Economic Globalization - an overview

Running head: IMPACT OF ECONOMIC GLOBALIZATION
Impact of economic globalization
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IMPACT OF ECONOMIC GLOBALIZATION
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Introduction
The world first embraced the concept of globalization towards the end of the twentieth
century. The end of the Cold War led to the downfall of the erstwhile Soviet Union who was a
strong proponent of the ideas of communism. However, this proved to be disastrous for the
liberal ideas of a capitalist market economy as advocated by the United States of America. As a
consequence, when the Soviet Union collapsed, the United States found it prudent to expand on
its theoretical framework and establish a globe where there would be imposition of an integrated
economic market based on capitalist ideals (Reader 2017). The purpose of this paper is to
understand the issue of economic globalization. In this sense, the paper tries to draw on the
issues of inequality, economic stability, economic sustainability and that of the exercise of
macroeconomic policy. The paper concludes with the analysis of the concept of globalization
and its relevance for the modern world.
Economic globalization
The aspect of economic globalization refers to the situation whereby there is a
widespread global movement of commodities, services, capital, information and technology. The
exchange of such aspects takes place amongst the various nation states of the world who have
opened up their territorial boundaries to the outside world (Samimi and Hashem 2014). The
domestic goods and services produced within these countries are exported to other countries
while they import the goods and services provides and manufactured by the other nation states of
the world. As a consequence, it can be observed that the aspect of economic globalization leads
to an increase in the economic integration of the world and the interdependence amongst the
countries. In this regard, it needs to be noted that the formation of the World Trade Organization

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has led to the rise in the issue of economic globalization. The organization has helped the various
countries to establish a common framework under which they can carry out international trade,
thereby minimizing the issues of conflict and animosity at the global level.
Impact of globalization on inequality
While the issue of economic globalization has been welcomed by most the countries of
the world as a result of giving the freedom to the private platters to pursue any course of action
as desired, it has several limitations (Mihajlović and Krželj–Čolović, 2014). For instance, one of
the most important limitation of economic globalization is that of inequality.
Under the capitalist form of market structure, the private firms across the world are
encouraged to follow their own path of functioning. They have the discretion to produce and
manufacture in accordance with their own wishes. The governments of the concerned nation
states would have an extremely minimal role in this regard and would not interfere in the
working of such firms.
In this regard, the issue of inequality started to rise in the society. The people who had the
resources and the ability to work could find remunerating employment opportunities. This helped
them to expand their finances more. They could afford a decent standard of living and could
accumulate more resources (Nikolova, Rodionov and Afanasyeva 2014). On the other hand,
there are certain people in the society without any resources available with them. They do not
have the ability or the opportunity to find remunerating employment opportunities and as a result
of this, they fail to afford a higher standard of living for themselves. This has led to the creation
of an unequal society in the world where there is a class difference which exists between the
‘haves’ and the ‘have nots’ (Nica, Manole and Potcovaru 2016).