Globalization
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Introduction:
Globalization is a very hot topic these days. In this research paper I’ll outline what exactly globalization is and what impacts it has on the global economy. The few questions I’ll try to answer about this phenomenon are:
1. What is globalization?
2. What are the positive effects of globalization?
3. What are the negative effects of globablization?
4. What are the possible impacts of globalization?
5. What are otherglobalists and antiglobalists?
6. What’s my personal opinion about this matter?
7. The conclusion
With the answers to these questions I hope to give the reader a good understanding of the topic and something to think about.
Before we can analyze the problems of Globalization we have to take a closer look of what globalization actually is.
What is globalization?:
Globalization is a term used to describe growing interdependence of people around the world with regard to societal influence, economies, and cultural exchanges. Because of modern communication methods, we know fast what happens at the other side of the world. People from all over the world are getting more depended on each other.
Globalization is not a new phenomenon. Some say that the process already started in the 15th and the 16th century, during the expansion of the European states. Especially since the occupation of Latin America by the Portuguese and the Spanish people. Also the fights between the British, Belgian and French over Africa were of influence.
Others say that the globalization process started in the 19th century when the industrial revolution took place. They say the current globalization started in the eighties thanks to new information technologies such as the internet.
The economies of countries met each other and they were forces to work together. This way it became necessary to think of one economic system. After a while the original economic signs were not clearly visible anymore. The fact that some companies and less powerful institutions got replaced by big multinationals and financial institutions was also a decisive factor for the start of the globalization we now know.
However, globalization is actually a much bigger process than only the increase of international trade and foreign investments. On a company level it shows through strong mobility of capital that shows itself in a big increase of mergers between companies and the acquisitions of participation in other companies.
So globalization is creating a common world economy. The prices are lowered and the revenue is increasing. Government organizations are getting more and more privatized. The reason for privatizing the companies is to achieve a good price and quality ratio. This will be raised by the competition that takes place between the companies. Also the privatization is better for the economy in a way that there are fewer boundaries for the international trade and investments. Also now the consumer can choose for a company that gives him/her the best price/quality ratio.
Next to privatization deregulation is also of great importance to establish globalization. The fewer rules and boundaries there are the better. The economic world uses international agreements to privatize the public services or to reject national laws.
Big companies such as Nike, Adidas and Calvin Klein place their factories in low developed countries to cut the costs. There are very few obstacles to keep the salaries low and for this reason a bigger profit can be achieved.
Now that we’ve looked at the meaning of globalization, let’s take a closer look at the positive and negative effects of this phenomenon according to experts.
The positive effects of globalization:
Increase Economic Growth:
The economic globalization does have a lot of advantages. One of these advantages is the increase in economic growth. Because of the economic globalization, nations open up their economies to import goods, services and capital from other nations by removing the barriers such as trade restrictions, quotas and tariffs. This can create more opportunities for a country to promote trade and attract investments. The increasing trade and investments under globalization can increase economic growth and create jobs.
Higher business productivity:
Next to the increase in economic growth, globalization causes the national barriers to be lowered for trade and investments, so goods, services and money move more freely throughout the world. Because of this, businesses have a lot more competition and the businesses that cannot compete well will fail. In order for the businesses to survive they have to be sure they are competitive enough. Thus, open economic systems will cause companies to be more cost-efficient.
Consumer benefits:
Globalization will cause the competition between firms to rise, and thus the firms are more efficient. This has a positive effect on the consumers, because since the firms try to keep the production costs as low as possible on the free market, the end products will be cheaper as well. Consumers will now have more money to spend. Also because of the open borders consumers now have a wider choice of products and can benefit from a bigger variety of goods and services and the lower prices.
Gains to the owners of multinational enterprises:
Globalization allows free movement of new communication technologies among nations. Communication technologies such as the use of the internet, e-mail, mobile phones and satellite broadcasting offer people more opportunities to communicate in groups and get new information from both close and distant sources more quickly. Multinational enterprises can respond faster to the changes of wage costs, shifting their production from higher-wage industrialized countries to lower-wage developing countries. As a result, the lower wage costs can benefit the owners of the enterprises.
Furthermore, the owners of multinational enterprises can gain from the openness to foreign investments. In the developing world, capital is scarce. Most investment opportunities remain unexploited. When multinational enterprises invest their capital in the