Introduction(relevance of the topic and aim of the writing),Over the past decades, the world has been transitioning intoa global marketplace. Today financial markets, industry, and politics are allinternationalized. This internationalization has led to an increased transferof capital across borders, increased communication throughout the world, anincreased importance of trade in the economy, and an increase in internationaltrade policies.
Globalization has had drastic effects on the economic world andhas created many challenges politically. This essay defines globalization,gives a brief history, and gives several different perspectives onglobalization. Recommendations for the future will be given, such as whatregulations should be put into place, how the politics should be handled, andhow to prevent globalization from going too far too quickly. Define globalisation Globalisationis cut into six main aspects; firstly there is international trade and thecreation of the global marketplace. Globalization can be viewed as an enhanceto the amount of international trade. Globalisation refers to the integration of markets in the global economy, leading to theincreased interconnectedness of national economies. Markets whereglobalisation is particularly common include financialmarkets, such as capital markets, money and credit markets, and insurance markets, commodity markets, including markets for oil, coffee, tin, and gold,and product markets, such as markets for motor vehicles and consumerelectronics. The globalisation of sport and entertainment is also a feature of the late 20th and early 21stcenturies.
There are many different perspectives on how globalizationhas affected trade in day to day business, today. Businesses question whetheror not globalization is positive or negative, especially for developingnations. Globalization is the increasing integration and interdependence amongcountries resulting from the modern flow of people, trade, finance and ideasfrom one nation to another.
The World Bank, a strong supporter of globalization,defines it as, “the growing integration of economies and societies aroundthe world.” (Mukherjee, 2008). Globalization became an increasingly usedterm with technological innovations-most significantly the World Wide Web orInternet- that made financial transactions and recordkeeping of internationalshipments quicker and easier. As improved communication networks broughtfar-flung businesses together, it also brought different cultures togetherexpanding the concept of globalization which now intersects the media, ideas,politics, the arts and other social artefacts across the planet.
Globalizationhas expanded beyond its economic roots and has proliferated into human rights,the environment and even national security. Although these new initiatives do notlook similar to the ones we are used to seeing the difference is that today’sagreements come equipped with their own governance structures. This has led toan astonishing shift of policy-making prerogatives from individualnation-states to a host of new, higher level political institutions. This is acause for celebration the notion that political institutions have come togetherto grow in size, importance and boldness is today’s conventional wisdom.
There are three main perspectives on globalization, eachdiscussing different positives and negatives that are associated withglobalization. The three different perspectives are the neo-classical(proglobalization) perspective, the Marxist/Socialist (sceptical) perspective,and the Structuralist perspective (Wetherly and Ottr 2014). Neoclassical/neoliberal views The first competing view is the Neoclassical/neoliberalperspective, this view argues that overall history and current economics havejoined together to form a new relationship where nations are uniting both economicallyand politically.
It’s very essential for countries to come collectively in bothof these aspects in order to be a success in the globalized world. Theneoclassical/neoliberal perspective views that the world economy is controlledmore by the current marketplace than by governments. It is believed thatindustry, trading, and the global financial marketplace drives the economy,with governance having little to no control over the marketplace. If trade was so essential to expandingmarkets, thus allowing increased productivity and greater specialization, itwould be easy to show how international trade would be so beneficial (AdamSmith). Firstly, it provides a source of external funding that boosts theamount of money available to fuel trade internally.
Additionally, it enablesfurther expansion of markets on an international scale. An example of thiscould be two countries selling two pairs of goods, if one country has an ‘absoluteadvantage’ in producing one set of goods and the other country has an absoluteadvantage of producing their set of goods, they would each be specialized fortheir own country for selling the goods they have. The advantage of having thisis that both countries will benefit from the specialization provided that thegains from trade are fair. Furthermore, trade and the economic success enablesmany types of countries to both expand and the process profit from a huge economicexpansion into markets overseas to be able to acquire cheaper resources.
However, this could be a potential problem as countries that are significantlybetter at producing and countries which are more advanced would benefit fromthis whereas countries with less productivity and being less advanced wouldn’t simplybecause of lack of growth and development and thus making it harder to trade. DavidRicardo, refined smith’s theory by arguing that from two countries if onecountry was better than the other at producing both commodities, then thatcountry will be specialized for that particular produce. For example, Ricardo uses trade between two countries being England and Portugal in producesof cloth and wine to explain how it assists Portugal to import cloth even ifPortugal can produce cloth with less labour than England. Current economists portraythat England has a comparative advantage in producing cloth. Ricardo states,”To produce wine in Portugal, it might require only 80 men for one year,and to produce the cloth in the same country, it might require 90 men for thesame time. Thus it would be advantageous for them to export wine in exchangefor cloth.
Though they could make the cloth with the labour of 90 men, shewould import it from a country where it required the labour of 100 men toproduce it, because it would be advantageous to them to employ the capital inthe production of wine, for which she would attain more cloth from England,than she could produce by diverting a portion of her capital from thecultivation of vines to the manufacture of cloth.” With the amount of trading going on in the nationalmarketplace it is almost inevitable to have some sort of global governancesystem. Each country and its citizens have different beliefs on how agovernment should be developed and how much control it may have. It will mostlikely be a long time in the future before governments can come together andcreate any type of global system.
However, other scholars say that thedissemination of a “consumerist ideology” is the first step inbreaking down traditional modes of identification. As liberal democracy spreadsthe world will develop more universal principles of economic and politicalorganization. After these things take place a truly global civilization will becomepossible (Held. Et al., 1999).
Increased communication due to technologicaladvances has created more of a mass culture, than existed in the past.Despite this, capitalists argue there is very littleevidence of income inequality (Friedman, 2001). Since globalization has beenrising alongside the increase in accessible/useable technology and convenienceof improved transportation, technology has made it easier for people tocommunicate across borders, and has also lead to a decline in the cost oftransportation. The technological revolutions have lead to lower expenses oftransportation. It is now cheaper and more efficient to transport goods from countryto country. Globalized transportation has increased profitability and thus duringthe main growth stages of globalization between 1970 and 1993 mobilizationincreased nearly fifty percent throughout Europe. It was found that the averageperson went from travelling 16.5 km per day per person to 31.
5 km per day perperson. This travel generally takes place by automobile with automobileownership increasing to an estimated 810 million in 2010, up from 670 millionin 2003. Since the 1970s the flow of goods in Europe has dramaticallyincreased. The transport of goods by road has increased by 40%,intercontinental rail shipping has increased by 17%, and waterway shipping hasincreased by 12% (Capineri and Leinback, 2004).
A decrease in transportation costs has triggered business’to garner greater profits by factory relocation, concentrating production inone sector, or in one location, where country inequalities exist (Heshmati,2003). In addition, the digital revolution has also made globalizationincrease. Companies can now transfer files digitally over the internet, andeven over handheld device. This makes it possible to have meetings withoutevery participant of the meeting being physically present. The deregulation ofthe telecom market has led to lower long distance communication costs and theexchange of information easier than ever before (Mukherjee, 2008).International businesses can now communicate with others through the ease ofthe email, telephone conferences, and videoconferences. It is now much lessexpensive for business people to pick of the telephone and ask their colleaguesa quick question about a transaction that they are currently working on. Theincrease in telecommunications development had to do with a cause-effectrelationship between technological development and the deregulation offinancial market policies.
New technology revealed how inefficient thefinancial market regulations were to begin with, and the deregulations of thefinancial market regulations lead to an increased investment in telecommunications,which then lead to increase technological advances (Czaputowicz, 2007). Thisincrease in communication technology even further decreases the cost of doingbusiness internationally. · Inward investment by TNCs helps countries by helpingand providing new types of employment through jobs anddifferent skills for local people.· TNCs (transnational corporations) helpbring wealth and foreigncurrency to local economies when they buy localresources, products and services. The extra money created by this investmentcan be spent on education, health and infrastructure.
· The sharing of ideas, experiences andlifestyles of people and cultures. People can experience foods and otherproducts not previously available in their countries.· Globalisation increases awareness ofevents in far-away parts of the world.
For example, the UK was quickly madeaware of the 2004 tsunami tidal wave and sent help rapidly in response.· Globalisation may help to make peoplemore aware of global issues such as deforestation and globalwarming – and alert them to the need for sustainable development. Socialist/Marxist views – is bad The second competing view is the Socialist/Marxistperspective. They argue that globalization has led to an increase in theinequalities of countries/nations. Literature has many contradicting viewpointson exactly how unequal nations are currently, and how big a factorglobalization is playing in the inequalities.
Firstly, Marx was in agreementwith smith that capitalism led to unprecedented growth but he also made thepoint that there was a huge flaw. He believed the social system of capitalismis very unfair, he believed that owners of capital are able to exploit theiradvantage of certain access to recourses and some political powers are in thehands of a few people. The more wealthy nations are continuing to increase theirstatus of wealth whilst the poorest nations/countries are continuing to remainpoor. It has been established that 20% of the world’s richest populationcontrol 86% of world gross domestic product and 82% of world exports, while theworld’s poorest 20% consume, 1.3% (Herriott and Scott-Jackson, 2002).
However,(Crafts ,2003) predicts that growth rates for countries just beginning toactively participate in international commerce will grow steadily for thosecountries. Low-income countries will not be left out ofglobalization due to the increased reduction of trade borders throughout theworld. These types of reforms include creating macroeconomic and fiscalstability and easing trade regimes (Graham, 2001). These reforms help nationsintegrate into the global world more easily and help reduce the inequalitybetween the U.S. and nations that are already integrated into the globalmarketplace.
Emerging countries such as India and China have reduced povertyand has shown an increase in economic growth since they adopted open economicpolicies in the 1990’s (Cheng and Mittlehammer, 2008). This proves that withthe right policies developing nations do not have to suffer due toglobalization. It is important to put these policies in place so that morecountries will want to participate in globalization. Insome parts of the world there are no guarantees that the wealth from inwardinvestment will benefit the local community of the less developed countries.Often, profits are sent back to the MEDC where the TNCs are based.Transnational companies, with their massive economies of scale,may drive local companies out of business. If it becomes cheaper to operate inanother country, the TNC might close down the factory and make local peopleredundant.
However, If developing countries know that they will nothave to suffer from inequalities they will want to join globalization. In 1995The United Nations Conference on Trade and Development (UNCTAD) conducted anempirical study in developing countries in Asia. The study found that foreigninvestment has had a positive impact on economic growth when country-specificfactors are taken into account (Carkovic and Levine, 2002).
These factorsinclude; domestic financial development, school attainment, and nationalincome. Even though the numbers say that globalization is not imposingnegativity on developing nations, many researchers still believe that it is.This study might have been slightly skewed due to the country-specific factorsthat were taken into consideration. When researchers use the information fromthe countries previous condition it could have mixed data. Some of thecountries may have been so bad off in the first place that it actually seems asthough there is a positive income on that countries economy. An absence of strictly enforcedinternational laws means that TNCs may operate in LEDCs in a way that would notbe allowed in an MEDC. They may pollute the environment, run risks with safetyor impose poor working conditions and low wages on local workers.
· Globalisation is viewed by many as athreat to the world’s cultural diversity. It is feared it might drown out localeconomies, traditions and languages and simply re-cast the whole world in themould of the capitalist North and West. An example of this is that a Hollywoodfilm is far more likely to be successful worldwide than one made in India orChina, which also have thriving film industries.· Industry may begin to thrive in LEDCsat the expense of jobs in manufacturing in the UK and other MEDCs, especiallyin textiles. Structualist writers – could begoodThe final competing view is the Structuralist writer’sperspective.
This specific perspective differs from the other two perspectivesin various ways. Firstly, it is believed that there is no specific cause/reasonbehind globalisation. Globalization is considered a phenomenon that just graduallyprogressed over the years. Secondly, scholars believe that the outcome ofprocesses of globalization is not determined (Held et al.
1999). These scholarssay that globalization could be very influential however it’s an unknownphenomenon and its outcome will not be known for many years down the road. Afterthe Second World War, a development of economics was created in belief that LDC’s(Less developed countries) could not follow the same footsteps of the moredeveloped countries.
Many countries were led to develop distinctive non-marketpolicies to rapidly industrialize their economies. LDCs faced an alreadydeveloped capitalist world which needs time to be able to catch up on certainpolicies and thus it was argued that some structures required for a sustainablemarket system weren’t made in some of the developing countries and thereforethey had to be constructed before the integration of economies into the global system.Structualists wouldn’t particularly agree with the way some of these problems areaddressed but they believe and argue that if the business environment is to beconstructed in such a way as to enable globalization to increase growth, stabilityand development over time then those issues had to be addressed and resolved.Structuralist writers further believe that the same commonchanges have occurred from globalization but there isn’t a direct belief in theexact direction about how these changes came. in addition, this perspectivedoes not define any historical events or factors that define globalization. Aswell, they say the power of national governments is increasing but the natureof these national governments is changing. This perspective believes that therange of factors influencing processes of globalization is much greater, andthe outcomes of globalization are very uncertain. In conclusion, over the pastthirty years globalization has completely transformed how nations areconducting business in the world.
The increases in technology and the liberalizationor governmental policies have lead to globalization skyrocketing over the pastthree decades. This drastic increase in globalization has lead to an increasein inequality amongst nations, as well as an increase in the inequalitiesbetween social classes of individual countries. The positive effectglobalisation can have is the Inward investment by transnationalcorporations helps countries by helping and providing new types of employmentthrough jobs which requiresdifferent skills for local people. Additionally, TNCs (transnationalcorporations) help bring wealth and foreign currency to localeconomies when they buy local resources, products and services and thereforethe extra money created by this investment can be spent usefully on education,health and infrastructure. Conclusion (synthesis of main findings)In conclusion, over the past thirty years globalizationhas completely transformed how nations are conducting business in the world.The increases in technology and the liberalization or governmental policieshave lead to globalization skyrocketing over the past three decades.
Thisdrastic increase in globalization has lead to an increase in inequality amongstnations, as well as an increase in the inequalities between social classes ofindividual countries. There are three main perspectives on globalization withinliterature today. Each individual perspective has different viewpoints on whatcauses globalization, how globalization impacts society, and the future ofglobalization. There are also several theories of globalization that need to beunderstood. It is imperative to have a clear understanding of the trends andperspectives of globalization to be able to understand how it affects thebusiness world and society.
Each individual perspective has differentviewpoints on what causes globalization, how globalization impacts society, andthe future of globalization. It is imperative to have a clear understanding ofthe trends and perspectives of globalization to be able to understand how itaffects the business world and society.