Globalization In The Markets And The Effects
The process through which different economies, cultures and societies have been merged through developments in communication technology and methods of trading is referred to as globalization. Thus trade involves trade, capital movement, and spread of technology and movement of people (Rama, 2003). The phenomenon of merging markets of different nations to create a large global market is referred to as globalization of markets. This involves integration of trading and investment, movement of capital and people and the advancement of technology among different economies to create international economy (Das, 2010).
Through globalization barriers and borders that bar movement of labor, capital, goods and services seem to be drastically reduced. Globalization has been possible mainly due to advanced technology which has cut down costs of doing business internationally. Through globalization tariffs have been removed to create the famous free trade zones (Das, 2010), cost of transport have also been cut down, little or no capital controls by different economies and subsidies are still in place, and it has seen the implementation of common intellectual property laws.
The uncontrolled capital movement from developed countries to developing nations has seen some countries grow drastically while other economies have collapsed. Consequently, the benefits of globalization and its
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The entry of foreign firms in domestic markets of emerging economies has seen domestic firms upgrade the way they do business and improve the quality of their products. Thus completion has resulted in improved quality of products in an effort to increase consumer base and hence increase productivity (Rama, 2003). This has seen the relative quality of products increase from the previous one. This has also seen an increased efficiency in the process of production due to innovation encouraged by competition.
The decreased constraints on movement of goods and services have resulted in increased global production and accessibility to many products by consumers. This has given consumers a wide range of products to choose from and has also enhanced competition (Beyeler, 2003). Thus globalization has encouraged and enhanced industrialization. Furthermore segmentation of the market is enhanced by globalization which brings with it large economies of scales. This has resulted in reduction of prices of commodities. Globalization has also encouraged capital movement from developed nations to the developing countries.
This has seen many developing countries access credit for development. This has in turn encouraged rapid economic growths in many countries (Stiglitz, 2004). Globalization encourages interaction of people with different cultural backgrounds. This is commendable as it helps build understanding among different people and help them appreciate each other’s culture. This is vital in building global peace (Beyeler, 2003). However, this competition has a downside of it in that many people are losing their employment to machines which are considered to be more efficient that people.
Due to increasing unemployment, there is surplus cheap labor and this phenomenon is phasing unionized labor out in United States of America. On the other hand, the more skilled employees are migrating from developing countries to developed countries which have good terms (Stiglitz, 2004). Thus globalization is encouraging brain drain. Furthermore, globalization is enhancing overexploitation of poor workers who are forced to work for long hours for a meager salary. Global industrialization has had a negative effect on smaller industries in developing countries which have little competitive edge in the global market.
Furthermore, poorer countries depend on export of agricultural products which earn less foreign income due to subsidies which are offered to famers in developed countries (Rama, 2003). This promotes imbalances in economic prosperity among nations. This has resulted in their collapse. Capital flows to developing countries which have no good financial structures has been associated with the collapse of Asian economies in the 1990s and the financial crises which rocked world economies between 2007 and 2010.
Thus the liberalization of capital movement without financial structures to check these movements has been detrimental to some economies (Eckhardt & Mahi, 2004). In addition, since globalization encourages interconnection of different economies, any collapse in the economy of a single country will spread rapidly to other nations and hence could not be controlled easily. For instance exports from Asian countries have dropped as a result of the recent financial recession which has seen a reduction in the consumption by North American and hence less importation from these countries (Das, 2010).
The increased industrialization encouraged by globalization implies there is increased pollution of the environment. This continues to make the earth to be inhabitable. The movement of people, information, goods, capital and services enhanced by globalization has been associated with the increased spread of diseases such as HIV/AIDS, tuberculosis and Chagas disease (Eckhardt & Mahi, 2004). Corporations in developed countries are buying goods and services from foreign countries due to the lower costs of acquiring offshore workers.
This is increasing the gap between the have and have-nots in developed countries such as the United States of America due to diminishing middle class as a result of such outsourcing. The liberalization of movement of goods and people has also seen an increase drug trafficking cases which affects both developed and developing countries (Stiglitz, 2004). The problem is more pronounced in developing countries which have limited resources which would rather be used in combating poverty than be used to fight drug trafficking. Conclusion As seen above there are many benefits that are offered by globalization.
In spite the benefits associated with globalization, there is increasing gap between the rich and the poor. There is continued overexploitation of the poor. Furthermore world economy stability is in danger any time something goes wrong with a single country. Moreover, the globe continues to be polluted as a result of globalization. Thus there is need to have better systems in place to check this shortcomings of globalization if the benefits associated with it are to be realized fully. References Beyeler, M. (2003). Globalization, Europeanization and domestic welfare state forms: New intitutionalist concepts.
Global Social Policy, 3, 13-172 Das, D. (2010). Contours of deepening financial globalization in the emerging market economies. Global Journal of Emerging Market Economies, 2, 45-67 Eckhardt, G. & Mahi, H. (2004). The role of consumer agency in the globalization process in emerging markets. Journal of Macromarketig, 24, 136-146 Stiglitz, J. (2004). Capital-market liberalization, globalization and the IMF. Oxford Review of Economic Policy, 20(1), 57-71. Rama, M. (2003). Globalization and the labor market. World Bank Research Observer, 18(2), 159-186.