Pros and Cons of Globalization - Essay Example

Pros and Cons of Globalization Meaning of Globalization One of the most commonly used terms in business (Waters 2001), globalization is generally defined as the substantial increase in the integration of economies of countries around the world, specifically through trade and financial flows, that results from human innovation and technological progress ("Globalization: Threat or Opportunity" 2000). With this phenomenon, trade in various countries has been liberalized and businesses as well as investment funds moved across domestic markets to the international markets ("Investopedia"). 2. Forces and Consequences of Globalization in the Past, Present and FutureAccording to economists, this term has come into common usage since the 1980s in light of the technological advances that have facilitated the convenience and speed of conducting international transactions in terms of trade and financial flows ("Globalization: Threat or Opportunity" 2000).

Globalization has significantly affected the business environment such that the level of interconnectedness or interdependence between different markets has sharply risen. They also believe that the effect globalization has gone beyond the business aspect, since the dramatic increase in international trade and finance has helped establish more profound cultural exchanges that in turn increased the impact of global issues at the local scale (Waters 2001).Historically, globalization resulted in the faster rate of increase in international trade and flow of capital including foreign direct investment in a country.

Furthermore, there is the notable increase in the market share attributed to corporations that have established global presence ("Computer Desktop Encyclopedia" 2005). As globalization progressed, experts also observed that living conditions, as gauged by broader indicators of well-being, have been enhanced in most countries ("Globalization: Threat or Opportunity" 2000). Given these, it is expected that there will be a continuous proliferation in economic practices such as outsourcing by multinational companies and an expansion of the role of international organization, namely the World Trade Organization (WTO) and International Monetary Fund (IMF) that ensure proper conduct of international dealings ("Wikipedia").3. Positive and Negative Side of GlobalizationAdvocates of globalization argue that this phenomenon promotes comparative advantage that leads to more efficient resource in all countries open to global trading and brings about lower prices, higher employment rated and output.

As such, globalization enables developing nations to draw alongside their industrialized counterparts more expeditiously. However, economists perceive that there is a widening income gap between the low-income countries and high-income countries ("Globalization: Threat or Opportunity" 2000). Moreover, some anti-globalization proponents assert that it has imposed credit-based economics that result in unsustainable growth of debt leading to debt crises. This helps explain the economic condition of some Asian and Latin countries that have experienced financial crises in the past and now resort to "bailout" money from the IMF and World Bank subject to clauses relative to implementing fiscal and other economic policies that may not be beneficial to these countries in general (Rodrik 2006).

Apart from this, some studies also show that some free trade agreements have only benefited transnational corporations at the expense of national economies including local workers, farmers and environment ("Globalisation Guide" 2004). 4. Best Course of Action of Government and Business LeadersIn view of the above, it is recommended that the governments and business leaders should ensure that policies with regard to global transactions would not only consider the benefits to be derived by advanced countries and multinational players but also respond to the needs of the poor developing nations (Rodrik 2006).

Moreover, international organizations including the WTO should take into account human rights, labor rights and environmental objectives in other countries aside from economic gains of global industry players ("Globalisation Guide" 2004). In this regard, trade agreements should not be influenced by non-government organizations that consider only their selfish interest rather than the maximization of the returns derived by nations and business entities involved. ReferencesComputer Desktop Encyclopedia. (2005). Computer Language Company Inc.

Globalisation Guide. Available at: http://www.globalisationguide.org/04.html (Accessed: 29 March 2006)Globalization: Threat or Opportunity (2000) International Monetary Fund. Available at: http://www.imf.org/external/np/exr/ib/2000/041200.htm#ll (Accessed: 29 March 2006)Investopedia. Available at: http://www.investopedia.com (Accessed: 29 March 2006)Rodrik, D. (2006). Globalization for Whom, Harvard Magazine. Available at: http://www.harvardmagazine.com/on-line/070280.html (Accessed: 29 March 2006)Waters, M. (2001). Globalization, Routledge Taylor & Francis GroupWikipedia.

Available at: http://www.en.wikipedia.org (Accessed: 29 March 2006)