Question

What dangers do you see from increasing globalisation in the world economy? Your answers should be well justified, use economic terminology, and consider both pros and cons of the issues at hand.

Answer 1

Globalization has led to increases in standards of living around the world, but not all of its effects are positive for everyone. Globalization is the connection of different parts of the world.In economics, globalization can be defined as the process in which businesses, organizations, and countries begin operating on an international scale. Globalization is most often used in an economic context, but it also affects and is affected by politics and culture. In general, globalization has been shown to increase the standard of living in developing countries, but some analysts warn that globalization can have a negative effect on local or emerging economies and individual workers.

Globalization is not new. Since the start of civilization, people have traded goods with their neighbors. As cultures advanced, they were able to travel farther afield to trade their own goods for desirable products found elsewhere. The Silk Road, an ancient network of trade routes used between Europe, North Africa, East Africa, Central Asia, South Asia, and the Far East, is an example of early globalization. For more than 1,500 years, Europeans traded glass and manufactured goods for Chinese silk and spices, contributing to a global economy in which both Europe and Asia became accustomed to goods from far away.The Triangular Trade network in which ships carried manufactured goods from Europe to Africa, enslaved Africans to the Americas, and sent raw materials back to Europe is another example of globalization. The resulting spread of slavery demonstrates that globalization can hurt people just as easily as it can connect people.

Technological Disruptions:-

In addition to economic globalization, technological progress is also changing the scarcities in an economy. At present, technological progress primarily means an increasing capital intensity of production. In highly developed economies, the demand for labour is therefore declining. Low-skilled workers in particular can then be affected by unemployment and loss of income. This in turn leads to social tensions with the economic effects already mentioned.

Increase in Social Instabilities:-

Economic globalization is increasing GDP in all participating countries. At the same time, however, it is also intensifying the shortages in all national economies. This has an impact on income distribution. Globalisation therefore has negative income effects for certain people and regions in the countries involved. This can lead to growing social tensions that have a negative impact on economic development. Social tensions can also lead to increasing populism. And this populism in turn promotes protectionism with the negative effects on global economic development already described.  

Escalation of Geopolitical Conflicts:-

There are currently numerous geopolitical conflicts: Armenia and Azerbaijan , France and Turkey , North Korea, Afghanistan, U.S.-Saudi-Iran rivalry, Syria, Ukraine, Venezuela – the list can be extended at will. Even the fear that one of these conflicts could escalate is unsettling investors. However, investments are the prerequisite for economic growth. Should geopolitical conflict develop into a cross-border military conflict, this would result in an economic slump in all countries involved. Added to this would be negative effects on the entire global economy.Regardless of the downsides, globalization is here to stay. The result is a smaller, more connected world. Socially, globalization has facilitated the exchange of ideas and cultures, contributing to a world view in which people are more open and tolerant of one another.