The Positive and the Negative Impacts of Globalization - Assignment Example

?Running head: IMPACT OF GLOBALIZATION ON THE UK AND INDIA Impact of Globalization on the UK and India March 18, Impact of Globalization on the UK and India 1. Introduction In the contemporary era of globalization, there is an exchange of culture, education, business, and free information pertaining to economy, religion, social problems, and political issues, which affect the lives of nearly 6.5 billion humans on planet Earth. The major factor responsible for the globalization process is the evolution as well as revolution in information technology that has facilitated business activities, long distance communication, banking transactions, introduction of innovative and cost-effective technology accessible to the masses, and employment generation in almost every sector. However, the ongoing financial crisis that resulted from the collapse of the real estate market has slowed the process of globalization, which is sometimes blamed by the critics for the surge in unemployment and inflation. Based on the reports of Federal Reserve Bank of Dallas, Odom and Koech (2010) highlighted that the economic recovery has been slow in developed countries including the UK, while the developing countries including India are making fast economic progress. The compiled reports of Central Intelligence Agency pointed that the UK had recorded a GDP growth rate of 1.6% in 2010, which was better than its negative growth rate of -5% in 2009 (United Kingdom, 2011). However, the Central Intelligence Agency also remarked that India had recorded a growth rate of 8.3% in 2010, which was marginally greater than its growth rate of 7.4% in 2009 (India, 2011). Since India and the UK represent the developing and the developed economies respectively, this paper compares the positive and the negative impacts of globalization on these two countries. 2. Discussion Globalization has definitely increased trade in India and the UK besides encouraging entrepreneurship among the youth of these two countries. Due to globalization, some economic sectors of India will have more advantage than the UK, while there will be some economic sectors where the UK will have more advantage than India. The following section contrasts the positive and the negative effects of globalization in India and the UK. 2.1. Manufacturing: Since India has lower labour costs than the UK, globalization has caused an increase in the manufacturing activity in India, while the manufacturing activity in the UK has comparatively slowed down as industries favor India as the low cost manufacturing base (Economics Help, n.d.). 2.2. Employment: When the manufacturing industries of the UK shift their bases to India or another developing country, there will be loss of employment in that particular sector of the UK, while India will gain employment in the manufacturing sector. The unemployment rate in the UK was 7.9% in 2010, while it was 7.6% in 2009 (United Kingdom, 2011). However, the unemployment rate in India was 8.3% in 2010, while it was 7.4% in 2009 (India, 2011). The unemployment in manufacturing sector in the UK will be offset by employment generation in other sectors, such as finance and insurance, which shows that globalization causes shift in jobs from one sector to another without causing major catastrophic changes (Economics Help, n.d.). 2.3. Business Process Outsourcing (BPO): India has highly educated and talented professionals well-versed in speaking, writing, and reading English language. Due to a large pool of competent workers expert in providing IT enabled services to the business clients, several countries, such as the USA, Canada, Germany, Switzerland, and the UK outsource their work to India. Globalization has helped India to expand its BPO industry, while the UK has been a laggard due to the high labor and infrastructural costs. The size of the Indian BPO industry is estimated to be around $69 billion as of 2010 because the developed countries outsource their business assignments to India where the wages are nearly 80% lower than the developed countries (Kumar and Elgin, 2007). The negative impact of globalization is realized when the workers in the UK protest against the outsourcing of work to India. It was reported that the workers at the British Telecom had expressed resentment against outsourcing of business to India (Kumar and Elgin, 2007). These resentments and negative feelings adversely affect the cultural and political relations between India and the UK. 2.4. Education: India and UK show a significant difference in their literacy rates. India has a literacy rate of only 61%, which means that at least 600 million Indians are capable of reading and writing (India, 2011). However, the UK has a high literacy rate of 99%, which means that about 60 million people in the UK have attended a minimum of five years at the school (United Kingdom, 2011). Due to the considerable size of the Indian population, the number of educated Indians far exceeds the total population of the UK. Since the UK is the home to leading universities, including Oxford and Cambridge, many Indian students go to the UK for attaining undergraduate and postgraduate education. The number of Indian students studying in the UK has been increasing for the past few years, and in 2007, 19000 Indian students had joined educational programs in the UK (MacLeod, 2007). This continuous increase in the influx of Indian students to the UK is due to globalization. In this case, the UK gets the advantage to earn extra revenue through the fees paid by the Indian students, while Indian schools have the disadvantage of losing the foreign exchange and the potential revenue they would have generated from these overseas Indian students. 2.5. Trade: The volume of trade between India and the UK was estimated to be around $12 billion in 2008, but it has been predicted that the trade between the two countries could reach $40 billion by 2015 (Economic Times, 2015). Globalization has created better opportunities for India and the UK as their respective governments also relax the visa policies. Again, India can provide cheaper and better manufacturing facilities to the companies from the UK, while the UK can provide better technological services to India. It is anticipated that the trade of services between the UK and India could reach $12 billion by 2015 (Economic Times, 2015). If globalization yields a positive impact for India and a negative impact for the UK in the manufacturing sector, then it also yields a positive impact for the UK in services sector and a negative impact for India. Globalization creates reshuffling in the economic sectors, and it is for the two countries to leverage the gains of globalization by tapping more trade with other countries. The UK had exports worth $406 billion in 2010, while its imports in the same year were $546 billion (United Kingdom, 2011). However, India had exports worth $201 billion in 2010, while its imports in the same year were $327 billion (India, 2011). Since the exports of both the countries are lower than the imports, India and the UK need to explore new markets and expand their trading activities by taking full advantage of globalization. 3. Conclusion Globalization has both positive and negative impacts on the UK and India. The UK gains more opportunities in education, financial and banking services, and trading in a global economy, but it has disadvantage in the manufacturing sector where the jobs are outsourced to developing countries like India. On the other hand, globalization has raised the standard of living in India, provided more jobs in the manufacturing sector, and created better employment opportunities for educated youth in the BPO sector. Indian students are seeking admission to the universities in the UK due to globalization phenomenon. India and the UK should leverage the gains of globalization by expanding their trading activities mutually and with other countries. References Economics Help. (n.d.). Effects of Globalization on UK Economy. Retrieved March 18, 2011, from http://www.economicshelp.org/trade/globalisation_uk_economy.html Economic Times. (2009). India-Britain trade could reach $40 bn by 2015: Industry. Retrieved March 18, 2011, from http://economictimes.indiatimes.com/news/economy/foreign-trade/India-Britain-trade-could-reach-40-bn-by-2015-Industry/articleshow/4683610.cms India. (2011). Central Intelligence Agency. Retrieved March 18, 2011, from https://www.cia.gov/library/publications/the-world-factbook/geos/in.html Kumar, B.S., & Elgin, A. (2007). Impact of Globalization on BPO Industry in India. Indian MBA. Retrieved March 18, 2011, from http://www.indianmba.com/Faculty_Column/FC517/fc517.html MacLeod, D. (2007). UK universities continuing to attract Indian students. Guardian. Retrieved March 18, 2011, from http://www.guardian.co.uk/education/2007/mar/26/highereducation.uk Odom, P., & Koech, J. (2010). International Economic Update. Federal Reserve Bank of Dallas. Retrieved March 18, 2011, from http://mail1.dallasfed.org/institute/update/2010/int1005.cfm United Kingdom. (2011). Central Intelligence Agency. Retrieved March 18, 2011, from https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html Read More