“Globalisation is a process in which the world appears to be converging
economically, politically and culturally” (Needle, 2015). Nowadays, financial markets, industry, and politics are
all internationalized. The occurrence of this has increased transfer of wealth
across countries; it has increased communication throughout the world, an
increased importance of trade in the economy and an increase in international
trade policies. Globalization has had detrimental effects on the economy has
created many challenges around the world.
Globalisation is cut into six main aspects;
firstly there is international trade and the creation of the global marketplace.
Globalization can be viewed as an enhance to the amount of international trade.
There are globally organized production and investment flows, Migration,
communication flows, Cultural flows and rapid technological change around the
world. Globalisation integrates markets in the worldwide
economy, leading to the joining of national economies. Markets whereby
globalisation is particularly common include financial markets, insurance markets and product markets, such as markets for electronics,
motor vehicles and agriculture.
has played a huge part in the development of businesses to ensure they expand
into different parts of the world.
There are three main competing views on globalization, each
discussing different positives and negatives impacts that are associated with
globalization. The three different perspectives are the neo-classical perspective,
the Marxist/Socialist perspective, and the Structuralist view.
The first competing view is the Neoclassical/neoliberal
perspective, this view argues that overall history and current economics have
joined together to form a new relationship where nations are uniting both economically
and politically. It’s very essential for countries to come collectively in both
of these aspects in order to be a success in the globalized world.
The neoclassical competing view shows that the world’s
economy is controlled more by the existing market. It shows that If trade was
so essential to expanding markets, thus allowing increased productivity it
would be very easy to show how trade around the world would be so beneficial (Adam
Smith, 1790). Foremost it gives an amount of funding that assists the increase in
the amount of money available to trade internally. Furthermore, it enables more
of a market development across the globe. An example of this could be two
countries selling two pairs of goods, if one country has an “absolute advantage”
in producing one set of goods and the other country has an absolute advantage
of producing their set of goods, they would each be specialized for their own
country for selling the goods they have.
The advantage of having this is that both countries will mainly
benefit from this provided that the trade is fair. In addition, trade and the
economic success enables many types of countries to both develop and profit
from a huge economic change into the markets overseas to be able to acquire
cheaper resources/materials. However, this could be a potential problem as countries
that are significantly better at producing and countries which are more
advanced would benefit from this whereas countries that aren’t as developed wouldn’t,
simply because of lack of growth and development and thus making it harder to
trade. A man named David Ricardo refined Adam smith’s theory by arguing that with
two countries, if one country (country A) was better than the other (country B)
at producing, then that country will be known for that particular produce. For
example, he uses trade between two
countries being England and Portugal explain how it assists Portugal to import
cloth even if Portugal can produce cloth with less labour than England. Current
economists portray that England has a comparative advantage in producing cloth.
Ricardo states, “To produce wine in Portugal, it must have 80 men for a
year, and to produce the cloth in the same country, it must have need of 90 men
for the year also. Thus it would be advantageous for them to export wine in
exchange for cloth”(David Ricardo, n.d)
to globalisation rising alongside the increase in accessible/useable technology
and convenience of improved transportation, technology has made it easier for
people to communicate across borders, and has also lead to a decline in the
cost of transportation. It is now cheaper and more efficient to transport goods
from one place to another. Globalized transportation has increased
profitability and thus during the main growth stages of globalization between
1970 and 1993 the increase in transport was up by nearly fifty percent
A major change with transportation costs has enabled businesses
to acquire greater profits. This is from changing ideas within the business by
moving the place they create products (Heshmati, 2003). In addition, Companies
can now transfer files via the internet, and this enables the possibility to
have meetings without every member being physically present. This has led to
lower long distance communication costs and the exchange of information is
drastically easier than ever before. International businesses can now telecommunicate
with others through the use of email, telephone conferences, and
videoconferences. The increase in telecommunications development had to do with
a cause-effect relationship between technological development and the
deregulation of financial market policies. (Czaputowicz, 2007).
second competing view is the Socialist/Marxist perspective. They argue that
globalization has led to an increase in the inequalities of countries/nations. Marxist
argues on exactly how unequal nations are currently how globalisation plays its
part in those inequalities. Firstly, Marxist was in agreement with smith that
capitalism led to unprecedented growth but he also made the point that there
was a huge flaw. He believed the social system of capitalism is very unfair, he
believed that owners of capital are able to exploit their advantage of certain
access to recourses and some political powers are in the hands of a few people.
The more wealthy nations are continuing to increase their status of wealth
whilst the poorest nations/countries are continuing to remain poor. It has been
established that 20% of the world’s richest population control 86% of world
gross domestic product, as well as 82% of world exports. In comparison to the
world’s poorest 20% population consume 1.3%.
Rising countries such as India and China have
reduced poverty and have shown an increase in economic growth since they took
on open economic policies in the 1990’s (Cheng and Mittlehammer, 2008). It is vital
to put these policies in place so that more countries will want to partake in
globalisation. In some parts of
the world there are no guarantees that the wealth from inward investment will assist
the local community of the less developed countries. Often, some of the profits
are sent back to the MEDC where the TNCs are based. If it becomes cheaper to
operate in another country, the TNC might close down the factory and make local
people redundant. However, if countries which are still
developing acknowledge that they will not have to suffer from inequalities,
they might find it beneficial for them to join in the globalisation process. A study
found that foreign investment has had a positive impact on economic growth when
country-specific factors are taken into account (Carkovic and Levine, 2002).
Some of the factors are financial development, school attainment and state
final competing view is the Structuralist writer’s perspective. This specific perspective
differs from the other two perspectives in various ways. Firstly, it is
believed that there isn’t a main reason behind globalisation. Globalisation is
considered to have just progressed over the years. Secondly, globalization
could be very influential however it’s an unknown occurrence and the
predictions of its outcome will not be known for many years down the road. After
the Second World War, a development of economics was created in belief that
LDC’s (Less developed countries) could not follow the same footsteps of the
more developed countries. Additionally,
TNCs (transnational corporations) were to help bring wealth and foreign currency to local
economies when they buy local resources, products and services and therefore
the extra money created by this investment can be spent usefully on education,
health and infrastructure for them countries.
Many countries were led to enforce the non-market policies to
rapidly industrialize their economies. LDCs faced an already developed
capitalist world which needs time to be able to catch up on certain policies
and thus it was argued that some structures required for a sustainable market
system weren’t made in some of the developing countries and therefore they had
to be constructed before the integration of economies into the global system. The
positive effect globalisation can have is the Inward investment by transnational
corporations helps countries by helping and providing new types of
employment through jobs which
requires different skills for local people. Structualists wouldn’t particularly agree with
the way some of these problems are addressed but they believe and argue that if
the business environment is to be constructed in such a way as to enable
globalization to increase growth, stability and development over time then
those issues had to be addressed and resolved.
Structuralist writers further believe that the same common
changes have occurred from globalization but there isn’t a specific way of how
these changes came. This competing view believes that the range of factors
influencing globalization is much greater such as technological change,
difference in tax systems to get investments and growth strategies for countries;
however the outcomes of globalization are very vague. Additionally, the
increases in technology and the trade liberalization or governmental policies
have lead to globalization benefiting a lot of countries and this dire increase
in globalisation has lead to an enhance in inequality amongst nations, as well
as an increase in the inequalities between the development of individual
conclusion, globalisation can be defined in different competing perspectives,
the way it has changed policies in the world and how nations are conducting
business in the world are very important. The competing views of globalisation have
many different points on what globalization is and how it affects the world. There
are also several theories of globalization which include the trends and views
of globalization that need to be understood. It’s very necessary to know the fundamentals
of globalisation, not only because it impacts business today but it also has a
huge influence on society as a whole.
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