Globalization is the process of expanding economic relations to a worldwide level. This was made possible by the technology boom of the 1990s. With the invention of the internet, Americans had more communication with people all over the world. Globalization is part of our modern world today, and its effects can be both positive and negative. The consequences of globalization are very different between the developed world and the developing world.
In the developed world, globalization compels businesses to adapt to different strategies and compete in a global market. Some economists have a positive outlook on the relationship between globalization and economic growth. The economy can be measured by certain variables, such as trade, capital flows, GDP, foreign direct investment, and more. Trade between nations promotes economic growth; as technology continues to advance, trade becomes even quicker and easier. In addition, globalized countries have lower increases in government outlays and taxes, and lower levels of corruption in their governments.
However, many people claim that globalization has had a damaging effect on the developed world. Less wealthy industrialized countries have not received the same benefits as the wealthier nations. Although free trade increases opportunities for national trade, it also puts small businesses at risk. These small businesses are unable to compete globally. Free trade also tends to drive up production and labor costs. Many people are concerned that a higher demand for products leads to an abuse of natural resources.
Things are much different for the developing world. On the positive side, globalization gives governments of developing nations access to foreign lending. These funds can be used to improve many aspects of society, including health care, infrastructure, education, and social services. Altogether, foreign lending raises the standard of living in undeveloped countries. In addition, globalization gives the developing world access to an international market. This allows small companies to develop new products and services. As foreign companies relocate to less developed nations, many skilled workers receive jobs.
On the negative side, sometimes these foreign funds aren't used in an efficient way. Sometimes this funding only goes to benefit a small portion of the population. Globalization creates a wider disparity in incomes as some people are able to get jobs and some are not. Even though the overall poverty rate is lowered, many people in the developing world are in very deep poverty. Not everyone receives an elevation of living standards. The use of technology and automation causes many laborers to lose their jobs.
Overall, we see that globalization has had a major impact on both the developed world and the developing world. Globalization has many benefits, but there are also certain disadvantages.
http://www.mywestford.com/positive-and-negative-impacts-of-globalization/
https://www.investopedia.com/articles/economics/10/globalization-developed-countries.asp
http://smallbusiness.chron.com/effects-economic-globalization-developing-countries-3906.html
Nice post Emma, it provides an insightful analysis of the effects of globalization. To add on to your article, another effect of globalization is the export of low-skilled jobs from developed countries to developing ones. For example, as the entire world has opened up economically, many American-based companies have relocated their manufacturing jobs and factories to developing countries, were labor is much more cheaper. This allows them to cut costs and thus reduce their prices, benefiting the both the manufacturer and the consumer. However, this exportation of low-skilled jobs hurts the low-skilled workers of developing countries. Thus, there has recently been an endless debate pertaining to this issue on whether or not to incentivize American companies to not move their jobs abroad.
ReplyDeleteYou provided a really informative analysis of globalization's effects on our world today! Another notable effect of globalization is the improvement in the quality of products due to competition. Because the capitalist competition is now on a global scale, companies have to keep improving their services by adding things like customer service and raising customer satisfaction levels. Furthermore, when a product enters a new country, there are relatively high expectations, and products have to live up to those expectations. This creates a sort of Social Darwinist competitive climate.
ReplyDeletehttps://www.ukessays.com/essays/economics/positive-and-negative-effects-of-globalisation-for-business-economics-essay.php
It is true that globalization has had a significant influence across the globe regardless of a nation's prestige or financial stability. I decided to dive a little deeper into the issues that occur as a result of globalization for developing countries specifically. Participating members in global trade from developing countries may have trouble with certain rules and regulations that come with globalization. This need for structural changes in order to more efficiently interact with other nations is key and may prove to be difficult for developing nations. In this article I found by the International Monetary Fund (IMF), there is discussion of how Hong Kong has easily adapted and completed such changes in order to more actively compete in the international market. Such changes have happened in respect to legal matters and policies, creating a flexible market/labor design, and having a stable economy at home in addition to creating one abroad. https://www.imf.org/en/News/Articles/2015/09/28/04/53/spmds9703
ReplyDeleteUnfortunately globalization has benefits detraments as you greatly detailed. For example NAFTA has been a very controversial implementation of free trade in the new globalized era by the US, canada and Mexico. For Mexico the side effects have not been great. like you described, they have not properly allocated the increase in trade demand due to the agreement, and have also not capitalized on the potential increase in employment during such an agreement which has lead them to an increase in immigration and a higher poverty rate in 2014 than that of 1994. Because of this the US has also felt the negative effects due to a failing partner in the trade adding to the controversy over whether globalization has helped developing nations. Most however feel like such foreign relations should be modified rather than eradicated.
ReplyDeletehttp://cepr.net/images/stories/reports/nafta-mexico-update-2017-03.pdf?v=2