Globalisation in Economics and Its Consequences
The contemporary world is slowly getting more integrated socially, economically and politically. Economic globalization encompasses the entire world and a growing amalgamation of the global production, consumption and the fiscal markets with a simultaneous harmonization of global cultures. Globalization of the transitional monetary system was manifest after WWII and the Great Depression of the 30s in US. The evolution of Multinational enterprises was a resultant phenomenon of globalization. In principle, globalization on the fiscal front submits to the assimilation of merchandise, prices, labour incomes, revenue rates and proceeds toward industrialized nation standards (Garrett, 2000). The emergency in the volume of business between industrialized nations and the developing nations, augment in cross-border dealings, increase in immigration and transfer of skill are fundamental issues of globalization. In simple words globalization is analogous to making the entire world function as a huge country. This paper highlights a two-fold impact of economic globalization.
Globalization has some attractive benefits which would have been rather intricate to realize otherwise. Lessening of barriers in various countries, both fiscally and politically, have ensured that global organizations can harvest the benefits of economies of scale by employing in discounted labour and unprocessed material which are not manufactured locally. China for instance, has lowered its tariff rate to approximately 13 percent at present after it joined the World Trade Organization or (WTO) in the first year of the 21st century (Milanovic, 2000).
Globalization has brought about a rise in production ability of diverse firms globally, which now provides to a global customer base. A cycle of bulky flow of merchandise as well as services from industrialized nations to developing nations has made Indian fabric and Chinese gadget artifacts more popular globally. Even though Japan witnessed major gains from business in the post globalization era, it is presently facing retardation alongside its once favored business associate, the USA (Milanovic, 2000). Indirectly, this has triggered the success of South and South-East Asia economies which have improved their regional collaboration leading to elevated business dealings.
However, divergent viewpoints assert that globalization impacts this world and the people in this in various forms. Globalization impacts the fiscal status of a nation. Studies indicate that, it has destabilized the position of poor nations and made poor people vulnerable to risky competition. Globalization as a fiscal strategy by the industrialized nation is anything but a nightmare for the poor (Lindert and Williamson, 2001). Globalization has seen the poor nations disintegrate and worsen under the pretext of trade and venture. The irony is, even if the global society collaborates and function as one entity, the affluent always gets to dictate terms through policies that are not feasible in developing nations. For instance, United States is the richest economy in the world, but they manipulate globalization to their own selfish gains, hurting the fiscal and enriching issues of the other parts of the globe.
Based on research, globalization represents the interests of the developed world.
The hypocritical banner that developed nations are concerned about poor nations is a mirage. For illustration purposes, the attention from the so called ‘economic giants’ is not felt in sub-Saharan Africa. Poverty is escalating at an alarming rate, as aspect that re-affirms that globalization has become an overriding factor in manufacturing paucity. The impact of globalization leading to paucity may arise from rivalry among diverse workers or foreign ventures. Whereas giant corporations of the industrialized world have opened outlets in poor nations leading to enhanced transfer of advanced technologies, it has nevertheless led to mistreatment of workers of poor nations (Milanovic, 2000). In a nutshell, what works in the U.S might be lethal if experimented in Africa.
- Garrett, G. (2000). Capital Mobility, Exchange Rates and Fiscal Policy in the Global Economy. New York: William Morrow.
- Lindert, P. and Williamson, J. (2001). Does Globalization Make the World More Unequal? Cambridge: Cambridge University Press.
- Milanovic, B. (2000). The Two Faces of Globalization: Against Globalization As We Know It. World Bank Development Research Group; Princeton University Press.