Globalization

Introduction and definition

Globalization refers to the integration of goods, services, and culture among the nations of the
world. We have been experiencing globalization since the days of European colonization. And
advances in telecommunication and transportation technologies accelerated globalization. The
Internet has made all nations next-door neighbors. Diverse definitions have been given to
globalization, depending on the context in which it is being used. The world has suddenly become a
global village, where boundaries are being removed and organizations are free to envisage, design, create,
purchase and sell products in other countries making the world interconnected. According to
(Govindarajan & Gupta, 2000), globalization is defined as the increasing economic reliance that exists
among countries as seen in rising traverse relationship with the flow of goods and services. Cope (1999)
sees the process of globalization as “having two inter-related dimensions: scope (or “stretching”) and
intensity (or “deepening”). On the one hand, the concept of globalization defines a universal process or a
set of processes which generate a multiplicity of linkages and interconnectedness which transcend the
states and societies which make up the modern world system. On the other hand, globalization also
implies intensification in the levels of interaction, interconnectedness or inter-dependence between states
and societies which constitute the modern world economy”

The International Monetary Fund (IMF) defined globalization, as rapid economic incorporation
countries around the world by the movement of goods, services and capital across borders.
Globalization is needed in countries to improve the relationship between these countries and to
improve the economic stability of these countries. According to the Joseph Nye and John
Donahue, “Globalism is a state of the world involving networks of interdependence at multi-
continental distances.” World Bank Definition: Globalization is the growing integration of
economies and societies around the world.”

Globalization a process where people, companies, and governments from different nations

interact and integrate through international trade and investments has effects on the environment,
culture, political systems, economic development and on the human physical well-being in
societies around the world. Through the Internet, media, planes, international business and
embassies we are now more connected to each other than ever before. Due to globalization
someone in China can easily communicate and sell their products to an individual the US. The
rise of globalization is largely attributed to major changes in the telecommunications and
transportation industries. Globalization today allows for goods to be made and sold all over the
world. Companies to establish and compete for customers in many countries for example fast
food chains are opening outlets every day around the world. Also, companies can operate where
production costs are cheapest due to globalization. And it’s not only products globalization also
makes it possible to get services from around the word e.g. via the internet a US-based company
can hire an accountant in India to do its taxes.
Globalization is not only about trade there is also the cultural aspect to it. Through it, different
cultures meet and people get to know and understand the various ways of life and accept them.
Now that you know what globalization is let’s get into its impact.
Main Aspect of Globalization

Globalization has various aspects which affect the world in several different ways. These aspects
include:

Industrial globalization – development of worldwide production markets and broader access to

a range of foreign products for consumers and companies involving particularly movement of
material and goods between and within national boundaries.

Financial globalization – development of worldwide financial markets and better access to

external financing for borrowers.

Economic globalization – establishment of a global common market, based on the freedom of

exchange of goods and capital.

Economic globalization involves a wide variety of processes, opportunities, and problems related
to the spread of economic activities among countries around the world. Eg: Multinational
corporations operate on a global scale, with satellite offices and branches in numerous locations.
This means multinational companies can stay open virtually 24 hours a day and service
customers no matter where they're located.

Political globalization - creation of international organizations to regulate the relationships

among governments and to guarantee the rights arising from social and economic globalization.
Political globalization refers to the growth of the worldwide political system, both in size and
complexity.

Informational globalization – increase in information flows between geographically remote

locations. (This can also be seen as a technological change related to the advent of fiber optic
communications, satellites, and increased availability of telephone and Internet.)

Cultural globalization - sharing of ideas, attitudes and values across national borders. This
sharing generally leads to an interconnectedness and interaction between peoples of diverse
cultures and ways of life. Mass media and communication technologies are the primary
instruments for cultural globalization. Cultural globalization refers to the transmission of ideas,
meanings, and values around the world in such a way as to extend and intensify social relations.
This process is marked by the common consumption of cultures that have been diffused by the
Internet, popular culture media, and international travel.
POSITIVE IMPACTS OF GLOBALIZATION 
Gives Access to a Larger Market-Through globalization countries and companies have access
to a bigger consumer base. Instead of only selling products in their country a business can
expand to other regions boosting sales and in the process making more money.
Provides Cheaper Goods for Consumers-Because of globalization a lot of companies are
moving to areas where their cost of production is low they, in turn, offer cheaper products
because they are not expensive to make hence lower prices for consumers.
Globalization Wets Countries do what they do best-For example, a country can buy cheap
steel from another country instead of making its own steel. They can then focus their efforts on
making other things they are good at like computers and export them to the countries they import
cheap steal from.
Leads to Better Economies -With many multi nation’s heading to Africa to tap the consumer
base in this part of the world more jobs are being created helping people in these countries get
better wages and improve their stands of living. This investments by these multinationals or
foreign countries also help strengthen the economies of these countries with the foreign
exchange they bring in. With an increased number of investors looking for investments
opportunities around the globe, country economies will benefit wherever they invest. Through
globalization economies of different countries are becoming more connected to one another since
they depend on each other for trade.
Promotes World Peace and Unity-Globalization brings governments together so that they can
tackle common goals together. For example, due to globalization world leaders have seen the
impact of pollution and have resolved to tackle climate change together. Also, it is unlikely that a
country trading a lot of products and services with another will attack it or want to go to war with
it.
Innovation-The desire to make a profit has always been a spur to expanded trade, innovation,
and the communication of ideas. The great ideas from leaders spread more easily.
Better Quality and Variety-Competition from different countries drives firms to improve their
products. Consumers have better quality products and more variety as a result.
NEGATIVE IMPACTS OF GLOBALIZATION
Causes Environmental Damage-Globalization has led to increased production for businesses in
order to meet global demand. Increased production means more natural resources are used and
this can be used up before they are regenerated leading to a negative impact on the environment.
Also in developing countries rules and regulations on environmental protection are not as strict
as in developed countries. This has seen some multinationals leave their countries to set up in
developing countries to take advantage of this lax regulation in the process they manufacture
products that are harmful to the environment.
Causes Fluctuation of Prices-Increased competition means that businesses with the best prices
win. Due to competition prices are always fluctuating, for example, a country like the US has to
reduce its prices often to compete with prices for the same product coming from China. China’s
production costs are lower than the US hence they can have ridiculously low prices. For the US
companies reducing prices will have a negative effect on their profits which in turn may led to
actions like laying off workers.
Job Insecurity-Globalization provides a double-edged sword when it comes to jobs. It creates
jobs for people in developing countries who provide cheaper manufacturing jobs. For example,
many companies are setting up in India and China because wages and manufacturing jobs
are cheaper there this means less opportunities in developed worlds. In short, globalization takes
jobs from one country and provides them to another. This can be negative or positive depending
on what part of the world you are in.
The Effects of Globalization on Developing Countries
Developing countries are effected positively and negatively in many aspects, from internal
affairs to external affairs. Globalization can have very drastic impacts on a country both positive
and negative. I will examine the effects both positive and negative of globalization on
developing countries economy, Trade process, education and health system.
Globalization has helped less developed countries deal with the increasing economic developed
in the rest of the world. This has solved the poverty problems in these countries. In the past this
was impossible for less developed countries due to trade barriers. The World Bank and
International Management encourage these less developed countries to go through market
reform. Many countries began to move towards these changes by removing tariffs and free up
their economies. Developed nations invest in less developed nations which lead to creation of
jobs for poor people in the less developed countries, this is a positive outcome of globalization.
However, globalization has had its negative effects on these less developed
nations. Globalization has increased inequality in developing nations between the rich and the
poor. The benefit of globalization is not universal. Globalization is making the rich richer and the
poor poorer.
The health and education system in developing countries has benefited in a positive way due to
the contribution of globalization. Education has increased in the recent years because
globalization has created jobs that require a higher education. “Health and education are basic
objectives to improve any nations, and there are strong relationships between economic growth
and health and education systems” Globalization has helped improve developing countries rates
of illiteracy living standards and life expectancy. According to the World Bank (2004) “ With
globalization, more than 85 percent of the world’s population can expect to live for at least sixty
years and this is actually twice as long as the average life expectancy 100 years ago”. An
Increase trade and travel, diseases for example HIV/ADIS, Swine Flu and a verity of plant
diseases, move easily across borders. Another drawback to globalization is the loss of highly
educated and qualified professionals in developing countries due to migration to developed
countries for a better life. It is safe to say that globalization has good benefits and negative
setbacks for developing nations in the world. Globalization can be thought as a tool and
depending on how one uses the tool or how often or even in what ways it is used. Globalization
can be good for a Nation depending on the nations and the developing nations investing in it.