Monday, December 21, 2009

Globalization Essay

Essay on Globalization

Globalization can be defined as the ongoing global trend toward the free flow of goods and services and the creation of a world economy. Through global trade and cooperation, Globalization aim to benefit everyone who partakes in it. While it provides a great number of benefits to society, they are provided at the expense of others. Since it is argued for the greater good, it has become one of the most heated topics in international business

Benefits
One of the most practical benefits that has resulted from globalization is the tremendous increase in the speed of communication. The prime example would be the Internet. The Internet is a global medium that instantaneously provides swarms of material containing information uploaded from various parts of the world. Since this information is shared worldwide, everyone with access to the Internet can take full advantage of it. Globalization also provides for cell phone companies to use such slogans as “anywhere, anytime” minutes. As a result of sharing technology across the globe, people can communicate with just about anyone.

Another practical attribute that a global economy brings is lowered transportation costs and reduced tariffs. Under the theory of globalization, all barriers to trade will be lowered, allowing foreign products to compete directly with domestic products. Consumers benefit when the cost to import a product is lowered since foreign goods are in turn more affordable. The producers of these goods also benefit from the larger consumer market.

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Globalization attracts firms to invest in lower developed countries where labor is cheaper. As they make these investments, a few benefits arise in that host country. First, the economy is lifted due to the sudden rise in the workforce. All the employees hired would be residents of that host country. Next, the government can collect taxes on everything produced and exported from the host country. For major apparel and car manufacturers, this figure can be rather substantial. Finally, the technological and managerial know how used to run the corporation is brought to the host country, providing knowledge and insight for many other domestic businesses.

In addition to boosting the economy, globalization benefits the environment as well. Such global agreements as the North American Free Trade Act, and organizations including the European Union promote environmental regulations throughout their respective regions. In creating a global economy, world wide environmental standards can be created. Through cooperation and regulation, globalization could be the answer to cleaning up the environment.

Disadvantages
While it seems that globalization has many positive attributes, those who oppose it have a strong argument as well. Globalization widens the gap between the rich and the poor. While it does indeed create wealth, the people who reap that wealth are already wealthy. A United Nations Report by Joe Lauria states, “the richest 200 people in the world more than doubled their net worth in the four years to 1998 to $1 trillion, which is more than the gross national products respectively of Canada, Belgium, Spain, South Korea, Brazil or Russia.” When companies invest in foreign nations, the money that they earn is invested back into the firm’s home country. The only use of the foreign country is for cheap labor. In addition, despite of the increased economic prosperity that the firm creates, the foreign nation becomes dependent upon the company for employment, revenue, and technological improvements. Without the firm, the country can no longer be self-sufficient.

Since companies seem to seek out the cheapest labor on the globe, foreign governments have decreased their human rights standards in order to attract investment. Some of these decreased standards include no child labor restrictions, no minimum wage laws, and unsanitary working environments. Furthermore, foreign governments also recede any environmental standards to make themselves more marketable towards large firms. As a result, companies do in fact have lower costs, however, they result from the exploiting of both people and the environment.
In addition to the effect that globalization has on foreign countries, the effect that it has on the home country is also substantial. When a firm decides to manufacture its products in a nation with cheaper labor costs, all of the people employed in the home country loose their jobs. This has a tremendous effect on the economy, especially when the firms employ tens of thousands of people.

Every nation ends up giving up freedom with respect to globalization. For globalization to work, all participating nations must promote trade by reducing or eliminating any trade barriers. In turn, every nation’s sovereignty is put into jeopardy. When international organizations force countries to carry out an action, such as reducing tariffs, individual governments no longer have absolute control of their nation. In addition, as consumer goods of various different nations slowly permeate throughout the world, they will diminish the traditions and cultural identity of nations through universality.

Conclusion
Since the first time that two countries traded with each other, globalization was born. Now, it is on an ever-growing path towards a free world market and a global economy. Despite the practical and inescapable benefits that globalization has brought, it has also provided a way for the rich to get richer, at the expense of the poor. It would be unreasonable to think that globalization could be stopped. The world is far to integrated to try and turn back now. Yet, it is obvious that the entire process needs to be reformed. Instead of trying to benefit everyone, globalization should try to benefit everyone more equally.

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