Globalization can be defined as the ongoing global trend toward the free flow of goods and services and the creation of a world economy. Through global trade and cooperation, Globalization aims to benefit everyone who partakes in it. While it provides a great number of advantages to society, they are given at the expense of others. Since it’s argued for the greater good, it has become one of the most heated topics in international business.
One of the most practical benefits that have resulted from globalization is the tremendous increase in the speed of communication. The prime example would be the Internet. The Internet is a global medium that instantaneously provides swarms of material containing information uploaded from various parts of the world. Since this information shared worldwide, everyone with access to the Internet can take full advantage of it. Globalization also provides for cell phone companies to use such slogans as “anywhere, anytime” minutes. As a result of sharing technology across the globe, people can communicate with just about anyone.
Another useful attribute that a global economy brings is lowered transportation costs and reduced tariffs. Under the theory of globalization, all barriers to trade will be reduced, allowing foreign products to compete directly with domestic products. Consumers benefit when the cost to import a product is lowered since foreign goods are in turn more affordable. The producers of these products also take advantage of the larger consumer market.
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Globalization attracts firms to invest in lower developed countries where labor is cheaper. As they make these investments, a few benefits arise in that host country. First, the economy is lifted due to the sudden rise in the workforce. All the employees hired would be residents of that host country. Next, the government can collect taxes on everything produced and exported from the host country. For major apparel and car manufacturers, this figure can be rather substantial. Finally, the technological and managerial know-how used to run the corporation is brought to the host country, providing knowledge and insight for many other domestic businesses.
In addition to boosting the economy, globalization benefits the environment as well. Such global agreements as the North American Free Trade Act, and organizations including the European Union promote environmental regulations throughout their respective regions. In creating a world economy, global environmental standards can be established. Through cooperation and control, globalization could be the answer to cleaning up the environment.
While it seems that globalization has many positive attributes, those who oppose it have a strong argument as well. Globalization widens the gap between the wealthy and the have-nots. While it does indeed create wealth, the people who reap that money are already wealthy. A United Nations Report by Joe Lauria states, “the richest 200 individuals in the world more than doubled their net worth in the four years to 1998 to $1 trillion, which is more than the gross national products respectively of Canada, Belgium, Spain, South Korea, Brazil or Russia.” When companies invest in foreign nations, the money that they earn is spent back into the firm’s home country. The only use of the foreign country is for cheap labor. Besides, despite the increased economic prosperity that the company creates, the foreign nation becomes dependent upon the company for employment, revenue, and technological improvements. Without the firm, the country can no longer be self-sufficient.
Since companies seem to seek out the cheapest labor on the globe, foreign governments have decreased their human rights standards to attract investment. Some of these reduced standards include no child labor restrictions, no minimum wage laws, and unsanitary working environments. Furthermore, foreign governments also recede any environmental standards to make themselves more marketable towards big business. As a result, companies do in fact have lower costs. However, they arise from the exploiting of both people and the environment.
In addition to the effect that globalization has in foreign countries, the effect that it has on the countries of origin is also substantial. When a firm decides to manufacture its products in a nation with cheaper labor costs, all of the people employed in the home country lose their jobs. It has a tremendous effect on the economy, especially when the firms employ tens of thousands of individuals.
Every nation ends up giving up freedom on globalization. For globalization to work, all participating countries must promote trade by reducing or eliminating any trade barriers. In turn, every nation’s sovereignty is put into jeopardy. When international organizations force countries to carry out an action, such as reducing tariffs, individual governments no longer have absolute control of their nation. Also, as consumer goods of various countries slowly permeate throughout the world, they will diminish the traditions and cultural identity of nations through universality.
Since the first time that two countries traded with each other, globalization was born. Now, it is on an ever-growing path towards a free world market and a global economy. Despite the practical and inescapable benefits that globalization has brought, it has also provided a way for the rich to get richer, at the expense of the poor. It would be unreasonable to think that globalization could be stopped. The world is far to integrated to try and turn back now. It is evident that the entire process needs to be reformed. Instead of trying to benefit everyone, globalization should work to benefit everyone more equally.
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