Impacts Of Globalization Order

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Impacts of Globalization

Introduction

Initially, globalization was started by colonization that took place in Asia, Africa and

America done by the Europeans who were the supreme power of the world. They needed a new

market for the products they produced during the industrial revolution. This resulted in them

moving to other countries to look for markets thus encouraging interaction with people of

another state (Gruzinski, 2013).However, technological advancement globally nowadays has

resulted in the movement of people around the globe. These have been facilitated by the

improved transportation and communication means as better ways of movement of people and

goods has been improved as well as better communications methods which are easy and cheap.

All these improvements have been made a reality by the intensive research which people are

undertaking to enable them to come up with innovation which can solve life problems. Most

countries in the world have poverty levels and globalization has led unity among states to

development of the Millennium Development Goals which are goals measurable and have

definite deadline aiming at improving the lives of the world’s poorest people. These are

sustainable development goals which are set by the 191 UN member states to ensure that the

members radiate problems that they face by the year 2015 (WHO, 2017). Globalization has made

the globe a small village where people can move around and communicate with each other

quickly and at reasonable prices. Technology advancement has resulted in globalization which is

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the increased interaction of people, states which are driven by international trade and investment.

Therefore, this paper will look at the social, economic and political influence of globalization to

world economies.

Economic Impacts of Globalization on World Economies

Human development among nation has a direct influence on the economy of any nation

as the people are able to make and trade things which are of value. Globalization has had both

positive and negative effects on the world economies. The merits include; enhancing foreign

direct investment among countries globally. It has led to increasing technological innovation

because of facilitating competition thus through this it has helped a great deal champion for

international development through technological development. Additionally, it has brought

economies of scale where large companies get discounts as a result of their bulk purchasing of

their raw materials (Knox, 2016).

According to Kuepper (2017), the demerits of globalization include; interdependence of

nations which makes them not rely on themselves adequately to meet their needs. These can be a

risky situation in case of conflicts between the countries which depend on each other. Inequality

in the distribution of benefits between the developed and the least developed nation may occur

with the rich countries taking advantage of the developing nations. These can lead to conflicts of

interests both nationally and internationally. Globalization leads to opening of countries for

foreigners, and this can be a threat to the country's national sovereignty

Globalization has merits, but it is not possible to neglect the demerits as they may lead to

failure of nations. Most significant benefits are that its opens boundaries form trade among

countries. These bring an exchange of culture among the people who exchange ideas thus

enhance their creativity and innovation.

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 Foreign Direct Investment (FDI)

Globalization has facilitated international development and it has made countries be

ranked as either developed, developing or least developed countries. The ranking mainly is done

mainly by the company economic growth which defines the living standards of the people.

Therefore, FDI and globalization are directly correlated as FDI has led to interactions of people

globally as well globalization has made people know new areas they can start their firms.

Foreign direct investment by companies has been as a result of trying gain competition for

looking new markets. Business uses the blue ocean strategy to be able to get areas of fewer

competitions and be able to make huge profits. To be able to get a competitive advantage, firms

move into foreign markets to look for ‘Blue Ocean' to be able to maximize their profits.

However, the new markets pose great risks of failure for the firms, and they need to carry out

intensive research before they start operations (Mebert, Andreas, and Stephanie Lowe, 2017).

Risks that firms may face in foreign markets include; high competition from the domestic

companies as a result of their ability to know the market better. Wage rates in the new country

may be a great challenge if they are high as this means that the company will incur more costs

when paying the employees. Availability of labor both skilled and non-skilled is critical as

employees are the backbone of any firm. All employees with or without skills are equally

important to the firms, and their absence can lead to job stoppage. Firm when going

internationally must be aware of the nature of labor skills available in the new market. Taxes are

significant for any firm as they reduce the profit margin. Foreign countries have different

taxation policies, and all firms must be aware of the amount of taxes to pay in the foreign

country to check whether the investment will be viable. The firm should also check the

infrastructure of the in the market at it determines the speed of the production process. It should

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have better transport and communication services. The potential market for the company should

be accessed to enable the firm approximate the number of profits it can make. If the market is

small, the market venture is not necessary as a firm should engage in areas with high potential

buyers of the firm's goods and services hence assurance of high profits. Finally, the firm should

check the political stability of the country. It is advisable to carry business in a stable political

country as the environment supports business. Unstable nation politically is prone to wars and

riots hence this is not a conducive environment for business. Firms' operating in such

environment hardly make any profits.

The merits of engagement in the foreign market depend on the firm in question, and they

include high numbers of customers in the market which can increase the firm's profits. A

company must look for a market which has a gap to be able to come and fill it hence making a

substantial amount of money. The new market may also have fewer competitors making it has

the monopoly in the market thus getting high-profit margin. Foreign nations may have cheap

labor for the firm hence reducing its cost on employees' wages and salaries. Raw materials are

important for firms' activities, and a foreign market may be merit to an international firm if it has

all the required raw materials and at cheap costs. Lower taxation in the market can be very useful

as it would reduce the company expense and increase its profits.

However, globalization leads to foreign direct investment which has a severe impact on

the domestic companies and the country in general. The two areas of concern about globalization

are competition and nations natural resources.

 High Competition by Foreign Firms

FDI opens up opportunities for foreign companies to enter new markets which they view

not congested and have fewer competitions. New firms in a country disrupt the business as they

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bring stiff competition to the domestic companies which they cannot persevere. The high

competition may lead to failure or collapse of local organizations as a result of low sales.

However, some governments have put stringent measures to ensure they blur foreign firms doing

business in their countries. Some of the action that can be used include; use of tariffs which is an

increase in taxation on imported goods. The government through tariffs intends to increase

exportation by domestic firms. The government may use Quotas which is a total restriction of

importation of a total quantity of a good or service. Antidumping policies can be set to make

foreign companies not bring illegal or harmful substances to the host nation in the form of

disposing at a cost.

 Natural Resource Exploitation

Foreign nations tend to exploit the natural resources' of the host country without taking

precaution. The natural resources' can be forests, mines, forests, farms, etc. these are because the

company's goal is to get profits at the expense of the other nations without caring. The

environment helps the human being to survive and it extinction can lead to the end of humanity.

Foreign company's clearance of bushes and forests to do farming can lead to the areas becoming

desert afterward. Paper industries use trees to carry out their businesses hence cutting down the

tree that attracts rains. Destruction of the natural resources leads to global warming which

increases the earth's temperatures. Winoto (2014), notes that developing countries have resource

though they are exploited by the wealthy nations who benefit from the proceeds. An example is

Indonesia which has high levels of salt and oil yet a large number of citizens live in poverty. He

views the natural resources for the people despite sources of money. Secondly, in Africa

minerals and forests as the foreign companies extract the value and leave the remnants beggars

with no share of the cake (Rinat, Zafrir, 2013).

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Political Impacts of Globalization

Positive Impacts

Globalization has increased political awareness in countries making adoption of

democracy and mature politics. Nations have copied political systems of others to make them

have a stable political system which ensures country’s stability. The new systems of government

have contributed greatly to the adoption of rules and regulations for governance. It has led to the

arrangement of countries in blocs which are very important for support of countries. The blocs

give the members knowledge on how to carry out trade and also help in times of difficulties. The

leadership of governments has been strengthened due to globalization hence making countries

have better leadership as they carry out benchmarking(Scholte, Jan Aart, 1997).

Negative Impacts

Globalization has reduced the importance of nation since it has brought about trade blocs

to make nations champion for their needs collectively. Some of the blocks include the World

Health Organization, European Union, International Criminal Court, ECOWAS, among others.

These blocs are led to general agreements among members hence making nations lose their

sovereignty making them not able to make important decisions regarding their problems. It has

also made Non-Governmental organization has great power on member nations decision making.

Terrorism has increased tremendously over the years due to the increased ultra-modern

technology which assists criminals to operate and strengthen their networks. Terrorist activities

are facilitated by feelings of people being neglected and humiliated over centuries by

globalization. Globalization has led to the rise of neo-colonization with former colonizers having

great influence on the colonies decisions making to a great extent. Therefore, democracy is not

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nurtured by globalization as people lack the power to decide what they want to do (Baylis, et al.,

2017).

Social Impacts of Globalization

Positive Impacts

Social impacts of globalization are how it affects the lives of the people, families and the

societies. Globalization has improved the living standards of people as they can get jobs from the

foreign c companies. These reduce the poverty levels of the communities. Communication and

transport facilities are improved making the lives of people better. Improvement of the economic

and political factors of countries has improved major aspects of the community. These have led

to social justices which makes the community be based on values that preserve the human

dignity by ensuring fairness and equality. Gender equality has been championed by globalization

which is evident in the increased participation of women in different fields of life. The structures

of the societies have also changed with social norms, languages, morality issues changing as a

result of interaction with people from other countries. Therefore, globalization has influenced

greatly lives of people across the globe (Fathima, 2017).

Negative Impacts

Globalization has led to communities’ loss of identity as western culture has influenced

the lives of people. These have made people forget their culture and follow other culture which

brings controversies. Dressing habits have changed drastically as well as the language of people.

These have brought animosity as people blame each other for the loss of their cultures.

Additionally, people have copied cultures of other people making it difficult to differentiate

people globally. New business has emerged which has eroded people respects such as

prostitution. Western cultures have also led to things like same-sex marriages among the people

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in communities which such activities were illegal thus bringing confusion and conflicts of

interests (Hay, Colin, and David Marsh, 2016).

Conclusion

Finally, the great instruments for globalization are multinational corporations and new

technology as they promote great extend interaction of people and nations. Scramble for Africa

and other parts of the world was high form colonies to get raw materials and also markets for

their products. According to Ferraro (2008), in his work concerning dependency theory, it is true

that all the nations depend on each other in order to grow both economically, socially and

politically. No nation can succeed in isolation and globalization has enhanced dependency

among nations thus helping their growth over the centuries. Globalization is good, but countries

must put up measures to caution themselves form the intense competitions and exploitations by

foreign nations. Companies that wish to engage in international trade must carry out intensive

research to ensure they do not make losses in the new market which may aid to successfully

execution of business when required. However, the wealthy nations must not mistreat the

developing nations because of globalization for their benefits. The government should be alert to

protect entrepreneurs from illegal and unethical operations which the competitors execute. They

are the backbone of the economy, and they are the ones who determine the development of the

nation. Globalization has led life easy for people and communication easy for people (Baylis,

John, Patricia Owens, and Steve Smith, 2017).

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References

Amadeo, Kimberly. “Advantages and Disadvantages of Foreign Direct Investment.” The

Balance, 24 June 2017, www.thebalance.com/foreign-direct-investment-fdi-pros-cons-

and-importance-3306283.

Baylis, John, Patricia Owens, and Steve Smith, eds. The globalization of world politics: An

introduction to international relations. Oxford University Press, 2017.

Fathima, Mehlika. “GLOBALIZATION AND ITS SOCIAL-CULTURAL-POLITICAL AND

ECONOMIC IMPACTS.” Academia.edu - Share Research, 2017,

www.academia.edu/4668865/GLOBALIZATION_AND_ITS_SOCIAL-CULTURAL-

POLITICAL_AND_ECONOMIC_IMPACTS.

Ferraro, Vincent. "Dependency theory: An introduction." The development economics

reader 12.2 (2008): 58-64.

Gruzinski, Serge. The mestizo mind: The intellectual dynamics of colonization and globalization.

Routledge, 2013.

Hay, Colin, and David Marsh, eds. Demystifying globalization. Springer, 2016.

Knox, Paul L., Sallie A. Marston, and Michael Import. Human geography: Places and regions in

a global context. Pearson, 2016.

Mebert, Andreas, and Stephanie Lowe. Blue Ocean Strategy. CRC Press, 2017.

Pettinger, Tejvan. “Factors That Affect Foreign Direct Investment (FDI).” Economics Help, 26

June 2017, www.economicshelp.org/blog/15736/economics/factors-that-affect-foreign-

direct-investment-fdi/.

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Rinat, Zafrir. “Food for Thought: How Rich Countries Exploit the Resources of Poorer Ones -

and Get Away with It.” Haaretz.com, 12 Sept. 2013, www.haaretz.com/world-

news/1.546450.

Scholte, Jan Aart. The globalization of world politics. 1997.

WHO. “Millennium Development Goals (MDGs).” WHO, World Health Organization, 2017,

www.who.int/topics/millennium_development_goals/about/en/.

Winoto, Harjo. “Natural Resources: The Curse of Developing Countries?” Rappler, 5 Aug. 2014,

www.rappler.com/move-ph/ispeak/65261-natural-resources-curse-developing-countries.

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