Globalization is defined as the process of integration of different nations. In simpler terms, it is when companies and people from different countries come together to do business. Many people call it ‘becoming one’. When they say this, they mean that globalization removes physical boundaries between different countries by making them a single unit where transactions take place. How does this take place? It takes place when economies trade with each other, invest in other economies. In my opinion, the major driver of it is information technology. Globalization has an effect on mostly everything; economies, environment, culture and much more.
These effects may be positive and negative. This paper will discuss the many pros and cons of globalization. In the end, it will attempt to give a reasoned justification foe which side has stronger arguments. Discussion As mentioned earlier, globalization is the interaction between different economies. When economies interact, all those involved are affected by this interaction. Other than that, the political systems of these economies are affected along with their environments, their cultures, their business activity, economic prosperity, and even their average citizens.
The ubiquitous effects of it cannot be ignored. What is more important to understand, though, is whether these widespread effects are positive or negative. Just like everything else, globalization also has two sides to it; the good side and the bad side. Light will first be given to the benefits of globalization followed by its problems. Pros of Globalization The first and most obvious advantage of economies coming together is economic prosperity. This is driven by international trade and investment. Trade allows better specialization of goods and gives economies comparative advantages.
Furthermore, trade encourages competition between different economies which leads to efficient ways of production. As a consequence, efficiency in production leads to higher productivity and economic growth. In other words, globalization develops the economy by increasing the overall productivity levels of it. Secondly, when an economy grows, it gives opportunities for employment and it, therefore, raises living standards. More jobs are created as a result of economic development. When more people in a country are employed, the income levels go up.
The GDP per capita grows and it allows people to buy consume more goods and services. This raises the general standard of living of the economy. This is especially true for poor, developing countries. When developing countries take part in international trade and foreign investment, the average citizens have access to the goods of many different countries. If the economy is growing, jobs are being created and the citizens are witnessing a variety in imported goods and services, their standards of living are likely to rise significantly.
In addition to economic prosperity and the physical well-being of the citizens, globalization also has a positive impact on businesses. It allows them to have a bigger market than ever before. It allows businesses that engage in foreign trade and globalization to cater to a worldwide market. This increases their chance of success. What is not acceptable in one economy may be highly appreciated in another one. Globalization affects political systems also, as mentioned earlier. When the world becomes a smaller place and relies on other economies to develop, decisions made in the different countries also have to be made accordingly.
On the whole, political decisions affect all the citizens of the economies involved so they are made in a way so that everyone benefits from them. Globalization also has a widespread effect on culture. It allows cultures to intermingle. How so? Technology and media allow people to see and understand the cultures of each other. This is beneficial because it helps us understand different cultures, prefer them and then adopt them. Opponents, however, disagree and call it ‘Americanization’. This will be discussed further in the ‘cons of globalization’ section.
The interaction of different culture also allows us to become more open and broad minded. For example, people all over the world watch American Idol, and now its Indian version, the Indian Idol and many others. This allows us to become more lenient towards others and so opens paths for better communication and interaction. It allows the free movement of ideas between countries. This is especially beneficial for people who live in third world countries and would have had no knowledge about the foreign world otherwise. Globalization also gives rise to more technological development. Technology is actually a driver of globalization.
It connects people and businesses. But because it connects economies, it also allows them to develop their own technological infrastructure by learning from those of the others. Basically, open economies allow for innovation due to fresh ideas from the foreign world. Pro-globalists also believe that globalization encourages human resources to remain in their countries. This is because a) globalization creates jobs b) jobs in multinational companies that were not available locally prior to globalization are now available to the local people. These people can stay in their own country but work in a foreign company.
Finally, globalization can also affect the environment positively. Owing to globalization, countries now have to think about other economies before they make any kind of decisions because these decisions have widespread consequences. This encourages countries to become more ecologically conscious and aim for sustainable growth. Cons of Globalization The biggest argument against globalization is that it empowers multinationals to make exploit labor in countries where cost of labor is low. This is, indeed, true because the only reason big, foreign companies would invest in third world economies is so that they can cut down on our costs.
Companies are not genuinely interested in providing value added services and goods in these economies and raising their living standards. The only thing they are interested in higher profits. MNCs are investing in LDCs and this creates jobs in these countries. Although this is a great benefit for these poor economies, other developed economies are suffering as a result where such jobs are being lost. They are always insecure because they never know that their jobs may be outsourced to another country where costs are lower.
Still looking at the economic perspective, globalization transfers the recession of one economy to another. This is especially true for the recent financial crisis. It transferred from one country to another and then finally, it became a global crisis. Globalization permits the intermingling of cultures, as mentioned in the previous section. However, most opponents take this intermingling of the ‘American culture mingling with other cultures’. Opponents are of the view that globalization causes cultures to fade out to give way to the most popular and acceptable culture; the American culture.
They call this Americanization. Anti-globalists are also of the opinion that the free movement of ideas between countries transfers the comparative advantages of countries. For example, when companies from more developed economies operate in poorer economies, they employ all the same methods. In other words, they transfer their competitive edges to local companies. Another perspective taken on transfer of ideas is in terms of transfer of controversial technology such as arms and ammunition. This includes nuclear technology also.
Opponents believe that globalization gives way to nuclear proliferation and hence, increases the threat of nuclear to a global level. Some experts also believe that globalization not only transfers ideas between different countries, it also transfers diseases and the like. It allows easier spread of infectious diseases and social deterioration. An example of this is that the export of mad-cow meat from one country to another will transfer the diseases and consequences associated with mad-cow meat. Finally, opponents see a shift in power from local and poor governments to MNCs and governments of developed economies.
Therefore, globalization empowers the richer economies and makes the poor economies poorer. This is especially true when these labor-intensive economies are exploited to become low-wage economies. Conclusion Globalization has given way to international trade and foreign investment and has allowed economies to specialize in their comparative advantages. As a result, it has increased competition, employment opportunities, and economic growth. It allows greater understanding and knowledge of the world that we live in and develops the technology infrastructure on the global level.
It allows free movements of ideas and goods and as a result, raises living standards. All these advantages of globalization, in my opinion, are far significant than the problems of globalization. This is because the problems of globalization can be controlled. But the benefits of globalization can not be achieved from anything else. It is true that multinationals exploit labor in the third world countries to generate higher profits. However, this can be controlled by the local governments by introducing minimum-wage and other strict work policies.
Other than MNCs are only beneficial for a poor economy; they bring cheaper, foreign goods, create jobs, give taxes, raise living standards and develop the economy. These are long term benefits and economies must make use of them in the most optimal way. Other than that, globalization is said to fade away cultures and give way to only one culture. My argument here is that if Americanization is so widespread, there must be a reason for it. If people are letting go of their native cultures to adopt the American culture, it has to be because there is more in the American culture for them than their own culture.
There is reason for the popularity of the American culture and that reason is the ease and convenience of this culture. If people want to choose this convenience for themselves, there is nothing wrong with it. In conclusion, globalization may give way to problems, but the problems are relatively minor as compared to the long-term, sustainable advantages that it brings. Economies must control the threats and use these opportunities to make the most of this global phenomenon. References Harf, J. & Lombardi, M. (2006). Taking Sides: Clashing Views on Global Issues. McGraw-Hill.