Introduction (relevance of the topic and aim of the

Introduction
(relevance of the topic and aim of the writing),

Over the past decades, the world has been transitioning into
a global marketplace. Today financial markets, industry, and politics are all
internationalized. This internationalization has led to an increased transfer
of capital across borders, increased communication throughout the world, an
increased importance of trade in the economy, and an increase in international
trade policies. Globalization has had drastic effects on the economic world and
has created many challenges politically. This essay defines globalization,
gives a brief history, and gives several different perspectives on
globalization. Recommendations for the future will be given, such as what
regulations should be put into place, how the politics should be handled, and
how to prevent globalization from going too far too quickly.

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Define globalisation

Globalisation
is cut into six main aspects; firstly there is international trade and the
creation of the global marketplace. Globalization can be viewed as an enhance
to the amount of international trade.

 

Globalisation refers to the integration of markets in the global economy, leading to the
increased interconnectedness of national economies.  Markets where
globalisation is particularly common include financial
markets, such as capital markets, money and credit markets, and insurance markets, commodity markets, including markets for oil, coffee, tin, and gold,
and product markets, such as markets for motor vehicles and consumer
electronics. The globalisation of sport and entertainment is also a feature of the late 20th and early 21st
centuries.

 

There are many different perspectives on how globalization
has affected trade in day to day business, today. Businesses question whether
or not globalization is positive or negative, especially for developing
nations. Globalization is the increasing integration and interdependence among
countries resulting from the modern flow of people, trade, finance and ideas
from one nation to another. The World Bank, a strong supporter of globalization,
defines it as, “the growing integration of economies and societies around
the world.” (Mukherjee, 2008). Globalization became an increasingly used
term with technological innovations-most significantly the World Wide Web or
Internet- that made financial transactions and recordkeeping of international
shipments quicker and easier. As improved communication networks brought
far-flung businesses together, it also brought different cultures together
expanding the concept of globalization which now intersects the media, ideas,
politics, the arts and other social artefacts across the planet. Globalization
has expanded beyond its economic roots and has proliferated into human rights,
the environment and even national security. Although these new initiatives do not
look similar to the ones we are used to seeing the difference is that today’s
agreements come equipped with their own governance structures. This has led to
an astonishing shift of policy-making prerogatives from individual
nation-states to a host of new, higher level political institutions. This is a
cause for celebration the notion that political institutions have come together
to grow in size, importance and boldness is today’s conventional wisdom.

 

There are three main perspectives on globalization, each
discussing different positives and negatives that are associated with
globalization. The three different perspectives are the neo-classical
(proglobalization) perspective, the Marxist/Socialist (sceptical) perspective,
and the Structuralist perspective (Wetherly and Ottr 2014).

 

Neoclassical/neoliberal views

The first competing view is the Neoclassical/neoliberal
perspective, this view argues that overall history and current economics have
joined together to form a new relationship where nations are uniting both economically
and politically. It’s very essential for countries to come collectively in both
of these aspects in order to be a success in the globalized world. The
neoclassical/neoliberal perspective views that the world economy is controlled
more by the current marketplace than by governments. It is believed that
industry, trading, and the global financial marketplace drives the economy,
with governance having little to no control over the marketplace.  If trade was so essential to expanding
markets, thus allowing increased productivity and greater specialization, it
would be easy to show how international trade would be so beneficial (Adam
Smith). Firstly, it provides a source of external funding that boosts the
amount of money available to fuel trade internally. Additionally, it enables
further expansion of markets on an international scale. An example of this
could be two countries selling two pairs of goods, if one country has an ‘absolute
advantage’ in producing one set of goods and the other country has an absolute
advantage of producing their set of goods, they would each be specialized for
their own country for selling the goods they have. The advantage of having this
is that both countries will benefit from the specialization provided that the
gains from trade are fair. Furthermore, trade and the economic success enables
many types of countries to both expand and the process profit from a huge economic
expansion into markets overseas to be able to acquire cheaper resources.
However, this could be a potential problem as countries that are significantly
better at producing and countries which are more advanced would benefit from
this whereas countries with less productivity and being less advanced wouldn’t simply
because of lack of growth and development and thus making it harder to trade. David
Ricardo, refined smith’s theory by arguing that from two countries if one
country was better than the other at producing both commodities, then that
country will be specialized for that particular produce. For example, Ricardo uses trade between two countries being England and Portugal in produces
of cloth and wine to explain how it assists Portugal to import cloth even if
Portugal can produce cloth with less labour than England. Current economists portray
that England has a comparative advantage in producing cloth. Ricardo states,
“To produce wine in Portugal, it might require only 80 men for one year,
and to produce the cloth in the same country, it might require 90 men for the
same time. Thus it would be advantageous for them to export wine in exchange
for cloth. Though they could make the cloth with the labour of 90 men, she
would import it from a country where it required the labour of 100 men to
produce it, because it would be advantageous to them to employ the capital in
the production of wine, for which she would attain more cloth from England,
than she could produce by diverting a portion of her capital from the
cultivation of vines to the manufacture of cloth.”

 

With the amount of trading going on in the national
marketplace it is almost inevitable to have some sort of global governance
system. Each country and its citizens have different beliefs on how a
government should be developed and how much control it may have. It will most
likely be a long time in the future before governments can come together and
create any type of global system. However, other scholars say that the
dissemination of a “consumerist ideology” is the first step in
breaking down traditional modes of identification. As liberal democracy spreads
the world will develop more universal principles of economic and political
organization. After these things take place a truly global civilization will become
possible (Held. Et al., 1999). Increased communication due to technological
advances has created more of a mass culture, than existed in the past.

Despite this, capitalists argue there is very little
evidence of income inequality (Friedman, 2001). Since globalization has been
rising alongside the increase in accessible/useable technology and convenience
of improved transportation, technology has made it easier for people to
communicate across borders, and has also lead to a decline in the cost of
transportation. The technological revolutions have lead to lower expenses of
transportation. It is now cheaper and more efficient to transport goods from country
to country. Globalized transportation has increased profitability and thus during
the main growth stages of globalization between 1970 and 1993 mobilization
increased nearly fifty percent throughout Europe. It was found that the average
person went from travelling 16.5 km per day per person to 31.5 km per day per
person. This travel generally takes place by automobile with automobile
ownership increasing to an estimated 810 million in 2010, up from 670 million
in 2003. Since the 1970s the flow of goods in Europe has dramatically
increased. The transport of goods by road has increased by 40%,
intercontinental rail shipping has increased by 17%, and waterway shipping has
increased by 12% (Capineri and Leinback, 2004).

 

A decrease in transportation costs has triggered business’
to garner greater profits by factory relocation, concentrating production in
one sector, or in one location, where country inequalities exist (Heshmati,
2003). In addition, the digital revolution has also made globalization
increase. Companies can now transfer files digitally over the internet, and
even over handheld device. This makes it possible to have meetings without
every participant of the meeting being physically present. The deregulation of
the telecom market has led to lower long distance communication costs and the
exchange of information easier than ever before (Mukherjee, 2008).
International businesses can now communicate with others through the ease of
the email, telephone conferences, and videoconferences. It is now much less
expensive for business people to pick of the telephone and ask their colleagues
a quick question about a transaction that they are currently working on. The
increase in telecommunications development had to do with a cause-effect
relationship between technological development and the deregulation of
financial market policies. New technology revealed how inefficient the
financial market regulations were to begin with, and the deregulations of the
financial market regulations lead to an increased investment in telecommunications,
which then lead to increase technological advances (Czaputowicz, 2007). This
increase in communication technology even further decreases the cost of doing
business internationally.

·        
Inward investment by TNCs helps countries by helping
and providing new types of employment through jobs and
different skills for local people.

·        
TNCs (transnational corporations) help
bring wealth and foreign
currency to local economies when they buy local
resources, products and services. The extra money created by this investment
can be spent on education, health and infrastructure.

·        
The sharing of ideas, experiences and
lifestyles of people and cultures. People can experience foods and other
products not previously available in their countries.

·        
Globalisation increases awareness of
events in far-away parts of the world. For example, the UK was quickly made
aware of the 2004 tsunami tidal wave and sent help rapidly in response.

·        
Globalisation may help to make people
more aware of global issues such as deforestation and global
warming – and alert them to the need for sustainable development.

 

Socialist/Marxist views –  is bad

 

The second competing view is the Socialist/Marxist
perspective. They argue that globalization has led to an increase in the
inequalities of countries/nations. Literature has many contradicting viewpoints
on exactly how unequal nations are currently, and how big a factor
globalization is playing in the inequalities. Firstly, Marx was in agreement
with smith that capitalism led to unprecedented growth but he also made the
point that there was a huge flaw. He believed the social system of capitalism
is very unfair, he believed that owners of capital are able to exploit their
advantage of certain access to recourses and some political powers are in the
hands of a few people. The more wealthy nations are continuing to increase their
status of wealth whilst the poorest nations/countries are continuing to remain
poor. It has been established that 20% of the world’s richest population
control 86% of world gross domestic product and 82% of world exports, while the
world’s poorest 20% consume, 1.3% (Herriott and Scott-Jackson, 2002). However,
(Crafts ,2003) predicts that growth rates for countries just beginning to
actively participate in international commerce will grow steadily for those
countries.

 

Low-income countries will not be left out of
globalization due to the increased reduction of trade borders throughout the
world. These types of reforms include creating macroeconomic and fiscal
stability and easing trade regimes (Graham, 2001). These reforms help nations
integrate into the global world more easily and help reduce the inequality
between the U.S. and nations that are already integrated into the global
marketplace. Emerging countries such as India and China have reduced poverty
and has shown an increase in economic growth since they adopted open economic
policies in the 1990’s (Cheng and Mittlehammer, 2008). This proves that with
the right policies developing nations do not have to suffer due to
globalization. It is important to put these policies in place so that more
countries will want to participate in globalization. In
some parts of the world there are no guarantees that the wealth from inward
investment will benefit the local community of the less developed countries.
Often, profits are sent back to the MEDC where the TNCs are based.
Transnational companies, with their massive economies of scale,
may drive local companies out of business. If it becomes cheaper to operate in
another country, the TNC might close down the factory and make local people
redundant. However, If developing countries know that they will not
have to suffer from inequalities they will want to join globalization. In 1995
The United Nations Conference on Trade and Development (UNCTAD) conducted an
empirical study in developing countries in Asia. The study found that foreign
investment has had a positive impact on economic growth when country-specific
factors are taken into account (Carkovic and Levine, 2002). These factors
include; domestic financial development, school attainment, and national
income. Even though the numbers say that globalization is not imposing
negativity on developing nations, many researchers still believe that it is.
This study might have been slightly skewed due to the country-specific factors
that were taken into consideration. When researchers use the information from
the countries previous condition it could have mixed data. Some of the
countries may have been so bad off in the first place that it actually seems as
though there is a positive income on that countries economy.

 

 

An absence of strictly enforced
international laws means that TNCs may operate in LEDCs in a way that would not
be allowed in an MEDC. They may pollute the environment, run risks with safety
or impose poor working conditions and low wages on local workers.

·        
Globalisation is viewed by many as a
threat to the world’s cultural diversity. It is feared it might drown out local
economies, traditions and languages and simply re-cast the whole world in the
mould of the capitalist North and West. An example of this is that a Hollywood
film is far more likely to be successful worldwide than one made in India or
China, which also have thriving film industries.

·        
Industry may begin to thrive in LEDCs
at the expense of jobs in manufacturing in the UK and other MEDCs, especially
in textiles.

 

Structualist writers – could be
good

The final competing view is the Structuralist writer’s
perspective. This specific perspective differs from the other two perspectives
in various ways. Firstly, it is believed that there is no specific cause/reason
behind globalisation. Globalization is considered a phenomenon that just gradually
progressed over the years. Secondly, scholars believe that the outcome of
processes of globalization is not determined (Held et al. 1999). These scholars
say that globalization could be very influential however it’s an unknown
phenomenon and its outcome will not be known for many years down the road. After
the Second World War, a development of economics was created in belief that LDC’s
(Less developed countries) could not follow the same footsteps of the more
developed countries.

Many countries were led to develop distinctive non-market
policies to rapidly industrialize their economies. LDCs faced an already
developed capitalist world which needs time to be able to catch up on certain
policies and thus it was argued that some structures required for a sustainable
market system weren’t made in some of the developing countries and therefore
they had to be constructed before the integration of economies into the global system.
Structualists wouldn’t particularly agree with the way some of these problems are
addressed but they believe and argue that if the business environment is to be
constructed in such a way as to enable globalization to increase growth, stability
and development over time then those issues had to be addressed and resolved.

Structuralist writers further believe that the same common
changes have occurred from globalization but there isn’t a direct belief in the
exact direction about how these changes came. in addition, this perspective
does not define any historical events or factors that define globalization. As
well, they say the power of national governments is increasing but the nature
of these national governments is changing. This perspective believes that the
range of factors influencing processes of globalization is much greater, and
the outcomes of globalization are very uncertain. In conclusion, over the past
thirty years globalization has completely transformed how nations are
conducting business in the world. The increases in technology and the liberalization
or governmental policies have lead to globalization skyrocketing over the past
three decades. This drastic increase in globalization has lead to an increase
in inequality amongst nations, as well as an increase in the inequalities
between social classes of individual countries.

The positive effect
globalisation can have is the Inward investment by transnational
corporations helps countries by helping and providing new types of employment
through jobs which requires
different skills for local people. Additionally, TNCs (transnational
corporations) help bring wealth and foreign currency to local
economies when they buy local resources, products and services and therefore
the extra money created by this investment can be spent usefully on education,
health and infrastructure.

 

Conclusion (synthesis of main findings)

In conclusion, over the past thirty years globalization
has completely transformed how nations are conducting business in the world.
The increases in technology and the liberalization or governmental policies
have lead to globalization skyrocketing over the past three decades. This
drastic increase in globalization has lead to an increase in inequality amongst
nations, as well as an increase in the inequalities between social classes of
individual countries. There are three main perspectives on globalization within
literature today. Each individual perspective has different viewpoints on what
causes globalization, how globalization impacts society, and the future of
globalization. There are also several theories of globalization that need to be
understood. It is imperative to have a clear understanding of the trends and
perspectives of globalization to be able to understand how it affects the
business world and society. Each individual perspective has different
viewpoints on what causes globalization, how globalization impacts society, and
the future of globalization. It is imperative to have a clear understanding of
the trends and perspectives of globalization to be able to understand how it
affects the business world and society.

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