Globalization is the interconnection that has been experienced in the world through the improvement of communication, trade, and transportation. The aim of globalization is to enhance free movement of goods and services through international trade.
It also increases wealth in the process of distribution of goods and services. Regional economies and many cultures have been incorporated through free flow of information, easy transportation, and trade. There are many types of globalization, including economic globalization, technological globalization and cultural globalization.
However, the focus here is on the aspects of economic globalization. Economic globalization involves a global system that allows movement of goods, capital and resources; for example, the European Union. Economic globalization has improved interdependence of different countries across the world because of global trade. However, striving for better economies has affected different cultures as they tend to emulate countries that have successfully developed their economic systems.
Economic globalization has led to the interdependence of economies in the whole world due to the trades carried out across many borders. This has led to continuing expansion of the global market. Development of science and technologies are a driving force to economic globalization. These technologies have made transport and communication easy. The cost of shipping and airfreight has reduced to allow international trade.
Multinational Corporations have increased in number and they have planned production and distribution of resources and thus, have helped in profit maximization. As they are increasing all over the world, they are reforming the macroeconomics mechanisms of the process of the global economies.
Due to the high income, many industries are restructuring and upgrading. Many developed countries have entered into the developing countries to do business since there is no competition as compared to theirs, thus leading to economic globalization. Domestic and multinational organisations are striving to improve their image in the global market and many have turned to mergers and acquisitions (Joshi, 2009).
Similarly, economic globalization has brought in economic benefits because there is stiff competition, which has led to the decrease of prices and variety high quality goods. Production efficiency has also been improved as the domestic firms try to compete with the foreign competitors. Provision of financing has helped poor countries acquire capital for development.
There are many opportunities for finance all over the world. Before globalization, capitalists and companies could only get money from investors in their local countries, but as the economies are integrated, there are many sources of finance.
Developers in any country can get investors from another country. United States, for example, can give funds to countries such as Canada or in Asia. Not only the developed countries can have access to fund, but also the developing countries from Africa can also access funds from many international sources.
According to Bordo (2005), many countries have joined the world trade organization. For example, China and U.S signed an agreement to access the WTO. Through the signing of this agreement, it is clear that China is ready to transform its economic system and join other countries in the progression of economic globalization.
The US will also benefit because it will boost its exports to China, hence generating more jobs. China will also enhance its economic expansion on the US market share. Economic globalization has also decreased poverty in China from 20 to 15 percent.
Although globalization has changed the whole world in economical, social and political aspect, many people are losing their cultures. Free flow of information, transportation and communication has turned the whole world into a global village and thus, reduction in costs has change people’s tastes and preferences in the society and this has led to the negative effect of cultural values. Before the era of globalization, culture was well defined and the issue of loss of identity did not disturb people since they never knew that it would one day be an issue.
Later, the process of globalization busted the culture identities. Some of the countries like the United States are not affected by lose of culture identity since they are okay with their cultures exported around the globe and thus only the weaker cultures in underdeveloped countries are being affected. Waters (2001) concurs that culture identities have been lost and people and the specificities that make a society unique such as food, language and dressing have been changed completely.
They have replaced traditional foods with fast foods, and big clothing brands have replaced the unique traditional clothing. In short, people eat and dress the same despite the fact that they are from different societies and cultures in the world. Many societies are losing their identity and uniqueness that makes them different from the rest.
In conclusion, growth of trade through economic and financial globalization has benefited both the developed and the developing countries. Although there are risks involved such as unstable capital movements in globalization, bodies such as International monetary funds have put efforts to help economies to handle risks through economic analysis.
Globalization has been motivated by policies that have unlocked economies both locally and internationally. Many countries have taken up free market economic systems, which have increased their productivity and creation of many opportunities in global trade and investment. However, the all governments should understand how globalization works through analysis of issues and debates regarding globalization.
Bordo, M. (2005). Globalization in Historical Perspective. Chicago: University of Chicago Press.
Joshi, R. M. (2009). International Business. New York: Oxford University Press.
Waters, M. (2001). Globalization. London: Routledge.