GLOBALIZATION

WHAT IS GLOBALIZATION?
• Globalization can be defined as a process of rapid economic, cultural, and institutional
integration among countries.
• This unification is driven by the liberalization of trade, investment and capital flow,
technological advances, and pressures for assimilation towards international standards.
• Globalization makes the world more accessible to everyone.

TYPES OF GLOBALIZATION
1. Economic: Countries that trade with many others and have few trade barriers are
economically globalized.
2. Social: A measure of how easily information and ideas pass between people in their own
country and between different countries (includes access to internet and social media
networks).
3.Political: The amount of political co-operation there is between countries.

CAUSES OF GLOBALIZATION
• Trade liberalization • Improvements in technology • Reduced cost/improvement of
communications and transportation • Deregulation of financial markets. • Increased
significance of TNCs (transnational corporations)
TRADE LIBERALIZATION: Trade liberalization refers to a reduction of trade barriers, this will
open up worldwide markets. Trade barriers have fallen since the Second World War. New
organizations were formed to increase integration – GATT (General Agreement on Tariffs and
Trade, WTO from 1995)
IMPROVEMENTS IN TECHNOLOGY: Improved technology makes it easier to communicate
and share information around the world. The most important development in the recent
years is the internet.
REDUCED COST AND IMPROVEMENT OF COMMUNICATIONS AND TRANSPORTATION: Fall
in the real cost of transporting goods has allowed cheaper importation and exportation of
goods. Decline in the cost of communications has also helped this. Improvements in
transportation have also allowed firms to split up the production process to cash in on varying
cost conditions in different parts of the world. This has helped to facilitate the growth of TNCs.
DEREGULATION OF FINANCIAL MARKETS: There have been moves towards removing
restrictions on the movement of financial capital between countries. Many countries have
removed capital controls – made it easier for firms to operate globally. Reinforced by
developments in technology that enable financial transactions to be undertaken more quickly
and efficiently – i.e. the Internet. Financial markets have increased globalization due to their
being set up in various countries. They allow for more interface and communication between
different parts of the world over the trade of financial assets.
INCREASED SIGNIFICANCE OF TNCs: After the Second World War more economic power was
shifted to corporations – accelerated growth. TNCs have grown even further due to favorable
corporation tax rates in many countries and tax breaks, as TNCs supposedly bring in more
jobs. TNCs partake in foreign direct investment, which increases the integration of economies.
Many TNCs want to gain entry to, for example, the EU due to its single market, and China due
to its large and growing market.

EFFECTS OF GLOBALIZATION
Globalization has led to increase in competition.
Globalization causes exchange of technology. Globalization helps in knowledge and
information transfer across the globe.
Globalization has led to increase in investment levels and rise in opportunities.
Globalization has led to vast Multinational and multicultural management.
Globalization leads to Procurement & Outsourcing. Accenture provides Procurement &
Outsourcing services includes sourcing, demand management, invoice processing, travel and
expense processing, contract administration and many more.

ADVANTAGES OF GLOBALIZATION
Cheaper Goods For Consumers and Better Product Quality: Increased competitiveness may
also lead to decline in the price of goods, improvements in quality of goods and choice of
goods.
Increase In Skilled Workers: Increased international labor mobility has led to an increase in
skilled workers.
Lower Cost of production: Nike shoes are made in Vietnam due to lower cost of production.
Improvement In Education: The spread of the internet has helped to improve education.
Cultural Diversity: Increased movement of labor leads to an increase in the spread of different
cultural ideas.
Poverty Reduction: GDP of the developing countries has increased twice as much as before.
Transportation: Globalization has led to tremendous increase in transport services across the
globe.

DISADVANTAGES OF GLOBALIZATION
Increased Commodity Price: Prices then and now have increased tremendously.
Exploitation of Cheap Labor: Workers working day and night to produce goods for very little
money.
Cause of Diseases: It is the cause of very serious health problems all over the globe.
Increased Relative Poverty and Inequality: We have everything by globalization, we have
nothing by globalization.
Increased Vulnerability and Instability: The international Coffee chains are causing a serious
threat to local coffee shops.
Disparity: The Economic system that has generated tremendous wealth disparity that really
seems unfair.
Uneven Wealth Distribution: The rich are getting richer and the poor are getting poorer.