Understanding of the Concept of Globalization - Essay Example

Globalization Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: Globalization What do you understand by the term 'globalization'? What are the benefits and the costs of globalization? What are the key challenges posed by globalization for national governments? How has globalization impacted on the organization in which you work or are most familiar? Introduction The prominence of the concept of globalization has increased in the recent times despite its utility in different fields in the past. This fact is fortified by Manning et. al. (1999) who determined that globalization can be perceived as an idea which is relatively new in social sciences, even though individuals and collectives who work and write about transnational corporations, mass media and international business have been credited for using it for some time. In the contemporary world, it is an apparent fact that the volume of goods and services as well as investments which are being transferred across national borders has greatly escalated. This is evidenced by the fact that approximately foreign exchange transactions which are carried out on daily basis have been approximated to be over $ 1.5 billion. On the other hand, statistics have revealed that goods and services worth approximately $8.9 billion and $2.10 billion respectively are transacted across borders (Hill, 2009). All these can be traced back to the concept of globalization. Nonetheless, it is fundamental to note that despite the centrality of the concept of globalization in influencing all the aforementioned factors, the efforts to gain a comprehensive and all-encompassing definition of this concept have been problematic as a result of its multi-faceted nature, a fact which will be explored in the subsequent section. From the above background, this paper is a profound effort to give an understanding of the concept of globalization. Additionally, it will analyze the benefits and the costs of globalization as well as the key challenges posed by globalization for national governments. Lastly, it will explore how globalization has impacted on one familiar organization. Understand of the term 'globalization' As pre-divulged in the preceding section, the definition of the concept of globalization has been confronted by diverse challenges based on the multi-faceted nature of this term. As a result, different fields of academia focus on specific aspects of globalization based on the particular paradigm of these disciplines. This fact is revealed by Akram et. al. (2011) who determined that so far, there is no robust consensus on a singular definition of globalizations between diverse fields of academia. This is based on the fact that while economics primarily focuses on transfer of funds, goods and services in the entire globe, political science extensively focuses on the role of UNO, GATT and WTO among other international institutions in their definitions. In addition, some other disciplines like sociology and anthropology primarily focuses on the interconnectivity of diverse cultures across the globe. Nonetheless, there are some definitions of globalization which attempt to encompass the various facets of this concept which will be used for the purposes of analysis in this paper. Two of these definition will be used in this paper. Firstly, Guy (2009) defined globalization as a process of structuration through which there has been the reorganization of the world as a whole (the globe, earth, planet) as a single place. This definition points to the process of reorganizing the global structures into an interconnected, single space. On the other hand, The United Nations Educational, Scientific and Cultural Organization (UNESCO), (2001) developed a more encompassing definition of the concept of globalization where they perceived it as a set of economic, political, technological and cultural structures and processes which emanate from the shifting character of production, consumption as well as the trade of goods and assets which form the foundation of the international political economy. Both of the above definitions bring forth what globalization encompasses as well as its global outlook. Despite the differences in the definition of the concept of globalization by various scholars and organizations, it is an apparent fact that this process poses various benefits as well as costs in the contemporary world, some of which will be explored in the following section. Benefits and costs of globalization It is an evident reality that the advent of globalization has made the interaction between different nations, either politically, socio-economically, technologically as well as culturally to be inevitable. This poses diverse benefits as well as costs in different scales, some of which are analyzed below. Benefits Growth of international trade; globalization has had the overall impact of increasing the level of trade between different countries and regional economic blocs. As a result, this impacted on the flow of goods and services from one region to the other, mostly with the liberalization of economies in different countries. Consequently, countries are able to find market for their products at the international level which has an extensive impact on their gross domestic product (GDP). In addition, the increase of international trade has had an impact on the level of specialization and division of labor at the international spectrum. This is whereby different countries are able to specialize on the production of particular goods or services which they are best at. As a result, the quality and volume of goods being produced and channeled to the international chains of trade has tremendously increased which is extensively beneficial to the world economy. This fact is supported by Intrigator (2003) who cited that as a result of increased globalization, the level of specialization and division of labor has intensified which has the implication on increased production which currently in existence, not only at the national level but also on the global spectrum. Free labor movement; it is worth noting that globalization has also had the impact of increasing the level of migration from one region to another. This has been facilitated by enhancement of both transport and communication networks as well as other infrastructure. This has had the impact of increasing the labor movement between one region to the other. This is mutually beneficial to different countries whereby in case a country is experiencing high rates of unemployment, individuals have an opportunity of seeking employment from other regions. Similarly, in case a country is experiencing labor deficit, it has the capacity of acquiring skilled and qualified workforce from other regions and cover this deficit. This has the overall impact of creating labor stability in different countries and regions of the world. Greater competition; globalization plays a central role in increasing the level of competition between different countries. As a result, globalization breaks the monopoly which was key in protecting the local markets. Thus, increased competition has an impact in improving the quality of goods and services as different firms compete to attain and maintain their competitive advantage. In addition, it impacts on the reduction of prices for various products in different countries which is beneficial to the consumers of these products as competing producers make efforts to capture maximum market share (Intrigator, 2003). Increased capital flow; globalization has the benefit of increasing the level of capital flow, mostly to the developing economies. This is key in financing major development projects which impacts on the GDP of these countries as well as tackling other challenges like unemployment. In addition, globalization has made it possible for different countries to attract both short and long-term investment. This investment, mostly by foreign companies has been perceived as being integral to the improvement of the developing countries’ economies. Costs Despite the above explored merits of globalization, there are some inherent costs or demerits which are associated with this process. Tax competition and avoidance; Pettinger (2012) also determined that globalization has the overall demerit of increasing the level of tax avoidance and competition by different multinational companies. This is whereby most of these companies have been able to set up their offices in other countries with low rates of corporation tax, away from their mother countries. T this respect, these multinational companies are able to channel their profits through these established subsidiaries. This scenario insinuates that these companies pay very little taxes in their mother countries where they undertake most of their operations. In this regard, the governments in these countries are usually obliged to increase the taxes on VAT as well as income tax. In addition, it has also been seen that this phenomenon creates unfair competition between the domestic firms who do not use the same tax avoidance schemes and the multinational firms. Labour drain; contrary to the benefit of free labor movement alluded in the preceding section, globalization has also been credited for facilitating the process of ‘brain drain’ mostly from the developing economies. This is whereby these countries are not able to retain their best skilled workers who are often attracted to the higher wages in other regions, mostly in the developed countries (Pettinger, 2012). As a result, globalization culminates to a situation whereby some countries are deprived of their most knowledgeable and skilled workforce culminating in labour drain. Free trade harms developing economies; despite the benefits of free trade mentioned in the foregoing section, free trade creates an unequal operating platform between the developed and developing economies. This reality is advanced in the infant industry argument which states that the developing countries usually need protection from the adverse impacts of free trade if they are to develop. In addition, the developing countries have been cited to be harmed by the tariff protection the western countries impose on some industries like agriculture which form the foundation of production and exportation among the developing economies (Pettinger, 2012). Key challenges posed by globalization for national governments Based on the above costs of globalization among others, it is apparent that globalization poses some key challenges to national governments in different countries, some of which are explored in the ensuing analysis. Threats to national security; Paul and Ripsman (2004) pointed to the fact that a growing body of research has argued that globalization has had the overall effect of weakening the national security state. This poses a major challenge to national governments which seek to protect their national borders from external invasion, mostly with the advent of terrorism in the modern world. This is founded on the reality that globalization facilitates easy movement of people across national borders and this has made most nations to be vulnerable to external attacks. As a matter of fact, advances in transport and communication attributed to increased globalization means that individuals or agencies planning to execute an attack on a certain state can now conveniently coordinate their operations in and out the target states with limited inconveniences being experienced. As a result, national governments are confronted by the challenge of securing their national borders in major points of entry to the country, for instance, airports aimed at deterring the entry of the individuals and collectives planning to execute an attack on the country. This elevates the budgets allocated to these operations which places a major challenge on most national governments around the world. Interference on domestic policies; with the increased role of the international agencies like the United Nations, International Monetary Fund and World Bank among other institutions in the new era of globalization, these bodies poses major challenges to national governments. This is in terms of formulation and implementation of domestic policies aimed at assisting the local citizens. This is mostly epitomized whereby in case a certain national government lends money from the World Bank, this debts often have some ‘strings attached’ and the lending body often has a say in determining how the money is used in disregard of the needs at the local level. In this case, the development programmes being planned by the national government might not be comprehensively implemented based on the conditions being placed by these international lending bodies. The impacts of international law: In this case, globalization has increased the prominence of international treaties, for instance, the Rome statute underpinning the operations of the International Criminal Court (ICC). As a result, this reality can pose major challenges to a national government based on the virtual of being a signatory to these treaties. This is best epitomized in Sudan whereby based on the non-compliance of the president (head of the national government) to summons by the ICC, the country has been subjected to diverse sanctions from agencies like the European Union which impacts on the stability of this country and poses a major challenge to the national government. Impacts of globalization on an organization; Qantas Airlines Qantas Airways Limited which was founded in 1920 is a major player in the Australian airline industry. Globalization has posed extensive impacts on this company, both positively and negatively. In the positive perspective, globalization has been core to the expansion efforts of this company. As a result of increased market liberalization, this company has been able to expand outside the borders of Australia. This has seen the company making significant entry to markets in Europe and Asia among other regions. The effects of increased globalization have even seen this company making strategic alliances with international airlines like Emirates which has boosted its global presence efforts (Waqas, 2013). In addition, globalization which is characterized by technological advances has seen the company extend its presence in modern technological platforms. This is best epitomized in its advertisement efforts whereby modern promotion platforms like social media, blogs, YouTube among others have formed a key component of the airline’s advertisement efforts. This has elevated the level of popularity of Qantas in the global level, something which could not have been achieved through traditional promotional methods like the print media which had limited audience primarily in Australia. However, globalization has also been key in elevating the level of competition in the domestic airline market in Australia. This is mostly with the entry of foreign airlines which seek to capture some market share previously dominated by Qantas airways. In this regard, globalization has increased the market dynamics in Australia which affected not only the market share of Qantas but also its performance in terms of revenue income. Conclusion The above analysis has pointed to the fact that despite the increased popularity of the concept of globalization in the contemporary world, there has been little consensus among scholars in regard to the definition of this term. This review has also showed that there are several benefits of globalization, for instances, growth of international trade, free labor movement, increased capital flow and increased investment among others. However, it has also revealed that globalization has some costs linked to tax competition and avoidance, labor drain as well as free trade harming developing economies. On the other hand, globalization has been revealed to pose major challenges to national governments, mostly related to threats to national security, impacts of international laws as well as interference with domestic policies. Lastly, the paper has explored the impacts of globalization on Qantas airways in regard to increased expansion, diversification of promotional efforts as well as heightened domestic competition. References Akram, M. et. al. (2011). Globalization and its Impacts on the World Economic Development. International Journal of Business and Social Science, 2(23): 291-297. Guy, J.S. (2009). What is Global and What is Local? A Theoretical Discussion Around Globalization. Parsons journal for information mapping, 1(2): 1-16. Hill, C. W. (2009). International Business. New York: McGraw-Hill. Intriligator, M.D. (2003). Globalization of the world economy: Potential benefits and costs and a net assessment. Policy Brief, Santa Monica: Milken Institute. Manning, S., et. al. (1999). Special issue on globalization. Journal of World-Systems Research, 5(2): 137-456. Paul, T.V. & Ripsman, N.M. (2004). Under Pressure? Globalization and the National Security State. Millennium: Journal of International Studies, 33 (2): 355-380. Pettinger, T. (2012). Costs and Benefits of Globalization. Retrieved March 26th, 2013 from http://www.economicshelp.org/blog/81/trade/costs-and-benefits-of-globalisation/ UNESCO. (2001). Globalization and Governance. Retrieved March 26th, 2013 from http://www.unesco.org/most/most_ar_part1c.pdf Waqas, M. (2013). Emirates, Qantas alliance gets green signal. Retrieved March 26th, 2013 from http://arabiangazette.com/emirates-qantas-alliance-green-signal/ Read More