Globalization and the World Economy Essay

Globalization is a powerful real aspect on the b be-assed homo system, and it represents one of the approximately influential forces in determining the upcoming course of the planet. It is described as having many dimensions economic, policy-making, social, cultural, environmental, and security (Intriligator, 2001). Globalization in the 21st century is inevitable. Increased world(prenominal)ization and international nobble letteres atomic number 18 maturation because technology is expanding rapidly especi eithery in dialogues and transportation.According to Daniels, Radebaugh, and Sullivan (2007) countries are beginning to remove many international restrictions facilitating share and calling. Numerous governments aim developed service to swear out conduct international blood more than easily. Consumers are becoming more screwledgeable ab push through foreign goods and services and want them in their home sphere. Increased orbicular competition has excited more c ompanies to enter the international arena for selling goods and services. In most cases, improved political relationships among some of the study economic powers maintain do international trade more profitable.As the world shrinks because of the meshwork, improved communion and transportation more countries are cooperating on transnational issues related to business and commerce. Globalization has changed the scope and point of business. The impact of world-wideization can be categorized generally in terms of distance, agricultural, and culture. Our world is becoming increasely interdependent because of world(a)ization. Globalization did non just happen. It was driven and is be driven by a number of oecumenic ontogenys. Some of these developments build spanned many years, and some shake off occurred in a relatively short period of time.The first development was the end of the cold war. As state by Brooks and Wohlforth (2000) the world changed in 1991 when the Soviet E mpire collapsed. Mikhail Gorbachevs policies swear outed to bring major political changes. With the removal of a fiddling terror of war, global interdependence could take hold. The second development is the worlds increasing population proceeds. This festering all but ensures a broad, expanding, intercontinental grocery for goods and services, and an expanding workforce. The third development is the emergence of free marketplaces on a worldwide basis.According to Ruggiero (1996), country after country is opening its borders to a freer give ear of goods, services, technology, and capital. Many are forming regional trade blocks that facilitate investiture and commerce in their local economies. The World Trade Organization (WTO), an international organic structure that deals with the rule of trade between nations, is actively helping countries at all level of development with monetary and trade agreement support. The fourth development has been the ongoing emergence of a wo rldwide technical and logistics framework.Daniels, Radebaugh, and Sullivan (2007) remark that fearsome strides in communications and transportation technology enable businesses to quickly know about and demand products and services developed in another spell of the world. A worldwide telecommunications network is in place to facilitate global commerce, with millions of phones supported by satellites and fiber optic cables. An array of ships, planes, trucks and other logistic systems makes it possible to transport tribe and packages to almost any point in the world.The last development is the explosion of the net profit on the world scene, which is acting a key role in aspects of global commerce. Kabuga (2000) argues that the arrival of the internet has speeded up globalisation. This growth in internet usage on a worldwide basis has had a major effect on global business activities. The advent of the internet has allowed for rapid assenting to world markets. wise(p) how to use the internet for globalisation activities can be very practiced for a company. In this dotcom economy, everything can be produced anywhere and sold anywhere.The internet has given many companies a impudently view on how to do by global business needs. Globalization is not just a me in any case trend. There are solid reasons why some businesses embrace the global path and others do not. Three solid business factors for globalization are expansion of sales, to acquire re computer addresss, and to minimize attempt. Daniels, Radebaugh, and Sullivan (2007) claim that a companys sales are dependent on two factors the consumers interest in their products or services and the consumers willingness and ability to buy them.Higher sales recollect higher profits, so increased sales are a major motive for companys expansion into globalization. To acquire resources manufacturers and distributors seek out products, services, and components produced in foreign countries (Daniels, et al. , p18). immaterial sources may give companies lower costs, novel or better products, and additional operating knowledge. To minimize swings in sales and profits, companies may seek out foreign markets to take advantage of business cycle differences among countries (Daniels, et al. , p18).International operations may reduce operating risk by smoothing sales and profits and preventing competitors from viewing advantages. When deciding how and where to conduct business globally, its important that companies have some knowledge of the target countries. According to Daniels, Radebaugh, and Sullivan (2007) political policies and legal practices, behavioral factors, economic forces, and geographical influences are key outdoor(a) forces that affect the way a company operates and the amount of adjustment it moldiness make to its operations in a charactericular country. cognize priming information on the countries can help in two areas communication and credibility. Knowing about the targ et country gives a common rationality for talking with battalion from that country. This can open the door to effective communication. Knowing about the target country gives credibility when talking about the country to others, both within the organization and native to the foreign country. Another gain ground of knowing about foreign operations is increased awareness of how to help an operation be successful.Without adequate knowledge, a company may not lay down what it takes to succeed with a foreign operation or realize that an operation is in danger of failing. Globalization has sparked some of the most highly charged debates of the past decade, been the subject of countless books and cause of major demonstrations in Europe and North America (World Bank, 2000). Critics of globalization see it as a process by which power is taken from the poor and given to the juicy and powerful, particularly to transnational corporations Aisbett (2004).Daniels, Radebaugh, and Sullivan (2007 ) have put these claims into three broad categories threat to national sovereignty, growth, and growing income inequality. Globalization does not reduce national sovereignty. It does ready a strong incentive for governments to pursue sound economic policies (International fiscal Fund, 2000). trance globalization may confront government officials with more ambitious choices, the result for their citizens is greater individual freedom. In this sense, globalization acts as a check on government power that makes it more difficult for governments to misdirect the freedom and property of their citizens.Criticisms against globalization are really criticisms against economic growth. The self-assertion is that globalization brings more production or growth, which, in turn, brings both semipermanent and negative consequences (Daniels, et al. , p15). Growth and globalization have gone hand-in-hand economic growth in the last fifty years has been faster than it was in antecedent centurie s. According to Krueger (2002), the impact of the faster growth on living standards has been phenomenal. We have observed the increased well-being of a larger percentage of the worlds population by a greater increment than ever before in history.Globalization offers greater opportunity for people to pat into more and larger markets around the world. In regards to growing income inequality people look at not only absolute achievement or improvement, but also at how well they do compared to other people, curiously those in other countries. Thus, improvement in global well-being is of little solace to most people unless they, themselves, are doing better and at least(prenominal) keep up with others (Daniels, et al. , p15). Growing income inequality is said to be the Achilles tip of globalization (Krueger, 2002). This characterization is misleading in several respects.There has been in the last century remarkable income growth, but it obvious that the progress has not been evenly di spersed. The gaps between rich and poor countries, and rich and poor people within countries, have grown. The richest stern of the worlds population maxim its per capita Gross Domestic Product (GDP) increase nearly six-fold during the century, turn the poorest quarter experienced less than a three-fold increase (International Monetary Fund, 2000).As give tongue to by Krueger (2002) poor people are desperate to improve their real conditions in absolute erms rather than to march up the income distribution. The focus should be on impoverishment than on inequality. Many have argued that these claims have exploited people in developing countries, caused massive disruptions to their lives and produced few benefits in return (World Bank, 2000). According to Daniels, Radebaugh, and Sullivan (2007) anti-globalization forces have protested meetings of international organizations and conferences, both peacefully and violently in recent years, as they press for legislation and other core to stop or slow the globalization process.Organizations against globalization see it as a new form of imperialism or as a new stage of capitalism in the age of electronics. Globalization has involved greater openness in the international economy, an integration of markets on a worldwide basis, and a movement toward a borderless world. Supporters point to the significant reductions in impoverishment achieved by countries, which have embraced globalization with the world economy such as China, Vietnam, India, and Uganda. Globalization has had a significant impact on all economies of the world, with obscure effects (Intriligator, 2001).According to an article on Freetrade. org (2007) for the less developed countries, globalization offers access to foreign capital, global export markets, and advanced technology while breaking the monopoly of inefficient and protected domestic producers. Faster growth, in turn, promotes poorness reduction, democratization, and higher labor and enviro nmental standards. Because it expands economic freedom and spurs competition, globalization raises the productiveness and living standards of people in countries that open themselves to the global marketplace.This growth in cross-border economic activities takes various forms such as International Trade, Foreign manage Investment (FDI), and Capital Market Flows. In international trade, a growing share of spending on goods and services is devoted to imports from other countries. A growing share of what countries produce is sold to foreigners as exports. As express by Daniels, Radebaugh, and Sullivan (2007) to meet their international objectives companies strategies require them to trade and transfer mover of production internationally.When countries have fewer restrictions on foreign trade, it gives them the opportunity to gain economies of scale by servicing markets in more than one country from a single base of production. This trading and transferring of goods and services is w hat links countries economically. some(prenominal) impacts of globalization on national economies deserve particular mention. One is the growth of foreign direct investment at a rapid rate. Foreign direct investment is on the rise around the world.It is now a competitive requirement that businesses invest all over the globe to access markets, technology, and talent. Attracting foreign direct investment has become a key part of national development strategies for many countries. They see such investments as bolstering domestic capital, productivity, and employment, all of which are crucial to jump-starting economic growth. While many set off FDIs positive effects, others blame FDI for crowding out domestic investment and lowering certain regulatory standards.The effects of FDI can sometimes but be perceived, while other times they can be transformative. While the FDIs impact depends on many conditions, well-developed and implemented policies can help maximize gains (World Bank, 20 00). Capital market flows over the course of the past decade, companies in many countries (especially in the developed world) have increasingly diversified their portfolios to let in foreign financial assets (foreign bonds, equities, loans), while borrowers increasingly turn to foreign source of funds, along with domestic ones.While flows of this kind to developing countries rose sapiently in the 1990s, they have been much more volatile than either trade or FDI flows, and they have been restricted to a narrower range of emerging market countries (World Bank, 2000). Globalization has many advantages properly executed it integrates world trade and financial markets, promotes economic growth, and provides opportunities for better education and living standards. It has already been noted that globalization has both positive and negative effects.Whether one sees globalization as a positive or as a negative development, it must be understood that it has shitly changed the world system a nd that it poses both opportunities and challenges. It is additionally clear that the above economic, political, social, cultural, environmental, and security developments that have led to globalization are still very active. I believe these trends toward greater globalization will continue to expand in the future.