First Era and Current Age of Globalisation - Essay Example

First Era and Current Age of Globalisation Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Globalization is a very common phenomenon in the world we live today. It helps explain the circumstances in which the people have been living and how the world has been operating as one community despite the geographic distances that are involved. Globalization takes into account various aspects that seek to explain how all aspects of life from economy to culture, crime and to financial environment have come to be highly interconnected. There are two ages of globalization that can be talked of in the world of business (Economist 2001). The first era is the one that had lasted from 1850s to around 1920 and the current era that runs since 1920s to date. While these two eras may demonstrate similar scenarios in regard to business, differences are also enormous. For instance, towards World War 1, the world economy evolved in many different ways that are similar to what is happening today. The mobilization of commodities, labor and capital, reached the records higher with very high recording at the sea lanes and telegraphic lines as more and more people as well as raw materials were trying to move to the East. However, this could not go for long following World War 1 when German Submarines made enormous attacks on different ships bringing globalization operations to a standstill (Perraton 2001). This essay in brief, is aimed at discussing the similarities that existed between the first age of globalization and the current age of globalization and also give the advantages and disadvantages of the current state of globalization. Similarities Past the age of globalization resembles the current era of globalization in many different ways. The last era was characterized by the level of free trade and limited restrictions as well as low control of capital flows. During this time many discoveries had been made which include technology revolution in major sectors of the economy like communication, transport and energy. Some other discoveries that contributed to the high level of globalization and that are common even up today include radios, paved roads and internally combustionable engines (Fischer 2003). By the time, the American economy was the strongest and had become the major source of business innovations. At the same time China market was opening up and that major western countries including Russia, had major expectations in it. However, this could last for long following the occurrence of World War 1. Major economies were disrupted including that of Germany leading to hyperinflation in many different countries of the world. Further, the technology also petered out as innovation went down with stagnated consumption which led to decline development in major economic areas like automobile. This led to the great depression in America’s economy denying it the chance of remaining the most powerful country in the world in regard to the economy. In China Civil wars dominated alongside invasion by foreigners (Economist 2001). This problem was replicated in the earlier years of the current era of globalization especially between the 1920s and 1930s. Different countries especially those that had retained political freedoms exercised a lot of restrictions on various aspects like trade and migration as well as in investment in order to protect their economies, something that had been witnessed in the late years of the past era. The major similarity that has been portrayed in two eras is about prediction and seeing uncertainties. While the economy of the world and in particular in the major powerhouses like Germany and USA had shrunk without much anticipation, the problem has also been witnessed in the current era. There has been very scarce prophesying about the effects of war between major countries in the world economy. Particular world writers have managed to earn some living by making some major predictions on the performance of the world economy (Martinez-Torres 2001). One such example, is the renowned world economist, Karl Marx who had predicted the breakdown of capitalism and imperialism in the world. In essence of what is being said here is that, some major events have occurred in the world and whose repercussions on the economy have not been predicted. For example, World War 1 got major economies off guard leading to collapse of the world economy. This is the trend that has been witnessed even in today’s economy. Examples include the great depression in the 1980s and the recent being the Eurozone financial crisis which have affected not only major economies of the world but many other countries including those from developing world as well (Badie 2000). Great power rivalry played a part in the performance and the collapse of the world economy in the past era of globalization. Today the problem can still be witnessed. Because of the high interconnectedness of the world nations, the competition of certain economies is having major effects on the world economy. For example, while in the past era there was strong competition between Germany and the United states, in the current era the competition has been witnessed between the USA and Russia formerly known as the USSR and now USA and the People’s Republic of China. This kind of competition has continued for over years and has resulted in a situation where the involved countries are seeking to have influence by investing in the developing world and in particular Africa (Gilpin 2000). Differences While there are some major similarities in the two eras, there are also differences as well. Today like before 1920, protectionism greatly posses challenges to free trade. Going as per the standards that existed before 1920, major countries were shamelessly over protective when it came to Agriculture. While the United Kingdom had used no tariffs at all to protect its agriculture sector, countries like the United States, Japan and the European Union, now use tariffs and various subsidies in order to protect their farmers from foreign competition (Martinez-Torres 2001). In the current era of globalization it can be argued that unlike in the previous era, no one can say that there is one stable monetary system but one thing one can be sure of, is the uncertainties that may exist. No way it can be argued that it's more stable than it was before 1920. Even though gold is no longer used in the monetary system, there are established exchange rates. In the Europe, we have a monetary union which is known as the deustsche mark zone. In the East Asia is the dollar standard. However, what can be said to be common on the two systems is that both systems are founded on fiat currencies (Micklethwait and Adrian 2000). Finally, in the current era, technological innovation is highly advanced with no single signal of slackening. Technology has moved from minicomputers through to pinheads and scramjets which can cross through the Atlantic just within an hour. This has shown how there is no limit to human ingenuity with provision of sufficient funds for research and development. This is good news for business. On the other hand, the bad news is that technology can be used by enemies of globalization to fight back (Engel and John 2004). For example today, an entire city can easily be obliterated with just a single nuclear weapon was case of September 11, 2001 in the united states during the terrorist attack. Advantages First and foremost, globalization is important in helping companies and other multinational corporations to reach wider markets and also consumer access variety of commodities and services. Further, advances in such areas as transportation and communication alongside an increase in internet use, are some of the major factors that have led to interdependence in economic and other business activities. Finally, globalization made the world a small village where everybody can be accommodated and communicated to through the internet within a very short time (Micklethwait and Adrian 2000). Disadvantages Without well controlled and managed globalization, developing countries, are subject to competition by companies in developed countries. This is negative to local business which are yet to develop and be able to compete favorably in the global arena (Micklethwait and Adrian 2000). This could be extended to a situation where the business does not have the capacity in terms of resource to compete hence opting to move out of business. Other disadvantages of globalization as is today include: some countries are becoming increasingly depended on other countries in meeting their needs; adverse economic problems in one country, can easily escalate to other countries and economic recession cannot easily be limited to one country’s borders (Guillén 2001). Conclusion This essay has discussed the concept of globalization and has paid particular attention to the first age of globalization of between 1850 and 1920 and the current age of globalization. What has also been discussed in this article is the similarities and differences in the two eras. Further, advantages and disadvantages of globalization as is in its current state. In general what can be concluded in this discussion, is that globalization has evolved and given it is current state, both presents challenges and benefits to businesses. References Badie, B. (2000). Global Transformations: Politics, Economics and Culture, (Feature Review) New Political Economy, 5(2), p. 45-78. Economist. (2001). A Survey of Globalization: globalization and its Critics. The Economist. Sept 29. Engel, C. and John, R. (2004). “European Product Market Integration After the Euro”. Economic Policy, 19(39), p. 348-384. Fischer, S. (2003). “Globalization and Its Challenges”. American Economic Review, 93(2), pp. 1-30. Gilpin, R. (2000). The Challenge of Global Capitalism: The World Economy in the 21st Century. New York: Princeton. Guillén, M.F. (2001). Is Globalization Civilizing, Destructive or Feeble? A Critique of Five Key Debates in the Social Science Literature. Annual Review of Sociology, 27, p. 235-60. Martinez-Torres, M.E. (2001). Civil Society, the Internet, and the Zapatistas. Peace Review, 13(3), p. 347–355. Micklethwait, J. and Adrian, W. (2000). A Future Perfect: The Challenge and Hidden Promise of Globalization. New York: Times Books. Perraton, J. (2001). “The Global Economy–Myths and Realities”. Cambridge Journal of Economics, 25, pp. 669-684. Read More