The Rapid Growth of Globalization - Essay Example

Globalization Any discussion on the relevance of globalization is highly challenging as there have been heated debates over the advantages and disadvantages of this global phenomenon. One can never completely negate globalization as it is highly relevant in the modern world where the rapid growth in technology and information systems has facilitated easy communication, trade relations, technology transfers and various other forms of international relations. No doubt, globalization has enabled crossing of national boundaries and reduced the cultural and geographical divide among world nations. Information sharing and bilateral or strategic ties among world nations have been the two major offshoots of globalization. The world today is rightly termed as a global village where no country can stand in isolation. However, all these positive impacts of globalization do not prevent one from assessing its negative impacts; globalization has also given rise to terrorist upheavals and organized crimes such as sex tourism, mafia and drug-trafficking networks all throughout the world. This paper seeks to explore whether the positive effects of globalization can outweigh its negative impacts. One needs to have thorough understanding of the meaning of globalization before analyzing its positive and negative effects on world nations. Robert P. Clark’s postulates that globalization is “the process by which more and more people come to experience the world as a single place” and that this “transformation requires that we be able to think globally, that is, think about our world as a single, integrated entity” (Clark 2002, p. 1). As the author makes it clear it is high time that everyone assumed the responsibility of a global citizen; as global citizens each one should have the broad mindedness to think globally; no one should be moved by narrow nationalism. Globalization has facilitated free trade, foreign investments and global capital markets and there are many who hold the view that globalization benefit only the industrialized developed nations. However, one needs to admit that the most striking impact of globalization is that the world has become an open market where open trade and industrial linkages have become so common and easy. This is very well observed by Prakash S. Sethi when he states that “globalization and the unrestricted flow of capital, goods, and services lead to the creation of wealth and prosperity among all participating nations” (Sethi 2002, p.3). Multinational companies have offered fresh horizons of opportunities to many developing and poor nations to utilize their human resources. However, it is evident that unless equity and social justice are ensured in global relations, global development will turn out to be the monopoly of the powerful nations where power equations dictate terms on global relations. To find solutions for this global disparity in development, equality of opportunities and fair treatment are to be ensured for the poor nations on a global basis and for this there should be constructive changes made for the empowerment of such nations. Expressing their views on the impact of globalization, Eddy Lee and Marco Vivarelli make it clear that “globalization aids economic growth and that economic growth aids poverty reduction” among the developing nations; the authors substantiate their view by emphasizing how fast-globalizing nations like China, India, and Vietnam have successfully crossed the poverty line whereas “many slow globalizers in sub-Saharan Africa have displayed the opposite trend” (Lee and Vivarelli 2006). Thus, it can be concluded that globalization is relevant not only for the developed or powerful nations; it provides an opportunity for the developing nations to unleash its potential resources to accomplish economic development and stability. The rapid growth of globalization have given rise to the emergence of large numbers of international capital markets and it is essential to consider how these have affected the domestic markets of various nations. According to Torre and Schmukler, the increasing use of international capital markets contributes to both positive and negative effects on domestic markets. The authors argue that globalization exerts positive impact on the domestic markets as “the financing obtained by firms and governments in international markets tends to be of longer-term nature than that obtained in domestic markets” and because that “when firms go to international capital markets, they become more transparent, providing domestic investors with better investment opportunities” (Torre & Schmukler 2007, p. 22). However, the international capital markets can adversely affect domestic market trading and liquidity as the trading activity takes place in a foreign land. Similarly, financing in international markets involves a lot of risks for the domestic markets as international crises can destroy domestic markets. There is also the danger of foreign currencies dominating the domestic markets, exposing them to currency risks. However, one should bear in mind that “if countries and companies benefit from access to foreign capital, only a small group of countries and firms are the ones reaping most of the benefits (Torre & Schmukler 2007, p. 22). It can thus be concluded that the rapid increase of international capital markets brought out by globalization has the potential to bring about both positive and negative impacts for the domestic markets and therefore it is imperative that individual nations frame competent policies and strategies to safeguard their domestic markets against any sort of exploitation from international capital markets. It is also worthwhile to analyse how free trade has affected world nations. Proponents of free trade and globalization would like to believe that it is the best path to economic growth especially for developing nations. It is likely that once trade barriers are removed, exports will grow due to its competitiveness in price and in such areas where the country has superior expertise. Similarly, imports in areas where the country is lagging such as infrastructure development will also take place and the nation will be able to bear the cost of the same due to its increased revenues from the higher levels of exports. However, there are too many factors involved that create barriers to free trade between countries. A country whether it is developed or developing needs to have a certain level of technical and scientific capability. Developing countries that open up indiscriminately and quickly to open trade need not necessarily derive any benefits from it unless they have the above capabilities. Language, geographical distance, political affiliations, racial and social cohesiveness and productivity of labour are other issues that stand in the way of benefiting from free trade. It can thus be concluded that minimizing barriers to trade and investment is not a panacea for economic development. Unless other issues are tackled, an open market will fail to attract FDI and increased foreign trade. Globalization has enhanced employment opportunities and it is essential to know how employees of “globalized” firms benefit from labor market outcomes. Daveri, Manasse & Serra purport that “employees of firms subject to foreign competition indeed face more certainty in their earning stream and employment prospects. However, their career is also faster (they are more likely to be promoted) and/or their ability to upgrade their skills is higher (they are more likely to be involved in training programs) than employees of firms shielded from foreign competition” (Daveri, Manasse & Serra 2003, p. 1). Similarly, as globalization has spread to almost all areas of one’s life, one can find conscious efforts from most countries to attract foreign investments. However, Khor warns that “foreign investments can have both positive and negative effects, and a major objective of development policy is to maximize the positive aspects while minimizing the negative aspects, so that on balance there is significant benefit” (Khor 2004, p. 96). For this, the national governments should formulate effective policies to regulate FDI and have policy instruments and options over investment. Finally, globalization has opened wide horizons of knowledge and facilitated intercultural sensitivity for the international community. Online education is an offshoot of globalization whereby the learners get opportunity to communicate, share and contact with people of the rest of the world and develop new ideas and technical skills. To quote Edmundson’s words: “Globalization offers individuals not only unprecedented access to information, particularly through the internet, but also to widen their social circles by interacting with people around the world online. That in turn often leads to offline friendships, concrete scholarly collaboration, and professional development” (Edmundson 2007, p. 97). The large number of the student community who stays and learns overseas offers the best testimony to the growing importance of globalization. In fact, globalization has reduced the bridge between world nations and it has become easier for anyone in any parts of the world to assume the role and responsibility of a global citizen. To conclude, it can be stated that globalization has both positive and negative aspects. However, neither nations nor individuals can keep themselves away from the impact of globalization. It is sad to note that globalization has also contributed to terrorist upheavals and organized crimes such as sex tourism, mafia and drug-trafficking networks all throughout the world. Zakaria (2004) was right when he pointed out that in spite of terrorism the “great engine of globalization has kept moving, rewarding some, punishing others, but always keeping up the pressure by increasing human contact, communication, and competition” (Quoted in Edmundson 2007, p. 95). Therefore, it is not possible for one to run away from the globalization issues; on the other hand, there should be comprehensive efforts to minimise the negative aspects of globalization and to promote its positive sides. References Clark, R.P 2002, Global Awareness: Thinking Systematically about the World, Rowman & Littlefield. Daveri, F., Manasse, P & Serra, D 2003, The twin effects of globalization, World Bank, Development Research Group, Trade. Edmundson, A 2007, Globalized e-learning cultural challenges, Illustrated Edition: Idea Group Inc (IGI). Khor, M 2004, Rethinking globalization, Zed Books. Lee, Eddy & Vivarelli, M 2006, ‘The Social Impact of Globalization in the Developing Countries’, International Labour Review. vol. 145, no.3. Sethi, P. S 2002, ‘Corporate Codes of Conduct and the Success of Globalization’, Ethics & International Affairs, vol. 16, no. 1. Torre, A.D.L & Schmukler, SL 2007, Emerging capital markets and globalization: the Latin American experience, Illustrated Edition: Stanford University Press. Read More