MN2166K - Exploring Globalization and Its Multifaceted Impact

This essay provides a comprehensive analysis of globalization and its multifaceted impact on the global economy. It begins by introducing the concept of globalization and its qualitative changes, highlighting its effects on developing countries, trade, technology transfer, and competition. The essay discusses the merits of globalization, such as economies of scale, technological innovation, and foreign direct investment (FDI), as well as its demerits, including interdependence, inequitable distribution of wealth, and threats to national sovereignty. It further explores globalization's effect on increased competition, stabilized security, wealth equality, international institutions, shifting trade patterns, FDI dynamics, technological effects, and standard of living. The analysis considers the varying industrial and cultural changes across different countries, ultimately offering a balanced perspective on the complex relationship between globalization and the global economy. Desklib provides access to similar essays and solved assignments for students.

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.

Inequitable distribution:
It is said that globalization made poorer more poor and richer more rich. With the
introduction of latest technology and innovation, there is less demand of worker whose
work now getting done through the more innovative machine like robotics and other latest
technology or more capital driven technology instead of labour intensive technology. Also
FDI moved towards that country which adopted new market reforms and policy more rapidly
than those which fail to do so or took too much time in doing so. (Canuto, Otaviano, 2018)
This did not help in distribution of FDI to every part of the world and it remains concentrated
in few selected country which in turn did not help every section of society. These things
created a situation of unequal distribution of wealth in the society. It also did not help
countries which remain on peripheral of economy or peripheral countries and did not
benefit from this so called globalization process. So, it is not that through globalization all is
well but instead many things got affected negatively due to this.
Threat to sovereignty:
Globalization is the process where world is become one village, where one country is free to
enter other territory’s on his will and do business in that particular country in his terms and
condition, which put the sovereignty of that country in danger and can create situation
which can be harmful for that country’s future prospects. So, it is said, sovereignty of any
country must be protected at any cost besides helping that country to achieve millennium
developmental goals as set my United Nation.
(Kuepper, Justin, 2018).
Globalization and its effect
Increased competition
One of the best positive effects of globalization is increase in competition between the producers, as
they are multiplying very rapidly. This multiplication is a good sign for consumers because they will
get the goods and services of better quality. When any business crosses the country border and
become a part of international markets, new goods and services are available in the market and now
the consumers had more options are available to choose from. With increase of competitors, they
are compelled to improve their goods or services, to survive in the market. As a result, in the market
buyers have better things available to choose in lower prices.

Stabilized security
Globalization also helps to make strong bond between the countries as a result nation security
stabilizes. When any country depends on the economy of other country’s economy, it never tries to
attack each other or create such a condition that their relation gets effected.
More wealth equality throughout the world
Globalization brought prosperity or poverty is very controversial, reason for this type of thought is
that now days when there is globalization, many people have jobs, have their own business and as a
result they can give their families more comfortable life. This is a positive change; we see that
globalisation helped many people in developing countries to increase their living standard. But many
argue that due to globalised world unemployment has increased and now more people are living
with proper job.
International Institutions
Institutes across the world get internationalize and people across the world benefited from it. It is
due to various type of exchange of programme through these institutions. High volume of trade
among countries also helped more big institution. (Akram, Muhammad Ch. 2011)
Shifting of Trade pattern
Trade, now has even been possible between south-south instead of north–south trade which was
prevalent norms during earlier time of pre-globalization. (Kacowicz, Arie M. 2007) Country’s are now
diversifying their trading partner to gain from growing competition.
Foreign Direct investment Dynamics
In post globalization period foreign direct investment has increased mostly in emerging or
developing market. Emerging market like India, Brazil, Indonesia, Mexico are the main players to
attract foreign direct investment.
Technological effect
There is clear trend of technology transfer from technologically advanced country’s to developing
countries, which helped them to come out of outdated technology and adopting more advance
technology for their production and manufacturing needs.

Standard of living
Prosperity and standard of living has though improved for some of the people but it did not
improved quality of life for every section of societies. In some cases it has been seen that inequality
in life has gone up and gab between rich and poor gone up.
Effect on unemployment
Globalization did not solve the problem of unemployment but in fact in some cases level of
unemployment gone up due to adoption of more capital intensive technology. It does benefited
where technology was more labour intensive instead of capital intensive.
Industrial effect:
Industrialisation effect was remained varied among various countries. Like in India, it was mainly
related to service sector and IT sector, in China majority of it is related to manufacturing sector, in
Brazil, Mexico it was mostly in commodity sector. So, it was very diverse kind of industrial growth
scenario across the world.
Cultural changes:
Mobility of labour among various countries is not that much visible due to stringent immigration law
of various counties. Cultural integration of various cultures remained limited to upper strata of
society. But still, it brought diverse cultural background people more closer and helped them getting
to know each other’s culture more closely.
Environmental changes:
Environmental changes does effect negatively because of globalization. It helps in rapid
industrialization and more emission of CO2, which affected our climate severely. Due to lack of any
proper law related to emission, many developed country are recklessly abusing our climatic
condition. There is blame game is going on, on each other and ignoring its devastating effect which
may prove very dangerous in coming years. (Akram, Muhammad Ch. 2011)

Conclusion
There is a huge and remarkable impact of globalisation on international business. Globalisation are
interrelated to international business as a result, day by day, people and businesses are coming
much closer to each other. Once, useful resources’ utilisation and business was difficult and not
easy. Globalization no doubt has benefitted not only rich country but also poor country or emerging
economy as well, many countries’ economy has gained greatly through this. But, it is also very much
visible that there are lot of population are still living in very serious condition, who are not been able
to afford even single meal a day, which is very shameful for all right minded people across the world.
But besides some negative things, globalization has brought many positive things like technology
transfer, cheaper production, division of labour, may be more job opportunity (though till now it is
not visible), entrepreneurship among new generation, more opportunity for international exposure.
So, in nutshell, it can be concluded that like everything have some positive or negative effects this
too have mostly positive and some negative impacts too. But, richer country’s should be/should
have been more considerate about this.

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