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Positive and Negative Effects of Globalization on Today's World

Autor:   •  February 14, 2012  •  Research Paper  •  1,592 Words (7 Pages)  •  1,783 Views

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Introduction

The current integrated and interdependent world economy is the outcome of the process or a phenomenon called Globalization. Various definitions of Globalization are available today. As per Block (2004), in his research paper, states that Giddens has defined globalization as

“Intensification of world-wide social relationships which link distant localities in such a way that local happenings are shaped by distant events and, in turn, distant events are shaped by local happenings.”

IMF (2008) claims that globalization is a result of advancement in technologies and modernization of the people. It is the result of growing incorporation of economies in the world, predominantly through the movement of labor, technology, knowledge, services, merchandise and investments across international borders. Globalization also has a direct effect on the social, environmental and political aspects of the economy (ibid). Enhancement in technology is the key driving force of globalization. Advancement in technology especially the growth of internet and telecommunication infrastructure has facilitated an easy method of communication and conducting business globally and creating global markets. Moreover the interconnections of economies will increase both opportunities for the business and competition among them. Zhu (2009) argues that globalization has two different parts namely Globalization of markets and Globalization of productions.

Globalization of markets is about fusion of national markets, which are traditionally distinctive and separate, into one huge global market. Here the markets which are physically separated by national boundaries will be merged conceptually with the help of technologies and policies and then perform the business globally (Zhu, 2009). Ex. Coca-Cola soft drinks, McDonalds Hamburger, and Starbuck coffee has a global market by basically providing the similar products worldwide. The second part Zhu (2009) has mentioned is about the globalizations of productions. This strategy is focused on cost saving concept. Here the organisation outsources the production and services typically from a location outside the parent country to take advantage of national differences in cost and quality. This is mainly due to availability of cheap labor, land, energy, high quality and less capital to invest on sourcing process. For example Boeing 777, leading commercial airline jet producer has eight suppliers in Japan, one in Singapore, three suppliers in Italy and so on. The effects of globalization have both advantages and disadvantages. The next section will describe few benefits and issues faced by the world due to globalization.

Advantages of globalization

More economic opportunity for poor or developing countries: The world trade has taken a major shift in recent past with more developing countries coming into the front lane

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