Process of Globalization

Discuss about the Process of Globalization.

Introduction

The concept of globalization is quite old. It started over thousands of years where people use to buy and sell to each other in the lands at larger distances. When defined in the simplest terms then globalization occurs when people belonging to myriads of culture, tradition and different economic perspectives, interacts and integrates to achieve a common goal.  The main drivers of this process are the international trade and investments from various sources. In its broader sense, this process implies the opening of local and nationalistic prospective to a wide outlook of the interdependent world with free transfer of capital, goods and services across national frontiers. This interconnection has not only given birth to the interconnection between to remote markets in terms of trade, but has also promoted cultural exchange between countries. Redding (1999) defined globalization as the increasing integration between the markets for goods, services and capital and at the same time breakdown of borders. According to Harris (2002), every change has its positive and negative impacts; hence, this process too stimulates both a driving and a resisting force. Although there a number of suggested benefits of this process, yet, due a number of loopholes the same process has been held responsible in bringing greater risks to the participating countries by worsening debts and increasing multinational corporation fairies(The Levin Institute, 2015).

The following report has been written to highlight the countries and industries affected by this global force and at the same time evaluate the positive and negative impacts of the same. As already mentioned the pros and cons of any system or process go hand in hand, hence, to identify the efficiency of any process there is a need to evaluate it critically from both the sides. Globalization, being a triumphalism light, has led to a number of chained events that are responsible for deepening the problem of global debt. So the prime aim of this report lies in evaluating the similar type of cases that clearly showcase the two sides of the coin at the same time (Hamdi, 2013).

Countries and industries affected by Globalization

The elements of globalization have a direct or indirect effect on each of its participants. Globalization carries chance and a number of advantages with it, but, it depends on nations how they take it. The advantages of globalization have been taken much by country like China.

China is the largest country in terms of population which is nearly 1.3 million. The strengths of the country include that there is an ample availability of cheap labors and moreover the manufacturing costs are quite lower as compared to the other competitors in the same race. These two facts are highly responsible in attracting a good Foreign Direct Investment, which has helped the country to remove poverty. There have been a number of other economic benefits like the researchers have stated that in the year 2005, a hike of 15% was observed in the industrial production while consumer demand has increased by 10% (Gao, 2003). The human development index of the country at present is 94 and only 16.6% population is in poverty. The year 2003, bought yet another revolution in the country’s economy when it became an official member of the WTO (World Trade Organization). In terms of tourism industry, this step was a lucrative one as it attracted many tourists towards China. Not only for tourists but the country has become a hub for a number of investors too (Ukessays Team, 2015). During the year 2003 export increased around 32.3% and import around 40.5%. There was also a notable increase in the tourism industry by 9.7%. As globalization has boosted the communication sectors of a country, hence the tourism industry is the prime sector to be benefited the most. It has enhanced the tourism industry participants to adopt computerized information and reservation systems. It has also increased demand for innovative travel services like booking hotels through online payment systems, connecting to people situated in remote areas through teleconferencing and making payments to people through smart cards and electronic fund transfers. Major international hotel groups, including Cendant, Marriot and Starwood Hotel and Resorts are involved in various countries worldwide. Globalization has not improved the economic conditions of China, but has simultaneously played a great role in improving the lifestyle of the people by giving them immense opportunities of employment. As China is one of the leading developing countries, hence while strengthening its economic sector, the country has to take steps in improving the living conditions of its countrymen (Peixin, 2003). The country has been successful in promoting a number of domestic sectors and hence providing a good employment options to the ones that are highly adhered to their traditional beliefs and occupation.

Globalization has also shown its impact on the economy of the USA and its citizens. As we all know that the US economy is the ideal for all the other developed as well as developing countries. This strong position has become achievable with the help of globalization, which has allowed the spread of American influence throughout the world. Globalization has aided the Americans to sell their products outside the country and has even strengthened the country’s real time communication abilities with international organizations and other nations (Dairy Management Inc., 2016). As globalization has highly supported the concept of international cooperation, hence the world has become smaller so that the nations could easily communicate with one another. At the critical times of “9/11-terrorist attack”, the country was easily able to communicate with allies as well as with the enemies in times of peace and conflicts. Apart from this, many US Companies have moved their manufacturing jobs overseas where business is much cheaper. Dairy industry has faced a great reformation in its profits and sales as the process of Globalization has allowed the producers to search for its customers beyond their domestic markets. The American dairy farmers have taken the challenge to their industry as an opportunity to expand their businesses in foreign markets and even capture most of the domestic markets before the other foreign suppliers rule them. The dairy industry in the USA has been an important source of direct increment for US economy (Ohlan, 2014). The access to new markets has revealed a number of unreachable zones that could be targeted to sell the products at a great pace. The changing market has presented both challenges and opportunities for the country. The economic downturn has significantly impacted the dairy industry and hence globalization is considered as an ongoing force that could shape this industry in future. As Globalization has highly supported the concept of interconnectedness, hence the dairy industry has able to create a number of importers as well as exporters for its raw materials and final products respectively (Heron, et al., 2010).

It was in the late 80s, when Australia realized the importance of globalization trends and hence entered in the race of opening its domestic markets at the global level. At that time, the country was hit by an economic turmoil and was also suffering from high unemployment rate and joblessness. Agriculture has been a major export center of Australia due to the fact the country has been endowed with such a large land area and favorable climate. The shrinking workforce and increasing global competition had forced the farmers to work with more efficiency and vigor. All these factors were highly supported by the concept of globalization and the continent is increasingly being viewed as the “food basket” of the Asia Pacific region (Oxley, 2010). The vast agricultural tracts of the country and its international reputation of its quality have always attracted the foreign investors. GrainCrop is one of the largest agribusinesses, operating mainly within the grains segment of agricultural sector in Australia. The company accounts for an estimated 85% of the grain exports in a growing agribusiness sector (Ryanilahi WordPress, 2014). A failed takeover led to share prices for the company to plunge by more than 20% in the late 2013. At this critical time, the company opened up to foreign investments and was able to ramp up its capital equipment and infrastructure. Although this event has strengthened the beliefs of other industries in the concept of globalization and FDI, yet, the government has not allowed 100% foreign acquisition. This was basically done in an attempt to slow down the rapidly increasing foreign ownership within the agribusiness sector (Riethmuller, 2006).

Positive Impacts of Globalization

Globalization has become the most debated topics of the recent times. As it accompanies a number of challenges with itself, it has been tagged as non-imperialism by its opponents. Despite its challenges, its positive aspects have played a crucial role in changing the lives of the people around the world in a commendable manner. Globalization has created myriads of new prospects, new ideologies and have opened new markets for the entrepreneurs that they may have not experienced in their own countries.

There are a number of countries that are less industrialized as compared to their powerful competitors. These countries may have ample of resources, but not better opportunities for exposure. Globalization has created better chances for such countries to enter into bigger markets at the global level. It also allowed the less privileged ones to trade with the rich countries and accelerates their growth rates at a great pace.

The last two decades have witnessed a great positive impact on the East Asian Economies. The elements of Globalization are held responsible for affecting the economic growth and thus reducing poverty rates. The spectacular growth in East Asia, during which there was an eightfold increase in the GDP and also millions of people were raised out of poverty, was largely due to Globalization. It is predicted that the economies that are globalized have higher growth rates than the non- globalizers. Hence, the growth rate for a country is highly influenced by the presence of elements of globalization. Globalization brings great prosperity to those countries that have the capability to open their markets to international trades and investments. Countries that open their markets to global level have the capacity to earn well than those who limit their investments in domestic markets. As we all know that the growth in the gross domestic product is related to export growth, hence the elements of globalization can easily hike the GDP by accelerating the export growth of a country (Welch, 2015).

Apart from the economic benefits, Globalization is also held responsible in enhancing a country socially. The social impact includes a decline in poverty rates. The majority of the countries (such as Vietnam, China and India) which have adopted the elements of Globalization at a great pace have experienced a significant decrease in poverty. A report released by World Development showed that the proportion of people falling under extreme poverty decreased from 57% to 31% in China. Whereas countries like Myanmar, Sierra Leone and Ukraine, which rejected the concept of Globalization, are the most impoverished ones.

Globalization is the phenomena created through human activity and in turn constantly changes the human behavior. As a social and cultural process, Globalization has exposed the people to new thoughts, perceptions, cultural beliefs and family norms (Pologeorgis, 2016). The people that were once restricted to the culture that they had been taught from the childhood, now wants to explore other cultural beliefs and how other people look towards the world. This exchange of thoughts has strengthened their emotional relationships with all sorts of human beings and has also allowed them to develop a feeling of humanity and togetherness. Global proliferation of communication carries ideas and thoughts across continents, sensitizing the people to think in the same direction over an issue. This helps in promoting social justice and equality in an enhanced manner.

Negative Impacts of Globalization

In the year 2001, a famous researcher Prus simplifies the term Globalization as the process where connectivity is an inevitable element and capitals, goods, traditions, cultures and people are transferred across borders. Woods (2000) stated that the government of developing countries starts to compete with each other to attract foreign direct investment (FDI) and multi-national corporations (MNCs). In such countries the low-wages and optimum interest rates allows the investors to put huge money in the markets. If the conditions are favorable then this amount proves to be lucrative else there are great risks of facing a defeat too. So if a process can have a positive impact, then it can definitely have a number of negative impacts associated with it too.

The growth of international trade cannot be beneficial for all the nations across the world. The antagonist of Globalization has said that the growth of international trade is exacerbating income inequalities within the industrialized and less industrialized countries. It is not sure that all the countries have their growth rates, expanding at the similar rate. The developed nations with a great grip on their industries may take a supreme advantage of the benefits of globalization and may expand at a great pace while the developing nations may look for best chances to expand as they are liable to take any sort of risks soon (Lee, 2006).

The concept of homogenization has made the cultural uniqueness to diminish with time. The globalization has led to a development of a “universal culture” that draws its elements highly from the American culture. With the establishment of togetherness and connectedness, some of the culturally rich countries are also forced to adopt the universal cultural and replacing their own culture with it. In such a case, there is a loss of cultural liberty which can further lead to chaos and cultural wars among the participants of the globalization (Martens & Akin, 2010).

Some of the non-economists and a wider range of the public believe that in a short-run the costs invested in the process of globalization, often outweighs its benefits. As we are talking about uniting a number of remotely situated countries with different perceptions, growth rates and quality of life of its people, hence it may take an incorporation of a number of resources in this process which has to be arranged itself by the participants of the globalization scheme. In such a case, the developing nations have to invest in a good proportion even though they are struggling in increasing their growth rates. If a country fails in receiving the desired results at the end of the process, then it becomes extremely impossible for it to reinvest in other benefit yielding processes (Westford School of Management, 2016).

The Globalization process also poses a potential threat to the domestic industries as after globalization all the markets are exposed to foreign investors and the local manufacturers either have to adopt a high level of marketing policies to retain their customers or have to search for other potential markets to maintain their sales rate. If the manufacturers adopt the latter option then there are chances that the company has to invest a huge amount in exploring and capturing the new markets and start their work from scratch. The companies which are still struggling for their existence easily face huge defeats when they leave their domestic markets and adopt new global trends. In such a case, the industries have to fight back to maintain their position in the domestic markets. Globalization has given a great exposure to these MNCs to explore the markets other than their domestic ones, but once they enter foreign markets then they pose a great threat to the existence of small businesses.

Conclusion

Globalization has made the people around the world connected with each other by entering into a mutual relationship where both sides are equally benefitted. The economies of a number of developed and developing countries have improved with the concepts of globalization. The outsourcing of people from one nation to another has led to the spread of the cultural beliefs and traditions. The major proportion of people suffering from poverty has been given good-level job so that they can improve their life standards. But all sorts of processes have both positive as well as the negative sides.

Globalization has become the most controversial issues of the recent times whether seen in terms of economy or politics or social or cultural aspects. Marx has said about globalization that “it is a process that is inevitable as progressive and praiseworthy.” Hence, globalization is a dual edged sword which has to be held carefully from both the sides. Its impact is seen in all types of countries, whether developed or developing. The MNCs and other notable industries set their businesses overseas to get better results in terms of sales and even in labor cost reduction, but at the same time, the local competitors face a great challenge due to entrance to new, capable giants in their markets. Although the concept of Globalization has existed for a very old time, but yet it is being amended by the people who are adopting it in some or the other form. The real benefits of this process can only be enjoyed if the participant countries know the exact norms and meanings of being globalized. Else, the harmful effects of globalization are quite strong enough to devastate most of the leading economies.

Bibliography

Dairy Management Inc., 2016. Globalization: Meeting the Needs of Global Dairy Consumers. [Online]
Available at: http://www.dairy.org/for-industry/globalization

Gao, T., 2003. Globalization and China: Impact on the economy and people’s quality of life, Available at: http://www.hofstra.edu/pdf/biz_mlc_gao.pdf

Hamdi, F., 2013. The Impact of Globalization in the Developing Countries. Developing Country Studies, 3(11), pp. 1-4, Available at: www.iiste.org/Journals/index.php/DCS/article/download/8180/8274

Heron, R., Lewis, N. & Hayward, D., 2010. Global Economy case study: How does the dairy industry operate in the global economy?. Global Economy case study: How does the dairy industry operate in the global economy?, September.

Lee, E., 2006. The social impact of globalization in the developing countries. The social impact of globalization in the developing countries, September.

Martens, P. & Akin, S., 2010. Is globalization healthy: a statistical indicator analysis of the impacts of globalization on health. Is globalization healthy: a statistical indicator analysis of the impacts of globalization on health, 17 September.

Ohlan, R., 2014. Globalization and Dairy Industry: Studium Press, Available at:https://www.researchgate.net/publication/260135852_Globalization_and_Dairy_Industry

Oxley, A., 2010. Globalization and Australia: APEC Centre, Available at: www.multiculturalaustralia.edu.au/doc/globalization_oxley2.ppt

Peixin, Z., 2003. China and Globalization. China and Globalization , 10 October, Available at: http://www.chinese-embassy.org.uk/eng/dsjh/t27161.htm

Pologeorgis, N., 2016. How Globalization Affects Developed Countries. How Globalization Affects Developed Countries , 18 March.

Riethmuller, P., 2006. Globalization and its Impact on the Australian Agri-food System, Available at: http://www.uq.edu.au/economics/images/news/paul/Kasesarttalk.pdf

Ryanilahi WordPress, 2014. Globalization and its impact on Australia. Globalization and its impact on Australia, 01 November.

The Levin Institute, 2015. What Is Globalization?. What Is Globalization?, Available at:http://www.buzzle.com/articles/positive-effects-of-globalization.html

Ukessays Team, 2015. Positive And Negative Effect Of Globalization On China. Positive And Negative Effect Of Globalization On China, 23 March.

Welch, J., 2015. Positive Effects of Globalization. Positive Effects of Globalization, Available at: http://www.buzzle.com/articles/positive-effects-of-globalization.html

Westford School of Management, 2016. Positive and Negative Impacts of Globalization. Positive and Negative Impacts of Globalization, 06 April.

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