Discover the pros and cons of globalization and its effects on the economy, politics, culture, and the environment with this guide.
Exploring the Pros and Cons of Globalization
Globalization refers to the increasing interconnectedness and interdependence of countries through the exchange of goods, services, ideas, and information on a global scale involves the integration of economies, cultures, and societies, enabling the flow of people, capital, technology, and knowledge across borders.
This phenomenon has been driven by advancements in transportation, communication, and technology, facilitating global trade, investment, and cultural exchange. It has both positive and negative effects, influencing various aspects of society, including the economy, politics, culture, and the environment. The following A Comprehensive Guide to the Globalization Pros and Cons below are;
Photo from ilearnlot.com
Pros of Globalization:
Globalization has been a topic of much debate and discussion. It brings with it several advantages that have had a significant impact on the world. Here are some of the key pros of globalization:
Economic Growth:
Globalization has opened up new markets and expanded opportunities for businesses to trade and invest across borders. This has stimulated economic growth by increasing productivity, innovation, and efficiency. It has helped developing countries in particular to attract foreign investment, create jobs, and improve their standard of living.
Access to a Variety of Goods and Services:
Through globalization, people have access to a wide range of products and services from around the world. This has increased consumer choices and affordability. It has also allowed businesses to access a global customer base, leading to market expansion and diversification of offerings.
Cultural Exchange and Understanding:
Globalization has facilitated cultural exchange and understanding by enabling the flow of ideas, values, and traditions across borders. This has led to a greater appreciation and tolerance of different cultures, promoting diversity and enriching societies.
Technological Advancements:
Globalization and technological advancements go hand in hand. The exchange of technology and knowledge across borders has accelerated innovation and progress in various fields. It has contributed to improvements in healthcare, communication, transportation, and many other sectors.
Collaboration and Cooperation:
Globalization has encouraged collaboration and cooperation between countries. It has fostered international partnerships and alliances, leading to joint efforts in addressing global challenges such as climate change, poverty, and terrorism.
Increased Standard of Living:
Globalization has played a role in raising the standard of living for many people around the world. It has brought access to better healthcare, education, and improved living conditions. It has also facilitated the sharing of best practices and knowledge, leading to advancements in various industries.
While globalization has its benefits, it also has its downsides. In the next section, we will explore some of the cons of globalization.
Cons of Globalization:
While globalization has brought numerous advantages, it is not without its drawbacks. It is important to consider the following cons of globalization:
Economic Inequality:
Globalization has contributed to widening the wealth gap between the rich and the needy. Developing countries, in particular, may struggle to compete with the economic powerhouses, leading to unequal distribution of wealth and resources. This can result in social and political instability.
Job Displacement:
Globalization has led to the outsourcing of jobs to countries with lower labor costs. While it has created new job opportunities in certain sectors, it has also resulted in job losses in traditional industries. This can lead to unemployment and income insecurity, particularly for workers in vulnerable industries.
Environmental Impact:
Globalization has increased the demand for resources and has intensified production and consumption patterns. This has hurt the environment, contributing to climate change, pollution, deforestation, and the depletion of natural resources. Transporting goods across long distances has also led to increased carbon emissions.
Cultural Homogenization:
While globalization promotes cultural exchange, there is also a risk of cultural homogenization. Globalized trends, languages, and practices can overshadow local traditions, languages, and customs. This can lead to the erosion of cultural diversity and the loss of cultural heritage.
Exploitation of Labor:
In some cases, globalization has resulted in the exploitation of low-wage workers in developing countries. Sweatshops, poor working conditions, and violation of labor rights are some issues associated with globalization. This raises ethical concerns and calls for better regulations and labor protections.
Loss of Sovereignty:
Globalization entails an interconnected world where decisions made by international organizations and multinational corporations can impact national policies. This can erode the sovereignty of individual nations, limiting their ability to make decisions in their best interests.
It is essential to address these challenges and work towards a more inclusive and sustainable form of globalization that minimizes the negative impacts while maximizing the benefits for all.
Bottom line
Globalization is the increasing interconnectedness and interdependence of countries through the exchange of goods, services, ideas, and information on a global scale. It has both positive and negative effects on various aspects of society, including the economy, politics, culture, and the environment. Pros and Cons of Globalization: A Comprehensive Overview.
The pros of globalization include economic growth, access to a variety of goods and services, cultural exchange and understanding, technological advancements, collaboration and cooperation between countries, and an increased standard of living. However, globalization also has cons such as economic inequality, job displacement, environmental impact, cultural homogenization, exploitation of labor, and loss of sovereignty. It is important to address these challenges and strive for a more inclusive and sustainable form of globalization.
Positive, Good, Negative, and Bad impacts or effects of Globalization on Economy; Globalization makes business management easier and efficient for the company. Based on my research, Globalization simplifies business management in the world. This is due to the advancement in technology, transport, communication, education, and regulations of trade that makes trade fair to all parties. This attracts more people to engage in international business and international trade. Managers within the global face a lot of challenges due to high competition in the industry; good decisions must make to satisfy and maintain their customers and attract more customers for their products.
Here is the article to explain, What are the Positive, Good, Negative, and Bad impacts or effects of Globalization on Economy?
Companies enjoy economies of scale in the business due to the reduction of cost in the management. This report explores a range of interlinking questions, starting with what is globalization, what are the impacts or effects of globalization in developing countries and developed countries, this is in terms of positive and negative impacts or effects on the economy. Globalization is something that affects all of us, no matter what our profession or interest is.
Globalization is a very wide and very important focus of discussion. I spent time researching what it is and the effects it has in developed countries and developing countries. So in this report, I will define what globalization is and the effects according based on my research. Globalization despite having benefits to the world also has negative impacts or effects of it.
The following Positive, Good, Negative, and Bad impacts or effects of Globalization on the Economy below are;
Globalisation has brought benefits in developed countries as well as negative impacts or effects, while positive. The positive impacts or effects include several factors which are education, trade, technology, competition, investments and capital flows, employment, culture, and organization structure.
Positive impacts or effects;
It would be rather difficult to discuss the extent of the positives that globalization has had on the world at large. But still, here are some of the positive impacts or effects of globalisation and the negative impacts or effects they have had on so many demographic segments of society.
Global market.
Most successful emerging markets in developed countries are a result of the privatization of state-owned industries. For these industries to increase consumer demand many of them are attempting to expand and extend their value chain to an international level. The impact of globalization on business management see by the sudden increase in the number of transactions across the borders.
In protecting yields and maintaining competitiveness, businesses are continuing to develop a wide range of their footprint as it lowers cost and enjoys economies of scale. Multinational corporations are a result of globalization. They occupy a central role within the process of globalization as evidenced through global foreign direct investment inflows.
Their concentrations within Europe in western economies have led to size constraints, therefore there is a need for new geographical areas to operate whereby they will face a lot of competition in the market. Through this they will enlarge their market and enjoy economies of scale as globalization facilitates time-space compression, economies compete at all levels including that of attracting investors.
Cross-cultural management.
Globalization tends to be the realm of the elite because in many parts of the world they are the only people who are affluent enough to buy many of the products available in the global marketplace. Highly educated and wealthy people from different backgrounds interact within a westernized milieu. Western styles, since are symbols of affluence and power, the elite often embraces western styles of products and patterns of behavior to impress others.
Today Western culture and patterns of behavior and language are staples of international business. United states have a powerful impact upon many other countries and societies. The world today has a popular cultural force. The popular consumer culture of the economically dominant West is relentlessly and inevitably transforming other regions, cultures, nations, and societies.
In addition, such perspective implies that technological change, mass media, and consumer-oriented marketing campaigns work in tandem to remake whatever they touch in their image. Even attitudes and ideas about society, religion and, technology transformed by cultural diffusion brought by globalization. For example, in America McDonalds, represent fast, cheap,p and convenient food while it is not the same worldwide. It’s of high price in other countries like China and Russia where it involves cultural experience.
Foreign trade.
Globalization has created and expanded foreign trade in the world. Things that were only found in developed countries can now be found in other countries across the world. People can now get whatever they want and from any country. Through this developed countries can export their goods to other countries. Countries do business through international trade, whereby they import and export goods across the globe. These countries that export goods get comparative advantages.
Organizations have been established to control and regulate the trade activities of the countries in the world to have fair trade. World trade organizations emerged a powerful international or organizations able to effectively influence individual governments to follow international trade rules, copyrights, policies on subsidies, taxes, and tariffs. Nations can not break rules without facing economic consequences. The number of nations that are dependent on trade, foreign capital, and the world financial markets increased greatly.
Countries engaged in foreign trade enjoy a comparative advantage. The post-Recardianan trade theories predicted that specialization in labor and capital-intensive goods would bridge enormous wage gaps between the poor and the rich countries, that is the developing and developed countries, sparing the latter from massive labor immigration.
Resource Imperative.
Developed countries need the natural and human resources of the developing countries while developing countries need the capital, techno, logy, and brainpower of the wealthier countries. Developed countries’ economies are increasingly dependent on the natural and human resources of developing nations. The growing interdependence of nations and their activities on one another fosters by the depletion of natural resources; as well as overpopulation.
Foreign investment.
One of the most visible positive impacts or effects of globalization in India is the flow of foreign capital. A lot of companies have directly invested in India, by starting production units in India, but what we also need to see is the amount of Foreign Investment Inflow that flows into the developing countries. Indian companies which have been performing well, both in India and off the shores, will attract a lot of foreign investment, and thus pushes up the reserve of foreign exchange available in India.
This is also one of the positive impacts or effects of globalization in the US and other developed countries as developing countries give them a good investment proposition. Managers’ objectives might not be the same as those of stockholders in some situations. The more complex the corporation the more difficult it is for shareholders to monitor management’s actions whereby it provides the managers more freedom to act in their self-interest at the expense of shareholders.
Multinational firms are more complex than national firms. Managers might favor international diversification because it reduces firm-specific risk or adds to their prestige. These goals might be of little interest to shareholders. This divergence of interests between shareholders and managers might reduce the value of multinationals relative to domestic firms.
Competition.
One of the most visible positive impacts or effects of globalization is the improved quality of products due to global competition. Customer service and the ‘customer is the king’ approaches to production have led to improved quality of products and services. As domestic companies have to fight out foreign competition; they compel to raise their standards and customer satisfaction levels to survive in the market. Besides, when a global brand enters a new country, it comes in riding on some goodwill, which it has to live up to. This creates competition in the market and a survival of the fittest situation.
Culture.
The positive impacts or effects of globalization on culture are many! Not all good practices were born in one civilization. The world that we live in today is a result of several cultures coming together. People of one culture, if receptive, tend to see the flaws in their culture and pick up the culture which is more correct or in tune with the times.
Societies have become larger as they have welcomed people of other civilizations and backgrounds and created a whole new culture of their own. Cooking styles, languages, and customs have spread all due to globalization. The same can say about movies, musical styles, and other art forms. They too have moved from one country to another, leaving an impression on a culture that has adopted them.
Legal Effects.
Increased media coverage draws the attention of the world to human rights violations. This leads to improvement in human rights. Global economic growth does not necessarily make people happier, worldwide free trade should also benefit humanity as well as protect nature, not just reward managers and stockholders. Those who would be authentic leaders need to address inequalities.
Globalization should promote openness and information along with exchange with greater democracy and prosperity. Gone are the days where the limited jurisdiction became a hindrance in the prosecution of criminals. These days due to international courts of justice, these criminals can no longer seek asylum in a foreign country but will be brought forward and there will be justice.
Due to globalization, there is also an understanding between the security agencies and the police of two or more different countries who will come together to curb global terrorism. Hence, it is now possible to catch the perpetrators of crime irrespective of which country they choose to hide in. This is undoubtedly one of the greatest positive, good, negative, and bad impacts or effects of globalization on society or the economy.
Negative impacts or effects;
Globalization also has its side effects on developed nations. These include some factors which are jobs insecurity, fluctuation in prices, terrorism, fluctuation in currency, capital flows, and so on.
Jobs Insecurity.
In developed countries, people have jobs insecurity. People are losing their jobs. Developed nations have outsourced manufacturing and white-collar jobs. That means fewer jobs for their people. This is because the manufacturing work is outsourced to countries; where the costs of manufacturing goods and wages are lower than in their countries. They have outsourced to developing countries like China and India.
Most people like accountants, programmers, editors,s, and scientists have lost jobs due to outsourcing to cheaper locations like India. Globalization has led to the exploitation of labor. Safety standards are ignored to produce cheap goods. “In practice, however, the recent experience in Latin America has been that many such open-handed multinationals moved their operations too; for example, China or South East Asia because of cost and market considerations”.
Fluctuation in Prices.
Globalization has led to a fluctuation in price. Due to the increase in competition, developed countries are forced to lower down; their prices for their products, this is because other countries like China produce goods at a lower cost; making goods to be cheaper than the ones produced in developed countries. So, for the developed countries to maintain their customers they are, forced to reduce the prices of their goods. This is a disadvantage to them because it reduces the ability to sustain social welfare in their countries.
Positive, Good, Negative, and Bad impacts or effects of Globalization on Economy; Image by Fathromi Ramdlon from Pixabay.
References; Positive and Negative effects of Globalization. Retrieved from https://www.ukessays.com/essays/economics/positive-and-negative-effects-of-globalisation-for-business-economics-essay.php?vref=1
Internationalization Meaning and Definition with its Advantages; With the globalization of the world economy, the number of companies that are active globally is increasing at the same time. Although international business as a concept has existed since the days of the East India Company and lasted into the first decades of the 20th century, the expansion of international companies was halted due to the two world wars. Then there is the hesitant move to internationalize the operations of multinational companies.
Here is the article to explain, What is the Internationalization? with their main points of Introduction, Meaning, Definition, Benefits, Advantages, and its Factors.
What really made the company’s global expansion possible was the Chicago School of Economic Thought, fueled by the legendary economist Milton Friedman, who defended neoliberal globalization. This ideology, which gradually began in the early 1970s, became a major force to be reckoned with in the 1980s and became the norm in the 1990s. The result of all this is the rapid expansion of global companies around the world.
In this way, the international business grew in scope and size to the point where it is today. The world economy dominates by multinational companies from around the world. What was originally a western corporate phenomenon has now spread to firms from the east (from countries such as India and China). This module examines the phenomena of international business from various perspectives, such as B. The characteristics of international businesses, their influence on local economies, target economies, and the way they must operate and succeed in the global competition for ideas and profits.
Above all, international business must ensure that it combines a global perspective and local adaptations, leading to glocal phenomena; where it must think globally and act locally. In addition, international companies need to ensure that they do not violate local laws while returning their profits to their home countries.
Introduction to Internationalization.
In addition, consideration should give to employment issues and the conditions of work governing global business operations. With so many third-world countries liberalizing and opening up their economies; there is no better time to do international business than right now. This balance by the counterbalancing force of the ongoing economic crisis has dealt a crushing blow to the world economy. The third force that defines international business is that third-world countries are not only ready to welcome foreign investment; but, are also trying to emulate international business and become like that. Hence, these aspects discussing in detail in the following article.
Lastly, doing international business must ensure that several operating procedures and norms are sensitive to local cultures and customs; while sticking to their brands which develop for the world market. This is the challenge we discuss earlier as “global” alignment. Any company operating in more than one country can describe as an international company. International business refers to trade and investment operations carried out by companies across national borders.
Companies can collect, acquire, produce, market and carry out other value creation processes at the international level and on an international scale. Business associations can also participate in cooperation with business partners from various countries. Apart from individual companies, governments and international institutions can also conduct international business transactions. Companies and countries can exchange various types of physical and mental assets. These assets can be in the form of products, services, capital, technology, knowledge, or jobs.
Meaning and definition of internationalization.
Expansion through internationalization is an organizational strategy in expanding outside the national market. The need to expand through internationalization arises when an organization has reached its full potential of internal expansion and seeks opportunities to expand across national borders.
However, moving to a global scale is no easy task. Organizations must adhere to strict criteria for price, quality, and on-time delivery of goods and services; which may vary from country to country.
Expansion through internationalization can be done through one of the following Target and Strategies:
As part of this strategy, companies offering different services offer personalized products and services that are suited to local conditions in overseas markets. This can of course be an expensive task as research and development, production and marketing have to be carried out taking into account local conditions in different countries.
Global Target:
Global companies rely on a profitable structure and offer these products and services in specific overseas markets where they have experience. In this way, standard products or services are offered to certain countries around the world.
Transnational Target:
According to this strategy, companies are pursuing a combined approach of transnational and global strategies. Companies rely on both cost-effective structures and local responses; H. following local conditions. In this way, the company offers its standard products and services while ensuring that they are appropriate to local conditions in the countries in which it operates.
Internationalization of Business.
Let’s attempt to discover the motives why an enterprise would like to go global. It is essential to be aware that there are many challenges in the route of internationalization, however, we’ll focal point on the tremendous attributes of the system for the time being.
There are 5 principal motives why an enterprise can also choose to go global;
First-mover Advantage;
It refers to getting into a new market and experience the benefits of being first. It is handy to rapidly begin doing enterprise and get early adopters with the aid of being first.
Opportunity for Growth;
Growth viable is a very frequent motive for internationalization. Your market may also saturate in your domestic us of a and consequently, you can also set out on exploring new markets.
Small Local Markets;
Start-ups in Finland and Nordics have continually seemed at internationalization as a fundamental method from the very starting due to the fact their neighborhood market is small.
Increase of Customers;
If clients are in brief supply, it may additionally hit a company’s doable for growth. In such a case, groups may also seem to be for internationalization.
Discourage Local Competitors;
Acquiring a new market may additionally mean discouraging different gamers from getting into the equal enterprise area as one corporation is in.
Benefits or Advantages of Internationalization.
There are a couple of benefits of going international. However, the most hanging and impactful ones are the following four.
Product Flexibility.
International corporations having merchandise that don’t truly promote properly ample in their neighborhood or regional market can also locate a plenty higher consumer base in worldwide markets. Hence, a commercial enterprise residence having a world presence want no longer dump the unsold inventory of merchandise at deep reductions in the neighborhood market. It can search for some new markets where the merchandise promotes at a greater price.
An enterprise having worldwide operations may also additionally locate new merchandise to promote internationally which they don’t provide in the nearby markets. International groups have a wider target audience and therefore they can promote a large vary of merchandise or services.
Less Competition.
Competition can be a neighborhood phenomenon. International markets can have much less opposition where the groups can seize a market share quickly. This thing is mainly nice when superb and most beneficial merchandise is available. Local agencies may also have identical first-class products, however, global corporations may also have little opposition in a market the place an inferior product is available.
Protection from National Trends and Events.
Marketing in various international locations reduces the vulnerability to occasions of one country. For example, the political, social, geographical, and non secular elements that negatively affect us may additionally be offset by using advertising the identical product in an exceptional country. Moreover, dangers that can disrupt commercial enterprise can be minimized through advertising internationally.
Learning New Methods.
Doing commercial enterprise in greater than one u. s . a . gives magnificent insights to research new approaches of carrying out things. This new expertise and trip can pave the way to success in different markets as well.
Globalization.
Although globalization and internationalization are used in an equal context, there are some important differences.
Globalization is a ton large technique and frequently consists of the assimilation of the markets as a whole. Moreover, when we speak about globalization, we take up the cultural context as well.
Globalization is an intensified manner of internationalizing a business. In prevalent terms, international corporations are large and extra huge than low-lying worldwide enterprise organizations.
Globalization capability the intensification of cross-country political, cultural, social, economic, and technological interactions that result in the formation of transnational enterprise organizations. It additionally refers to the assimilation of economic, political, and social initiatives on an international scale.
Globalization additionally refers to the costless cross-border transition of items and services, capital, knowledge, and labor.
Factors Causing Internationalization (Globalization) of Businesses.
There are many elements associated with the trade of technology, worldwide policies, and cultural assimilation that initiated the manner of globalization. The following are the most essential elements that helped globalization take structure and unfold it drastically;
The Reduction and Removal of Trade Barriers.
After World War II, the General Agreement on Tariffs and Trade (GATT) and the WTO have decreased tariffs and more than a few non-tariff obstacles to trade. It enabled extra international locations to discover their comparative advantage. It has a direct influence on globalization.
Trade Negotiations.
The Uruguay Round of negotiations (1986–94) can be viewed as the actual boon for globalization. It is viewed as a massive set of measures that had been agreed upon completely for liberalized trade. As a result, the world exchange extent improved using 50% in the following 6 years of the Uruguay Round, paving the way for groups to span their choices at a global level.
Transport Costs.
Over the remaining 25 years, sea transport prices have plunged 70%, and the airfreight expenses have nosedived 3–4% annually. The result is a improvement in worldwide and multi-continental alternate flows that led to Globalization.
Growth of the Internet.
The enlargement of e-commerce due to the increase of the Internet has enabled corporations to compete globally. Essentially, due to the availability of the Internet, customers are involved to purchase merchandise online at a low rate after reviewing the nice offers from more than one vendors. At the identical time, online suppliers are saving a lot of advertising and marketing costs.
Growth of Multinational Corporations.
Multinational Corporations (MNCs) have characterized world interdependence. They embody countless countries. Their sales, profits, and the drift of manufacturing are reliant on various nations at once.
The Development of Trading Blocs.
The ‘regional exchange agreement’ or ‘regional trade agreement’ (RTA) abolished interior change limitations and changed them with a frequent exterior tariff towards non-members. Trading blocs in reality promote globalization and interdependence of economies using alternate creation.
What is the Internationalization? Meaning Definition Advantages; Image by Pete Linforth from Pixabay.
The current phase of Globalization; of course, is not a new phenomenon. The period 1870 to 1913 experiences a growing trend towards globalization. The new phase of globalization which started around mid 20th century became very widespread, more pronounced and overcharging since the late 1980s by getting more momentum from the political and economic changes that swept across the communist countries, the economic reforms in other countries, the latest multilateral trade agreement which seeks to substantially liberalize international trade and investment and the technological and communication revolutions.
Here explains the question – How to we look at the current phase of globalization?
There are several similarities and differences between the two phases of globalization.
The Human Development Report, 1999, mentioned the following as the new features of the current phase of globalization:
New Market:
They are;
Growing global markets in services- banking, insurance, transport.
New financial markets- deregulated, globally linked, working around the clock, with action at a distance in real-time, with new instruments as derivatives.
Deregulation of antitrust laws and the proliferation of mergers and acquisitions.
Global consumers market with global trends.
New Actors:
They are;
Multinational corporations integrating their production and marketing, dominating food production.
The World Trade Organization- the first multilateral organization with the authority to enforce national governments’ compliance with rules.
An international criminal court system in the making.
A booming international network of NGOs.
Regional blocs proliferating and gaining importance- European union, Association of South-East Asian Nations, Mercosur, North American Free Trade Association, Southern Africa Development Community, among many others.
More policy coordination groups- G-7, G-40, G-22, G-77, OECD.
New Rules and Norms:
They are;
Market economic policies spreading around the world, with greater privatization and liberalization than in earlier decades.
Widespread adoption of democracy as the choice of political regime.
Human rights conventions and instruments building up in both coverage and number of signatories and growing awareness among people around the world.
Consensus goals and action agenda for development.
Conventions and agreements on the global environment– biodiversity, ozone layer, disposal of hazardous wastes, desertification, and climate change.
Multilateral agreement in trade, taking on such a new agenda as environmental and social conditions.
New multilateral agreement for services, intellectual property, communications, more binding on national governments than any previous agreements.
The Multilateral Agreement on Investment under debate.
New (Faster and Cheaper) Tools of Communication:
They are;
Internet and electronic communication linking many people simultaneously.
Cellular phones.
Fax machines
Faster and cheaper transport by air, rail, and road.
Computer-aided design.
Four phases of globalization:
This approach naturally leads to 4 phases of globalization.
First phases, consumption, and production take place together because the “hunter-gather” lifestyle meant consumption moving to “production” (i.e. food sources).
Second phases, consumption, and production remained together but it was because people “brought” the food to themselves by developing agriculture.
Third phases, were when modern globalization started in the 19th century. Steamships and railroads (and world peace called Pax Britannica) made it economical to consume goods that were made faraway. With things being made in one country and consumed in another, trade boomed.
Finally, the one we are in today – started when production itself got broken up and shifted around to different nations. This knows as offshoring and it radically transformed world trade and manufacturing.
The transitions between the phases – so-called “phase transitions” – were marked by world-shaping changes.
The current and as yet not concluded the fourth phase of accelerated globalization that comprises the last two decades of the 20th century, as well as the first two of the 21st, will characterize especially by the rapidly increasing globalization of the financial markets, the building of communications systems that span the globe “in real-time,” and the overcoming of a binary, ideologically motivated political bloc system.
By no means does this indicate—as the once more intensifying and often religiously-clothed contrasts between the “Occident” and the “Orient” show in all clarity—that under this we might be standing directly before a breakthrough to a unified world society, or that the borders between states have become obsolete. The number of states on our planet that have become independent is also consistently increasing.
How to we look at the current phase of globalization? #Pixabay.
Discuss of Current phase:
This also applies, of course, to other configurations between different surges in globalization. The opening of the occidental modern era onto a common space open to the future, space with which the internet age became both technologically and culturally configured during the last two decades of the 20th century, is, here again, not to comprehensively understand without consideration of those processes designated as the third phase of accelerated globalization, especially the process leading to the development of divergent modernities.
Along with globalization “from above” (especially of financial markets and capital), there appears a globalization “from below” (on the level of mass migrations and their attendant fundamental globalization critique) and even “transverse” globalization (on the level of an information and knowledge society that interconnects on a world-wide scale, the centers of which—let us not deceive ourselves—lie nonetheless in the USA and, to some extent, in Europe).
Within the parameters of this fourth phase, China, India, and perhaps Brazil have become global players that in the future will have an important say not only in political and social matters but in the realms of economics and culture as well. Indeed, China might currently find itself in a position that could compare in many respects to that of the USA within the time frame of the third phase. That the next surge in globalization, which might still expect to occur in the 21st century, should necessarily benefit English alone is, in light of the growing importance of Asian markets and powers, hardly likely.
Characteristics of the Current phase:
The characteristics of the current phase of accelerated globalization are undoubtedly quite specific, yet they are no more specific than those of the past phases, nor are they independent of them. Only when it understands that the present globalization is not something completely new, a creation ex nihilo, will we be able to draw forth the lessons of the preceding phases of this process.
Only then is it possible for one to respond to the trailblazing and vectorizations observable since the expansion of Europe at the close of the 15th century with new paths and new forms of knowledge? Does that take the place of the dissolution of world order currently being articulated? And which could develop such models and measures as are indispensable to peaceful coexistence in diversity?
In the search for these new paths, for this other knowledge, the literature of the world—and it is from here that this work proceeds—are of inestimable value. For their knowledge is a knowledge that does not limit to particular regions of nations, but quite clearly strides beyond individual cultural areas and is constantly on the move.
What is Economic Environment? The totality of economic factors, such as employment, income, inflation, interest rates, productivity, and wealth, that influence the buying behavior of consumers and institutions. This article we have a discussion on Economic Environment and their parts; liberalization, privatization, and globalization. Economic environment refers to all those economic factors which have a bearing on the functioning of a business unit.
Economic Environment discusses the questions of What do liberalization, privatization, and globalization of the Indian Economy mean? Better Explanation.
Business depends on the economic environment for all the need inputs. It also depends on the economic environment to sell finished goods. Naturally, the dependence of business on the economic environment is total and it is not surprising because, as it rightly says, business is one unit of the total economy.
Define Economic Environment in India?
To solve the economic problems of our country, the government took several steps including control by the State of certain industries, central planning and reduced importance of the private sector. Besides people, markets require purchasing power and that depends upon current income, savings, prices, debt and credit facilities, etc. The economic environment affects the demand structure of any industry or product. The following factors should always keep in mind by the business people to determine the success of the business.
Per capita income.
Gross national product.
Fiscal and monitory policies.
The ratio of interest charged by different financial institutions.
Industry life cycle and current phase, and.
Trends of inflation or deflation.
Each of the above factors can pose an opportunity as well as a threat to a firm. For example, in a developing economy, the low demand for the product is due to the low-income level of the people. In such a situation a firm or company can not generate the purchasing power of the people to generate the demand for the products. But it can develop a low priced product to suit the low-income market otherwise it will slip out from the market.
Extra Things:
Similarly, the industry gets several incentives and support from the government if it comes under the purview of the priority sector whereas some industries face a tough task if they are regarding as inessential ones. In the industry life cycle, timing is everything when it comes to making good cycle-sensitive decisions.
The managers need to make appropriate cutbacks before the onslaught of recession because at that time sales are bound to decline which leads to increasing inventories and idle resources and that is a costly situation.
On the other hand, business people cannot afford to get caught short during a period of rapid expansion. This is where accurate economic forecasts are a necessity and therefore, a manager must pay careful attention to the major economic changes.
The main objectives of India’s development plan are:
Initiate rapid economic growth to raise the standard of living, reduce unemployment and poverty.
Become self-reliant and set up a strong industrial base with emphasis on heavy and basic industries.
Reduce inequalities of income and wealth.
Adopt a socialist pattern of development — based on equality and prevent exploitation of man by man.
As a part of economic reforms, the Government of India announced a new industrial policy in July 1991.
The broad features of this policy are as follows:
The Government reduced the number of industries under compulsory licensing to six.
Disinvestment was carrying out in the case of many public sector industrial enterprises.
Policy towards foreign capital was liberalizing. The share of foreign equity participation was increasing and in many activities, 100 percent Foreign Direct Investment (FDI) was permitted.
Automatic permission was now granting for technology agreements with foreign companies.
Foreign Investment Promotion Board (FIPB) was set up to promote and canalize foreign investment in India.
Main Features of economic Reforms or New Economic Policy:
They are three things liberalization, privatization, and globalization. The following features of the economics below are;
Economic Environment: Liberalization, Privatization, and Globalization
Liberalization:
Liberalization of the economy means to free it from direct or physical controls impose by the government. Before 1991, the government had imposing several types of controls on the Indian economy, e.g., industrial licensing system; price control or financial control on goods, import license, foreign exchange control, restrictions on investment by big business houses, etc. these had to dampen the enthusiasm of the entrepreneurs to establish new industries.
These controls had given rise to corruption, undue delays, and inefficiency. Economic reforms, therefore, made a bid to reduce restrictions impose on the economy. Also, Economic reforms were based on the assumption that market forces could guide the economy more effectively than government control.
Measures Taken for Liberalization:
Following measures have been taking under economic reforms for liberalization of Indian economy:
Abolition of Industrial Licensing and Registration:
The New Industrial Policy (NIP) is the first part of the liberalization measures. Under the NIP, industrial licensing has been greatly liberalizing. All industries, except a few specified ones, have been de-licensing under the NIP and liberated from the clutches of control in a bid to eliminate the obstacles to industrial growth. De-licensing of passenger car industry, bulk drugs industry, consumer electronics industry, etc. became landmarks and several new players entered these industries.
Industries for which licenses are still necessary are:
Liquor.
Cigarette.
Defense equipment.
Industrial Explosives.
Dangerous Chemicals, and.
Drugs.
Small Scale Industry (SSI) de-reservation, however, has not made much progress.
The concession from the Monopolies Act:
According to the provisions of Monopolies and Restrictive Trade Practices Act (MRTP Act) all those companies having assets worth more than 100 crores used to declare MRTP firms and were subject to several restrictions. Now the concept of MRTP has been done away with. These firms are now no longer require to obtain prior approval of the government, at the time of making investment decisions.
Freedom for Expansion and Production to Industries:
As a result of the liberalization policy, industries have been giving the following freedom:
Before liberalization under the provisions of old policy at the time of granting the license, the government used to fix the maximum limit of production capacity. No industry could produce beyond this limit. Now, this limit has been removing.
Producers are now free to produce anything based on demand in the market. Previously, only those goods could produce which were mentioning in the license.
Increase in the Investment Limit of the Small Industries:
The investment limit of the small industries has been raising to Rs. 1 crore to enable them to introduce modernization. Investment limit of tiny industries has also been increased to Rs. 25 lakh.
Freedom to import Capital Goods:
Under the policy of liberalization. Indian industries will be free to buy machines and raw materials from abroad to expand and modernize themselves.
Privatization:
In the context of economic reforms, privatization means allowing the private sector to set up more and more of such industries as were previously reserved for the public sector. Under it, an existing enterprise of the public sector is either wholly or partially sell to the private sector.
Measures adopted for Privatization:
Following measures were adopted in respect of privatization under economic reforms:
Contraction of the Public Sector:
Initially, in the economic development of India, the public sector was according to prime importance. As observed by Dr. Manmohan Singh, priority was given to the public sector in the hope that it would help capital accumulation, industrialization, development, and removal of poverty. But none of these objectives could realize. The policy of contraction of the public sector was, therefore, adopt under the new economic reforms.
The number of industries exclusively reserved for the public sector was reduced from 17 to 4. The Government has been divesting its stake in public sector undertakings in the light of the redefinition of its role from being a provider of goods and services to that of a policy-maker and facilitator. Between 1991-2002 the Government has privatized assets worth US$ 6.3 billion.
Note: At present, the Government is considering disinvestment of the Shipping Corporation of India, State Trading Corporation, Minerals and Metals Trading Corporation, among others. One of the biggest privatization programs that the Government has initiated is the leasing of international airports at the four metropolitan cities of Delhi, Mumbai, Chennai, and Kolkata.
Globalization:
It means integrating the economy of a country with the economies of other countries under conditions of freer flow of trade and capital and movement of persons across borders.
“ Globalization may define as a process associated with increasing openness, growing economic interdependence and deepening economic integration in the world economy.”
Main components of Globalization of the Indian economy are as under:
Increase in Foreign Investment:
Under economic reforms, the limit of foreign capital investment has been growing from 40 percent to 51 percent. In 47 high priority industries foreign direct investment to the extent of 51 percent will allow without any restriction and red-tapism. Also, Export trading houses will allow foreign capital investment up to 51 percent. In this regard, the Foreign Exchange Management Act (FEMA) will enforce.
Devaluation:
To promote exports under the policy of globalization, the Indian rupee was devaluing. In July 1991, the rupee was devaluing to the extent of 20 percent on average. The objective was an export promotion, import substitution and attraction of foreign capital.
Reduction in tariffs:
To render the Indian economy beneficial internationally, custom duties and tariff impose on imports and exports are reducing gradually.
Export Promotion:
Several measures have been taking to meet the deficit of the balance of payments. Exports have been promoting. Special facilities like the abolition of export duties, cheaper export credit and cuts in import duty have been providing to the exports to increase the share of Indian exports in world trade. The government also enhance the duty drawback in respect of a large number of items. The greater flow of bank finance to the export sector at a concessional rate also enhances the competitiveness of exports.
The rupee made Convertible:
The government brought in partial convertibility of the rupee in 1992-93 and full convertibility on the trading account in 1993-94. The move supported the intention to give the exchange rate mechanism its due role in regulating the trade flow. It also serves to encourage exports.
