Four Dimensions of Globalization - Term Paper Example

Four Dimensions of Globalization Introduction The concept of globalization can be simply defined as the process through which economies and cultures throughout the world are integrated into a global economy so as to enhance cross border trade, foreign direct investment, sharing technological innovations. As scholars point out, this concept significantly promotes fast cross-border circulation of ideas, languages, and cultural ideologies. Globalization liberalized cross border trade laws and hence nations across the world got free access to foreign markets. Economists claim that World War I & II and their serious implications led to the emergence of globalization because nations believed that unregulated cross border trade would create a better economic environment. This paper will consider all four dimensions of globalization and evaluate whether this concept is overall a positive or negative force. Four dimensions of globalization The four fundamental dimensions of globalization stated by the A.T. Kearney/Foreign Policy Magazine Globalization Index are “economic integration, personal contact, technological connectivity, and political engagement” (qtd in Caselli 36). As mentioned in the introduction, the globalization facilitates liberalized cross border trade and hence national economies would dependent on one another. Economic globalization, a direct byproduct of globalization, promotes interdependence of national economies through increased cross border movement of goods, services, capital, and technology. As Mussa points out, globalization of financial services industry is a key factor leading to the global economic integration. It is observed that globalization greatly promotes personal contact. As globalization necessitates interdependence among nations, businesses, and people, this concept would create a need for people to keep connected. In other words, this process enhances socialization of people which in turn would improve the personal contact. The concept of globalization also improves technological connectivity. It is clear that globalization has increased transactional volume of business organisations and hence firms (particularly MNCs) find it difficult to run their operational activities manually. In addition, increased cross border business activities and high level migration flow augmented the need of high tech communication facilities. Hence, nations began to develop improved technologies to enhance technological connectivity and to reduce manual labor. Finally, in order take full advantages of globalization, national political landscapes across the globe were compelled to maintain good diplomatic relations between them. Evidently, better political engagement played a crucial role in minimizing border conflicts and wars between nations. Positive impacts of globalization In the view of Devetak and Hughes, the process of globalization keeps nations connected through a global network and this system benefits nations around the globe to obtain free access into foreign markets and customers (34). Evidences suggest that globalization aids an organization to reduce its operating costs because this concept allows the organization to choose appropriate foreign market that would provide more potential business conditions such as cheap materials and labor, liberal government policies, and huge group of potential customers. The emergence of globalization led to the removal of cross border trade barriers which in turn enhanced import and export activities. According to the World Trade Report 2008, the average world merchandise increased as a result of globalization and it continues to grow despite the small trade downturn caused by the dotcom crisis in 2001. “For the entire 1950-2007 period, trade expanded on average by 6.2 percent, which is much stronger than in the first wave of globalization from 1850 to 1913” (World Trade Report 2008). Evidently, this situation benefited national governments to acquire huge volume of foreign investment. The formation of a global financial market can be cited as one of the direct benefits of globalization. The global financial market significantly assisted the borrowers to obtain better access to external financing. Many of the economists note that increased volume of national as well as international trade transactions would add to the rapid economic growth of a country. Undoubtedly, a developed economy can improve the living standards of its citizens. Since globalization strengthens national relations, every nation can acquire highly developed technologies and hence they (nations) can enter the next phase of growth. In this way, the process of globalization enhances technological advancement and overall organizational productivity. The global interconnectedness greatly benefits nations to adequately meet their investment needs and thereby manage their capital accumulation process effectively. Another potential benefit of globalization is that this concept greatly increased the cross border migration. Since globalization created abundant employment opportunities internationally, particularly in Europe and America, people across the globe began to migrate to foreign countries where they realized high standard living conditions. Advancements in communication facilities resulted from globalization also played a notable role in boosting the migration flow. Globalization led to the development of telecommunications media which in turn fastened the spread of a global mass culture (European Parliament). Globalization promoted international relations once this concept weakened the ability of nations to control transnational operations and economic activities. Negative impacts of globalization One of the most common argument against globalization is that this concept makes rich richer and poor poorer. Cases of regions like Africa and Latin America justify this argument. According to a study conducted by Bhorat and Westhuizen, the African economy could achieve a growth rate of only 2% between the period 1984 and 1993; this growth rate was not even sufficient to meet the growing population needs. In addition, while evaluating the economic landscape of Latin America, it seems that this region is still under the dominance of western economies. As Bhorat and Westhuizen point out, Latin American countries depend on capital inflows from European countries, because of their external debt is still beyond the limits. Since globalization has eliminated cross border trade barriers, developed economies obtain the opportunity to freely enter the markets of underdeveloped economies. Hence, economically developed nations exploit the resources and manpower of the poorly developed economies and this situation worsens the economic and industrial status of the Third World. Some economists hold the view that the global interconnectedness would adversely affect the world as a whole in times of recessions. They point out that globalization played a crucial role in intensifying the impacts of the 2008-09 global recession. Conclusion From the above discussion, it is clear that the concept of globalization has a range of positive effects whereas it has some negative consequences too. As globalization greatly promotes international trade, this concept creates a range of employment opportunities and this situation in turn would assist countries to improve their unemployment rate. A better employment rate would aid a country to improve its citizens’ annual income and thereby their living standards. Evidences suggest that globalization is a positive force that boosts the growth of developing economies. To illustrate, the rampant economic growth of developing economies like India, China, and Brazil can be attributed to the liberal cross border trade policies under globalisation perspective. From an employer perspective, globalization is very helpful to resolve employee shortage issues as this process made labor globally mobile. Globalization enhanced international business strategic alliances (mergers and acquisitions) because this process facilitated interaction of business houses globally. The emergence of globalization contributed to the formation of industrial relations worldwide; and this situation enhanced the development of a strong global economy. This concept promoted cross border movement of labor and cultures and which in turn led to the creation of culturally diverse workplaces. Management experts indicate that cultural diversity in workplace often creates worksite problems like employee conflicts. Likewise, globalization does not contribute much to the fast development of poor classes of the society. However, considering the effects of all four dimensions of globalization, globalization appears to be a positive force. In simple words, benefits of globalization outweigh its costs. Works Cited Bhorat, Haroon and Westhuizen, Carlene van der. Economic Growth, Poverty and Inequality in South Africa: The First Decade of Democracy. Web 04 Dec 2012 http://dev.absol.co.za/Presidency/docs/reports/15year_review/social/economic_growth.pdf Caselli, Macro. Trying to Measure Globalization: Experiences, critical issues and perspectives. New York: Springer, 2012. Devetak, R and Hughes, CW. The globalisation of political violence: Globalisation’s shadow. Abingdon: Routledge, 2008. European Parliament. Science and Technology Options Assessment. Web 04 Dec 2012 http://www.europarl.europa.eu/stoa/publications/studies/20001301_en.pdf Mussa, Michael. Factors Driving Global Economic Integration. International Monetary Fund. Web 04 Dec 2912 http://www.imf.org/external/np/speeches/2000/082500.htm World Trade Report 2008. Web 04 Dec 2012 http://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2b_e.pdf Read More