knowledge about globalization basically it is beneficial for the country’s people as well as for the country.


Benefits of globalisation

1. Socially, it leads to greater interaction among various populations.
2. Culturally, globalization represents the exchange of ideas, values, and artistic expression among cultures.
3. Globalization also represents a trend toward the development of a single world culture. 
4. Politically, globalization has shifted attention to intergovernmental organizations like the United Nations (UN) and the World Trade Organization (WTO).
5..Legally, globalization has altered how international law is created and enforced.

Effects of globalisation

Positive effects of globalisation 

1. Foreign Direct Investment

Foreign direct investment (FDI) tends to grow at a much greater rate than world trade does. This can help to boost technology transfer, industrial restructuring, and the growth of global companies.

2. Technological Innovation

Increased competition helps inspire new technology development. The growth in FDI helps improve economic output by making processes more efficient.

3. Economies of Scale

Increased global trade enables large companies to realize economies of scale. This reduces costs and prices, which in turn supports further growth. However, this can hurt many small businesses trying to compete at home.

Negative effects of globalisation 

1. Interdependence

Interdependence between nations can cause local or global instability. This occurs if local economic fluctuations end up impacting a large number of countries relying on them.5 For example, in 2020, Ukraine was the fifth larger exporter of wheat. When Russia invaded the country, it threatened food supply chains for countries like Pakistan, Lebanon, and Vietnam that import Ukranian wheat.6

2. National Sovereignty

Some see the rise of nation-states, global firms, and other international organizations as a threat to sovereignty. Ultimately, this could cause some leaders to become nationalistic.7
Two prominent examples of the rise of nationalism as a pushback to globalism include the 2016 election of Donald Trump in the U.S. and the British vote to leave the European Union (known as “Brexit”). These events contributed to the anti-globalization movement and stoked anti-immigration sentiments.

3. Equity Distribution

The pros of globalization can be unfairly skewed toward rich nations or individuals, creating greater economic inequalities.8 For example, in the wake of NAFTA, the average net weekly pay for maquila workers was $55.77 in 1998—less than $2 more than the average cost for basic needs in the maquiladora trade zone.9

4. Protectionism Through Tariffs

The 2008 economic crisis led many politicians to question the merits of globalization. In 2007, worldwide capital inflows accounted for more than 20% of the world’s GDP. By 2019, this figure fell to less than 5%.11
The U.S. and Europe introduced new banking regulations that limited capital flows. Many countries put in place tariffs to protect vital industries at home. In the 1990s, the U.S. placed a 127% tariff on Chinese paper clips.12 And Japan has levied tariffs on imported rice as high as 778%.13

5. Future Outlook

Some economists suggest that businesses are not investing across borders to build capital infrastructure. They argue that companies seek countries with low taxes. Some form of globalization may be inevitable in the long run, but the historic bumps spurred by economic crises suggest that change is the only constant.