Globalization could also, in an optimistic scenario, lead to enhanced global cooperation and peace. This is based on the theory that increasing economic interdependence among nations encourages diplomatic relations and collaboration rather than war (Baldwin, 2008). While at first this competition sounds bad, it tends to have positive effects. For example, it spurs innovation as companies strive to maintain their competitive edge in a global market.
Positive impact of globalization on women:
For example, wages and manufacturing costs are lower in India and China, making countries like US and UK to outsource cheaper labor. The effect is people in developed countries losing or having fewer jobs. The privatization of industries owned by the state has enabled the emerging markets to be successful. Most of the companies are increasing the consumer demand through extension and expansion of their value chain to international levels.
How to balance the opportunities and challenges of globalization for economic development?
American technology companies have acquired startups outside their borders. Financial services providers such as banks and insurance companies have either acquired or merged with regional competitors to increase their reach and expand their customer bases. Companies in the West outsourced manufacturing and operational capabilities in other regions of the world. Examples include Nike and Apple, which have outsourced manufacturing in Asian countries, as well as other firms, which have outsourced their business processes in countries such as India and the Philippines. Kraay mentioned that per capita GDP growth jumped from 1.4 percent a year in the 1960s to 2.9 percent in the 1970s and further to 3.5 percent in the 1980s.
- The following is a non-exhaustive list of policies that can be adopted by governments to reduce the negative impacts of globalisation.
- The impact of globalisation is directly linked to its triggers and barriers.
- Globalization is a causality of cultural erosion in communities from both developed and developing countries.
- Increased production and consumption have led to higher levels of pollution, deforestation, and depletion of natural resources.
- And economic interdependence among countries discourages war between them.
How Globalization Affects National Debt and Budget Deficits
In the quest for lower production costs, some multinational corporations have outsourced manufacturing to countries with lax labor laws and poor working conditions. This has led to the exploitation of workers, including low wages, long working hours, and unsafe working environments. The globalization effect indicates that financial integration helps in a nation’s production base and leads to an increase in the specialization of production.
Following this way, most developing countries have very advanced high schools and universities. There is no need to move to developed states to seek education because it is readily available in these countries. Enhanced education is a positive impact of globalization in developing countries. The governments of most developing nations provide free training to encourage parents to school their children. Education is compulsory in most developing countries due to globalization because, without it, investors and traders would have a hard time hiring locals.
Now states can purchase them and produce low price products with a good profit.Developed countries advertise for the low-income community to buy their products with compatible prices. They also sell goods to developing countries because they are affordable. They are supposed to promote the economic growth of the country from where they buy their raw materials as they invest their money overseas by building industries to produce cheap goods.
In a globalized marketplace, local businesses face intense competition from larger multinational corporations. The focus on economic growth and consumerism can overshadow the need for sustainable environmental practices, exacerbating global environmental challenges. Environmentalists are often concerned that globalization is exacerbating environmental degradation. Increased industrial activity and international transportation contribute to pollution and natural resource depletion (Mir, Hassan & Qadri, 2014).
Social Share
- Why are triggers and barriers important in understanding globalisation?
- People are able to more easily move around the world due to advancements in technology and thereby utilise their skills in other countries.
- Moreover, cultural homogenization is a byproduct, with traditional identities often diluted by global influences.
- The collaboration of minds from different cultural and intellectual backgrounds can lead to the development of creative solutions to pressing global challenges.
Powerful global entities may exert control over these resources, leaving local populations with limited benefits and contributing to environmental degradation. The interconnectedness of financial markets can lead to the rapid spread of economic crises. A downturn in one part of the world can trigger a cascading effect, impacting economies globally. This contagion effect can exacerbate economic challenges and make recovery more difficult.
Analyzing the Role of Anchoring in Economic Decision-Making
Unfortunately, such an option is available only for those people in developed countries as usual defaults of economies in third-world states make it insecure. People are afraid to invest their earnings because they can not predict whether their national currency will be equivalent to the US dollar next year. Others spend it by establishing firms and industries in foreign countries where they gain profits.
How Does Globalization Affect Society?
With fewer barriers to the import/export market, the cost of producing goods or offering services would decline without affecting the profit margins of companies. Consumers would benefit from the lower prices, consume more, and create additional job opportunities around the world. By creating an environment where free trade encouragement readily exists, more innovation, creativity, and engagement would occur at every level of society. Globalization would remove tax havens for wealthy individuals and businesses. Tax havens are defined as either a country or independent area where taxation levies are at low rates.
Positive and negative effects of globalization
Positively, it creates a global market that increases specialization and trade. It also improves job opportunities, reduces inequality, and advances technology. However, it can also increase terrorism, job insecurity due to outsourcing, and environmental damage from rising production and trade. Yes, globalisation might look like a costly venture, but the long-term benefits, and sometimes the short-term benefits are essential to economic growth. The economic opportunities created by globalisation have also spurred internal migration.
Many smartphones are designed in one country, have parts made in other nations, and are assembled somewhere else before being sold internationally. This process shows how manufacturing, technology, and sales networks span multiple continents. Such products highlight how globalisation connects businesses and consumers across borders.
Governments can provide support for SMEs to help them compete with larger firms in a globalized economy. This can include providing access to finance, facilitating market access, and providing training and advisory services. Globalization has increased income inequality between and within countries, with some countries and individuals benefiting more than positive and negative impacts of globalisation others. Globalization would likely centralize distribution of necessary resources. With only a few controlling access to the many, the chance to negatively impact populations on a large scale become greater when borders are reduced.