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Globalisation - its benefits and drawbacks

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What is globalisation

Globalisation means the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.

According to dictionaries
Globalisation (n) is the "process enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communications" (Collins) or - from the US - to "make worldwide in scope or application" (Webster). The financial markets, however, are where the story begins.

 

globalisation

 

Promotion of free trade:

  • Elimination of tariffs; creation of free trade zones with small or no tariffs
  • Reduced transportation costs, especially resulting from development of containerization for ocean shipping.
  • Reduction or elimination of capital controls
  • Reduction, elimination, or harmonization of subsidies for local businesses
  • Creation of subsidies for global corporations
  • Harmonization of intellectual property laws across the majority of states, with more restrictions.
  • Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States)

Benefits of Globalisation

  • By buying products from other nations customers are offered a much wider choice of goods and services.
  • Creates competition for local firms and thus keeps costs down.
  • Globalisation promotes specialisation. Countries can begin to specialise in those products they are best at making.
  • Economic Interdependence among different nations can build improved political and social links.

Drawbacks of Globalisation

  • Cheap imports from developing nations could lead to unemployment in developed countries where the cost of production is high.
  • Choosing to specialise in certain products may lead to unemployment in other sectors which are not prioritised.
  • Increased competition for infant industry.
  • ‘Dumping’ of goods by certain countries at below cost price may harm industries in order countries.

Explore these sites about Globalization:

 


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