What is globalization?
Globalization refers to the trend toward countries joining together economically, through education, society and politics, and viewing themselves not only through their national identity but also as part of the world as a whole.
Types of Globalization
- Economic: Countries that trade with many others and have few trade barriers are economically globalised.
- Social: information and ideas spread between different countries (internet and social networks).
- Political: The amount of political co-operation between countries.
Causes of Globalization
The development of communication technologies such as internet, email and mobile phones have been vital to the growth of globalisation because they help MNCs (multinational corporations) to operate throughout the world. The development of satellite TV channels such as BBC and CNN have also provided worldwide marketing avenues for the concept and products of globalisation.
The development of refrigerated and container transport, bulk shipping and improved air transport have allowed the easy mass movement of goods throughout the world. This assists globalisation.
Free Trade Agreements
MNCs and rich capitalist countries have always promoted global free trade as a way of increasing their own wealth and influence. International organisations such as the World Trade Organisation and the IMF (International Monetary Fund) also promote free trade.
Modern communication technologies allow vast amounts of capital to flow freely and instantly throughout the world. The equivalent of up to $US1.3 trillion is traded each day through international stock exchanges in cities such as NewYork, London andTokyo.
The Growth of MNCs
The rapid growth of big MNCs such as Microsoft, McDonalds and Nike is a cause as well as a consequence of globalisation. The investment of MNCs in farms, mines and factories across the world is a major part of globalisation. Globalisation allows MNCs to produce goods and services and to sell products on a massive scale throughout the world.
The Effects of Globalization
Changed Food Supply
Food supply is no longer tied to the seasons. We can buy food anywhere in the world at any time of the year.
Division of Labour
Because MNCs search for the cheapest locations to manufacture and assemble components, production processes may be moved from developed to developing countries where costs are lower.
Less Job Security
In the global economy jobs are becoming more temporary and insecure. A survey of American workers showed that people now hold 7 to 10 jobs over their working life.
Damage to the Environment
More trade means more transport which uses more fossil fuels and causes pollution. Climate change is a serious threat to our future.
Websites such as YouTube connect people across the planet. As the world becomes more unified, diverse cultures are being ignored. MNCs can create a monoculture as they remove local competition and force local firms to close.
Increase in anti-Globalisation Protests
There is a growing awareness of the negative impacts of globalisation. People have begun to realise that globalisation can be challenged by communities supporting each other in business and society and through public protest and political lobbying.
Advantages of Globalization
- Increased free trade between nations.
- Increased liquidity of capital allowing investors in developed nations to invest in developing nations.
- Corporations have greater flexibility to operate across borders.
- Global mass media ties the world together
- Increased flow of communications allows vital information to be shared between individuals and corporations around the world
- Greater ease and speed of transportation for goods and people
- Reduction of likelihood of war between developed nations
- Increases in environmental protection in developed nations.
Disadvantages of Globalization
- Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor.
- Increased likelihood of economic disruptions in one nation effecting all nations
- Money problems can easily be spread.
- The mix of cultures can lead to loss of national identity.
- Small companies have to go out of business because they can’t compete with the big international companies.
- Gap between the poor and the rich increases.
- Greater risk of diseases being transported unintentionally between nations
Globalization does have problems and negative effects, but it is not going to disappear. We need to learn how to reap its benefits, and minimize its costs. To do that, we must understand its impacts, work to remedy the problems, work to spread the benefits as widely as possible.