Globalization of the Finance Industry - Essay Example

Is Globalization of the Finance Industry a good thing and how has Information Technology influenced Globalization? Globalization has impacted different spheres of life. It has brought changes to the way people live as well as earn their livelihood. It has altered their economic conditions on a consistent basis and made a direct connection with the use of Information Technology. IT has played a pivotal role at making life easier for different people across the globe. Hence it comes as no surprise here that the global financial industry has benefited as a result of these advancements and improvements. Globalization within the financial tenets is indeed a safe bet since the customers and stakeholders are coming in close connection and linkage with each other and there is more room for getting in touch with one another, thus enhancing the chances of working in unison and earning multiple times over and over. However the drawbacks are also apparent in such an undertaking but from a global perspective these seem to take a back seat when there is a comparison of the benefits with the disadvantages, the former ruling roost over the latter in this case. For the understanding related with the discussion at hand, the focus will be on making a clear cut basis for the role of globalization in the finance industry and the manner in which IT has played a key role at speeding up things when it comes to working within the global domains. Globalization in the coming times will leave a lasting impression in the different spheres of life than is present at the moment. In an economic zone, globalization plays a significant role at increasing trade on an international front which as compared to the global economy, is much faster and ahead of its time. Furthermore, we can predict an increase in the flow of capital that has been coming from the global regimes which might include for the foreign direct investment as being one part of it. Then there are the agreements which are signed on a global scale that eventually lead to world bodies like the World Trade Organization (WTO) and others. Global financial systems also come to light as their developmental work gets thumbs up. International transactions speed up as the world bodies like WTO, WIPO, IMF and the like play their role in a more coherent and active manner. Economic practices like global sourcing or outsourcing as we know of it, off-shoring and others increase courtesy the multinational concerns. (Berberoglu, 2005) Since this discussion is also on understanding what the future holds for the globalization regimes in terms of the Information Technology’s undertakings, there is a need to comprehend the fact that when distances are minimized between regions and people as such, this could create a number of other problems which the mankind does not foresee at the beginning. In fact it calls the same contract of human beings as a blessing since things are done in a quick period of time and there are less communicative loopholes in reaching far-off destinations. What they forget is the fact that it leaves a hole in the real-life scenarios of people. The people are more prone to seeing the benefits of this globalization drive and forget the social and collective aspect that globalization has taken away from us. There is less interaction of people on a one-to-one level which is of a physical stance and more technological handshakes are making the rounds, coming directly under the globalization’s advantages. (Kohler, 2003) The world is forgetting its roots and this is one aspect that surely does not go down well with the purists – the people who know the value of life and the social interactions which have benefited the care and concern aspect for humanity. Thus proper attention is a buzzword under these regimes and the anti-globalization leaders are somewhat correct in their stance which is aimed at society mingling within its own self and relying less on the benefits that machines bring to the human beings. As far as the technologically advanced infrastructures are concerned, what globalization does is to improve these and supports the same in the development of the telecommunications aspects as well as a host of other areas, not only on a regional scale but throughout the world. There is immense possibility of trans-border data being transferred whereas technologies like Internet, submarine fiber optic wires and cables, wireless telephony devices and communication satellites are being made use of. The dependence on the technological innovations is also something that can be discussed at stretch. Globalization has offered to the society a number of drawbacks as well. This means that globalization is not something that can be looked upon in entirety but has to be centered on the minuses that it offers as well. (Akande, 2002) For starters, they bring new and fresh challenges to the local markets as they have to meet the expectations as laid down by the reforms and works of the global companies and industrial units. For others, this may mean that they have to let go of their traditional norms and cultural values so that they can adjust in accordance with the globalization’s developments. The effect of this regime thus brings in an atmosphere of finding out the foreign entities more than their own personal selves which is indeed a drawback to say the very least. There is decimation in the ranks of the local cultures as is apparent in the case of third world countries where influence of West is pretty clear for one and all to see. Similarly, within Africa this has been the norms for decades now. (Vanin, 2005) There are a number of companies worldwide which are playing significant roles at boosting the financial interactions with the top most companies and multinational organizations of the world and Goldman Sachs stands out as one of the most acclaimed and renowned ones. On that note, Goldman Sachs Inc. is an example that comes within this discussion since it has a link with the topic at hand. It is indeed one of the largest global investment banks which was established in 1869. The basic dogma on which Goldman Sachs was founded was to act as a financial advisor for the biggest companies in the world as well as the governments of financially sound economies. Also it takes care of the wealthiest families that are present in the world. Goldman Sachs has the duty to offer advisory services for mergers and acquisitions, underwriting undertakings, engagements in proprietary trading, investments in private equity dealings, etc. Thus the role of Goldman Sachs is pertinent within the global financial transfers and money in short. There is a secretive link of Goldman Sachs within the world’s financial markets and for this reason it is remarked as Wallstreet’s secret society. The former employees of Goldman Sachs head the World Bank, New York Stock Exchange, look after the White House affairs and the US Treasury Department as well as CitiGroup and Merill Lynch. It has made a huge name for itself in the world of finance over a period of time and there are no parallels on this front all said and done. (Kay, 1995) Thus globalization has played a pivotal role at making sure that Goldman Sachs as a company remains in touch with its dedicated clients on a consistent basis and there are no shortcomings on any count whatsoever. Also the roles spelled out by Goldman Sachs are of essence since this form as the decisional basis for the biggest companies of the world and the advisory facets that are looked after by Goldman Sachs are also something to write home about. In all essence, the commercialization of culture is one significant thing that comes to mind under this discussion. This has an impact on people’s thinking, their values, their habits and behaviors. In fact the commercialization of culture makes one thing for sure; it keeps the local culture in cold storage and tries to show off the innate qualities, whether there or not in reality, to its adopters. No matter how much globalization boosts the world economy, it provides as a hindrance point for the local area economies since there is a lot of liberalization that happens in the global domain. International trade barriers start becoming easy targets for the global regimes and thus the individual governments face one problem or the other due to the very same. This is also a fact that profits are poured in left, right and center but then this holds true for only the multinationals and large conglomerates in the real sense of the word. (Lerch, 2005) Some anti-globalization bodies also suggest that globalization gives rise to capitalism and thus should be banned from the face of the earth. They believe that this form of movement is against the poor and it exploits upon their necessities and gets the best work done out of them for the cheapest possible money. Goldman Sachs has received positive press coverage of late since its corporate social responsibility measures are apparent in front of one and all and this is a measure that has been making all the right moves for Goldman Sachs in the long run. Also Goldman Sachs’ measures in the wake of the changing global climate initiatives have given it much acclaim, a fact that is openly discussed by one and all. One should believe that companies of Goldman Sachs’ stature need to resolve their disputes when it comes to gathering positive word of mouth for such campaigns and undertakings that look to solve the problems related with mother earth and more than that humanity in general. Also Goldman Sachs has been on the forefront of promoting youth education at all relevant quarters of the globe which is another feather in its cap and one that has raised its standing manifold times. For these initiatives, Goldman Sachs was voted amongst the top 100 companies of the world in Fortune Magazine’s 100 Best Companies to work for since the list was brought into publication ever since its launch in the year 1998. On the same token, Goldman Sachs has been doing its bit at collecting funds for charity worldwide and this is another shot in the arm for such a huge financial company which is doing all the right things that can win it favors in the long run by the different stakeholders which have placed their trust in Goldman Sachs or would be doing so in the near future. Globalization helps improve cultural exchange across a wide cross section of regions scattered all over the world. It helps in playing its due part in the multiculturalism concept where the individuals within it have easy access to the cultural diversities of one another. The third world is thus at the receiving end of this game nonetheless, as they fathom. One of the major drawbacks that can be taken out from the globalization drive is that it makes use of the poor people and promotes child labor. This means that the third world nations are being made use of and it is because of the already developed nations that this heinous crime is being committed in the first place. What this also means is that the developed countries know about this fact and they somehow or the other try to cover on this aspect so that the exploitation could be maximum and there are no balanced compensations for the people who are giving in their best day in day out. (Aase, 2004) Cheap labor thus accounts for the biggest reason that globalization is successful in these countries and it is without a shadow of a doubt that this can be regarded as the disadvantage of globalization towards the societal fabric within the modern times. All these aspects come directly under the worldwide tenets and need to be looked upon in the wider context of the globe rather than for a singular society so to speak. Similar controversies were also faced by Goldman Sachs when it was accused in 2007 of masterminding an insider trading scheme. This was on the part of a former associate of Goldman Sachs who pleaded guilty to grabbing $6.7 million and thus putting the whole financial basis of Goldman Sachs at peril. (Spiro, 1999) These kinds of accusations and controversies usually come part and parcel with such gigantic undertakings that are had by companies of Goldman Sachs’ stature. It is with an effective proactive approach, helped duly by the public relations tenets of Goldman Sachs that could get it out of hot waters under all circumstances, today as well as in the future. In the year 2005, there was a conflict of interest situation faced by Goldman Sachs when one of its former executives was linked with merger talks of New York Stock Exchange and Archipelago. This former executive was heading the New York Stock Exchange at the time and thus the hue and cry was a result of such initiatives that were being considered. Moving on, the role of IT towards the globalization basis is something to ponder upon in detail. It is with the inventions and innovations that have taken place within science and technology that globalization have been able to make its mark in the world of present times. If there were no computers and business machines today it would have been very easy to comprehend the fact that there would have been no global outsourcing mechanisms in place and hence no financial interactions in the first place as well. The global transfer of wealth is thus coming to a new shape and structure since the world is shrinking with each passing day and different markets are being explored, thanks to globalization and its different attachments. More than anything else, it is the will of the people to be successful at all fronts that has boosted the whole philosophy related with globalization. Also the businesses and more so the financial centers and hubs have started to realize their hidden potential and hence created bridges between different companies and markets spanning all over the globe thus opening new avenues for work and tasks nonetheless. Investment banking has come to the fore as has the changing trading regimes with the globalization bit playing a significant role in the whole scheme of things. (Kantor, 2001) There is a need to comprehend the fact that when distances are minimized between regions and people as such, this could create a number of other problems which the mankind does not foresee at the beginning. In fact it calls the same contract of human beings as a blessing since things are done in a quick period of time and there are less communicative loopholes in reaching far-off destinations. What they forget is the fact that it leaves a hole in the real-life scenarios of people. The people are more prone to seeing the benefits of this globalization drive and forget the social and collective aspect that globalization has taken away from us. There is less interaction of people on a one-to-one level which is of a physical stance and more technological handshakes are making the rounds, coming directly under the globalization’s advantages. Bibliography AASE, Sara. (2004). Is Globalization a Powerful Force for Good or a Means of Exploitation? New World Order UMN News AKANDE, Wole. (2002). The Drawbacks of Cultural Globalization. Global Policy Forum BERBEROGLU, Berch. (2005). Globalization and Change; The Transformation of Global Capitalism. Lexington Books DUNNING, John. (2003). Making Globalization Good: The Moral Challenges of Global Capitalism. Oxford University Press KANTOR, Shira. (2001). Renowned Author Receives Degree, Criticism at U. Minnesota Daily KAY, John. (1995). Foundations of Corporate Success: How Business Strategies Add Value. Oxford University Press KOHLER, Horst. (2003). The Challenges of Globalization and the Role of the IMF. International Monetary Fund LERCH, Marika. (2005). Challenges of Globalization: New Trends in International Politics and Society. Transaction Publishers SPIRO, Leah Nathans. (1999). Goldman Sachs: How Pubic is this IPO? BusinessWeek Online VANIN, Cristina. (2005). Real Costs of Globalization. Catholic New Times Word Count: 2,531 Read More