Impact of Globalization in Global Economy

Added on -2022-08-16

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The aim of this paper is to discuss the impact of globalization in the global economy and
found out the most influential factors that contribute to the growth of international trade. The
impact of globalization has been a topic of argument as some of the critics find this to be the
reason of the economic growth through the international trade benefitting all parts of the world.
On the contrary, some of them find that changing economy of a few countries guided the path of
globalization for which the distribution of wealth and economy were made possible. In this paper
the impact of changing global economy and its impact upon the international business will be
found out from the economic, social and cultural pints of view. In this regard, the analysis of
Globalization, drivers of globalization, international trade, the blocs of nation like UE, entities
like World Trade Organistion, advantages and disadvantage of globalization and the need of
international trade, consumer tastes, trade barriers, government regulation and monetary
currency of the different countries of the world will be done.
The growth in the international trade is influenced by all the factors affecting the global
economy and similarly the global business environment influences the growth and development
of international business.
The huge change and growth of the global economy has been recorded after the Second
World War when most of the European countries along with the Asian ones got the
late 19th and early 20th century paved the way for this huge global shift. The connectivity of the
economy and culture increased after the two world wars and the sharing of knowledge and skills
were initiated. In order to understand how the growth of international trade has been
influenced by the factors affecting the global economy, it is important to analyze the main
factors relating to economy of the world. These factors include foreign direct investment,
economies of scale, technological innovation, and interdependence among the countries, equity
distribution and different GDP, monetary currency and buying capacity of the nations. Firstly the
foreign direct investment tends to increase the global trade by helping to boost the technology
transfer, growth of the global companies and industrial restructuring. The countries which lack
economy to support the local brands to flourish, can allow FDI to promote the local and national
companies to contribute in the national trade.
Economies of scale has been enabled by the forces of globalization so that the larger
companies can realize the scope for enhancing their capabilities and perform greatly in the
foreign markets. This factor of economies of scale can reduce the cost and process and supports
the economic growth in the nation. This however leads the market to get concentrated fast
including the scope for both the bigger and smaller enterprises and compete domestically. The
globalization has reduced the inequality in an effective way. The rich countries have bigger
brands which are visiting the comparatively underdeveloped countries and strengthening the
economy there. The gap in the market structure and market power between the developed and the
developing nations are chief factors attracting the bigger international brands. By measuring
market concentration in different parts of the world, these brands enter the markets and bring
prosperity. Tis due to the fact that the entering of bigger brands can carte scope for strong supply
chain as well as employment scopes. The countries with positive relation among themselves are
unifying he economies through the better investment as well as trade (Rani, Ismail and Mohamed
2018). The scope of investment, employment and technological growth are being seen in those
underdeveloped countries making them developing and independent. The gap between the
capabilities of the developed and developing countries depend greatly upon the monetary
currency which reflects the economic situation of the countries where the international trade will

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