Economic Logic of Globalization:

Globalization is the process of integrating countries and increasing the cooperation between
them. It leads to greater free trade, movement of labor, enhanced capital flows and growth of
multi-national and transnational companies. There are several costs and benefits associated with
globalization.
Benefits:
Free Trade: International trade allows countries to produce those goods in which they
have a comparative advantage. This leads to production of a larger variety of goods at
lower cost. The size of the market increases due to export opportunities and specialization
leads to economies of scale. It promotes competition and efficiency in the market.
Free Movement of Labor: Free movement of labor is beneficial to both the workers and
recipient countries. It reduces geographical inequalities and if a country is going through
high employment there are work opportunities elsewhere.
Increased economies of Scale: As countries specialize in the production of commodities
that they have a competitive advantage in and the size of production increases they
experience economies of scale. Economies of scale are advantages that come by
increased size of production like cheaper supplies, improved Research and Development
that reduces average cost.
Greater Competition: As a country is opened to trade domestic monopolies cannot exploit
consumers as they face competition from foreign firms.
Increased Investment: Globalization leads to capital flows between different countries.
Investors can channelize their surplus funds this helps in the economic development of
nations.
Costs:
Free Trade can harm developing countries: There is an opinion that free trade can harm
developing countries. The Infant Industry argument states that firms in developing
economies need to be protected from foreign competition to be able to develop.
Environmental Costs: Some people argue that globalization has resulted in pollution as it
has increased the use of non-renewable sources of energy. However, this is not because
of globalization but a failure to set environmental standards.
Labor Drain: It allows workers to move freely between nations and causes migration of
skilled labor to higher paying countries resulting in brain drain.
Less Cultural Diversity: Globalization has led to a convergence and amalgamation of
different countries and cultures which has resulted in reduced diversity.
Tax Avoidance: To increase investments countries reduce corporate taxes which enable
TNCs and MNCs to set up offices in these countries and save taxes on profits.


Economic Logic of IPL:
The Indian Premier League (IPL) took advantage of the increasing popularity of shorter forms of
cricket. IPL embodies the principles of globalization by involving different nations. It promotes
international integration as it has players from all over the world (the maximum number of
foreign players in a team is 4) and is also now focusing on conducting it in South Africa. The
IPL was conducted in South Africa in 2009 as there were security issues due to general elections
in India.
IPL makes use of the global popularity of cricket as a sport and caters to a worldwide audience.
It earns maximum revenues by selling its broadcasting rights in different countries. IPL also acts
as a stimulus to the economy as it increases tourism and is a profitable time for small vendors.