Economic globalization refers to the increasing interdependence and interdependence of economic activities worldwide. These include trade in goods and services, investment, international flows of capital, technology and manpower.
Globalization or economic globalization has improved the standard of living of the people of the world. However, it cannot be said that the impact of globalization has brought positive results for all.
Globalization in simple terms refers to communication with different regions of the world. Globalization in economics refers to when a company, organization or country conducts its activities internationally. Globalization is generally seen in terms of economics.
Globalization also influences politics and culture, and is itself influenced by them. Globalization generally increases the standard of living in developing countries.
But many analysts warn that the impact of globalization could be negative for local economies, emerging economies and many individual workers.
A Historical Observation
Globalization is not a new thing. Since the beginning of civilization, people have been buying and selling goods with their neighbors. As civilization advanced, people traveled far and wide to buy the products they wanted. During this time they used to exchange their own products with the products of their choice.
An example of early globalization is the Silk Road. Merchants used this network of ancient trade routes to trade in Europe, North Africa, East Africa, Central Asia, South Asia and the Far East. For more than 1500 years, Europeans traded their glass and other manufactured goods for silk and spices from China.
Thus a global economy was created, where both Europe and Asia became accustomed to consuming goods from faraway countries. When Europeans set out in search of the New World, globalization began on a larger scale. The exchange of plants, animals, food, culture and ideas from different parts of the world began. This event is known as the Columbian Exchange.
A triangular trade network began, where ships transported manufactured goods from Europe to Africa, captive slaves from Africa to the Americas, and raw materials from the Americas back to Europe. This was an example of globalization at that time.
From the slave trade, we understand that globalization not only connects people, but also harms people.
Rapid improvement in communication and transportation systems in recent years has also increased the rate of globalization. Businesses are finding new investment opportunities due to the improvement in communication. At the same time, innovations in the information technology sector have enabled people to communicate instantly and to transfer financial assets across national borders quickly.
Countries are also facilitating globalization by reforming fiscal policies and enacting international trade agreements. However, political and economic stability is essential to reap the benefits of globalization. Many African countries have not been able to take advantage of globalization like countries in Asia and Latin America. Experts blame political, economic and other instability of the countries as the reason for this.
Beneficial Aspects Of Globalization
Business organizations gain comparative advantage due to globalization. Especially when they have access to cheap raw materials. Globalization also allows businesses to use the cheap labor of developing countries and the technical skills and experience of developed countries.
Globalization results in the use of raw materials from different parts of the world to make different parts of the same product. Globalization has long played an important role, especially in the automotive industry. In this industry, various parts of automobiles have to be procured from different countries. Today, businesses from multiple countries can be seen working together to produce even simple products like cotton T-shirts.
Globalization also affects the service sector. Many businesses in the US operate their call centers or IT services from India. As part of the North American Free Trade Agreement (NAFTA), US automobile companies moved their factories to Mexico, where workers’ wages are much lower.
It appears that due to globalization, more job opportunities are being created in countries where the need for jobs is high. It has a positive impact on the entire economy of those countries. The standard of living of their people is also improving a lot. An example of a country that has benefited the most from globalization is China.
Another country is Vietnam, where globalization has enabled their farmers to sell rice at higher prices. Due to this, many farmers have been able to come out of the poverty line. Again due to better living standards, children from poor families are able to quit work and start school.
Consumers are also benefiting from globalization, as the cost of producing goods is falling. This means that companies are able to offer products at lower prices to consumers. If the price of the product comes down, it plays a big role in improving the quality of life of the consumers. Due to globalization, consumers have access to a wide variety of products in the market. In many cases, consumers can take advantage of this opportunity to develop better, healthier eating habits. In many cases, the impact of globalization has increased the tendency of people to eat unhealthy food and the outbreak of diseases like diabetes has started.
Disadvantages Of Globalization
Not everything about globalization is beneficial. In all kinds of changes, one side benefits, the other side suffers.
When the jobs of local people go to outsiders due to globalization, they are at a greater disadvantage. Because of this, workers in the developed world have to compete for jobs with low-wage workers in the less developed world. In this situation, the trade unions and workers became helpless to the corporations. In a low-wage labor market, they either have to work for less or lose their jobs.
The situation is more complicated in developing countries. Because the economy here undergoes more rapid changes. Some people in the supply chain are in dire straits. Let’s take the garment industry of Bangladesh. About four million people work here. But the monthly income of an average garment worker is less than the daily income of a US citizen.
Many experts believe that in low-income countries, when children are given the opportunity to work, the negative effects of child labor occur, and children from poor families lose interest in schooling. Due to globalization, workers are more exploited in developing countries that do not have adequate safeguards.
Various studies also show that globalization contributes to increasing income disparity and inequality between the more educated and less educated members of a society. The continuing pressures of globalization make life more difficult for low-skilled workers as wages fall.
What’s In The Future?
Globalization is a complex process that has both positive and negative effects. It is important to formulate and implement sound policies to maximize the benefits of globalization and mitigate its negative effects.
Although there are some negative aspects, globalization will remain in the future world. Globalization will lead to a smaller, more connected world. In social terms, globalization has facilitated the exchange of information and culture. Globalization has created a world where people are more tolerant and generous towards each other.Â
