“Globalisation is a process in which the world appears to be convergingeconomically, politically and culturally” (Needle, 2015). Nowadays, financial markets, industry, and politics areall internationalized. The occurrence of this has increased transfer of wealthacross countries; it has increased communication throughout the world, anincreased importance of trade in the economy and an increase in internationaltrade policies. Globalization has had detrimental effects on the economy hascreated 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 theworld. Globalisation integrates markets in the worldwide economy, leading tothe joining of national economies. Markets whereby globalisation isparticularly common include financialmarkets, insurance markets andproduct markets, such as markets for electronics, motor vehicles and agriculture. Globalizationhas played a huge part in the development of businesses to ensure they expandinto different parts of the world. More interlinked markets means that therewill be an increased flow of goods, services, money, information/ideas There are three main competing views on globalization, eachdiscussing different positives and negatives impacts that are associated withglobalization.
The three different perspectives are the neo-classical perspective,the Marxist/Socialist perspective, and the Structuralist view. The first competing view is the Neoclassical/neoliberalperspective, this view argues that overall history and current economics havejoined together to form a new relationship where nations are uniting both economicallyand politically. It’s very essential for countries to come collectively in bothof these aspects in order to be a success in the globalized world. The neoclassical competing view shows that the world’seconomy is controlled more by the existing market. It shows that If trade wasso essential to expanding markets, thus allowing increased productivity itwould be very easy to show how trade around the world would be so beneficial (AdamSmith, 1790).
Foremost it gives an amount of funding that assists the increase inthe amount of money available to trade internally. Furthermore, it enables moreof a market development across the globe. An example of this could be twocountries 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 advantageof producing their set of goods, they would each be specialized for their owncountry for selling the goods they have. The advantage of having this is that both countries will mainlybenefit from this provided that the trade is fair. In addition, trade and theeconomic success enables many types of countries to both develop and profitfrom a huge economic change into the markets overseas to be able to acquirecheaper resources/materials.
However, this could be a potential problem as countriesthat are significantly better at producing and countries which are moreadvanced 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 totrade. A man named David Ricardo refined Adam smith’s theory by arguing that withtwo 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. Forexample, he uses trade between twocountries being England and Portugal explain how it assists Portugal to importcloth even if Portugal can produce cloth with less labour than England.
Currenteconomists portray that England has a comparative advantage in producing cloth.Ricardo states, “To produce wine in Portugal, it must have 80 men for ayear, and to produce the cloth in the same country, it must have need of 90 menfor the year also. Thus it would be advantageous for them to export wine inexchange for cloth”(David Ricardo, n.
d)Dueto globalisation rising alongside the increase in accessible/useable technologyand convenience of improved transportation, technology has made it easier forpeople to communicate across countries and has also lead to a decline in thecost of transportation. It is now cheaper and more efficient to transport goodsfrom one place to another. Over the years, during the evolution ofglobalization the increase in transport was drastically high which meant globalizedtransportation has increased in profitability because there are larger cargo shipsand therefore transporting the flow of goods between countries has dropped (BBC.co.uk,2014).
A major change with transportation costs has enabled businessesto acquire greater profits. This is from changing ideas within the business bymoving the place they create products (Heshmati, 2003). In addition, Companiescan now transfer files via the internet, and this enables the possibility tohave meetings without every member being physically present. This has led tolower long distance communication costs and the exchange of information isdrastically easier than ever before. International businesses can now telecommunicatewith others through the use of email, telephone conferences, andvideoconferences. The increase in telecommunications development had to do witha cause-effect relationship between technological development and thederegulation of financial market policies.
(Czaputowicz, 2007). Thesecond competing view is the Socialist/Marxist perspective. They argue thatglobalization has led to an increase in the inequalities of countries/nations.
Marxistargues on exactly how unequal nations are currently how globalisation plays itspart in those inequalities. Firstly, Marxist was in agreement with smith thatcapitalism led to unprecedented growth but he also made the point that therewas a huge flaw. He believed the social system of capitalism is very unfair, hebelieved that owners of capital are able to exploit their advantage of certainaccess 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 wealthwhilst the poorest nations/countries are continuing to remain poor. It has beenestablished that 20% of the world’s richest population control 86% of worldgross domestic product, as well as 82% of world exports.
In comparison to theworld’s poorest 20% population consume 1.3%. Rising countries such as India and China havereduced poverty and have shown an increase in economic growth since they tookon open economic policies in the 1990’s (Cheng and Mittlehammer, 2008). It is vitalto put these policies in place so that more countries will want to partake inglobalisation. In some parts ofthe world there are no guarantees that the wealth from inward investment will assistthe local community of the less developed countries. Often, some of the profitsare sent back to the MEDC where the TNCs are based. If it becomes cheaper tooperate in another country, the TNC might close down the factory and make localpeople redundant.
However, if countries which are stilldeveloping acknowledge that they will not have to suffer from inequalities,they might find it beneficial for them to join in the globalisation process. A studyfound that foreign investment has had a positive impact on economic growth whencountry-specific factors are taken into account (Carkovic and Levine, 2002).Some of the factors are financial development, school attainment and stateincome. Thefinal competing view is the Structuralist writer’s perspective.
This specific perspectivediffers from the other two perspectives in various ways. Firstly, it isbelieved that there isn’t a main reason behind globalisation. Globalisation isconsidered to have just progressed over the years. Secondly, globalizationcould be very influential however it’s an unknown occurrence and thepredictions of its outcome will not be known for many years down the road. Afterthe Second World War, a development of economics was created in belief thatLDC’s (Less developed countries) could not follow the same footsteps of themore developed countries. Additionally,TNCs (transnational corporations) were to help bring wealth and foreign currency to localeconomies when they buy local resources, products and services and thereforethe 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 torapidly industrialize their economies. LDCs faced an already developedcapitalist world which needs time to be able to catch up on certain policiesand thus it was argued that some structures required for a sustainable marketsystem weren’t made in some of the developing countries and therefore they hadto be constructed before the integration of economies into the global system.
Thepositive effect globalisation can have is the Inward investment by transnationalcorporations helps countries by helping and providing new types ofemployment through jobs whichrequires different skills for local people. Structualists wouldn’t particularly agree withthe way some of these problems are addressed but they believe and argue that ifthe business environment is to be constructed in such a way as to enableglobalization to increase growth, stability and development over time thenthose issues had to be addressed and resolved.Structuralist writers further believe that the same commonchanges have occurred from globalization but there isn’t a specific way of howthese changes came. This competing view believes that the range of factorsinfluencing 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, theincreases in technology and the trade liberalization or governmental policieshave lead to globalization benefiting a lot of countries and this dire increasein globalisation has lead to an enhance in inequality amongst nations, as wellas an increase in the inequalities between the development of individualcountries.
Inconclusion, globalisation can be defined in different competing perspectives,the way it has changed policies in the world and how nations are conductingbusiness in the world are very important. The competing views of globalisation havemany different points on what globalization is and how it affects the world. Thereare also several theories of globalization which include the trends and viewsof globalization that need to be understood. It’s very necessary to know the fundamentalsof globalisation, not only because it impacts business today but it also has ahuge influence on society as a whole. ReferencesFreepatentsonline.com. (2011).
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