Professional Documents
Culture Documents
1. Free flow of goods and services between countries due to the reduction in trade
barriers.
2. Creation of an environment for flow of capital and investment among countries.
3. Free flow of technology from one country to another.
4. Free movement of labor among countries.
True globalization is attainable only if all four components are present. However,
globalization has some advantages and some disadvantages. Some of these advantages and
disadvantages are:
Advantages:
· Education: With the increase in globalization, it has become easier for people to move
across borders to different parts of the world to acquire better education. This has resulted
in an integration of cultures. People from underdeveloped and developing countries often
move to developed countries to get better education. More and more Indian students are
traveling to countries like the UK or the USA to pursue higher education. This has also
opened their cultures towards the Indian culture to some extent.
· Increase in free trade: An increase in free trade has opened doors for investors in
developed countries to invest their money in developing countries. Big companies from
developed countries have the freedom to operate in developing countries. In the 2000s,
Japanese and European companies such as Kawasaki and Siemens started producing high-
speed trains in China. This helped Chinese firms in gaining knowledge about the production
process and now Chinese companies such as China South Locomotive & Rolling Stock Corp.
are producing high-speed trains on their own.
· Faster flow of Information: Information flows from one part of the world to the other
immediately, resulting in the world being tied together. Vital information can be shared
between individuals and corporations at a very fast rate. It has also facilitated in increasing
the ease of transporting people and goods.
· Decrease in prices of goods and services: As the competition in the market has
increased due to rapid globalization, producers have to price their products competitively in
order to remain in the market. This has become a boon for the consumer as he can get better
quality products at cheaper prices. An example is that of the car Ambassador in India. It was
the only car available in India along with the Fiat before the liberalization of the Indian
Economy. These cars were inefficient and expensive. Once the Indian economy was opened,
other car companies started selling their cars in India at cheaper prices. This was a major
benefit for the Indian consumer.
· Reduction in cultural barriers: As people move from one country to another, barriers
between various cultures tend to decrease.This has resulted in tolerance and openness
towards other cultures. This has also facilitated communication between different cultures
and hence, nations. It has also led to a reduction in wars as we are today living in one of the
most peaceful periods in the history of mankind.
Disadvantages:
· Unfair working conditions: Many multinationals have been accused of social injustice
by exploiting labor in underdeveloped countries in order to cut costs. Labor are provided
unhealthy working conditions leading to health hazards. Many large companies have also
been accused of using child labor in their factories in underdeveloped countries. Nike’s
much publicized use of child labor along with poor working conditions and low wages in its
factories in Indonesia is a well-documented example.
· Fall in employment growth rate: Though the promotion of the idea that the advances
in technology and increase in productivity would create more jobs has been a cornerstone of
globalization, it has been seen that in the past few years, such advances have led to a
decrease in the employment growth rate in some developing economies. This can also be
attributed to the fact that companies move their production facilities from one place to
another in search of cheaper labor once the workers in the previous country start
demanding better wages.
· Growing disparity among the rich and the poor: 86% of the world’s resources are
said to be consumed by the richest 20% of the world population. This means that the poorer
80% only gets to consume 14% of the world’s resources. This is a direct result of
globalization according to some activists who believe that globalization only serves the rich
whereas the poor have to face its disadvantages.
· Small scale industries face extinction: Small scale industries which are indigenous to
a particular place face extinction as they do not have the resources or the power that the
multinational companies have. As a result, these small industries are unable to compete
with bigger companies and go out of business. An example is the bamboo furniture making
industry in India. The manufacturers work out of their homes and work hard to make
furniture out of bamboo. These workers cannot compete with large companies selling cheap
plastic furniture and as a result, their industry faces extinction.