Question

Do you agree that, despite its flaws, globalisation has served national and global economies well? Discuss, using examples to support your argument.

Answer 1

Globalization is defined as a process that, based on international strategies, aims to expand business operations on a worldwide level, and was precipitated by the facilitation of global communications due to technological advancements, and socioeconomic, political and environmental developments.

Positive impact of Globalization

Comparative Advantage

Globalization had increased the trade between economies through comparative advantage which has resulted in positive impact on economic growth and economic performance.Additionally, there is a strong positive relation between capital flows and their impact on economic growth

Foreign Direct Investments

With Globalization FDI by developed economies have increased and this has resulted in positive economic growth rates and increase of trade for these countries

Diversification of Risk

One of the potential benefits of globalization is to provide opportunities for reducing macroeconomic volatility on output and consumption via diversification of risk.

Economies of Scale

Globalization of product and financial markets refers to an increased economic integration in specialization and economies of scale, which will result in greater trade in financial services through both capital flows and cross-border entry activity.

Some industrialized countries like United Kingdom, Belgium, Denmark, Finland, France, Germany, Japan, Luxembourg, Norway, Sweden, Switzerland, and the United States have benefited a lot from Globalization.

Some examples of Globalization

In the process of globalization, many enterprises embark on a path from Localization to globalization, and McDonald's is just the example that plays an important part in the fast-food business in the world. Now McDonald's is not just a restaurant, but also a cultural symbol, which has an impact on consumers.

Coffee is said to be originally from Ethiopia and consumed in the Arabid region. But due to Globalization it has become an internationally consumed product.

Books, movies, music , news are instantaneously available in all parts of world through internet and use of digital platforms.

Nutela which is relished by almost everyone consists of several different ingredients collected from different countries to make a single product.

Laptops, smartphones, cars, LCD, LED are all products of Globalization. In this present crisis of Covid 19 all these channels have become essential part of communication.

The most common example of globalization might be ebay or amazon. Nowadays flows of goods and services are not only cheap and fast, but reliable and secure. You can order anything you wish from every part of the world.

Satellite television also helps in spreading the cultures globally as the shows of the one country will also be broadcasted in many other countries of the world. Thus will result in Cultural Globalization.

The USA in the past the Big 3; GM, Ford, and Chrysler; all have invested heavily in Mexico for car manufacturing. The point is that there is a low cost of production in Mexico, so these companies manufacture cars in Mexico by investing there and then ship back to the US once it gets manufactured. Following this, they were able to become the price maker.

Hongkong and Shanghai Banking Corporation Limited also known as HSBC founded in the year 1865 is one of the top banks operating in the world. It is holding operation in 85 countries globally with its headquarters located in London.

You can enjoy spicy Indian food while sitting in Europe. At the same time the delicious Italian Pasta and Pizza or can be relished by Asian countries.

Drawbacks

But there is other side of coin. Globalization had certain flaws. Deforestation , Disrupted Ecological Balance are the results of Globalization. Increasing pollution in developed countries are given by Globalization. Australian forests were burning in the past which has resulted in loss of valuable Flora and Fauna . This is because of Globalization. The income inequality between rich and poor is increasing. The Developed nations are exploiting developing nations. Scarcity of natural resources like water is also outcome of Globalization.Spillovers of harmful chemicals and toxic wastes in the sea is another negative affect of Globalization. Terrorism is the biggest disadvantage of Globalization. Development of Nuclear weapons and other deadly weapons have threatened the existence of mankind.

To conclude Globalization have changed our lives by making it more convenient, comfortable, speedy and luxury oriented . But at the same time it has given us deadly pollution, terrorism, growing dissatisfaction , materialistic mindset etc. It is upto us how we make judicious use of Globalization.