Maximizing the Benefits of Globalization While Minimizing the Costs
Never in its history mankind have been so interdependent, interacted and well connected as today. The modern era of mass communication has turned the entire planet into a village. The process has resulted in diffusing different cultural and trends of the nations and communities. The societies, which were once too remote to be disturbed by any outside source, culture or trend, are under the brutal assaults of globalization. The advantages and disadvantages of Globalization vary nation to nation.
It is perceived differently by the developed and developing nations. Despite all the objections and concerns every nation and every corporation has taken steps to get the advantages of globalization and evade the disadvantages. This paper will discuss the measures by which benefits of globalization can be maximized and its costs can be minimized. What is Globalization? The term Globalization refers to a complex process or multiple processes, which result in the integration and interdependence economically, culturally, politically and technologically.
According to the Encyclopedia of Britannica Globalization is “The Process by which the experience of every day life, marked by the diffusion of commodities and ideas, can foster a standardization of cultural expressions around the world. (Britannica, 2006) “Thus globalization means the consequences and outcomes of the interaction of ideas, cultures, traditions, technologies and norms, which are homogeneous and standardized through out the globe. Speaking in terms of economics “globalization is the convergence of prices, products, wages, rates of interest and profits toward developed country norms. (Sharif, 2003, p.
163). Economically globalization has made possible the free monetary flow across the globe and enabled the corporation to work on foreign soil with greater flexibility. Maximizing the Benefits of Globalization While Minimizing Its Costs: World nations whether developed or developing, multinational corporations and businesses all have been trying their best to take full advantage of the increasing sphere of trade and economic growth. The statistics of the last decade has shown that the benefits of globalization differ for countries due to the different in their political, economical and demographical situations.
The developing nations may maximize the benefits of globalization by appealing large scale of foreign investment which will not only bring money, new technology and foster economic growth but it will also create new jobs and consequently increase the standard of living of that country. Major financing organizations may also provide funds and aids at the times of crisis. Many newly developed countries of East Asia like Singapore, Malaysia, Indonesia and South Korea have achieve great economic growth and development by heavy foreign investment and technology transfers.
On the other hand globalization has made adverse Impact on the local industry and manufacturers of the developing countries. Due to high manufacturing costs and no subsidies from the government they are unable to compete the swarming international products and goods. That’s why when many developing countries lifted trade barriers and introduced free trade in the region the local industries were cornered by the multinational corporations. This changes a country into a consumer economy and thus it is unable to play as an active partner in the global economy.
Most of the opposition of globalization is because of these adverse results and affects after introducing free trade policies in developing countries. To shun these affects the policy makers must make a balancing trade policy giving equal opportunity to the local and international manufacturers by balancing the free trade policies. Another adverse affect of globalization is the unequal distribution of wealth. This has played a pivotal role in arranging the masses against the global process. In most of the developing countries lifting the trade barriers have increased the gap between the rich and the poor.
The industrialists and manufacturers have become richer, while the common masses are still living in poor conditions. This is the only reason of the widespread perception that globalization is detrimental to poor. The policies of the world financing institutions like World Bank and International Monetary Fund are not quite compatible for developing countries. Their trade models are based on developed economies and has rendered adverse affects on most developing nations of Sub-Saharan Africa, Latin America and South Asia.
The policy makers of developing countries should weigh the pros and cons of these policies imposed by financing institutions before implementing them in their countries (Bigman, 2002). While the developed nations can maximize the benefits of globalization by minimizing manufacturing cost by investing in developed countries and enjoying the benefit of abundant cheap labor and raw material available there. The increasing standard of living in the developing countries will create new markets, spheres and domains for the developed countries and corporations based there.
The advancement in communication technologies like teleconferencing can be used to minimize the physical distances thus saving the time and money spent during traveling etc. The flow of information via Internet has made correspond much easier than the past. All these tools can be used to increase the pace of production, marketing the product in a more convincing manner as well as cutting the cost of production. The advance transportation facilities, which are becoming common through out the globe because of standardizing global norms it has become possible to reach the most remote areas and consumer markets of the world.
By using advance means of transportation and marketing developed nations can gain access to new markets and expand their business spheres. Despite all these gains and efforts there are some negative affects of globalization in developed nations. The most concerning and worsening problem is the flow of skilled and non-skilled jobs from the developed nations to the developing nations. This has resulted in the increasing number of jobless people in the developed countries. Most corporations are investing in developing countries in order to achieve the benefits of cheap labor and resources.
In the developed nations, the most effective way to help those who lose their jobs due to globalization — or for other reasons, such as technological change — is to achieve a growing economy that generates an ample supply of new jobs (Weidenbaum, 2003). The policy makers in the developed countries revise their trade policies and high tax rates on manufacturing industries, which will make possible for the home based industries to hire local labor. While despite the decline of the manufacturing sector the services sector is emerging as a major GDP producer in developed countries.
Thus the developed nations can easily compensate the losses of declining manufacturing sector by promoting the services, which are dependant on technology advances in which the developed nations always have a superior position. We have seen that though the balance of trade of most developed countries is negative, but the balance of payments is always positive thanks to the services provided to the developing nations. Conclusion: The process of globalization is a process in which every nation or state has gain something but on the cost of something.
Thus the only way to remain an active competent nation in this highly interdependent world is to maximize the gains and minimize the costs of globalization. But the measures to be taken vary country-to-country, nation-to-nation and state-to-state. This is primarily because of the difference in political, economical and demographic scenario of the country.
Bigman, David. (2002) Globalization and the Developing Countries: Emerging Strategies for Rural Development and Poverty Alleviation, CABI Publishing in association with ISNAR, ISBN 0 85199 575 6
Globalization. Encyclop? dia Britannica. Retrieved April 12, 2007, from Encyclop? dia Britannica 2006 Ultimate Reference Suite DVD Shariff,Ismail. (2003) GLOBAL ECONOMIC INTEGRATION: PROSPECTS AND PROBLEMS. An International Journal of Development Economics. Development Review, Vol1, No. 2: p. 163-178 Weidenbaum, Murrey. (2003) Weighing the Pros and Cons of Globalization, Woodraw Wilson International Center for Scholars. Retreived from the World Wide Web on April 12th 2007, https://www.wilsoncenter.org/Sample Essay of PaperHelp