Effects of Globalisation - Coursework Example

Globalisation Name Course Name and Code Instructor’s Name Date Introduction Globalisation is an important component that shapes modern economies and earlier economies. The first era of globalisation can be tranced back to WWI, the Great Depression and World War II. Development and economic integration within this era was evident especially reduction of transport costs and also the effect of economic difficulties caused by wars and economic depression (Wild & Wild, 2012). The second era began in early 1970s whereby technology played a major role (Glenn, 2012). Even though this second era globalisation also experienced some economic downturns, globalisation has become a major component within the socioeconomic environment (Milward, 2003). The aim of this paper is to analyse through comparing and differentiating between these two eras, and also analysing the impact of globalisation. Globalisation In the late 1800s, declines cost associated with globalisation contributed immensely in contributing to expansion of the economies. Introduction of railroads and steamships reduced transportation costs, which contributed to decline in produce costs (Glenn, 2012). For example, the price of wheat when compared between Liverpool and Chicago fell resulting in reduction of wheat price. Other products also witnessed a decline in cost contributing to economic development. Apart from decline in transportation costs, globalisation also redefined their lows resulting in reductions in tariff protection such as Brittan’s Corn Laws that influenced corn prices. Moreover, these laws were completely abolished in 1846 after the Napoleonic wars. Laws governing free trade started spreading through Europe, reciprocal trade agreements were also witnessed such as the agreement between France and Britain in 1860, which was referred as Cobden Chevalier Treaty. Within subsequent years, numerous tariffs were addressed and reduced resulting in situation whereby standardisation of tariffs was encouraged (Wild & Wild, 2012). Nevertheless, from 1879, these benefits of globalisation was reversed through liberalisation which saw countries such as France and Germany starting to level protection over products but at lower levels until 1914 (Lara, 2008). Similar in the new era, the cost of transportation has greatly reduced resulting in division of labour based on regions (Glenn, 2012). For example, managing countries acquire products and services from Asian countries at a cheaper price and shipped cheaply to other countries. In addition, Internet has played a major role in ensuring costs of doing because has immensely decreased. Information technology has made it easier for a software to be sent from Asia to United States, while also it is easier to complete a business contract through teleconferencing without been physical at the place where the contract is been processed. These tariffs were imposed because landowners reacted towards reduction of land rents and wheat prices (Glenn, 2012). With the Great Depression and World War I, due to rising quotas and tariffs, trade collapsed. International trade was revived after World War II based on GATT (General Agreement in Tariffs and Trade), which is attributed to internationally community such as World Bank, IMF and industrial organisations (Wild & Wild, 2012). Reduction in tariffs and quotas has continuously increased and virtually eliminating these business restrictions. In addition, international organisations have been working on non-tariff barriers to trade. Moreover, measures are been formulated and implemented to ensure that other factors associated to globalisation such as culture and geographic regions are abolished. For example, European Union are advocating a scenario where most parts of Europe embrace specific regulations and laws sustain European Union as a single state rather than the a group of twenty seven countries. Another important aspect within the idea of globalisation is labour. Labour is important in economic development and this labour should be cheap available (Glenn, 2012). In the earlier era, international migration played a major role since in the nineteen century, international migration surged but it declined after World War I but since World War II, international migration has surged again. International migration can be viewed from three phases, which are contract and slave labour of 1600-1790, the free settlers of 1790-1850 and later the mass migration of 1850-1920 (Wild & Wild, 2012). These movements were associated to economic factors that included reduction of transportation costs and higher wages. In the new era, technological advancement has reduced the need for movement from one location to another physical to ensure that tasks are completed. For example, some components of Iphone are made in China but assembled in United States (Glenn, 2012). This illustrates that it is not a must individual travels from China to United States to ensure that services are offered (Frerks & Goldewijk, 2007). Generally, the similarity between these two eras is that labour was an important aspect and usually sourced, and the difference is labour should physically be located at a specific region rather than division of labour. Capital flow is another important factor that has been associated with the two eras (Frerks & Goldewijk, 2007). Capital flow is viewed from the angle of international integration of finance in which, if viewed graphically is seen as a u-shaped curve based on world factors. Here, world factors may include Breton Woods system, The Great Depression and World Wars (Wild & Wild, 2012). When these world factors were not in place, economics and financial institutions thrived resulting in advancement in economy (Magee & Thompson, 2010). Some of the countries that were favoured by globalisation at earlier era include British, France, Netherlands, United States and Germany (Glenn, 2012). However, in the new era, different countries have prospered such as China, Asia and Brazil (McKinley, 2007). These countries have become industrial countries in which most by products and raw materials are acquired by developed countries to utilise in their own countries. For example, many countries outsource their services to China or Asia. Effects of Globalisation Advantages Globalisation has played a major role in reducing cost of doing business resulting in reduction of cost of the products and services produced (Glenn, 2012). Globalisation allows for competition meaning business have to ensure their products are cheaper compared to competitors and this competition ensures products are cheaper (Holmes, 2009). Generally, companies can easily procure raw materials and input services and goods at competitive translating in cheaper prices. Diversification and division of labour ensures that high quality products and services are offered. This means that globalisation promotes specialisation in that countries can easily specialise in services and products that they are best in producing (Frerks & Goldewijk, 2007). Division of labour and diversification of labour ensures that quality is championed because comparison can be done on the products and services that are in place. For example, raw materials for electronics and electronic parts have been produced in large volumes from China and later assemble in other countries such as Britain. This means division and diversification ensures that high quality of products and services are achieved. Another benefit associated with globalisation is relationship between countries and regions involved (Magee & Thompson, 2010). Economic interdependence among countries working together builds both social and political links. Working together is important because these countries can easily share information and products another country lacks (Frerks & Goldewijk, 2007). Moreover, it sis easier for these countries to share and solve problems that can occur either been politically instigated or not. Thus, interdependence among countries involved is important for socioeconomic advancement. Disadvantages of Globalisation A major concern is depression since globalisation has been associated to numerous depressions. For example, the Great Depression was a major factor associated to globalisation in which product and service costs skyrocket and high unemployment rates were reported (Glenn, 2012). Moreover, globalisation makes depression and economic problems to be felt across countries and continents. For example, the housing bubble bust that was reported in United States resulted in many countries economic downturn (Magee & Thompson, 2010). The housing bubble bust was felt as far as Australia and in Brittan and other countries stimulus plans were enforced (Frerks & Goldewijk, 2007). This means that if not addressed well, globalisation might affect immensely economic stability of a region. Globalisation has also seen increase in unemployment in some countries (Dreher et al., 2008). For example, countries are purchasing from and sourcing services and products from those countries that offer cheap labour. This cheaper labour result in cheaper goods and services meaning that many people can access the cheaper products and services. Such strategy makes local products and services more expensive resulting in unemployment (Chandra, 2004). Therefore, if globalisation was not in place, unemployment could be lower because local industries and manufactures could have employed more people. Inequality in development may also be associated to globalisation. Some countries that are poor and developing such as the African countries may become poorer (Magee & Thompson, 2010). Educated population is important in becoming richer and lack of this requirement in poor and developing countries may stagnate the economy (Frerks & Goldewijk, 2007). Moreover, due to association of globalisation to information technology development, the developing countries that do not have access to this technology may further be left behind while other countries develop faster. Conclusion Globalisation between two eras is evident in which each era viewed an issue differently. Even though the issue was embraced different, the aim of the issue was to ensure economic development was encouraged. Both eras championed labour, transport and cheap cost of product. For example, reduction of transportation cost through steamship is comparable to information technology presence in new era as a contributing factor to globalisation. Moreover, some advantages associated to globalisation include cheap and quality labour, interdependence and reduction of product and service costs. Some disadvantages associated with globalisation include economic disintegration of negative economic factor occurs, inequality and reliance to developed countries. References Chandra, R. (2004). Globalisation, Liberalisation, Privatisation and Indian Polity. London: Gyan Publishing Dreher, A., Gaston, N., Martens, P., & Martens, W. (2008). Measuring Globalisation: Gauging Its Consequences. New York: Springer Frerks, G., & Goldewijk, B. (2007). Human Security and International Insecurity. London: Wageningen Academic Publishers Glenn, J. (2012). Globalisation. London: Routledge Hoffe, O. (2007). Democracy in an Age of Globalisation. New York: Springer Holmes, A. (2009). The Third Way: Globalisation's Legacy. London: Troubador Publishing Ltd. Lara, J. (2008). Multinational Corporations and the Emerging Network Economy in Asia and the Pacific. London: Routledge Magee, G., & Thompson, A. (2010). Empire and Globalisation: Networks of People, Goods and Capital in the British World, C.1850-1914. Cambridge: Cambridge University Press McKinley, M. (2007). Economic Globalisation as Religious War: Tragic Convergence. London: Routledge Milward, B. (2003). Globalisation? Internationalisation and Monopoly Capitalism: Historical Processes and Capitalist Dynamism. London: Edward Elgar Publishing Wild, J., & Wild, K. (2012). International business: The challenges of globalization (6th Ed.). New Jersey: Pearson. Read More