Globalization in Economics and Its Consequences

Globalization in Economics and Its Consequences

The term globalization can be defined in a number of different ways. It may have different meanings to different people in relation to their social, economic, cultural or political position. Simply put, globalization refers to the interconnectivity of people, ideas, cultures and traditions across the globe. According to Langhorne (2001), globalization refers to the process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade.  Tisdell (2004) on the other hand defines the term globalization as a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.

Globalization as a process is thus seen to occur in a variety of distinct forms: economic globalization occurs when there is a concrete integration of economies of different countries and states into the international (global) economy through trade, foreign investments, human and capital migration as well as through the spread of technology across the globe. Culturally, globalization occurs when ideas, norms, values, traditions and belief systems are spread from one society to another. This is made possible through the process of acculturation which simply refers to the exchange of cultural elements that occurs when groups of individuals with distinct cultures come into contact (Kennedy, 2009).

Politically, the term refers to the continued sharing and adoption by the world governments of dominant political ideologies and practices such as capitalism, democracy, and respect to human rights. Religiously, globalization refers to the spread and interaction of various world religious groups, their ideas, beliefs and practices across the globe. Technologically, the term refers to the exchange of technological knowhow, skills and manpower to enhance innovation and discoveries. As diverse as its meaning, globalization is known to be caused by different factors among them government policies that have opened economies domestically and internationally. Kennedy (2009) notes that “many governments have adopted free-market economic systems, vastly increasing their own productive potential and creating many new opportunities for international trade and investment”. This has resulted in corporations establishing foreign factories, production and marketing arrangements with external partners, hence defining globalization as an international industrial and financial business structure.

However, globalization has also been the major cause of unhealthy competition among world leading companies and national economies. A case in point is the economic ‘war’ between China and the United States of America. Globalization is also associated with environmental degradation due to industrial pollution as well as in extinction of cultures of the world as a result of assimilation and acculturation. Increased movement of labor across the world has also resulted in a rain drain that is common among the developing countries as well as problems associated with urbanization. Lastly, the spread of various deadly diseases such as Black Death, small pox and HIV/Aids, among others, has largely been attributed to the process of globalization.

In order to strike a balance between the positives and negatives of this process, it is imperative for individuals and nations of the world to first of all understand the process of globalization and how it works and thereafter, to come up with concrete policies that will help them to effectively contain the pressures associated with globalization.






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