What is Globalisation
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The world is constantly changing due to a variety of reasons. However, there are factors which are all-embracing and leave a mark on the lives of everyone. Globalisation made those changes inevitable. Nowadays, it plays a crucial role for all people even without them realizing it. Drinking Columbian coffee and Indian tea, eating food from McDonalds, using American iPhone, driving a German car, travelling to Maldives, talking to people from other countries via Skype, investing money abroad, and doing other usual activities make everyone a part of the globalisation process. Thus, this paper mainly focuses on defining globalisation and examining positive and negative effects it has.
Definition of Globalisation
Globalisation is usually defined as a process of vanishing economic, social, cultural, political, and technological borders between different countries (Jones & Austin2010, p. 120). Barriers which separate countries from each other reduce in order to encourage free movement of goods, services, labour, and capital (Rudra & Jensen 2011, p. 641).
The term `globalisation` was introduced about a half of a century ago (Scholte 2002). Since then, globalisation was present in every aspect of people’s lives. Nowadays, globalisation is the concept which touches various disciplines and different theoretical approaches (Scholte 2002). It brought significant changes to society, business, culture, and the world in general like “a powerful force that cannot be denied” (Ukpere 2009). Globalisation stimulates countries to develop international relationship, interact with foreign businesses, and participate in international organisations.
Globalisation is quite often referred to as internationalisation; for instance, Hirst and Thompson call it an extreme form of internationalisation. In the same way, liberalisation is a valuable side of globalisation since borders and restrictions on resources and capital flow are removed (Scholte 2002, p. 8-10).
Positive Consequences of Globalisation
Globalisation is a strong force, which influences countries and regions from the inside as well as international relationship between countries. Its enormous positive impact can be noticed in development of international trade, international workforce migration, capital flow, cultural exchange, existence of international and interregional organisations, etc. Globalisation supporters claim it to raise the living standards, spread technologies, and promote economic integration by exchanging products, capitals, and workforce. Globalisation provides a number of benefits to humanity (Ukpere 2009).
Production specialization is a positive side of globalisation. Local producers can have access to foreign markets and investment capital. Every region can specialise on a particular production type which is the most appropriate to the territory and its resources. As a result, the global production efficiency increases. Every region gets enough of different kinds of products after trading them with each other; “global trade is necessary to balance supply and demand across regions” (Godfray et al. 2010). Along with production specialization, accessibility of resources is a key factor. Any product can be easily found in every location now (Scholte 2002).
As a positive result of globalisation, international and regional organisations’ activities have intensified. The main aim of them is to regulate and solve global problems of the world. International organisations deal with poverty, hunger, terrorism, solve political issues, and regulate international finance and international economy. Well-known international financial institutions, such as World Bank, European Central Bank, and European Bank for Reconstruction and Development, were formed in order to regulate financial issues in the world and separate regions. World Trade Organisation, World Customs Organisation, etc. were formed as the world trade institutions which regulate international trade. Moreover, there are international health organisations, commodity cartels, food security, human rights, and environment institutions. Each of them has a significant role in facilitating fair practices on the international level, and improving the development of various economy sectors (Goldberg & Pavcnik 2007).
Global tendencies stimulated countries to open their economic markets to foreign investments and capital flows. Governments of different countries became more involved in integration and cooperation processes. The labour force became remarkably more mobile than before. Workers from less developed countries got the opportunity to migrate in order to find employment (Rudra & Jensen 2011).
Moreover, the amount of scientific and technological innovations increased due to global processes. Globalisation enabled the exchange of technologies and ensured access to international knowledge and experience, which speeded up the pace of their development (Ukpere 2009). In the global world, data and ideas spread incredibly quickly (Rudra & Jensen 2011). Information exchange caused technological boom, which improved productivity and efficiency of work. Moreover, it brought numerous advantages to everyday life.
Negative Consequences of Globalisation
Globalisation can be seen in every sphere of economy and people’s lives. It was introduced to society as a solution to a number of international problems, although its enormous negative consequences cannot be denied (Ukpere 2009).
One of the negative aspects of globalisation is inequality increase inside and among the countries (Mills 2008). Inequality inside the countries can be described with salary and income inequality, consumption inequality, and the income gap between skilled and less skilled workers. Such tendencies in developing countries started after launching trade reforms between countries (Goldberg & Pavcnik 2007).
Globalisation failed the aim to eliminate inequality between countries and to help least-developed countries in fighting poverty. In fact, globalisation trends affect managing natural resources, particularly in developing countries. Rich countries got the opportunity to become wealthier by exploiting poor countries’ facilities and resources (Rudra & Jensen 2011). Globalisation turned less-developed countries into factories, which cheaply produce goods for highly-developed countries. Countries with rich natural recourses became quite reliant on foreign markets for selling their goods and raw materials. However, specialization on primary commodities cannot have long-lasting positive effect. As a result, economic and political progress for exporters of primary commodities was still relatively slow (Ukpere 2009).
Moreover, highly-developed countries used globalisation processes to come into trade agreements with resources-rich countries (NAFTA, MERCOSUR). Tariffs and nontariff barriers reduction after signing the agreements facilitated export of cheap products and raw materials from poor countries. For this reason, developing countries faced low profits and high currency fluctuations (Goldberg & Pavcnik 2007).
Resource-rich countries tend to have higher political risk levels after raise of commodities trade on the international level. There is an increase in crime levels and child labour usage. Likewise, high amounts of production harm the environment of those countries in particular. Thus, only rich countries benefit from placing factories, investing in production facilities, and buying raw materials overseas (Ukpere 2009). The gap between industrialized and resource-exporting countries deepened. Therefore, the effect of globalisation on governing natural recourses has various negative issues (Rudra & Jensen 2011).
Increased role of transnational corporations after the beginning of globalisation processes is the reason of pushing small local companies out of the market. Small companies are not able to compete because of the economy of scale used by large international companies. Closing down businesses leads to the unemployment rate increase (Ukpere 2009). Transnational corporations are not only harmful for other businesses but also for people. Situation on the world employment market is demonstrated with a decrease in employees’ wages, increasing working hours, working conditions deterioration, enhancement of temporary workers amount, and labour unions weakening. Large companies concentrate wealth by underpaying their employees and not assuring their rights. Moreover, technological breakthrough affected employment market since the labour force is not needed so much anymore (Ukpere 2009).
The obvious effect of globalisation is total standardisation through the whole world. This concept is often called universalisation. Local traditions and customs, which make regions different from each other, are disappearing. Nowadays people on all continents tend to eat the same food, wear identical clothes, and listen to similar music. Languages disappearing can be also mentioned as one of globalisation consequences. Places and people lose their unique features; the society becomes global, or standardised. In other words, universalisation has a certain vector, which is directed on `Americanisation` or `Westernisation` of the world (Scholte 2002). Western lifestyle and products are introduced to other countries as the only way of development possible. Hence, it does not leave any room for uniqueness.
Globalisation influenced different sectors of economy and people’s lives. However, the impact of globalisation on society is rather contradictory. Although there were positive changes in technologies and living standards of certain countries, it did not have the same effect for every region. Positive results, such as developing international integration, free flow of products, services and resources, relationships between countries, and solving global problems on the international level, are diminished by a number of issues. The main disadvantages of globalisation processes are connected to highly-developed countries starting to control poor countries. Wealth has been concentrated by certain countries. Some market sectors were overtaken by several transnational corporations. Mentioned tendencies led to pushing small companies out of the market. Working conditions for a number of employees became worse with a decrease in wages. The world is changing in directions of global universalisation and standardisation. To summarise, the number and significance of problematic factors can prove heavy negative consequences of the world moving towards becoming a global society. Globalisation did not become a global remedy for the world’s problems. In fact, the problems it created are still to be solved.
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