The Effect of Glogalization on Economic Remissions - Essay Example

The Effect of Globalization on Economic Remissions Globalization refers to increased global integration of regional economic, cultural, and political systems owing to technological advancement, reduction in trade barriers and competition (Schifferes). Globalization largely has influenced a number of subjects globally ranging from culture, trade, and politics as various countries have continued to embrace new changes that come with free flow of goods, services, technologies, and people. Globalization has turned the world into what scholars refer to as global village. Individuals both artificial and natural have the liberty to traverse borders by various paths ranging from sea, land, and air turning the entire world into a borderless region. In other words, advancement in communication, trade, and transportation has made it possible for people to exchange goods, services, cultural practices, artifacts, languages, religion, and ideas. It is unfortunate that when the term globalization is mention the first thing to ring into individuals’ minds is always economic globalization. Majority of individuals often understand globalization in terms of trade, capital flow, and foreign indirect investments that multinationals are doing to governments and people while ignoring the role of remittance. It is noteworthy that economic globalization, which revolves around economic and financial aspects, has greater influence on the understanding of globalization as aspects of culture, language, politics and religion are viewed as underdogs. In other words, aspects of international trade that only features in operations of international organizations often dominate globalization. Multinational organizations especially from developed countries play a significant role in globalization as they catalyze increased integration of various national economies (Schifferes). International organizations are mostly major investors in various countries in which case they are so much involved with importation of labor in various countries of their operation besides engaging in foreign direct investments and spreading of technology. Because most governments need investments, which would later provide employment for their citizens, they are always motivated to reduce and lower trade barriers such as taxes, tariffs, and quotas to allow capital inflow from multinational firms. Multinational organizations tend to invest heavily in energy, financial and industrial sectors which require large capital inflow. Such investments facilitate further increase in currency trade and level of investments considering that investments in foreign markets are always done in foreign currencies. Globalization has also enabled multinational corporations to set up subsidiaries in low cost production regions globally. For instance the recent harsh economic times, which has seen major companies bankrupt due to inability to meet substantial cost of production has forced major companies to look for other avenues of minimizing costs thus the need to shift plants to low cost production regions. Shifting production subsidiaries have played a significant role in widening global production market as well as increased access to foreign brands at low cost. Globalization has also increased completion between organizations, an aspect that pushes further expansion of company operations to seek for new markets with less competition. As competition intensifies owing to global common market, most companies are forced to, improve productivity levels by utilizing current technological inventions and innovation in order to stay ahead of competition (Schifferes). Such intense competition between companies is often advantageous to the consumers as they enjoy quality products and services at considerably low prices. Migration of individual from one nation, a situation also referred to as cross border mobility is one of the earliest elements of globalization. Cross border mobility is considered as old as human history taking into consideration that as early as 1600’s during the periods of European colonial interest most individuals, especially black Africans were shifted across continents in form of slaves and indenture workers to provide free or cheap labor in plantations, mines and constructions projects. According to Kubursi (2), cross border mobility took a different twist during the periods of industrialization and economic expansion the past two centuries in North America, Europe, and Australia as majority of individuals moved from different regions of the globe to build, ports, railways, road network and work in the new factories in the industrializing countries for wages. Migration has continued to evolve and in the present global economy, migration is an important measurement of globalization. Unfortunately among all the major aspects of economic globalization especially commodities and services, cross border mobility of labor is highly controlled and most countries are coming up with policies to freeze mobility of labor (Kubursi 12). Despite the fact that labor mobility within and between nations is associated with certain concerns such as overcrowding of cities, brain drain from developing countries, and depopulation of remote areas is certainly desirable for economic growth. For instance to the developed countries immigration especially from the developing nation creates a large pool of cheap labor for blue collar jobs thus lower cost of production. Most importantly to the developing countries, labor mobility is a large source of foreign exchange through remittance. It is unfortunate that globalization has ignored the fact that migrations forms a large portion of gross domestic product of developing nations through remittance and instead focuses on free movement of labor across borders. In fact, presently in most developed nation states remittance from immigrant workers abroad forms significant part of the external finance compared to conventional sources of capital such as foreign direct investments and lending (Singer 3). Globalizations influence remittance in a number of ways apart from creating opportunity labor mobility in the sense that it creates a platform of transferring money to the recipients across borders through financial agents such as banks, or Western Union. Singer (6) asserts that money can be transmitted from immigrant workers via check, cash, or credit card. A large pool of money is transferred across continents inform of remittance from immigrant workers especially from the united states, European economies as well as middle East thus the need to incorporate remittance in aspects of globalization (Singer 26). Works cited Kubursi, Atif. The Economics of Migration and Remittances under Globalization. McMaster University Hamilton, 2006. Web. October 4 2011. Singer, David. Migrant Remittances, Financial Globalization, and Exchange Rate Regimes in the Developing World. Massachusetts Institute of Technology, October 2007. Web. October 4, 2011. Schifferes, Steve. Globalisation shakes the world. BBC News, 2007. Web. October 4, 2011. Read More