Sep 17, 2018 in Analysis

Global Economy


Globalization can be defined as an international strategy that is used to enhance and promote the business scale of a nation to attain a level that is worldwide. The issue of globalization is precipitated by the rapid progress that is being witnessed in the world due to the advancement in technology. The main objective of globalization is to be able to create a competitive position that can enable parties to lower their costs and, at the same time, gain consumers, products and services. 

As a result of the vital role played by globalization, this paper provides comprehensive information on the impact of globalization in various sectors of economies of various nations. The papers provide detailed information on the positive impacts of globalization to the economy. For instance, this paper focuses on ways globalization enhances business relations among different countries. In addition, this paper provides concrete information on how globalization has contributed to the development of countries across the globe. Moreover, this study provides detailed information on how companies have benefited from globalization with regard to increased productivity and investment opportunities. Another major focus of this study is how globalization has promoted information and communication technologies.


Although globalization has many positive aspects to the economies of many countries across the globe, it also has some drawbacks which might have negative impacts on the economy of a country. For instance, this study gives detailed information on how globalization has resulted to negative aspects such as such as, slavery and child labor and how it help criminals and terrorists.

Global Economy

Globalization is an international strategy that is used to enhance and promote the business scale of a nation to attain a level that is worldwide. Globalization can be said to have begun after human beings settled in various parts of the world (Siebert 2002). The issue of globalization is precipitated by the rapid progress that is being witnessed in the world due to the advancement in technology. It involves all the five continents in the world and all of them are affected by their engagement in the process. The main objective of globalization is to be able to create a competitive position that can enable parties to lower their costs and at the same time gain consumers, products and services.

The competitive position in globalization is gained when resources are diversified and there is the creation of new employment opportunities. Diversification is particularly important as it lowers risks, enables utilization of market opportunities and the spread of interests in various areas (Haugen & Mach 2010). Industrialized countries are associated with high levels of economic development and there are certain economic criteria that they are supposed to meet according the economic theory. These economic theories include:  the Gross Domestic Product, Industrialization and the Human Development Index (Waters 1995).

Gross Domestic Product is also the value of all those products that are finished, having been produced within the borders of a country in a year. It acts as a measure of the overall output of a country. Industrialization is a process that when driven by technological innovation, promotes the economic and social development of a country, thus transforming it into a developed nation (Maddison 2006). The Human Development Index has three components including: knowledge, education and the population life expectancy in the country. Thus, it can be argued that globalization is determined by those strategies that are pursued in an effort to result in greater development and increased opportunities.

Globalization has impacts on the developed nations as it forces the nations to adapt strategies that will match the new trends. These trends are the ones that enable worldwide competition and results to changes in labor supply, management and business leadership worldwide. Globalization comes with reorganization at the national and international levels. The reorganization affects the social and economic relations and, as a result, the transformation in production affects labor process, application of technology, the organization and structure of capital and structure of the class. Globalization is now being viewed as a process to marginalize those with less skills and less education qualification. The fact that it can result to high remuneration of capital cannot be ignored since it has a higher mobility compared to labor (Sjursen 2000).

From the introduction, globalization can be seen as having both advantages and disadvantages. It has effects on the wages and jobs in a particular nation since it encourages the growth of new employment opportunities, hence wages increase. Critics of globalization argue that it costs employment opportunities thus resulting to lower wages. Critics believe that it erodes the standards of living of people which are a negative impact to people in a given country.

Reasons that are cited against globalization include: the elimination of jobs in the developing countries, wages being forced in the developed countries, and exploitation of labor force from the developing nations. Those against globalization believe that it is responsible for the continued elimination of many jobs that were present in the developed countries. They argue that the well-paid jobs are sent abroad to the developing nations where there is labor at a lower cost. Forced labor in the developed countries is thought to result from dislocation of workers, thus there is reduction of wages (Boudreaux 2008). Finally, globalization causes workers from the developing countries to be utilized. When outsourcing for factors of production shifts to the developing countries, workers in the developed countries will have to cope with the low wages.

On the other hand, it can be argued that globalization leads to the creation of employment opportunities, as well as boosting wages. Those supporting globalization argue that it improves the standards of living to all citizens in a given country. They agree that globalization results in the creation of wealth, promotes flexibility in the labor market and results to development to all the economies participating in globalization, even in the developing countries.

It increases wealth in the developed, as well as the developing countries. The increase of trade and the national output boosts the per capita income. Labor markets that are flexible are generated in the developed nations. It suggests that workers benefit even from job turnovers as it allows workers to move to sectors that are of higher values to them and have better wages.

Globalization also helps the developing nations participating in trade even with the developed nations. Developed countries benefit from outsourcing in the developing countries. It improves services to the customers, gives better wages and good returns to the management. From the above argument, globalization has resulted in the developed countries outsourcing in the developing countries. Developed countries prefer to derive employment from these countries which has both its pros and cons. It gives opportunities to the emerging economies to tap their talents, since the developing countries are usually lacking the capital required to promote the growth and development of their economy (Maddison 2006).

Due to the global nature, it appears that people in the developing countries are getting jobs at the expense of people in the developed countries. As a result, the movement of jobs to the developing countries negatively affects people in the first world countries. With globalization, people in the world mingle more easily as a result of the new phenomenon. It can be agreed upon that globalization has brought changes not only in the economic perspective, but also in the social and political spheres. These changes in all these spheres come with challenges. 

Positive Impacts of Globalization

Globalization has advantages such as the ease of accessing products from other nations. There is a worldwide market that has been established for industries all around the world to ease the flow of both goods and services. This means that there is steady cash that is flowing into the developing countries thus helping decrease the difference that exists in the dollar.

With globalization, there has been witnessed an increase in production and this means that there are more options for investment, especially for the companies. The issue of compartmentalization of power is decreasing and instead, it is being replaced with a world power. With globalization, there is increase of the influx of information, especially in those countries that did not have anything in common initially.

Globalization comes with advancement in technology which eases the sharing of information. This is particularly important among the developing countries as it speeds up their economic growth. It is globalization that helps increase the demand of products, as well as services.

Negative Effects of Globalization

Developed nations outsource labor as a way of cutting down costs in the third world countries, for example in China and India where the cost of labor is low. These countries outsource the manufacturing jobs and also the white collar jobs, especially those with a population that can be able to speak English. Outsourcing results to resentment among the people living in the developed countries as they accuse companies as taking away jobs from them (Siebert 2002). Another problem is that the people, especially in America, are not usually satisfied with the level of customer satisfaction and service that they are subjected to.

There are those who argue that globalization has led to increase in activities such as slavery and child labor. This is common particularly in those countries where there is little accountability of those children that are subjected to work. This is termed critics as fierce competition in the global market coupled with unethical practices (Corbridge 1993).

Globalization has also helped criminals and terrorists. This happens when people and materials are allowed to travel freely across the borders of countries. It is not only the people in the developed countries that complain about the negative effects present because of the globalization, but also people in the developing countries. When developed countries move and set up their industries in the developing countries, they are accused of dumping their garbage. These dumped wastes accumulate to levels that result to pollution (Maddison 2006).

When food establishments like the MacDonald’s move to the developing countries, people in those countries consume the junk food that has adverse effects on their health. Some eateries that have been established in some countries fail to be sensitive to the people’s culture and religious beliefs. An example is when the McDonalds were sued in India for serving beef burgers.

Globalization is meant to ensure that there is prosperity and wealth created and distributed equally among all the people of the country. In countries where the systems of government are corrupt and greed, the money acquired as a result of globalization ends benefiting only a few people (Siebert 2002).Globalization has played a role in the degradation of the environment. The established factories require a lot of raw materials. These factories have immensely polluted the environment affecting the natural resources that exist on the planet.

All the stakeholders in globalization know that that the concept cannot be discharged. As a result, there is need for the development of solutions that will help to deal with the threats that are posed by globalization. It is globalization that has made business and trade free, and also improved the means of communication, hence making the world a better place for mankind. The political atmosphere in most countries has changed as a result of globalization where those problems that remained deep-seated are now shifting and coming to the lime light. The problems that have continued to affect most countries include poverty and unemployment (Trade Policy Research Centre 1997).

Solutions to Globalization

Globalization affects sectors of an economy such as politics, social institution and the economic stability of a country. Solutions proposed to the problems that arise as a result of globalization include the inclusion of the costs of pollution and also the costs that are associated with the depletion of natural resources in a given country. This will help ensure that globalization takes into consideration environmental matters.

The use of social accounting matrix as opposed to the traditional method of the Input-Output table in the national income account is also a solution. Another resolution to globalization is the imposition of taxes on money that enter into circulation of a given country especially from the foreign nations. The other decision would be identifying of the needy groups in a given country and helping them to improve their living conditions. These groups usually include the aged, women and children, since they are usually very vulnerable. Finally as a solution to the problem of globalization, earlier preparations on how to cope and deal with investments and trade free agreements need to be done (Appadurai 2001).

Globalization interconnects the whole world enhancing the spread of technology, information and increasing communication (Maddison 2006). When the economy is globalized, networks are created which serve as an economic boost to a country, as it helps to alleviate poverty by improving the living standards. When there is good communication, there are risks and also advantages that come with it. There is, thus, the need that the global economy is integrated to ensure that economic policies in a country are coordinated. It will also help to guaranty that international regulations are harmonized in an effort to address the global financial crisis that might be a result of globalization.

Economists believe that with the shift in global economy, the future of the world will be more interdependent and multipolar. This will require to the joining of hands and working together as international institutions by both the developed and the developing countries. Policy makers need also to take a global perspective in order to assure that all the parties benefit as a result of globalization (Trade Policy Research Centre 1997).


Governments need to be aware of the dependency that is created by globalization. Globalization can make the economy of a given country to be dependent on another country’s economy. It is, thus, the obligation of governments to ensure that there is the economical balance. It is also clear that those companies that will dominate in the global economy are those ones that are successful. The current mechanisms in globalization provide opportunities towards the achievement of technical progress and, at the same time, democracy and the political rights. Globalization should not be made a scapegoat to the unemployment problems being experienced, since it will undermine the efforts to propel the economy (Trade Policy Research Centre 1997).


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