Benefits and Shortcomings of Globalization

Globalization is the term used to describe how the independence in cultures, economies, and populations of the world has grown, brought about by the cross-border movement of goods and services, information, technology, and people. Over the centuries, different countries have built economic partnerships to help in the cross-border movement which has largely shaped modern life today. The world of today has become interconnected in all ways through the forces of media, technology, transportation, and global finance through the international boundaries crossing. Many opportunities have been created for all countries to grow and experience economic growth, which is conventionally measured in the Gross Domestic Product (GDP).

What are the advantage and disadvantages of globalization?

The modern world is established on globalization where lives have been made better. Globalization, however, creates a challenge for those who do not accept the fact that the world is getting smaller. Most companies that don’t embrace globalization end up losing their competitive advantage in the global market. Globalization offers the availability of products, goods, services, technologies, and knowledge in a wide array due to the availability of large customer bases. While globalization has helped grow social lives, promoted economic developments, and given rise to technological advancements, the MNCs have been empowered at the expense of developing nations leading to violation of human and environmental rights.

What are benefits of globalization?

Globalization has helped the rise in living standards through the growth of economies that has increased the wealth and income of nations and individuals. The international market has promoted an increase in the exchange of goods, information, and growth in technological enhancement. Poor countries can access opportunities from the well-developed economies through the availability of resources created through job opportunities, and technological opportunities brought by cross-border international trade.  There was a flat and low growth for about 150 years before 1950; when the first acceleration took place (Elixon, 2018). The period of globalization between 1980 and 2010 has been a real growth almost 35 times of the period between 1950 and 1980. The chart in fig. 1 below shows the trade growth between 1800 – 2014. In 2008, there was a global financial crisis that led to the collapse of global trade. The following two years, there was a growth and then a drop. Economists have associated globalization with trade because of its performance in economic growth.

Fig 1. Trade growth between 1800 – 2014.

Globalization has opened the world where people are sharing new ways of life and thinking. In the traditional setup, women were not required to involve themselves with the outside world and children were not getting the necessary education. With the interconnected world, women have gotten out of the family set up and children have been educated to take a place in the new world that their parents did not have (Dey, 2007). People from different backgrounds exchange ideas in all spheres at any time and place. Through technology, lifestyles, and products, change is inevitable which has brought down the walls of division and connected people through visions.

Globalization has increased competition in diversifying products where companies are rising to the task of meeting the customer demands who are in large numbers both locally and internationally. According to Aaker (2005), an efficient and attractive product in an area will be most likely effective in other areas, too. Furthermore, all the areas want and ask for the best quality and most advanced attributes. Global producers have been left in a dilemma of whether to be a global brand or have various brand names for different countries (Monalica and Roman, 2013). Globalization has made companies evolve, compete and make innovations in developing new products due to the narrow business opportunities in the market.

Shortcomings of globalization

Most companies from well-up economies have failed to protect labor rights, human rights, and environmentalism in the developing nations where they expand to. Companies have adopted the ‘race to the bottom’ process through globalization where they seek the countries with the weakest labor and environmental rights as well as lowest wages (Josephson, 2021).  Rather than the companies deciding to adopt and export the high standards in their countries and export them to the developing nations, they adopt the low standards where labor is not protected. With the increased border movement, plenty of tax havens associated with the movement of capital, goods, and services are not captured and redistributed by the government. Globalization should be a platform to spread values and practices like environmentalism and labor rights but the process has been slow and imperfect.

Multinational corporations are empowered at the expense of developing nations. The more industrialized economies and the multinational companies have bigger financial leverage and can dictate the advantageous terms of exchange since they capture a more significant value thereby victimizing the developing economies. Environment and labor rights become harder to enforce with the multinational corporations in play. At the expense of citizens and governments, multinational corporations have been given a leading role (Josephson, 2021). The MNCs have deep impacts on domestic policy by virtue that they can sue the states directly (Walls, 2017). By lobbying for favorable provisions in trade agreements they have reduced the sovereignty of states. Citizens no longer have the ability to hold their leaders accountable for the state in their countries.

Globalization being a global force has caused a mainstream of monoculture while other diverse cultures are being driven underground. For instance, if people continue watching Hollywood movies, there is a possibility of losing other languages and precious cultural practices (Josephson, 2021). With social globalization, the flow of information through the internet, television, and telephone have contributed to the rise in obesity with an increased risk in the supply of sugar and animal protein (Dorado, Cornselsen, Smith, & Walls, 2019). Cultural homogeneity has caused people’s preferences to converge and products cannot compete with cheaper multinational ones. People preferring a unified culture leads to forgetting their own culture and the unique art development of a country dies.

Conclusion

Globalization is the main factor in economic, technological, and social developments covering all spheres of life in both developing nations and well up economies. The developed economies who own the MNCs should be a guide to developing nations in helping grow the economies to rise to their positions in the global market. Multinational companies should stop interfering with the affairs of their host countries to allow them to run their developments with minimal distractions. Developing nations should therefore accept the globalization change and adapt fast for the good of their citizens. Globalization should not be an excuse for the loss of culture. Young people should realize that globalization is a tool for the development of their unique background art. If not well used, globalization will stop being a global good and end up causing destruction.

References

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Amelia, J. (2021). The pros and cons of globalization. Retrieved from https://smartasset.com/mortgage/the-pros-and-cons-of-globalization

Fredrik, E. (2018). WTO and globalization. Retrieved from https://ecipe.org/publications/the-economic-benefits-of-globalization-for-business-and-consumers/

Pricop, M., Tanţău, A. (2003) Globalisation, protectionism and company`s strategy, Tribuna Economică, Bucharest, 2003.

Soleda, C., Laura, C., Richard., S., & Hellen, W. (2019). Globalization and health. Economic globalization, nutrition, and health: a review of quantitative evidence. Retrieved from https://globalizationandhealth.biomedcentral.com/articles/10.1186/s12992-019-0456-z