Impact of Globalization on World Economy

Introduction
Economy of any countries is heavily dependent upon its ability to utilize its available natural
resources in most equitable and judicious and in sustained manner. But, no country is endowed
enough to be in a competitive advantageous position to produce everything on its own; hence, it has
to depend on trade with other country to fulfil its all other need. In such a scenario trade plays major
role, where country imports its requirement It is said that today world is globalized, where one
county is inter- connected to other through the fast mode of transportation and communication.
(iQualify UK)
There were many instances of world recession witnessed in different geographies; most prominent
of them was 1930’s depression in USA, which severely hits USA in which unemployment rate
reached as high as 25 percent and economic growth rate plummeted to lowest level. The Purchasing
power of people across the US hit severely. Even during the later period many such recessionary
economic crises occurred but most significant one after 1930’s depression was 2008 collapsed of
fourth largest US investment bank Lehman brothers due to sub-prime mortgage market crisis and its
global impact on financial market and economy as a whole was very severe.
Globalisation an Introduction
Globalisation is most commonly used as well as confused word across the world. It is said that
globalization has brought the world together and even closer. But how much does it affected people
across the emerging market positively, because developed economies are already developed and
reached a level of saturation, where as people from emerging market should have been benefited
most from it. Under the globalized world there are many thing changed no doubt. ( Ortega, Andres;
2018)
Qualitative changes:
Impact of globalization on qualitative life of people around world can be felt through looking at the
life of common people of developing countries. It is very much debatable, how far globalization
changes the life of majority of people living in poverty across Asia, Africa and South American
continent. In terms of GDP growth rate many countries or most of the countries in Africa witness a
growth rate of 4-6 percent during 1980 to 2000, which was earlier 1.5-2.5 percent during 1960’s and
70’s which certainly improve the quality of life in this region and South-east Asian countries like
Indonesia, Malaysia, and Thailand which also include East Asian countries Japan, Korea and Taiwan
also improved their economic growth rate substantially and impacted their qualitative life. ( Dicken,
Peter, 2015) But degree of impact of how far quality of life improved in African countries or some

other peripherals economies of Africa is questionable and required further investigation. Many
African countries live in absolute poverty in spite of their improved economic growth rate on paper.
“There have been big changes in the relative growth rates of different parts of the world. There has
been a relative shift, in aggregate terms, from developed to developing economies although this
should not be over-stated or, indeed, taken for granted. Many parts of the world remain, to a
greater or lesser degree, disarticulated from the engines of economic growth.” (Peter, Decken, 2015)
But in spite of all these, large part of world effected from this phenomenon of globalization, there is
now more aggressive trade starting to happen between developed and developing country, there is
more technology transfer started to happen, there is more competition among developed country
whose economy’s are primarily dependent upon export, to capture the market of overseas to export
their commodities/products. Major policy reforms have attracted large parts of the world to more
lucrative markets to where they could expand their business. (WTO, 2008)
This kind of competition among various countries have put consumer in more bargaining position,
where now products are available at cheaper rate and with more option to buy from. Now, China ,
which was once closed economy, after 1978 it started to open its market for world with massive
policy reforms exercise and now in the market to compete with United States, Japan to capture the
market across the world over for its manufactured cheaper products. China attracted lot of Foreign
Direct investment (FDI) in her country, this has certainly benefited the Chinese economy in big way
and per capita income of China has gone up very rapidly, it has now become manufacturing hub,
whose cheap products capture won the market world over.
This rapid globalisation has enabled technology transfer and its rapid growth all over the world and
especially in poorer country, earlier which were not in a position to get this. No doubt, introduction
of latest technology have brought more improvement in the production process, which help produce
cheaper products. Today’s world has completely become different from what it was 20 years or 4o
years ago. Many path breaking technology have been discovered and latest technology bring
comfort and changes in lifestyle of common man. Now, it is become obvious, for all to improve their
quality of products and services or otherwise it will be replaced with someone else with superor
quality of products. So, markets now become more competitive and cheaper.

Now, China has become force to recognise with and its push for African resources has benefited
many African countries as well and African countries have driven to a new growth path. But, for
these African country, there was also a danger exist that any slowdown in Chinese economy will put
these African countries growth once again in danger. So, African needed to attract even some other
economy as well which could buy their resources or invest in their country and momentum of their
growth should remain as it is. In such a situation India was most appropriate country who is slowly
becoming IT giant and looking for cheap manpower and resources to fit in Chinese place in case of
any over dependent on china. Also, India is looking for more unexploited areas and Africa is one such
continent.
Globalization and its impact on world economy:
Merits:
Economies of Scale:
Large scale demand needed to meet with large scale production, which created a situation
for economy of scale which can be achieved through the utilization of full potential of
production process and resources. Utilization of full potential has brought up economy of
scale on play.
Technological Innovation:
Innovation of new technology has brought cheaper products at cheaper price and in turn
gives more boost to bring even more technological up gradation.
Foreign Direct Investment (FDI)
Globalization promoted Foreign Direct Investment across the world and also in newer
territory, where till now, it was not visible very clearly. FDI helped less developed country to
gain from it through application of more resources in their country and in return gain from
it.
Demerits:
Interdependence:
Globalization has made one country to depend on other help, which if does not come in
right time will hamper that country’s economy severely and all other things like
employment, growth etc.