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Understanding economic globalization - Essay Example

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Economic journals define globalization as a process by which national economies and cultures are integrated into an international economy so as to enhance international trade, direct foreign investment, migration, and technology sharing…
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Understanding economic globalization
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Download file to see previous pages Economic journals define globalization as a process by which national economies and cultures are integrated into an international economy so as to enhance international trade, direct foreign investment, migration, and technology sharing. It is generally argued that the concept of globalization greatly contributes to effective and rapid circulation of ideas, languages, and cultural ideologies since nations have liberalized cross-border trade regulations with intent to enhance foreign investment and cross-border trade for international business expansion.On the contrary, Deepak Nayyar strongly claims that globalisation has not led to a rapid growth and economic convergence in the world. He adds that this process greatly slowed down economic growth, caused the divergence of income levels, and widened the gap between industrialised nations and developing countries. Nayyar’s framework mainly compares the globalisation process of late nineteenth century with that of the twentieth century. Nayyar’s framework Nayyar tells that the term globalisation is used both in a positive and a normative sense, and hence it is a cause for confusion. According to Nayyar (2006), the word globalisation is used in a positive sense to express a process of integration into the global economy whereas it is used in a normative sense to describe a developmental strategy in the context of a rapid integration with the world economy. In the opinion of Nayyar, globalisation can be simply referred to a spread of economic activities across national boundaries. He clearly explains that the phenomenon of globalisation has three economic manifestations including “international trade, international investment, and international finance” (Nayyar, 2006). More precisely, this process increases economic openness, promotes economic interdependence, and strengthens economic integration in the world; and in order to get more clear ideas about the globalisation process, Nayyar describes the terms economic openness, economic interdependence, and economic integration. Although globalisation and resulted economic openness facilitates flows of investment, services, technology, information, and ideas beyond national boundaries; this process cannot liberalise cross-border movement of people (ibid). In addition, Nayyar strongly argues that economic interdependence as a result of globalisation is asymmetrical. He opines that countries in the industrialised world are more interdependent while developing countries are highly dependent on industrialised countries. It also seems that countries in the developing world are less interdependent. A situation of interdependence emerges when the benefits involved in linking and costs involved in delinking are almost same for both partners. In contrast, when the derived benefits and incurred costs are notably different for both partners, it contributes to a situation of interdependence (ibid). By referring to these ideas, he states that globalisation has not much contributed to the economic prosperity of developing and underdeveloped countries. In the view of Nayyar, economic integration straddles national boundaries because importance of borders in economic transactions has been decreased as a result of globalisation related cross border liberalisation. To justify the argument that the globalisation has reduced the pace of economic growth and also caused some adverse effects on the economies, Nayyar points out a sequence of evidences. In order to strengthen his arguments, Nayyar refers to the point that global economy in the late 20th century and early 21st century (globalisation era) was very much similar to that in the late 19th (pre-globalisation era) century in many ways. He asserts that there were no restrictions on the movement of goods, capital, and labour across national boundaries during the early 20th century and hence governmental interventions seldom constrained economic activities. He tells that the popularisation of steamship, the railway, and the ...Download file to see next pagesRead More
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