Question

Write a 800-word essay

your understanding on globalization

Thanks

Answer 1

Globalization can be defined as the integration of the domestic economy to the world economy. It blurs the concept of national boundaries and stands for the free flow of goods, services, capital, labor and technology across national boundaries. One of the main attractions of the globalization is the increased volume of international trade and economists firmly believe that the trade is always the engine of growth. Globalization leads to the increased interaction of people, business entities and industries and this will eventually leads to cultural integration and idea transmissions. Many of the modern technologies including mobile phones and internet are the products of globalization. Even the ever changing fashion trends are also a product of globalization. The removal of cross border trade and capital movement barriers increases the integration of the domestic economy to the international economy.

World Trade Organization has propagation the idea of globalization as a new version of the theory of the comparative cost advantage theory of the classical school. That is the trade between countries will bring these countries more advantages than they refrain to their closed domestic economies. But this will happen only if there is strictly unrestricted flow of goods, services, capital and labor. as of the two sides of a coin, globalization also have its own advantages and disadvantages.

Some of the advantages of the process of globalization are:

1. The availability of the goods and services in the domestic market irrespective of its place of production due to unrestricted trade. This will increase the consumer's satisfaction due to the competition existing in the market will pressurizes the sellers to sell the products at competitive prices.
2. Increase in the employment rate due to increased production and also due to the transmission of labor across the globe.
3. Globalization reduces the inefficiencies in the production process as it will remove the inefficient players from the scene.
4. Globalization promotes the free flow of capital across borders. This will create new investment avenues and foreign investment in the form of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) will boost the domestic economy.
5. It will boost the domestic industries and propagate them to innovate and to expand as only then it could withstand with the foreign competition.
6. It also enhances the allocative efficiency through global trade.

As said earlier, the other side of the coin shows some drawbacks. this includes:

1. Globalization leads to the integration of world economy under one umbrella and the redistribution of power and authority. There is a greater scope for the accumulation of the power to control the world resources by a few.
2. Globalization become a boon only if it enriches the economies of developing and less developed countries. But it has seen that the globalization always leading to an increase in imports than exports and resulting in trade deficits in poor countries.
3. The technological advancement and its international transmission can have a negative impact on the growth of unemployment rates as the technology can replace labor.
4. MNCs are the big tickets in globalization. So the traditional domestic industries have to compete with them in order to remain in the economy. Most of the times they have been vanished from the scene without being able to compete with the giants.
5. As there are great chances to the concentration of economic power in the hands of few, this will increase the inequality persisting in the world.
6. Due to the high integration of the domestic economy with the world economy, there is global transmission of trade cycles. A trade boom or recession both can easily transmitted to the world. So the high degree of integration creates high vulnerability to the trade shocks.
7. There are increased chances of draining the autonomy of the developing countries in their fiscal and other policies due to the high monitoring of international institutions.
8. The resources exploitation of the third world countries by the MNCs.

So to conclude, there are positive and negative impacts to globalization. The over dependence of the domestic economy on the global economy always creates some threats. So when we look at the integration,we should not forget to strengthen our domestic economy. Because at the end of the day we have to enhance the welfare of the domestic population also should have the stress on national interest and priorities.