Question

in which country Globalisation was profitable and in which country unprofitable refers to economic growth ( 2 pages )

Answer 1

Globalisation refers to the interaction and integration among the people, companies and the governments worldwide. It is considered by some as a form of capitalist expansion which entails the integration of local and national economies in to a global unregulated market economy. It is however considered primarily as an economic process of interaction and integration that is associated with social and cultural aspects. Economic globalisation refers to the increased economic integration of national economies across the world through a rapid increase in cross border movement of goods, services, technology and capital. It comprises of the globalisation of production, which refers to the obtainment of goods and services from a particular source from locations around the globe to benefit from differences in cost and quality. It also comprises of globalisation of markets, which is defined as a union of different and separate markets in to a massive global marketplace. Economic globalisation also includes competition, technology, corporations and industries

                                    There is a growing uncertainty now a days as to whether globalisation means more opportunity or more risk. The economic trends behind incidents like the Brexit increases the importance of this question. The Global Economic Reports published however repeatedly refers to that the industrialised economies always make benefits out of globalisation whereas the developing and emerging economies always lag behind. The analytics are based on the Globalisation Index and the growth effects associated with them. If Globalisation index score rises by one point, it will lead to an increase of 0.3 percentage points in the growth rate for real GDP per capita. For example, while a country like Germany was taken in to consideration, the real GDP per capita in 1990’s in Germany was around €21,940. By 2016, it was risen to €30,910 [ie, an increase of €8970]. Now as defined by the globalisation index calculations, the real GDP should have reached only €29,640. The rest of the increase is considered to be a result of increasing globalisation and the benefit the nation was able to achieve based on it. For almost 50 countries analysed by this method, the effect of increased globalisation phenomenon was found on each nation.

                                    The extend of average annual gains was found to be different for each nation. The largest average income gains were found in Switzerland and Japan where they rose by an average of €1900 and €1500 per capita each year. Three reasons were also found out for differences arising from gains in GDP per capita and its relation with increasing globalisation. First, the absolute amount of growth gains brought about as a result of globalisation depends on how high GDP per capita was to begin with. Secondly, the change in globalisation rate also has effects on the same. Finally, the time of gains in the globalisation index also plays a major role.

           

                                    These developments in the recent years shows that slowing or even reversal of global interconnectedness between the countries have a negative impact on the economic growth. The developed industrialised economies always are found to benefit the most from globalisation as the increasing globalisation generated the largest per capita GDP growth for them in absolute terms. Thus it has to be realised that Globalisation has had positive impacts on the economic growth of a nation, contributing to rise in living standards and reduction of poverty across the world. But the impact of globalisation and the profit-loss analysis of it on a nation should not be defined solely by the economic growth of that nation. It could also be changed by the set of complementary policies such as improvements in human capital and the financial system. In fact, globalisation in itself does not increase or decrease the economic growth. Thus the effect of complementary policies should also be analysed while considering the impact of the profit-loss analysis of globalisation trends on a nation.