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Globalization: Good or Badc

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ontent:

Introduction««««««««««««««««««««.Page 3

What is globalization...«««««««««««««««....Page 3

Development in Globalization««.«««««««««««Page 4

Effects of Globalization««««««««««««...............Page 5

Industries affected by Globalization«««««««««««Page 7

onclusion««««««««««««««««««««...Page 10

References«««««««««««««««««««««Page 11
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Introduction:

Recently human society across the world established progressively closer contact over countries
and it is continuing to progress faster than ever. Using Jet airplanes, cheap telephone service,
email, computers, huge oceangoing vessels, instant capital flows, all these have made the world
more interdependent. Multinational corporations manufacture products in many countries and
sell to consumers around the world. Money, technology, and raw materials move ever more
swiftly across national borders. Along with products and finances, ideas and cultures circulate
more freely. As a result, laws, economies, and social movements are forming at the international
level. Many politicians, academics, and journalists treat these trends as both inevitable and
welcome. But it worth mentioning that The globalized world sweeps away regulation and
undermines local and national politics, just as the consolidation of the nation state swept away
local economies, dialects, cultures and political forms. Globalization creates new markets and
wealth, even as it causes widespread suffering, disorder, and unrest.

What is globalization?

Globalization is not new, though. For thousands of years, people²and, later, corporations²have
been buying from and selling to each other in lands at great distances, such as through the famed
Silk Road across entral Asia that connected hina and Europe during the Middle Ages.
Likewise, for centuries, people and corporations have invested in enterprises in other countries.
In fact, many of the features of the current wave of globalization are similar to those prevailing
before the outbreak of the First World War in 1914. [1]

Nowadays the world globalization defined in many ways and direction by experts and classified
to different types such as the Globalization of the Economy, the Globalization of Politics, of
ulture and of Law. In general globalization describe as an ongoing process by which regional
economies, societies, and cultures have become integrated through a globe-spanning network of
communication and trade. However, globalization is usually recognized as being driven by a
combination of economic, technological, sociocultural, political, and biological factors.[2] The
term can also refer to the transnational circulation of ideas, languages, or popular culture through
acculturation. Tom G. Palmer of the ato Institute defines globalization as "the diminution or
elimination of state-enforced restrictions on exchanges across borders and the increasingly
integrated and complex global system of production and exchange that has emerged as a
result."[3]

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 The terms Economic Globalization refer to the integration of national economies into the
international economy through trade, foreign direct investment, capital flows, migration, and the
spread of technology.[4]

Development in Globalization:

Over the past two decades, world output has been expanding and many countries are benefiting
from increased cross-border trade and investments. Many others suffer because economic
regimes are inefficiently managed, and this weakness reduces their capacity to successfully
compete globally (Schneider and Enste, 2002). International mobility of capital, resulting from
advances in communications technology and liberalization of financial markets has intensified as
the world economy witnesses the unleashing of market forces. Deregulation of domestic markets,
their opening to competition, privatization and the retreat of the state from economic
management are also features of the current global order.

Globalization, since World War II, is largely the result of planning by politicians to break down
borders hampering trade to increase prosperity and interdependence thereby decreasing the
chance of future war. Their work led to the Bretton Woods conference, an agreement by the
world's leading politicians to lay down the framework for international commerce and finance,
and the founding of several international institutions intended to oversee the processes of
globalization. These institutions include the International Bank for Reconstruction and
Development (the World Bank), and the International Monetary Fund. Globalization has been
facilitated by advances in technology which have reduced the costs of trade, and trade
negotiation rounds, originally under the auspices of the General Agreement on Tariffs and Trade
(GATT), which led to a series of agreements to remove restrictions on free trade.[5]

Globalization concerns have taken a far more positive path since the 1999 Seattle protests.
Activists have begun to realize that it is the world governments who are the backbone of
international organizations such as the G8, the World Bank, and the IMF and that efforts must be
directed toward both the organizations and the member governments in order to achieve policy
objectives and the recent global economic crisis has prompted unprecedented cooperation
between the world's major economies with the goal of standardizing and effectively regulating
the global financial markets. Many experts credit the coordinated international response as
averting a far more serious problem. [6]

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Effects of Globalization:

From different aspects we can say that globalization has a dramatic effect on the whole world.
These effects can be considered weather is good or bad and make so many argument all around
the globe and arise so many negative and positive ideas. If you visit several countries, you can
easily feel the effect globalization has on our daily lives. The globalization has affected on
industry, legislation, finance, economy, politic and even language, and culture and etc.

Positive effects:

onsidering the financial effects of globalization we can see that globalization has made it easier
to raise finance through individuals and firms outside the country. The International Monetary
Fund is a good example of an International Institute which lends money to countries in need for
finance. It`s also worth mentioning that the emergence of worldwide financial markets and better
access to external financing for borrowers. By the early part of the 21st century more than $1.5
trillion in national currencies were traded daily to support the expanded levels of trade and
investment.[7]

Another great effect of globalization is in the world economy. Promotion of liberal trading
activities is perhaps the greatest contribution of Globalization, acting as a boon to the world
economy. Following are the advantages enjoyed by countries engaged in mutual free trades:

dc onsiderable reduction in the cost of transportation, especially with the development of

containerization with respect to overseas ocean shipments

dc Decrease or abolition of control over capital and the capital market

dc Formation of free zones for carrying out commercial activities, against payment of little
or no tariffs at all

dc Decrease, abolition, or synchronization of subsidies in domestic trades

dc Decrease or abolition of every kind of tariffs However, the concept of free trade
emerging from Globalization suffers from limitations as well:

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 dc Restrictions imposed on the supernatural identification of intellectual properties. This
means that the patents granted by a particular nation will be recognized in another
country.

dc Synchronization of intellectual asset laws across most states are subject to additional
restrictions. [8]

Another main opportunity which globalization ± the integration of national economies ± is said
to offer to developing countries is that they would have better access to the technical advances in
developed countries. Integration would help to reduce the technology gap and to raise the level
of total factor productivity and per capita income in developing countries. Helpman and
Hoffmaister (1997) ± henceforth HH (1997) ± have shown empirically that countries which
have imported more from the world¶s technology leaders have experienced faster growth in total
factor productivity. This paper refines the measure which these authors used to proxy technology
imports and assesses whether on this refined measure technology transfer to low-income
countries have increased over the past few years. The role of technology adoption in the process
of economic development has been a recurrent theme in the economic literature. It highlights that
the cross-country distribution of per capita income will move up over time with no change in its
range if the distribution of technology adoption is constant over time, i.e. all countries adopt new
technology equally.

Negative Effects:

There also so many criticize are made against globalization and point out at its negative impacts
on the whole world relation. Some articles clime that the benefits of globalization is not
universal. The rich are getting richer and the poor are becoming poorer or Bad aspects of foreign
cultures are affecting the local cultures through TV and the Internet and some go further and
mentioned that multinational ompanies and corporations which were previously restricted to
commercial activities are increasingly influencing political decisions and the increase in prices
has reduced the government¶s ability to sustain social welfare schemes in developed countries.
Anyway in many aspects we can say that such a critics are not very irrelevant and can be
consider as some problems that made by globalization.

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In the term Finance also there are some problems and risks are provided by the globalization.
These risks are more likely to appear in the short run, when countries open up. One well-known
risk is that globalization can be related to financial crises. The crises in Asia and Russia in 1997±
98, Brazil in 1999, Ecuador in 2000, Turkey in 2001, Argentina in 2001, and Uruguay in 2002
are some examples that captured worldwide interest. If the right financial infrastructure is not in
place or is not put in place during integration, liberalization followed by capital inflows can
debilitate the health of the local financial system. If market fundamentals deteriorate, speculative
attacks will occur with capital outflows from both domestic and foreign investors. For successful
integration, economic fundamentals need to be and remain strong, and local markets need to be
properly regulated and supervised.

Industries affected by Globalization:

There are five main areas affected by globalization: globalization of and by the economy,
globalization of and by information/communication technology, globalization of and by politics,
globalization of and by business, and globalization of and by education. [9]Globalization is a key
trend in the business world today. The evolution of supply, demand, and environmental factors is
driving companies toward operating as if a homogeneous worldwide market existed in their
industries. Many forces are pushing for globalization. A decade of peace and increasing
governmental advocacy of free trade in all the major developed countries has lowered trade
barriers and given a renewed impulse to global trade. In the 20-year period from 1970 to 1990,
world trade will have more than doubled in importance, from 12 percent of total world
production to 27 percent (McKinsey and ompany, Inc., 1987).

Industries and companies that previously enjoyed relatively safe home markets now find
themselves faced with the possibility of new competition from companies that had never
attempted to market products in their part of the world. Globalization has made worldwide
competitiveness critical for survival. However, the conquest of global markets will be the reward
of the most efficient producers.

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One of the main industries which are influenced by the globalization is the Information/-
communication industry. The convergence of information and communication technologies has
resulted in a lower cost for information, furthering globalization. Technological developments
have also resulted in miniaturization and products have become smaller, weighing less. As a
result transportation costs have dropped dramatically and global sourcing has become common
practice. But every silver lining has a cloud. Technology typically conforms to the laws,
regulations, and style that prevail where it is developed, so a product which might be good for
the USA might not be in Pakistan due to the cultural or educational differences (or different
levels of economic development).[9]

The shortage of modern technology is widely assumed to hold down the level of per capita
income in low-income countries. But there is little empirical evidence on whether the improved
access to modern technology which has come about with globalization has helped alleviate this
shortage. It is clear that their improved access to modern technology alone does not guarantee
that low-income countries will realize productivity increases. They need the human capital
required to absorb and efficiently use modern technology. Moreover, economic policies and
institutional arrangements impact on the actual amount of modern technology which low-income
countries can import. One measure of global integration is the extent to which a country has
absorbed the global stock of technology and other knowledge. However, such a measure is
difficult to calculate. This section examines indirect measures of (technological) integration by
looking at the GDP ratios of trade, total imports and, most importantly, machinery imports. [10]

ompetitiveness used to be based (to a greater degree) on static comparative advantage. Today,
competitiveness does not just depend on the cost of factors of production, or on a specific
technological advantage. Rather, it depends on continuous innovation, high level skills and
learning, an efficient communications and transport infrastructure, and a supportive enabling
environment. In this context of rapid development and dissemination of new knowledge,
innovation is becoming a more critical element of competitiveness. Firms have to be constantly
innovating to avoid falling behind. This does not necessarily mean that they have to be moving
the technological frontier forward. Only the most advanced firms do that. However, all firms
need to be at least fast imitators and adopt, use and improve new technology in order not to fall
behind. This puts a great deal of pressure on firms¶ technological capabilities.

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Another common feature affected by globalization is increased outsourcing and the bundling of
more value chain activities in supplier firms. As a result, developed country suppliers have
increased their own involvement in Foreign Direct Investment ±FDI- and trade, while developing
country suppliers have increased their capabilities. The largest suppliers, all based in developed
countries, have become µglobal suppliers¶, with multinational operations and an ability to provide
goods and services to a wide range of lead firms (Sturgeon and Lester, 2004).

The automotive industry is also experience distinctive effect due to globalization because of its
extremely concentrated firm structure: a small number of giant companies exert an extraordinary
amount of power over smaller firms. Eleven lead firms from three countries, Japan, Germany,
and the USA, dominate production in the main markets. The global scope of both lead firms and
the largest suppliers was enhanced by a wave of mergers and acquisitions, and equity-based
alliances in the 1990s. Lead firm concentration, though not as extreme as in some industries,
such as commercial aircraft, has blunted efforts to establish the sort of industry-level technical
and business process standards that prevail in less concentrated industries.

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Globalization: Good or Bad
The reality is, the question whether globalization is good or bad is not black and white. But it can
be inferred that the process of connecting various economies and spreading technology, ideas,
and culture has done more good than harm. Globalization has posed the more overt economic,
social, and also political benefits worldwide.

Thomas Friedman (American journalist) wrote in his book ³ñ
 
  

  
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:

"Globalization is not a phenomenon. It is not just some passing trend. Today it is an overarching
international system shaping the domestic politics and foreign relations of virtually every
country, and we need to understand it as such."

Globalization is much like fire. Fire itself is neither good nor bad. Used properly, it can cook
food, sterilize equipment, form iron, and heat our homes. Used carelessly, fire can destroy lives,
towns, and forests in an instant.     "Globalization can be incredibly
empowering and incredibly coercive. It can democratize opportunity and democratize panic. It
makes the whales bigger and the minnows stronger. It leaves you behind faster and faster, and it
catches up to you faster and faster. While it is homogenizing cultures, it is also enabling people
to share their unique individuality farther and wider." [11]

Globalization has dangers and an ugly dark side. But it can also bring tremendous opportunities
and benefits. Just as capitalism requires a network of governing systems to keep it from
devouring societies, globalization requires vigilance and the rule of law. As with most issues, the
majority of people will be in the middle. They will see globalization not as something to worship
or demonize. Instead, they will see it as something to mold, shape and manage for the betterment
of everyone.

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0cBhagwati, Jagdish (2004). In Defense of Globalization. Oxford, New York: Oxford University
Press.

5. http://en.wikipedia.org/wiki/Globalization

6. http://www.newsbatch.com/globalization.htm

7. 4Globalization4c5c6 c7 
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11. http://www.globalenvision.org/library/8/545

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