EFFECTS OF GLOBALIZATION

Effects of Globalization



Effects of Globalization

Introduction

The acceleration and intensification of interaction and integration among governments, organizations and people of different nation is termed as globalization. Moreover, the role of values is significant in defining globalization. Globalization can neither be described as good nor bad; instead, the multifaceted processes and complex aspects of globalization have different impacts. Which can be viewed as positive or negative based on the values which are at stake (Rothenburg, 2003).

The integration across nations is not limited to only people; rather, it is an integration of cultures, values and ideas. People have their own point of views about globalization and its effects, the pessimists argue that globalization is generating friction, whereas, the people who endorses globalization appreciate the good things, and wants to jump on the bandwagon of benefits which globalization is bringing for them. Thus, globalization is not affected by the negative comments people have for it. This paper aims to identify a couple of negative and positive effects of globalization.

Discussion

In my opinion globalization has both, pros and cons and that the impact, it is leaving on the business environment cannot be categorized under the heading of negative or positive. Impacts may vary according to situations and values. In the forthcoming part of the paper positive and negative effects of globalization will be discussed.

Positive Effects of Globalization

Increase in Foreign Trade

While discussing the positive effects of globalization on cannot ignore the effects which globalization has left on international trade. Comparative advantage has always been an influencing factor even in the past, and through diversification of the products and exports and international division of labor, globalization has provided companies with such comparative advantages which cannot be imitated easily by other market players. Moreover, without globalization it was not possible to institutionalized, international trade. Previously, people used to invade countries in order to get what they want, but now, things are more civilized and are performed in a more humane way. This became possible because of the establishment of the World Trade Organization (WTO), as it has set certain restrictions for international trade, which enables countries to practice free trade around the globe, without any demarcation of boundaries. Thus, the WTO has brought all the countries together in doing trade with each other which has its own benefits. Despite of its risks, a number of countries are moving towards globalization and expanding their economies, through international trade. Consequently this move, results in the increase of the Gross National Product (GNP), due to increase in exports. The annual growth rate of GNP and export rates, across the globe, can be seen in Figure 1. In a nutshell, all of this happened as a result of globalization. This international trade eventually leads to inward flow of Foreign Direct Investment (FDI) in developing countries (World Bank, 2011).

This also lead to prosperity in developing countries as they become able to trade with developed countries, allowing inflow of foreign direct investment. The statistics can be seen from the pie chart below;

Globalization of ...