What Are The Main Reasons For Increased Globalization?
What Are The Main Reasons For Increased Globalization?
Many business organizations struggle to gain worldwide market to seek for more revenue sources-“profit” at endings. One example of a global company is the Microsoft Software company which is dominating the computer software industry. It is no doubt that their effective globalization effort is the secret behind its success. Looking at a typical economic view, its effects are clearly seen in our daily lives from purchasing of goods, daily works, currency fluctuation rates, rise of new business establishments (e. g. call centers), and other economic activities (e. g. production of goods, imports and exports).
In short, it had made life easier than before. Globalization is defined as the increasing interconnection of people and places as a result of advances in transport, communication, and information technologies that causes political, economic, and cultural convergence . It is a process of international integration of national goods, financial and labor markets, a process driven by firms in their continuing search for profits, and a process used by market arbitrage to control prices of certain products by ensuring that it is sold at the same price on different location.
Looking at the definition, we can directly conclude that globalization is directly proportional with economic and infrastructures progress, and technological advancement. It is because these developments enable cross-border transaction among one or more parties to take place even though they are on different locations around the world. It also facilitates sharing of modern techniques and innovative ideas from one place to another.
The increasing demand in the adaptation of e-commerce is one form of making your business global, establishments of Call Centers in different parts of the world which aims to globalize the way services are rendered. Brief History of Globalization Its early days can be traced back in the early 18th century when trading started between European colonies, and United States. However, it progressed more in the 19th century. The discovery of sea routes to different parts of the world enabled many progressive countries to share goods and products among neighboring countries.
At first, debates of the conflict between trade openness and protectionism had taken place . Environmentalist and promoters of social cultures feared that globalization will have an effect on the environment and will degrade cultural and societal values, and a threat to local products and services providers. Some feared that foreigners will gain control over their native lands and will promote inequalities among races. However there are people who struggled to promote the benefits of Globalization.
Significant events like “Bretton Woods Convention” and “Uruguay Round” that had taken place from 1984-1985 had contributed to the rise of World Trade Organization (WTO), and the North American Free Trade Agreement (NAFTA). These conventions aims for the development of Free Trading Policies among different countries which had led to reduction of Trading Tariffs and taxes rate which had attracted many business investors to invest in foreign territories. During these days, globalization is already accepted by many people as they have perceived the benefits it can provide especially in times of economic crisis.
Benefits of Globalization Globalization is beneficial for both the business organizations and their consumer market, however, more benefits can be seen on the consumer side. There are many benefits that it offers which I will summarize into the following: Bigger government revenue, consumer power, competitive advantage for business organizations. Bigger Government Revenue The people always seek not just for a clear and transparent government, but for a progressive government that looks forward for the progress of its people. Government officials allocate funds for different projects aimed towards community development.
These funds are taken from taxes of the people, government owned businesses, and local and foreign investors’ taxes. In most countries, common problems that exist are: lower revenue from taxes, increasing unemployment rate, and poverty. Lower revenue in terms of taxes is caused by either poor and corrupt tax collection system, or smaller number of taxpayers caused by smaller number of investors. Unemployment rate is also increasing as local companies are starting to shutdown its unproductive operation due to inability to sustain in the failing economy.
Poverty rate is proportional with unemployment rate, the more number of unemployed people means the more people is starving which also increases mortality rate and decreases life expectancy level. It is undeniable that this scenario mostly occur in less globalize countries. In my own point of view, any less globalize location can be likened to the early days of men on Earth where he survives by using his bare hands (e. g. tool less production, hand carried communication, and time consuming task processing).
How does globalization solve this problem? For people who are leaving in metropolitan areas, they prefer to have reliable income sources. They prefer to work on industrial companies for the reason that they are assured of receiving wages every quencina. Foreign investors hire local workers which had help decrease the number of unemployed individuals in different countries by offering flexible forms of works. These flexible forms of work increased the number of Part-time workers in many countries who are under globalization .
Although it has a negative impact (e. g. employees are hired on contractual basis), mostly deprives employees benefits, but it serves as an additional source of income for those employed as full-time workers outside their working hours. Another benefit is that most foreign employers paid their workers at higher amount compared to local employers- in some cases a contractual employee in any foreign invested company is compensated at bigger amount compared to regular employees of local companies.
This is still very beneficial for the people as they are given more work opportunities at a good compensation. In terms of taxes, the more number of employed individuals means the more taxes paid to the government. The more number of foreign investors, the bigger taxes are paid to the government also (e. g. in the Philippines, Call Centers contributed a government revenue of $864 million in the year 2004 ). Altogether these taxes will sum up to bigger amounts which can be funded to many government infrastructure projects.
When political leaders and economic experts from different countries meet, globalization has always been part of its main agenda. Globalization is not just politics, but is one of the most effective tools towards achieving an effective and progressive economy for any nation. Its result is very clear in rich countries where advances can be seen in various systems: medicine, education, transportation, communication, and better life opportunities for its individuals- less globalize countries don’t have these.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 21 December 2016
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