Globalization and Its Influence on the World Economies

Paper Info
Page count 6
Word count 1757
Read time 7 min
Subject Economics
Type Essay
Language 🇺🇸 US

Introduction

The contemporary society is characterized by drastic changes that arise from globalization. Globalization facilitates the realization of a world society interconnected by structures that make it appear like a village. Mainly, technological advancements experienced today have aided the transformation of the world economies, as seen in the intensification of international trade undertakings and the formation of culturally diverse organizational settings (Pieterse, 2015).

Notably, multinational corporations (MNCs) such as Coca-Cola, Starbucks, and MacDonald’s have expanded their operations internationally, thereby altering the economic and corporate atmospheres in foreign countries. Consequently, globalization has occasioned the generation of competitiveness in various industries in the world, thus nurturing development as depicted by the increase in foreign direct investments (FDI) in the developing economies (Dignam & Galanis, 2013).

However, the trend has evoked damaging outcomes such as unfair competition experienced by domestic companies, exploitation of workers, and racial discrimination (Roberts, Hite, & Chorev, 2014). As such, the contention whether globalization is beneficial to the world economies and workplace environment has dominated debates recently. Important to note, globalization has a great influence on the various economic settings in the world as it fosters the creation of a united society amid the background differences.

Thus, the negative consequences of globalization do not mean that the world needs to stop the operation of the MLCs in regions like Africa due to the cases of exploitation besides other socio-economic issues. In this light, this paper reveals that globalization is responsible for the growth of the modern society by developing global markets, enhancing FDIs, influencing corporate changes, creating employment, promoting positive cultural changes, and improving environmental consciousness.

The Development of Global Markets

Globalization, to an extensive degree, facilitates the growth and development of global markets that favor the creation of diverse trading opportunities and mend the quality of life thereby, fostering the eradication of poverty in different societies. Essentially, globalization accelerates the realization of prosperous societies by merging separate national markets into a single and huge international marketplace (Benería, Berik, & Floro, 2015).

As such, the widening of global markets affects the well-being of the communities in underdeveloped and developing economies through the integration of new ideas in the local economic processes. Mainly, the global markets have promoted the liberalization of trading activities by weakening the barriers that hinder the effective flow of goods and services across borders (Sandbrook & Güven, 2014).

However, some players in the global markets take advantage of the absence of trading barriers to establish economic imbalances that create unequal development opportunities (Beeson, 2014). For example, the trade imbalance between the U.S and China, which favors the latter due to its low artificial exchange rates besides other measures facilitated by globalization, has contributed to the former’s unemployment issue significantly, in the recent past.

Therefore, for the sake of improving the social and economic well-being of the U.S citizens, the necessity of creating economic agreements that regulate the payable interest rates among other aspects of trade between the two countries is crucial (Benería et al., 2015). In this light, addressing the issue amicably would create more employment opportunities, among other benefits to the trading partners leading to prosperous societies denoting the positive influence of globalization on the global markets.

Increase in Foreign Direct Investment (FDI) through Globalization

FDI is a good pointer of economic development that has a great influence on social prosperity. The FDI entails the establishment of subsidiary outlets of the parent corporation in foreign countries to facilitate the sustainability of the parent company (Sandbrook & Güven, 2014). In this respect, FDI is denoted by the investments in the shape of capital, inventories, land, and tangible assets to enhance the profitability of the company besides developing the socio-economic health of the host communities.

Due to the favorable economic structures developed by the globalization of economies, Starbucks has developed a 5-year strategic plan that seeks to open at least 2,500 more stores in the Chinese market by 2020 to foster its competitiveness in the coffee industry (Beeson, 2014). The establishment of more Starbucks stores in China would foster its economic growth amid the concerns of the slow growth of the country’s economy in the near future.

Furthermore, the FDI made by Starbucks in China would facilitate the spreading of the coffee-consuming culture in the country. Estimates show that China consumes 4.5 billion coffee cups annually compared to U.S’ 134 billion (Pieterse, 2015). Therefore, through FDI, corporations diffuse their culture in foreign economies, thereby promoting the realization of a global society with a common culture. Nonetheless, FDI has been criticized for creating stiff competition for the smaller corporations in the host country, leading to their decline. On the positive side, the entry of new players should be regarded as a way of steering competition that favors the delivery of quality goods and services to the public (Sandbrook & Güven, 2014).

Corporate Changes

Globalization has promoted the development of trending corporate structures in various economies to foster the effective delivery of products and services to the public. Notably, globalization fosters the transfer of information and knowledge across borders to facilitate successful economic processes (Dignam & Galanis, 2013). Essentially, information is a crucial factor of production in the contemporary economic environment, and thus, its availability is important for effective decision-making. Technological advancements have also enhanced the communication element of corporate processes through various platforms, especially through the Internet (Roberts et al., 2014).

Moreover, globalization has sensitized the essence of embarking on strategic business undertakings. For this reason, companies have shifted towards the expansion of their operations globally to bolster their competitiveness. Besides the trend evoking criticism regarding labor exploitation and unfair competition, it promotes social prosperity by delivering standards products and services to the customers at the grassroots level (Messner, 2013). Therefore, when Nike established its manufacturing plants in the developing countries to take advantage of the cheap labor, it demonstrates the influence of corporate changes that arise from globalization,

Employment Creation

The dawn of globalization triggered the movement of labor from developed economies to the developing and underdeveloped countries, thereby heightening the unemployment rates in the latter economies (Noon, Blyton, & Morrell, 2013). Furthermore, the trend, to a substantial degree, created income inequalities between the developed and developing countries. For instance, in 2010, the lowest mean wage rate in Sweden and Japan is $7.18 and $3 per hour, respectively (Noon et al., 2013).

Notably, the economic imbalances also occurred in the developed economies owing to the competitiveness of the labor market. However, since 2005, globalization has spearheaded employment creation mainly in the information technology (IT) sector. Evidently, the IT sector in India created employment opportunities that account for 8% of the country’s workforce in the 2013/14 fiscal year (Messner, 2013).

Therefore, besides the labor inequalities brought about by globalization in developing countries, the global village fosters the creation of job opportunities in sectors like the manufacturing and service industries. For instance, in anticipation of globalization in the early 1980s, China developed “special economic zones” characterized by the availability of cheap and unskilled labor. The strategy proved effective after it attracted FDI from countries like Taiwan and Japan leading to the drastic growth of its manufacturing sector that employs millions today (Sandbrook & Güven, 2014).

Critics might regard the operations of MNCs such as Nike in the developing economies as labor exploitative and influence the world to boycott their products. However, rejecting their products provides no solution to such labor issues bearing in mind the company has already created thousands of jobs directly or indirectly globally.

Culture Change

Considerably, globalization has influenced the worlds’ sense of cultural self since trade is now an essential aspect of social and economic growth (Pieterse, 2015). The effects of globalization manifest today in the organizational setting as companies embrace cultures that are compatible with the diverse values, attitudes, norms, and traditions of their workforce and customers. For this reason, the modern world is characterized by a market society founded on the essence of freedom of choice. As such, the growth of a culture that supports neo-liberalism where individuals determine their mores and lifestyles freely provided they do not infringe the rights of others (Roberts et al., 2014).

However, critics might contest the extent to which globalization has fostered emotional attachment to trading activities. For example, the 9/11 attacks directed at the World Trading Center in the U.S by terrorists uncover that globalization could significantly affect global economies when political and economic tensions arise (Pieterse, 2015). Therefore, such heinous acts show that commerce is a key aspect of the modern culture that conflicting parties could use to justify their beliefs. Notably, even terrorist organizations use the culture of commercialization to underline their identity in the global society.

Besides the emotional attachment aspect of trade in the contemporary society, business organizations continue embracing new strategic approaches that tune the corporate culture changes that reshape work tasks besides fusing technological advancements (Beeson, 2014). Consequently, corporations such as Starbucks and MacDonald’s have expanded their operations in the Asian continent to foster the commercialism culture in the new markets. Therefore, amid the political tensions that transcend to the economic scenes, globalization has established a libertarian society.

Environmental Consciousness

Today, the world’s environmental concerns understand that ecological processes disregard national boundaries in most instances and that environmental issues transcend borders thereby, affecting the entire globe (Christoff & Eckersley, 2013). Therefore, globalization has shaped a society that thinks and acts at a global gauge thus, establishing new perspectives of global responsibility.

In this regard, international organizations led by the United Nations Environmental Programme (UNEP) have sensitized the relevance of promoting environmental sustainability. Consequently, corporations in the modern society governments uphold the compliance with the provisions of international environmental agreements such as the Kyoto Protocol and the United Nations Framework Convention on Climate Change (UNFCCC).

Environmental consciousness in the modern society is common than ever before as players in the world economies integrate sustainable processes to conserve the environment in which they operate. Notably, globalization has promoted the adoption of corporate social responsibility (CSR) initiatives by individual sector players across the globe through tree-planting projects among other strategies (Lim & Tsutsui, 2012).

Conclusion

The onset of globalization in the past few decades has promoted the development of the world societies amid the challenges experienced. Particularly, modernization has encouraged the growth of the global markets, FDI, organizational and culture changes, employment creation, and environmental consciousness. The notable cases of economic exploitation in developing countries undertaken by the activities of giant corporations like Nike and Apple require the application of policies that safeguard the economic and civil rights of workers.

References

Beeson, M. (2014). Regionalism and globalization in East Asia: politics, security, and economic development. Basingstoke, UK: Palgrave Macmillan.

Benería, L., Berik, G., & Floro, M. (2015). Gender, development, and globalization: economics as if all people mattered. London, UK: Routledge.

Christoff, P., & Eckersley, R. (2013). Globalization and the Environment. Lanham, MD: Rowman & Littlefield Publishers.

Dignam, A., & Galanis, M. (2013). The globalization of corporate governance. Farnham, UK: Ashgate Publishing, Ltd.

Lim, A., & Tsutsui, K. (2012). Globalization and commitment in corporate social responsibility cross-national analyses of institutional and political economy effects. American Sociological Review, 77(1), 69-98.

Messner, D. (2013). The Network Society: Economic Development and International Competitiveness as Problems of Social. London, UK: Routledge.

Noon, M., Blyton, P., & Morrell, K. (2013). The realities of work: Experiencing work and employment in contemporary society. Basingstoke, UK: Palgrave Macmillan.

Pieterse, J. N. (2015). Globalization and culture: Global mélange. Lanham, MD: Rowman & Littlefield.

Roberts, T., Hite, B., & Chorev, N. (2014). The globalization and development reader: Perspectives on development and global change. New York, NY: Wiley.

Sandbrook, R., & Güven, A. (2014). Civilizing Globalization, Revised and Expanded Edition: A Survival Guide. Albany, NY: SUNY Press.

Cite this paper

Reference

EduRaven. (2021, October 31). Globalization and Its Influence on the World Economies. Retrieved from https://eduraven.com/globalization-and-its-influence-on-the-world-economies/

Reference

EduRaven. (2021, October 31). Globalization and Its Influence on the World Economies. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/

Work Cited

"Globalization and Its Influence on the World Economies." EduRaven, 31 Oct. 2021, eduraven.com/globalization-and-its-influence-on-the-world-economies/.

References

EduRaven. (2021) 'Globalization and Its Influence on the World Economies'. 31 October.

References

EduRaven. 2021. "Globalization and Its Influence on the World Economies." October 31, 2021. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/.

1. EduRaven. "Globalization and Its Influence on the World Economies." October 31, 2021. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/.


Bibliography


EduRaven. "Globalization and Its Influence on the World Economies." October 31, 2021. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/.

References

EduRaven. 2021. "Globalization and Its Influence on the World Economies." October 31, 2021. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/.

1. EduRaven. "Globalization and Its Influence on the World Economies." October 31, 2021. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/.


Bibliography


EduRaven. "Globalization and Its Influence on the World Economies." October 31, 2021. https://eduraven.com/globalization-and-its-influence-on-the-world-economies/.