Globalization - Root Causes, Pros, and Cons, Impacts of Globalization to a Nation's Economy - Essay Example

Pros and Cons of Globalization Name Tutor Course Date Background Information According to global monetary fund that stresses on growing the economic interdependence among nations, globalization is defined to be the worldwide process that looks into controlling or harmonizing prices, wages, products, rates or interest and profits. This implies that with globalization, variety of cross-border transactions that involve goods and services can be transacted from one nation to the other (freedom of international cash flows) with ease. This is majorly contributed, or attributed by the increasing technology and demand of humankind. Therefore, globalization is majorly relying on the role that is shaped by human migration, rapid movements of capital and international trade, and expansion of financial market. In this research paper, the pros and con of globalization are discussed giving positive and negative consequences to the economy (Currie, & Newson, 1998, p. 24). Root Causes of Globalization Politics As ancient scholar puts it that politics, social relations involving intrigue to gain authority or power, is a dirty game. There were politics that contributed to globalization given that prices of commodities and services could be expensive in some regions whereas some regions it could be cheap. The government do dictate the prices of commodities and services owing to the taxes that are imposed on goods and services. This charge is directly channelled to the same product or services making it expensive or cheap according to the rates under which the nation has taxed. With the increasing demands for cheap commodities and services, politics paved it way to people’s mind and later created a good arena for globalization. Politics made people enlighten of some other trade market prices for commodities and services; this made importation and exportation of goods and services tranquil. Therefore, gave rise to globalization. Migration Right from ancient times of 14th century to present, humankind do have conflicts. At times, humankind does think that the only way to solve the issues is by involving in a fright. For instance, the World War II as results of settling social issues of humanity. During that period, some people did not see the need involve in a fight; therefore, they migrated to other parts of the world that were peaceful. In the new regions, there were customs and belief that governed the way of life. This went through to people dietary and needs. Given that the immigrant could not adapt to some services or commodities, they had to import good from their mother nation after the settlement of the wars. This flagged a way for the globalization. Therefore, one will not be wrong to say migration paved way for globalization. Taste and Preference for Good and Services With the difference in taste or preference (strong liking of a commodity or service), there was a need to people to be selective in order to meet their demands. This implies that if a commodity or service could not be found in his or her mother nation, he or she could make efforts to make sure that he or she acquired the good or service. This may be attributed by the quality standards of the product or by the price/cost difference that is mainly dictated by exchange rates. By the fact that someone can easily import, and export a product to meet a given market price, he or she could make profits hence contributed to globalization. Technology Technology is the discipline that deals with the art or science of applying scientific knowledge to practical problems. With the invention of telecommunication and internet, it is believed that it paved way for globalization in the sense that people can easily communicate and exchange money with ease. For instance, the use of PayPal payment, a client can order and pay for a good or services outside his or her nation with ease; the good can be shipped to the client’s destination. Merits of globalization There are positive impacts that were incurred because of globalization. In this section, ne will be required to mention and discuss the positive contribution that globalization has made or contributed to a nation or an economy. To begin with, it is important to note that with globalization, the market for goods and services do increases. This implies the demand for the commodity or service goes up owing to the multitude numbers of people that are in need of the product is not service. This does cause an implication to the rate of production of a given good or services; productivity grows at a faster rate that may give a nation a compensative advantage to improve its economy. For instance, if a developing nation like Kenya, transacts some trade with a developed nation like UK, it is capable of obtaining foreign income, which is likely to improve it economy. Similarly, the rates of production of good and services in UK will have to increase (Asmussen, 2011, p. 53). However, with globalization, one can import goods and services with the aim to cut down cost of the goods and product. It is found that China has been able to penetrate into the global market by the fact that it has cheap products and is readily available. Therefore, it would not be wrong to say that globalization offers grounds under which global competition can take place; cheap import can keep a lid on prices, as inflation is likely to derail the economic growth of a given nation. As mention earlier, that globalization was much attributed by technology. This implies that technology made it easy for nations to communicate and make trade easily. An inner view of the same could be termed as an open economy whereby a nation can easily purchase or sale a product at favourable price. Similarly, with an open economy spurs, innovation ideas and other matters could be shared from abroad that may influence the quality of a given product or service. Thus, globalisation created a comparative competitive global competition that fashioned open economy (Asmussen, 2011, p. 41). In fact, freed capital flows gave the developed nation such as US and UK a better ground under which access to foreign investments could be achieved. This implies that respective nations can easily keep their interests low hence; cases of inflation could not be incurred. This is likely to improve the economy of a given nation. Thus to some many limits, globalization does improves access to products and services in the global market. Demerits of Globalization Just like any other element that has merits, it must also have demerits. In this section, one will be require mentioning and discussing the demerits of globalization to aspects of social setting as well as the economy of a given nation. It has been suggested that other developing nations do have cheap prices in their products and services. This implies that companies and industries go for the cheap cost since they aim to make profits. In one way or other, the citizen of a given nations that imports labour, is likely to lose jobs owing to the imports or the production shifts (Schmidt, & Hollensen, 2006, p. 65). For instance, in US, it has been the experience that many/million Americans have lost jobs due to a higher rate of importation and shifts in productions. This makes the new jobs to pay less since companies find alternatives to acquire labour or commodities. Similarly, with the increased numbers of lose jobs; make have developed fears of losing their jobs especially the companies or industries that operate under competitive pressure. These fears make employees be at favours of the global market prices. Any time that the global market price of a given product shoots or goes down, the company is likely to reduce the number of employees in order for it to make profits. On the other side of the employees, workers or employees use this opportunity to dictate what they need regardless of the companies’ ability; in many occasion, they tend to threaten to export jobs. This gives the managers hard to make decisions that may foresee the company prosper. In some special cases, the company may be forced to make a loss in order to retain its employees. This can be evident when multitudes of nurses all over the globe migrating to UK, US, or any another developed nation. The high wages and salaries of the developed nations mainly attract them (Naisbitt, 1994, p. 27). Because of the migration of people to meet the well wage or salaries for their commodities or services, some services and jobs such as white-collar jobs have been at high demands. This has made it difficult for a citizen of a given nation to get jobs given that imported labour offers the best deal as per the needs of the company. This have led conflicts among nations and to some extent, one may say that it has contributed to terrorism (The calculated use of ferocity against citizens in order to reach goals and objectives that may be political, religious or ideological in nature; this is done through pressure, compulsion, or instilling fear). Finally, availability of materials is the main component that determines the production rates. A company may move and establish itself in a developing nation in order to cut down the cost of production. Similarly, the cost of raw materials can be cheap to the developing nation, which may attract companies to invest in the developing nations. This usually disadvantages the employees by the relocation since some employees will not be entitled to some allowances that they could be getting in their mother nations. Impacts of Globalization to a Nation’s Economy and Possible Recommendations Irrespective on how anyone can interpret the effect of globalization in the social and economic settings, it is found that it has the effect on the economic trends as earlier mentioned. They may be manifested in fields of foreign trades, international finance, and international investment. More specifically, globalization can be seen to be a crease that creates openness inform of economic integration and cohesion in the world economy. During the mid-ninetieth century, there was unexpected expansion of trade flows that gave rise to worlds exports; the world’s exports increased from sixty-one billions US dollars to eight hundred and eighty three billion US dollars between 1950 and 1975 respectively; by 2000, a further increase was experience. This meant that the world trade growth was growing at a faster rate, as opposed to world output. This resulted to a deflection in the world gross domestics produce where the total stock of foreign investment increased. As a result of this rise, the world economy increased (Hirst, & Thompson, 1999, p. 73). Nevertheless, the multinational companies and industries became major determinant of the contemporary economy. The companies or industries produced close to twenty-five percent of the world’s output and consequently contributed seventy percent of world trade. This makes an implication that their sales were half the world’s GDP and a quarter intra-firm trades. Economically, the change is likely to affect a given nation positively as the GDP do dictate the economic growth of a nation. Therefore, there is a high tendency of globalization affecting economic internationalization. Similarly, the world market integrations do bring economic benefits to actors. The free movement of production factors among nation do maximize the effectiveness of nation economic levels. Moreover, the global markets prices for goods and services should cover factors of production; this implies that at the end of production, a uniform price should be established. This will mean the each player (nation) will optimize its factors in production in order to meet the global market price for a commodity. When this done, the economic growth of the world is likely to go down: over the last seventh decade of the ninetieth century, the accumulated world rate of growth amounts to three and half percent. Similarly, in the last decade of the twentieth century, a decrease of one percent was experiences. This implies that the incomes disparities have increased in many developed nations and under developed nations. However, the mobility of capital brands it more reasonable in relation to labour forces that may increase the problem of unemployment across the globe (Hirst, & Thompson, 1999, p. 51). As a result, nations may develop strict measures to ensure that people are not free to move from one nation to the other. In relevance to the same issue, UK and USA has practiced this form of strategy in order to control its economy. Conclusion Globalization is the worldwide scale of an issue. The technology, migration of people, preference of people, and politic of a nation do pave way for globalization. However, globalization has positive and negative impacts to a nation’s economy. Despite these aspects of globalization, a nation needs to weigh the option in order to see whether it will improve it economy or not before it involves in a trade transaction. As a strategy to make sure that this is settled, nations do form trade unions that member nations exhibit almost the same indexes of GDP. When the member nations involved in trade, they are likely to benefits from each other as opposed to when it trades with a nation of another region that may have lower index of GDP. As discussed earlier, it comes out clear that the world output together with GDP, dictates a nation progress in terms of it economy. References Asmussen, C. G. 2011. Dynamics of globalization location-specific advantages or liabilities of foreignness? Bingley: Emerald Group. Currie, J., & Newson, J. A. 1998. Universities and globalization: critical perspectives. Thousand Oaks, Calif.: Sage Publications. Hibbert, A. 2005. Globalization. Oxford: Heinemann Library. Hirst, P. Q., & Thompson, G. 1999. Globalization in question: the international economy and the possibilities of governance (2nd ed). Cambridge, UK: Polity. Milani, B. 2000. Designing the green economy: the postindustrial alternative to corporate globalization. Lanham, MD: Rowman & Littlefield Publishers. Naisbitt, J. 1994. 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