The_Influence_of_Globalization

The interdependence of nations, the internationalization of domestic economies, the frequent international cooperation, all of these phenomena are brought by globalization, which has become the buzzword of the twenty-first century. Business dictionary (2004) define globalization as a process of ‘interaction’ and ‘integration’ among the people, companies, and governments of different nations, the process driven by ‘international trade’, ‘investment’ and ‘information technology’. It is well known that contemporary globalization has effects on the economy, culture, environment as well as political fields in societies around the world. As a positive force in the world, globalization has already brought immense benefits to those countries that were able to participate in the process, although it exerts some negative impacts. This essay will primarily focus on international trade and illustrate this use in China as an example. Nowadays, many governments and international institutions have adopted policies designed to increase integration into the global economy. Actually, research carried out by World Bank (2002) finds that open economies grow between 2% and 2.5% per year more rapidly than closed ones. An increasing number of countries are eager to embrace the growing trend of globalization as its benefits. Firstly, through international trade, globalization strengthens international cooperation and expands people’s scope of activity. Countries tend to export what they produce efficiently and to import what they produce relatively less efficiently. Exports bring a vast amount of income to government and company while imports bring cheaper products to consumers, including high-quality goods and services that were not available previously. Due to globalization, international trade becomes increasing prosperous .Take China for example, China’s imports have risen by 70% since it joined the World Trade Organization, who institutes the rules for globalization. China became the world’s third largest importing country in 2004. (Appadurai, 2004:17) Secondly, globalization encourages free trade among countries and improves the production efficiency. Specifically, International trade allows participating countries to benefit from specializing in products and services in which they have a comparative advantage over other countries. In other words, it is more cost effective for them to specialize in a certain product. According to Killick (2000:39), ‘specialization is achieved when participating countries shift their scarce resources toward producing goods and services in which they have a comparative advantage over other countries, and in turn, increase the consumption of all goods. ’Globalization is seen as a driving force for International trade and exchange of products. As a consequence, cost is minimized whereas profit and efficiency are maximized. Thirdly, both developed and developing countries can benefit from globalization. With regard to trade between developed nations and developing nations, the developed nations have comparative advantages in the productions of technology while the benefits of developing nations are raw materials and labor. Therefore, developed nations tend to import natural resources, agricultural products, and simple manufactured goods from developing nations. In exchange, they export high-tech machinery and consumer goods. Moreover, the field of science and education in developing countries improved greatly due to introduce advanced technology from abroad. In brief, the overall boom in world trade has largely accelerated economic growth of both developed and developing countries. Fourthly, as the economy goes global and new technologies are introduced, new business opportunities create jobs that did not exist before. Global companies enter local markets, international companies and factories create a large number of job opportunities to local people. Furthermore, to those employees who work in international enterprises, it is an excellent chance to broaden their horizons and to experience something refreshing and enlightening. Nevertheless, it is undeniable that globalization has also exerted some negative impacts on our society. As Greenwell (2001:26) claims that globalization has weakened the position of poor countries and exposed poor people to harmful competition. His concern is understandable, especially since the gap between rich and poor has indeed become more obviously in recent decades. A study by the World Institute for Development Economics Research at United Nations University reports that in 2003, the richest fifth of the world’s population received 85% of the total world income, while poorest fifth received only 1.4% of the global income.(Scheuerman, 2004 )However, its reason is complicated and cannot be simply attributed to globalization. It is a fact that some developing countries have not yet exploited all the benefits that globalization can bring. One major reason is that industrialized countries continue to impose trade barriers on clothing or agricultural products, in which developing countries have a competitive advantage. It should be realized that the integration into a fast-paced and competitive global economy is not an easy task, particularly for developing countries. Therefore, globalization brings about both chances and challenges. However, China is a good example of developing countries that have achieved impressive growth in the process of globalization. According to assessments of the World Bank and other world organizations, China is one of the few developing countries that has been a winner in globalization. China has obtained not only large amounts of foreign investment but also advanced technology and management skills as a result of its participation in the globalization. More importantly, by opening up to the world, China widened its horizons and changed point of view on the outside world. The benefits it gained from globalization rely on its cheap labor, resources and capital inputs. In addition, China formulates appropriate strategies for economic development and the government takes gradual steps to supervise the opening process. Factually, increasing awareness of the negative as well positive aspects of globalization has not diminished China’s commitment to participating in the globalization process. Furthermore, China will be more competitive in the long term if it can successfully meet the many economic challenges posed by globalization. In conclusion, globalization is increasing the integration of national markets and the interdependence of countries in the world for a wide range of commodities and services. Countries that have successfully integrated into the globalization process are enjoying faster growth, better living standards, easier access to capital and new technology as well as higher productivity and lower prices than countries with closed economies. Although weak domestic policies, infrastructure and trade barriers can restrict a country's ability to take advantages of globalization, the substantial benefits brought by globalization are obvious. Each country would be better to makes decisions and policies that position them to maximize the benefits and minimize the challenges presented by globalization. References: Appadurai,A.,2004.Modernity at large: Cultural dimensions of globalization. Minneapolis, MN: University of Minnesota Press. Business Dictionary .2004.Oxford: Oxford University Press Greenwell,H.,2001.Trends in Income and Expenditure Inequality .NATSEM: University of Canberra Press. Killick,T.,2000.Globalization: Is it good for the poor' Keynote paper, Joseph Mubiru Memorial Lecture Scheuerman,W. E., 2004, Liberal Democracy and the Social Acceleration of Time, Baltimore: Johns Hopkins Press. Therborn, G., 2001. Globalization and inequality. Stanford, CA: Stanford University Press. World Bank Development Research Group, 2002.Trade, Growth and Poverty