Globalization: The Merging Into Independent Global Economic System - Research Paper Example

Globalization Introduction We are now living in a borderless world. What used to be thousands of miles or oceans and continents away is now a few mouse clicks away. We are now in an era of globalization, where the social, political, economic, cultural, and even environmental interactions are no longer confined to independent nation-states, but are inclusive of global communities and regions. Politics are no longer based on independent states, but are inclusive of alliances and interactions with other political entities. Social interactions are no longer confined to schools, communities, or even countries, the social networking sites have ensured that social interactions include people from different countries. Migration to other countries have also ensured that the workplace and the social community is not made up of one or two ethnic communities; but it has made sure that the cultural exchanges are alive. And the economic system has now been influenced by globalization as well. Through the supply chain system, end products are actually an amalgam of various products from different states. Economic interactions, including trading are also no longer confined to one or two countries, they now encompass trading blocs which include as much as 10 to 50 countries. We are now moving towards a world in which national economic are merging into an independent global economic system, commonly referred to as globalization. This thesis shall be discussed based on its specific applications, assessing its merits and pertinent details in the economic context. This paper shall first discuss the concept of a globalized economy. Then it shall establish the causes and the manifestations of such a globalized economy. Finally, it shall assess the impact of globalization to the general global setting Body After the Second World War, the US started to slowly emerge as a strong and powerful country. In its desire to implement liberal policies in the economic trading activities, it actively encouraged other countries to open up their markets. With the Allied powers’ victory after WWII, the stage was set for the implementation of globalization. Globalization refers to the “intensification of worldwide social relations which link distal localities in such a way that local happenings are shaped by events occurring miles away and vice versa” (Giddens, 1987, as cited by Suryadinata, 2000, p. 216). In terms of the economy, globalization means significant changes in the global economic trade and activity in a more open and integrated economic setting. In recent years, there has been a noticeable increase in worldwide trading, in terms of goods and services, as well as currencies, technologies, information, and even people (Crafts, 2000, 5). The impact of globalization can be seen in the amount of global financial exchanges which represent more than $1.2 trillion pouring through the New York markets on a daily basis; it can also be seen in the amount of stock market exchanges which represent more than the amount represented above (Intriligator, 2003, p. 1). Globalization represents more involved relations in the global economy whereby the markets are globally interconnected – leading to a higher flow of trade and resources (Hirst and Thompson, 2002, p. 249). There are various sources of globalization which have emerged in recent years. These sources have mostly been ushered in by the variety of technological advancements which have been introduced into market. These advancements have managed to decrease costs of transport and of communication, mostly because of the widespread use of computers and the internet (Giddens, 2000, p. 12). The cheaper cost of these technologies has also ensured that the technologies are available to as many people as possible. What used to cost businessmen and customers thousands of dollars now represents a more affordable prize. In effect, globalization has been pushed forward in a major way by computers and the internet, making the process of communication and trade more open and easier to support. Trade liberalization has made the globalized economy an improved possibility. These trade liberalization practices have caused the reduction of tariff rates and trade protective measures – ensuring a more liberal trading system (Intriligator, 2003, p. 2). Trade liberalization was first seen with the ratification of the General Agreement on Tariffs and Trade (GATT), and later the World Trade Organization (WTO). The terms of this agreement encompassed many states who had to reduce their tariff rates and lower their protective barriers on the exchange of international goods and services. Globalization also comes from basic organization changes with these organizations now reaching a wider market, mostly due to new technologies and to the significant coverage of business owners and managers via new communication channels (Giddens, 2000, p. 11). In effect, businesses which used to have a limited coverage now had an improved range in terms of international markets, manufacturing, and production plants. These international corporations have now relied heavily on their subsidiaries in order to be globally competitive. As a result, most global businesses now operate under multinational corporations with the competition not based on geographical territories, but on economic competition and world market shares (Intriligator, 2003, p. 2). Cultural changes are also considered part of globalization due to the widespread transmission and experience of popular culture, English-language usage, and shared experiences in food and art. These cultural changes exemplify how the world has gotten smaller and how information access is no longer the province of developed countries like the US (Berger, 2002, p. 19). What the US and other developed nations can access, are now also accessible to other countries, and vice versa. And as these countries have culturally come together, they also have managed to include economic and trade relations in their interactions. As a result, the market has now become more diverse in terms of products, marketing all resources from various countries openly (Prakash and Hart, 2000, p. 182). For which reason, it is now commonplace to see what used to be exclusive Asian or American products readily available in one setting and in any country. After considering the above applications and causes of globalization, it is also important to note the impact of globalization on national economies. In general, globalization has had a significant impact on the economy of most countries. It impacts on the production of goods and other services; and it also impacts on impacts on labor and raw materials (Intriligator, 2003, p. 4). It is also known to impact on technology, its transfer, as well as its widespread use. It affects the competitive process of businesses, as well as investments and investors. Most countries and citizens of the world experience both the benefits and the negative impact of globalization. Much of the benefit actually comes from the competitive process of doing business (Gerber, 2009, p. 4). Competition is one of the primary determinants of cost. In the global setting, the competition is fierce and widespread. For which reason, many businesses do not look upon competition with favor. Nevertheless, the impact of globalization on competition is undeniable as it increases production and efficiency. Competition can also lead to division of labor as well as specialization in the products and services offered (Gerber, 2009, p. 5). Such specialization means a greater quality, as well as better choices or options in services and products. Such specialized products and services have also become widely available, not just in the local scene, but in the global market as well. One is actually hard put to find any product with just one brand or source in the market today as the globalized market has allowed the more widespread availability of most products to most people in the world (Abu-Laban and Gabriel, 2002, p. 173). Competition is an important part of the globalized economy because it contributes to the lower costs and prices of commodities. Such lower costs help usher in growth in the economy (Baily, et.al., 2005, p. 4). Moreover, with a greater market covered, corporations can adequately expand their trading market, implying the need to increase production and output to fill in higher demands. Inasmuch as globalization has a positive impact on our economy, its negative effects are also clearly apparent and felt by smaller and underdeveloped nations. For one, the impact of environmental changes, most especially global warming are significant issues in society (Giddens, 2003, p. 8). The current and the long-term effect of these changes are significantly affected by the growing connectedness between the different countries of the world. While some aspects of globalization are not new, the current applications of globalization are a new and significant addition to the globalized economy. “Today, the picture is very different: national boundaries no longer act as ‘watertight’ containers of the production process” (Giddens, 2003, p. 8). In effect, people today are more aware and more involved in the global economy, as compared to the generations which have preceded us. Not many economic activities are insulated from outside competition, whereas traditionally, physical distance has always been considered built-in protective trades safeguard (Intriligator, 2003, p. 4). As a result, many products being introduced are no longer focused on reaching local markets; they are now geared towards the larger, regional setting. Manifestations of globalization can be seen in various practices in the corporate world. First, cultural sensitivity and education now seems to be an important part of the corporate and global world (Speer, 2010, p. 1). Many corporations now see the importance of implementing cultural training for their staff with these changes seen if “corporate culture and decision-making processes are to incorporate different local approaches and management styles, and if firms are to attract the best of world-wide talent” (Czinkota and Ronkainen, 2005, p. 118). Schools and universities have also recognized the need for internationalization through language courses, as well as lessons on diplomacy. The courses offered now have an international flavor which incorporates higher learning and diversity into a complete and comprehensive learning process. Outsourcing is also an important element of the current globalized economy (Suzuki, 2005, p. 4). Even with the internationalization of global corporations, the costs of production and resources would still be significant. As such, in order to remain competitive, corporations have now recognized the need to outsource their labor and resource needs from emerging economies and markets (Czinkota and Ronkainen, 2005, p. 188). In effect, it is now considered commonplace for corporate technical support and other economic activities to be outsourced to countries like India, China, and the Philippines (Engardio and Arndt, 2006). These developments in the current economic setting strongly indicate that we are very much in a globalized economy and will continue to steer our activities in the direction of the global economic setting. Conclusion We are now moving towards a world in which national economic are merging into an independent global economic system, commonly referred to as globalization. The current economic setting is a global one. There are various indicators to support such thesis. Tariff rates for imported goods and services have been decreased for most countries. More interconnections among trading nations have been seen, especially with the less restricted flow of products and services between borders. The internet and computers have contributed to this global market, making the communication lines between corporations, consumers, and closer and faster to connect. Efforts made by corporations to increase their globalization practices are rich with the application of outsourcing, cultural sensitivity and education, as well as multiculturalism practices. These practices emphatically declare the borderless nature of our economic activities. Works Cited Abu-Laban, Y. & Gabriel, C. (2002), Selling diversity: immigration, multiculturalism, employment equity, and globalization, Canada: University of Toronto Press. Baily, M., Farrell, D., Greenberg, E., Henrich, J., Jinko, N., Jolles, M., & Remes, J. (2005), Increasing Global Competition and Labor Productivity: Lessons from the US Automotive Industry, The Federal Reserve Bank of San Francisco, viewed 22 August 2011 from http://www.frbsf.org/economics/conferences/0511/4_IncreasingGlobalCompetition.pdf Berger, P. & Huntington, S. (2002), Many Globalizations: Cultural Diversity in the Contemporary World, New York: Oxford University Press. Crafts, N. 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