Question

Question 1.

We have studied how the World is now more globalized than before, how thanks to globalization MNEs are able to get around market imperfections and to create value. We also saw that the theory of comparative advantage suggests that everyone benefits from international trade- rich and poor countries, and it is a very strong rationale for globalization. So the discussion question for this topic is: Is globalization good? On another point- we see more and more firms having an ‘international’ component, customers, suppliers, etc., which takes me to my next question, can we avoid globalization?

Answer 1

Globalization meaning- It is the process of doing business internationally or globally. It means the growing economies all over the world. It can be understood in terms of Cross border trades, investment, cash flows, technology, people from one country to another.

Globalization is good (Advantage)- These are the following advantages of globalization:

1. Globalization increases the production in the countries and increased production provides job to people so it creates employment, when people in the country get employed, their consumption power increases and they demand for more products and it boosts the production and labor productivity and this cycle goes on.
2. Globalization increases the foreign currency flow and it grows the economy of the country.
3. Globalization reduces the capital output ratio. It increases the efficiency of available resources.

Globalization can lead to some problems like increased imports, fluctuation in exchange rate, changes in economic and fiscal policies but it has proven a boon in today's scenario. Globalization increases efficiency of many sectors including financial, manufacturing etc. We cannot avoid Globalization.