- Get Free Essays and Term Papers

A Z Narasinghe

Autor:   •  August 8, 2017  •  2,440 Words (10 Pages)  •  292 Views

Page 1 of 10


Globalization is used to describe the nature of international trading that dominates corporations and how they are no longer limited to serving specific groups of consumers in one country. (Leavy, 2004, Hammond and Grosse, 2003). The growth of globalization is attributed to the economic expansions and the capitalistic drive to achieve growth by utilizing existing resources as well as increasing the degree of efficiency in which operations are conducted. As a result globalization has also been very closely associated with outsourcing operations in which companies seek to transfer existing units of their production to different countries where the wages of the workforce are more economically sensitive. For example India works as call centers for large banking firms and other firms. Aviva has moved 7000 employees to India in the year 2007. Moreover, HSBC – 4500, Lloyds TSB – 2500, Vertex – 2200, Royal and Sun Alliance – 1200. (Daily Mail, 2007).

Another advantage of globalization is Free trade. Free trade is a way for countries to exchange goods and resources. This means countries can specialize in producing goods where they have a comparative advantage. This means they can produce goods at a lower opportunity cost. When countries specialize they can gains benefits from trade such as lower prices for consumers, greater choice of goods, bigger export markets for domestic manufacturers, economies of scale through being able to specialize in certain goods and greater competition.

Moreover, Globalization enhances the flow of capital, permitting the investors to invest on the untapped resources of the developing countries. Globalization of the mass media has reduced the global space substantially, keeping the people informed about all latest international happenings through different television channels. Improvement in global communication networks leads to easy flow of important information not only to individuals but at company levels as well. The democratic thoughts are rapidly spread among countries across the world, owing to Globalization. Globalization stresses on increasing mutual dependence among all the nation-states across the world. Globalization lessens the possibilities of warfare among developed countries to considerable extents. The developed countries display a tendency for working towards protecting their surrounding environments to large extents. Globalization enhances free international trades among countries across the world. Resources of different countries are used for producing goods and services they are able to do most efficiently. Consumers to get much wider variety of products to choose from. Consumers get the product they want at more competitive prices. Companies are able to procure input goods and services required at most competitive prices. Companies get access to much wider markets. It promotes understanding and goodwill among different countries. Businesses and investors get much wider opportunities for investment. Adverse impact of fluctuations in agricultural productions in one area can be reduced by pooling of production of different areas.


The rise in globalization has increased capital flow into developing countries' economies. Foreign Direct Investment injects capital into developing countries in terms of stabilizing the countries' economic. This is also a benefit that increased the countries' financing through loans and grants from developed countries (Aurifeille, 2006). However, there will be net capital inflow that could lead to negative effects on trade. Chan and Scarritt (2001) noted that the large capital inflows were caused by the appreciation of exchange rates and inflationary pressures that impact on the country's current account. This means that globalization in improving the countries' economy could actually stop the progress of the economy unless the host countries' balance of payment focuses on the foreign plant where the export is more than import. The adjustment in trade barriers has led to the promotion of specialization to developing countries because they are able to concentrate on the production of commodities which can be produced at the least cost (Aurifeille, 2006). Developing countries fully use the advantage of globalization to enhance their income through trading goods which they can produce most effectively.

The most important disadvantage of globalization is the increasing number of the loafer. After the industrial revolution, industry gravitated some particular countries. Because of that, these countries became a power in industry. However production decreased and so unemployment was raised in the other countries. Another reason of the unemployment rise is that the need of less manpower. As stated at Wikipedia, many workers found themselves suddenly unemployed, as could no longer compete with machines which only required relatively limited work to produce more product than a single worker.

Another major damage of globalization is that some cultures are getting lost. The cultures of the countries that have more economic power are more dominant than others. Because, wealthy countries produce many things that can affect cultures, for example, clothes, movies and technologic products. According to Ikerd, while the global community is increasing, more and more people have become ignorant about social, ethical and moral values which are various in defining groups. (2002) Therefore, globalization damages small cultures which are in risk of being extinct. Big disadvantages.

High competition is also a disadvantage of globalization. With globalization, trade between the countries has been started to remove limits. This situation of enterprises has prepared the ground to be in constant competition with not only national competitors but also international competitors. Therefore, business requires being in a more rigorous and challenging competitive atmosphere to maintain continuity and development. Rising of monopole companies and trough among production costs are the main effects of this hard competition in business. As pointed in Global Policy Forum, undeveloped countries choose to use foreign capital for their improvement however it disposes the equality and stability instead.

Other Disadvantages in brief are decrease environmental integrity, seek for cheap labor, limits cultural expressions. Globalization has the potential to decrease the environmental integrity as polluting corporations from well developed countries can take advantage of developing nations weak regulatory rules. Globalizations increases of non-skilled and skilled jobs from developing nations to well developed countries as huge corporations seek for cheap labor. This economic trend can also increase the likelihood


Download:   txt (16.2 Kb)   pdf (61.4 Kb)   docx (15.4 Kb)  
Continue for 9 more pages »
Only available on