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The term Globalization has been used widely over the past few decades accounting for major economic changes and transformations in business practices. The phenomenon has been responsible for re-engineering business models across the globe and triggering a new phase of economic growth and development. The globalization of economies has made a deep impact on the global trade environment creating new vistas of opportunities for entrepreneurs and organizations across the globe.
One of the distinct impacts of globalization is felt in the increasing integration between global forces that has accelerated the pace of development.
The process of globalization has been largely triggered by the rapid advances in technology, communications, science, transport and commerce. The essay studies the various aspects of globalization discussed by Jagdish N. Bhagwati (2007) in his book In Defense of Globalization. Anti globalization The pros and cons of globalization has been much discussed and debated by experts and critics.
Anti globalization views and sentiments have been voiced by critics. While there are many who view globalization as “an extension of capitalism” (Bhagwati, 2007) there are others who feel it is the engine of economic growth and development for the developing countries.
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This is largely due to its role in promoting global trade and commerce. Critics of globalization feel that the phenomenon is much responsible for creating a consumerist society spread by multinational corporations across diverse countries.
Certain sects of the critics of globalization firmly believe that the phenomenon is responsible for many social evils in the developing and underdeveloped countries today.
This includes growing poverty in some countries, unequal distribution of wealth and lack of environment protection considerations. The benefits of globalization according to critics are reaped mostly by the developed countries through wider market reach, global presence and expanded operations. Economic integration is one of the key objectives behind the process of globalization but this process of integration has created inequalities in the global trading system.
The global trade environment that has been liberalized is played to the advantage of the rich countries owing to their stronger role play in dictating terms and conditions of trade. The poor countries face evils such as low rates of pay, exploitation of labour and stressful work conditions. The cascading effect of the rising global trade has invited criticism and concern over various social and economic issues that are widely visible in the developing countries across the globe. “World trade has the potential to act as a powerful motor for the reduction of poverty, as well as for economic growth, but that potential is being lost.
The problem is not that international trade is inherently opposed to the needs and interests of the poor, but that the rules that govern it are rigged in favour of the rich. ” (The Globalisation Issue, 2005) Large multinational companies who are dominating the markets across the globe supply most of the commodities being sold in the supermarkets today. The global economy has greatly benefited from the new technology, liberalisation and growth of trade but at the same time, the gap between the rich and the poor has grown wider.
The rising income inequalities are more evident in these emerging economies. The developing countries are desperate to attract more foreign investment since it will create more jobs and opportunities for its people. This objective has been achieved by some of the countries like India and China to a considerable extent but there are many loopholes in the process that is acting as a deterrent to positive economic growth. Institutions like the International Monetary Fund advise these countries to reduce trade barriers to attract more investors and to keep their labour costs low.
The lure of easy availability of skilled labours at comparatively low costs has led to the entry of multinational corporations into these countries. The entrepreneurs are greatly benefiting from this process but the common man gets a comparative low wage for working long hours and facing huge workload. This form of exploitation is visible in most of the developing countries across all sectors. The wave of globalization has triggered most countries and economies to open their markets to global trade and expansion.
The increased trade between countries in a free market condition has not only helped many nations create wealth and improve their standards of living but it has also provided the consumers with greater choices and alternatives in terms of commodities and services available in the market. Moreover the increase in global trade and foreign investment has enhanced the employment conditions within the developing countries leading to improved standards of living and wealth accumulation. This has translated to increased purchasing power among consumers that has promoted increased consumerism.
The critics of globalization feel that this is a vicious cycle created to promote a capitalist society that takes into account the interests of the economically stronger segment of the population. The impact of globalization Global integration and economic integration have been the primary objectives of the process of globalization. Such attempts towards integration according to Bhagwati (2007) were initiated from earlier times through advances in the sector of transportation and communications.
The rapid advances in these two sectors provided the necessary platform to shape policies of global integration and create a free world economy. One of the notable aspects behind the process of globalization was the reducing cost of communications and transport that ensured easy access to diverse geographic locations across the globe. It provided the multinationals with expanded scope to reach out to new markets and establish their presence across many locations within the world.
Various attempts were made in subsequent years to remove barriers to free trade and promote foreign investment across physical boundaries. Information technology is one of the key factors that have influenced the changes in business practices across the globe. There is widespread transformation in the way information, services, and capital is transferred today. The ease of information access and service availability may have given birth to new business models and profit making ventures but it has also created new challenges for governments in controlling the flow of funds or information from one country to another.
The financial markets across the globe hence operate in highly fluctuating market conditions resulting in market crashes, panic and financial crisis. The growth in economic insecurity has intensified the pressures among multi-national to operate without much concern to environmental protection, consumer interests and social welfare. The economic growth is therefore sublimed by the growing corporatization of cultures and social environment. Free trade is effective in stimulating a country’s development and economic growth, creating additional job opportunities, and better standards of living.
Global trade is beneficial for kinds of economies, whether developed or developing. Producers’ benefit from selling their goods in international markets generating higher revenues and consumers benefit from expanded choices of products available in the market. Globalization can help reduce poverty levels and erase income inequalities in developing economies promising improved standards of living. However, for this process of globalization to be effective in practical terms global trade and investment must be regulated and controlled to meet social and economic objectives.
The international trade is regulated through a set of rules that the governments of the countries have created over the years. The poorer countries have restricted access to markets in developed countries due to the imposition of various trade barriers and agricultural subsidies. Most of the countries of the world are members of the World Trade Organization (WTO) who meet regularly to discuss the international trade scenario. This organization wants to liberalize global trade through the removal of tariffs and quotas and allow free movement of products through the global market.
The global trade might have great potential to open new avenues of commerce and opportunities but there are shortcomings to the increased global trade that is visible in the growing liberalization of markets and globalisation of economies. The attitude adopted by developed countries towards the developing or emerging economies is one critical barrier that imposes several restrictions on the benefits of globalization. The global trade system today is working only for the rich and exploiting the weaker sections of the society through increased consumerism and inadequate considerations to the marginalized sections.
The larger multinational companies are thriving, reaping surplus benefits from the globalisation of economies while the smaller firms are struggling to survive in the face of growing competition. These smaller firms do not have adequate resources to challenge the multinational companies and they tend to fumble in the process of survival. The effectiveness of the globalization process is limited by the standards and policies adopted by developed countries to retain profit margins and create more wealth for the already wealthy segment of the population.
Such practices are imposed by the rich countries on poor countries through market access policies that restrict domestic producers to sell their products in the local markets. Due to lack of sufficient capital funds or the higher poverty levels the manufacturers in these countries are unable to compete with multinationals and hence lose out consumers in the domestic market. Lack of adequate skilled manpower, poor infrastructure, and limited resources has imposed severe limitations to the country’s ability to produce quality products.
This reflects that the big companies keep getting bigger while the small companies are wiped out through superior technology and resource capabilities. Growing disparities in income and living conditions have caused social unrest and dissatisfaction with the entire system leading to rising incidents of crime, corruption and violence. The concentration of wealth in the hands of few is one of the many evils that free trade has imposed on the world. The power of money is evident when the governments are forced to formulate policies and adopt measures for the benefit of the global giants.
Globalization and economic growth The discussion so far has highlighted the issues related to globalization and process of economic integration. However, this does not indicate that the phenomenon is riddled with dark clouds. The positivity associated with the process of globalization is felt by some of the developing countries like India and China that have displayed a strong economic growth across the past few decades. The countries have not only witnessed a new spurt of growth in economic opportunities and raised standards of living.
The increased influx of foreign investments, transfer of skills and technology, growing employment and standards of living are indicative of the potential benefits of globalization. The author asserts in his book that the process of globalization can be highly effective in eradicating economic inequalities and achieving healthy economic growth. However, this requires able governance and effective policy making bodies that can provide the essential support to the growth of industries and commerce.
Markets have become more volatile as a result of global impacts and this has created the need for changing strategies in business operations and tactful government intervention to insulate the country’s economy from harmful economic effects. Monetary and fiscal policies are highly instrumental in regulating the country’s economy and creating market stability. Globalization has made its impact felt on the labour market as well that has displayed increased flexibility and shift towards knowledge based economic growth and development.
The changing market environment has forced the labour markets to focus more on skills development that is capable of meeting the needs of the dynamic business requirements. Employment is largely driven by the knowledge of specific technology and work processes. Specializations and expertise in specific domain areas drive the demand for professionals in the labour market. Another distinctive feature of the labour market is the increased mobility and migration of labour force. Multinationals promote the idea of moving employees to new locations, sometimes different countries to improve labour motivation and achieve company objectives.
There is increased flexibility of the workforce too owing to the advances in communications technology. However, all this has also resulted in growing pressures on the workforce to meet high quality standards and higher productivity. Global players in the industry who wield increasing powers in swinging government decisions in their favour and regulating market trends towards greater profitability and returns are increasingly governing economic markets. The poorer nations view globalisation as a means to achieving economic growth and development.
Liberalization and opening of markets to global trade channels have no doubt benefited the economies in strengthening their markets and industries and reaping the extensive benefits in terms of access to advanced technology, superior managerial skills and capital inflows. Conclusion It must be noted that the core concept of globalization is free trade and promoting efficiency of free markets. The benefits of globalization cannot be realized truly unless all the economies have liberalized their markets by opening them to free trade and investment.
The real essence of the phenomenon is realized in focusing on activities that enhance market competitiveness and practices free flow of resources from one region to another. Protectionist policies and measures can restrict the free flow of resources from one region to another that Economic activities are pushing resources into the hands of few who already have wealth accumulated, whereas farmers are forced to sell their stocks at low prices to business men who sell them at more than double prices in the big supermarkets.
An economy driven purely by market gains and profit maximization motive will never face a balanced growth and the results of this imbalance are realized in the form of above discussed socio-economic trends. Government policies and regulations should be directed towards social benefits that prevent misuse of power and wealth, promotes effective resource allocation, and is instrumental in reducing the rich-poor divide. Government policies and regulations should be directed towards social benefits that prevent misuse of power and wealth, promotes effective resource allocation, and is instrumental in reducing the rich-poor divide.
Corporate entities assume big responsibility in influencing global trade negotiations and promote sustainable development that is based on social and economic progress instead of adopting marginalizing policies that create inequality among classes. International development should not be export-driven, but rather should prioritize uniform economic and social development.
Global Economic Integration. (2020, Jun 02). Retrieved from https://studymoose.com/global-economic-integration-new-essay
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