Globalization is an international situation that has arisen in the late twentieth century in which the world’s investment, employment, production, and marketing systems have spread beyond the territorial boundaries to the international arena. As a result, the world has become a pervasive society and different countries are simultaneously participating in the process of uniform investment, employment, production, and marketing.
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Advantages and Disadvantages of Globalization
Globalization gives us many advantages and disadvantages. so let us make an in-depth study on the advantages and disadvantages of globalization.
9 Advantages of Globalization
As a result of globalization, we all enjoy many advantages. these are-
- Transfer of Technology
- Better Services
- Standardization of Living
- Development of Infrastructure
- Foreign Exchange Reserves
- Economic Growth
- Affordable Products
- Contribution to World GDP Growth Rate
- Extensions of Market
1. Transfer of Technology
Transfer of technology throughout the globe is good for us. Any country can borrow the technology through the agreement and can implement it in their country for their overall development. We can communicate with each other easily from any part of the globe by using advanced technology at minimal cost, time, and effort.
2. Better Services
Globalization always provides us with better services. Through technological advancement, our services like water supply, mobile networking, internet, electricity supply, and other services have been easier and better than before. By the way, easy access to the internet throughout the globe is also the result of globalization.
3. Standardization of Living
The integration of economies as the key process of globalization enables countries to fight against poverty and improve the standard of living of the people.
Many researchers have stated that when a country opens up its trade to the globe, its rate of economic growth is faster and living standards tend to increase.
4. Development of Infrastructure
Technological advancement and its transfer throughout the globe help to improve the country’s infrastructure. Countries are more enabling to deliver their services to the people. The development of infrastructure means the overall development of respective countries. Here it is necessary to say that economic growth and the development of infrastructure are compatible with each other.
5. Foreign Exchange Reserves
Through globalization, countries can build foreign exchange reserves owing to international financial flows.
6. Economic Growth
Globalization entails to optimum utilization of resources wherein deficit resources are procured and surplus resources are exported to other countries. This ensures overall economic growth.
7. Affordable Products
With access to the latest technology, the countries can provide products to their countrymen at affordable prices. Globalization promotes competition in domestic economies and in their endeavor to compete against competition, companies reduce product prices or follow a penetration pricing strategy.
8. Contribution to World GDP Growth Rate
Globalization ensures the contribution of every country to the world’s GDP growth.
9. Extensions of Market
Above all, Globalization promotes the extension of the market. It provides an opportunity for domestic companies in going global. For instance, domestically, companies can witness saturation in the demand for their products or services but through globalization, domestic companies can sustain and satisfy the growing demands of foreign customers.
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Disadvantages of Globalization
The globalization that just keeps doing well for us is not true. It impacts us in a multidimensional way. So it has some disadvantages also. These are-
- Growing Inequality
- Increasing the Unemployment rate
- Trade Imbalance
- Environmental Loots
1. Growing Inequality
Globalization can increase inequality throughout the world by increasing specialization and trade. Although specialization and trade boost the per-capita income it may cause relative poverty.
To illustrate this we will take an example. All dominated MNCs in the world are located in the United States. All these companies are buying cheaper labor from developing or underdeveloped countries for their product manufacturing or assembling. China, India, and Africa are prime examples of this. It increases the employment of such countries but they are lagging behind relatively developed countries.
Again those companies coming to these countries for cheap labor, they also deprive of that country’s i.e American people from work. So it appears that relative poverty is being created in developed countries as well.
2. Increasing the Unemployment rate
Globalization can increase the unemployment rate. Where people are getting jobs, how is it possible? Here is the explanation.
Globalization demands higher-skilled work at cheaper prices. But countries, where Institutions are relatively weak, are not capable of producing highly skilled workers. As a result, the unemployment rate is increasing in those countries.
When many foreign companies invest heavily in developing countries, they hire employees from that country. In some cases, their salaries are very lower than in other developed countries. Moreover, the demand for these employees in developed countries is very low. Moreover, with the emergence of the Global Economic Crisis, their jobs are at risk of losing.
3. Trade Imbalance
The balance of trade refers to the balance of values between a country’s exported and imported’s goods and services. As a result of globalization, any country can trade with any part of the globe.
That is why, in some cases, developing countries are so much dependent on developed countries in terms of importing goods but their export capabilities are lower than import. The trade imbalance has been occurring.
So, trade imbalance refers to the imbalance of values between a country’s import and export goods and services. It is also called a trade deficit. Trade imbalance may be increased in developed countries by their competitors.
4. Environmental Loot
The pace of industrialization is increasing as a result of globalization. Industrialization boosts economic growth but it harms the environment as well. Globalization loots nature and it harms us very badly.
Let’s try to understand with the example. Coca-Cola is the world’s leading soft drink company. This company consumes a huge amount of water for making soft drinks. In a state of northern India, Uttar Pradesh, a Coca-Cola bottle plant was closed by the government order because of too much usage of water claimed by local farmers.
In North India, the level of groundwater is very low, but huge usage of this water for the interest of an MNC is very harmful to domestic farming.
In Kerala, a state in southern India, the Coca-Cola plant was also closed due to the pollution of the water which was supplied to the local communities.
Also, MNCs use the natural resources of different countries extensively for their personal gain.
Various chemical industries are very harmful to our health by polluting the soil, water, and air.
Conclusion
From the above discussion on the Advantages and Disadvantages of Globalization, it can be said that the list of benefits of globalization can be easily lengthened. However, there are some disadvantages. According to critics, the process did not benefit the poor. The impact of globalization on environmental protection is not too great and Did not stabilize the global economy.
The policies formulated by the IMF, the World Bank, and the World Trade Organization only serve the interests of the developed world. Especially the internal interests of those countries. Developing countries have no place in it. The ideas of all these countries regarding globalization revolve around a particular economic and social scenario.
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