Economics and Globalisation Essay
The decline in barriers between the countries for international trade and investment has add all countries interdependent. Globalization offers an opportunity for a business to develop their trade all over the globe. Globalization not only gives an opportunity to the businesses but also to the people by creating more Jobs and giving the national economy an edge by investing on the national resources. By immigration and offspring Jobs globalization has created an impact differently on different parts of the world. For an instance, by off- shoring services or outsourcing Jobs countries like India, Pakistan, Philippines and Sir Lankan.
According to International Monetary Fund “Globalization refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders. The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders. There are also broader cultural, political, and environmental dimensions of globalization. The term ‘globalization’ began to be used more commonly in the sass, reflecting technological advances that made it easier and quicker to complete international transactions?both trade and financial flows. No one can Identify the origin of globalization according to several scholars, humans eave interacted for several years but
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It has an influence all over the world whether it is global economy or the armed forces of the world. The United states of America continues to be called the “superpower” of the globe. The basic components on which a superpower is measured: Military and economy. Britain is believed to be the first superpower of the modern era. However, after the end of world war-II Britain’s reign as a superpower came to an end. The British proved themselves as the greatest global leaders and proved to be capable of global dominance. They had an immense political power and economic stability.
They were one of the first countries to start industrialization and global trade in the modern era. They ruled all over the world because of their great economic strength and global influence. After world war-II they were three global leaders: Britain, Russia and The United states of America. After 1956, Britain was Financially weakened because of the two world wars and the Suez Canal crisis. The United States did not suffer any destruction or losses because of the world wars, which helped them gain the title of the superpower.
The Soviet Union and the united states had a completely opposite economic Ideology. The Soviet Union promoted communism whereas the United States promoted democracy. Both the countries had great global influence, both were the largest economies of that time and had and had the highest defense expenditure in the world. After 1991, when the cold war came to an end USA came out to be the sole superpower of the world. They had the biggest economic, political and cultural dominance all over the world. United States had share of 40. 3% in the world gap output.
According to Hill, Croon and Wisecracker (2015) “In the sass, US firms accounted for 66. 33 per cent of worldwide FAD flows. The United States accumulated a considerable stock of productive assets abroad. The Whole global trade was dominated by the United States in the sass, The US firms had 2/3rd share of the world’s foreign direct investment. The dominance of United states in Foreign Direct investment declined in 1980 because of developing economies now entering into the market. Even after the sass for three and a half decades the United States’ drums were beating louder.
Until 2014 when China Became the largest economy on globe. Why are the Chinese growing so fast? China adopted the Soviet Union’s economic policy (communism). Till 1978 China had a high state control on all productive assets. After 1978 Chinese encouraged rural economy and private enterprises. According to International monetary firm “In an effort to awaken a dormant economic giant, it encouraged the formation of rural state control over some prices, and invested in industrial production and the education of its workforce.
By nearly all accounts, the strategy has worked spectacularly. ” After 1978 the Chinese were on their way to become the largest economy of the world. While before 1978 china Just saw annual economic growth of just 6 per cent, whereas after liberalizing the annual economic growth rate increased from 6 percent to 9 percent. In several peak years China also witnessed a double digit economic growth. The Per capita income increased four times more and the world started predicting that the Chinese economy will be largest in next 20 years.
China opened doors for foreign direct investment in the country which became one of the biggest reason for such a huge economic transformation. When in 1978 China witnessing foreign investment was almost negligible, by 1994 it reached a large figure of 100 billion US dollars. China’s economy started booming, their open door policy worked and the annual inflows which were less than 1% 1978 reached an increasing 18% in 1994. The foreign direct investment built factories and brought Jobs in the country.
According to one of the Miff’s research by Huh and Khan (1997) “China’s recent productivity performance is remarkable. By comparison, productivity growth for the Asian tigers hovered around 2 percent, sometimes slightly more, for the 1966-91 period. China’s rate of almost 4 percent simply puts it in a class by itself. ” The question that arises is how did China see such a huge economic success even after having so much government control. Before 1978 15th of the Chinese population were engaged in agriculture by 1994 one out of two were engaged in agriculture.
The post 1978 economic reforms also included the open-door foreign investment policy, which added power in this extraordinary economic transformation. China continued to grow even after the global financial crisis of 2007-08. The GAP growth rate of China in 2009 was 8. 7% while the rest of the world was recovering from the Financial crisis Of 2007-08. According to PWS (PricewaterhouseCoopers) a multinational professional services network company report Yang (2014) “the aggregate purchasing power of the ‘E’ emerging economies – Brazil, China, India, Indonesia, Mexico, Russia and Turkey – will overtake that of the 67 by 2030.
By 201 5, Asia Pacific will have a larger middle class than Europe and North America combined. And the global emerging middle class will represent an annual market of some IIS$6 trillion by 2021. Such trends and tipping-points mean the traditional way of classifying economies is becoming increasingly irrelevant. ” China has already overtaken USA in 2014 becoming the largest economy. It is projected that China will over take the USA in terms of Market exchange rate. Perspectives of Globalization The growth is expected to continue till 2030.
The social effects because of Globalization show a concern after the 2007-08 financial crisis. Environmentalists on Globalization. According to according to an COED reports. After Chinese economic reforms of 1978 there were a lot of environmental effects in the country after high FAD in china a shifts of maximum productions of foreign companies in the country. If we think with the mindset of an environmentalist globalization is Just a way of making money for the richer countries or the countries who want to be rich where indirectly globalization forgets about the environment.
According to IFS (International Federation of Social workers) website (2012) “Large groups of the population in more ordinate circumstances are affected by Multiple Chemical Sensitivity (MASC.) due to exposure to chemicals found in personal care products, building material, processed food, pharmaceuticals and plastics. ” Global environment is changing because of globalization, the main focus of IFS nowadays is the environment and sustainable development.
Sustainable development and globalization must go hand in hand but unfortunately due to globalization we are getting more and more exposed to environmental degradation, we are witnessing more and more water level rise with the negative impacts on the environment, imagine a country like New Zealand which s completely surrounded by water what effects it will cost on us? Consumers on globalization The world has witnessed a tremendous speed in globalization which has given both bitter and sweet tastes to the consumers. According to economist Salmon Sari (August. , 201 5) “From apparels manufactured in countries like Vietnam and Bangladesh to smartness and televisions manufactured in China have become increasingly available to the population of the developed countries. The manufacture of these goods and services in low-wage developing countries reduce the manufacturing costs and, ultimately, the prices of these goods and services to their nonusers in developed countries. As the consumers pay relatively low prices for these goods and services, their real income may have increased. The consumers of the developed nations have gained a lot due to low prices of products which have raised their standards of living at the same time the developing countries are enjoying the benefits of locally manufactured foreign products. Workers on Globalization Due to globalization and FAD workers of developing nations have enjoyed a great gain in number of Jobs. Countries like China, India and other developing Asian countries away a positive shift of increment in Jobs, due to heavy FAD and by liberation’s these countries have been able to provide Jobs to their high labor force.
At the same time labor forces the developed nations have witnessed a decline because of the manufacturing and other services moving overseas in search of a cheaper labor force. According to Vaudevillian (2015) “only benefits developing countries with large labor pools but also creates disincentives for rent-seeking forces that exploit labor and suppress free Association and collective bargaining (face) rights in an attempt to maximize economies of scale.
Companies on Globalization opportunities for the companies, the liberal global environment has made international trade easier and outsourcing Jobs easier for the firms, which has increased their market share all over the world. Multinational firms are dominating the global economy, they contribute to 91% of US manufacturing sales. ” The global firms have emerged and come out of their homelands investing in other developing nations and have proved to be successful by cutting the variable and factor cost and increase their profit margins. Not only that they have also achieved and conquered a egger piece of global market share.
In conclusion, even after China has so much government control they look unstoppable and show an enormous growth to be the leaders of the world. By the fall of USA in 2014 when they were recovering from financial crisis China was Just showing progress. China is expected to be a global leader till 2030 with an enormous growth which will create a history with their unique and extraordinary policies. Such a great global market shift is remarkable there is no argument that Just in a decade China will be number one and will have a higher hand in market exchange rate.
The firms of the world who were Just limited to the national market are having a wider business market, leading the global businesses for the global firm owners has become easier. Globalization has not Just changed our economy and government policy but has also changed our lifestyle. The world’s lifestyle has grown more prosperous and today a consumer has more choices to make because of international trade. It has made the countries interdependent on each other and is making this huge globe a small family. The world’s high labor forces who were once Just involved in agriculture have Jobs now after globalization.
Globalization has changed many lives and futures, and is helping us to bridge the gap between the rich and poor. The environmentalist might have negative views on globalization but they are not completely wrong, “sustainable development” and economical development must go hand in hand. Global leaders must keep in mind about our world’s future while we are progressing in our present. It has become necessary to create a coordination between the global trade policies and sustainable development. Globalization mostly showed a positive trend in our graphs and is growing more positively with a quick momentum.