TOPIC – GLOBALIZATION

Presenting By – Aayushi Gautam

 INTRODUCTION TO GLOBALIZATION
Conceptualizing Globalization
Globalization is the process by which the world, previously isolated through physical and technological
distance, becomes increasingly interconnected. It is manifested by the increase in interaction between
peoples around the world that involves the sharing of ideas, cultures, goods, services and investment.
The last sixty years have witnessed a huge increase in globalization, but the phenomenon has been going
on for much longer. Thomas Friedman describes the current trend as the third great wave of
globalization in human history.
Globalization has brought fear of loss of jobs and loss of income, which are often described as the “race
to the bottom,” as industrialized countries are thought to have to reduce wages to be competitive with
those in the developing world. Globalization has also spawned fears about loss of culture. Many
countries worry about their cultures being overwhelmed by that of the United States. France is a good
example. Others fear replacement of their cultures by that of Western nations (e.g., some Islamic states).
Countries also fear the loss of national sovereignty as they become part of supranational entitles, like the
European Union or the International Monetary Fund. And yet, history shows that globalization has
corresponded to higher national incomes and increased opportunities. How can these conflicting views
be reconciled?
 PROS AND CONS OF GLOBALIZATION IN BUSINESS

Throughout history, commerce and business have been limited by certain geographic constraints. In
its earliest days, trade happened between neighboring tribes and city-states. As humans
domesticated the horse and other beasts of burden, the distances they could travel to trade
increased. These distances increased further with the development of seafaring capabilities.
Although humans have been using ships for centuries to transport goods, cargo, people, and ideas
around the world, it wasn’t until the development of the airplane that the blueprint of a “globalized
economy” was laid. This was for a simple reason: It allowed us to travel greater distances faster than
ever before.
The development of the internet and easier means of communication and collaboration propelled us
from those early days of globalization to where we are today: A few taps or clicks away from a co-
worker, business partner, customer, or friend.
Globalization has had numerous effects—both positive and negative—on business and society at
large. Here’s an overview of the pros and cons of globalization in business.
 PROS OF GLOBALIZATION
1. Economic Growth
It’s widely believed that increased globalization leads to greater economic growth for all parties. There are several
reasons why this might be the case, including:
 Access to labor: Globalization gives all nations access to a wider labor pool. Developing nations with a shortage
of knowledge workers might, for example, “import” labor to kickstart industry. Wealthier nations, on the other
hand, might outsource low-skill work to developing nations with a lower cost of living to reduce the cost of
goods sold and pass those savings on to the customer.
 Access to jobs: This point is directly related to labor. Through globalization, developing nations often gain
access to jobs in the form of work that’s been outsourced by wealthier nations. While there are potential pitfalls
to this (see “Disproportionate Growth” below), this work can significantly contribute to the local economy.
 Access to resources: One of the primary reasons nations trade is to gain access to resources they otherwise
wouldn’t have. Without this flow of resources across borders, many modern luxuries would be impossible to
manufacture or produce. Smartphones, for example, are dependent on rare earth metals found in limited areas
around the world.
 The ability for nations to “specialize”: Global and regional cooperation allow nations to heavily lean into their
economic strengths, knowing they can trade products for other resources. An example is a tropical nation that
specializes in exporting a certain fruit. It’s been shown that when nations specialize in the production of goods
or services in which they have an advantage, trade benefits both parties.
 CONS OF GLOBALIZATION
1. Increased Competition
 When viewed as a whole, global free trade is beneficial to the entire system. Individual companies,
organizations, and workers can be disadvantaged, however, by global competition. This is similar to
how these parties might be disadvantaged by domestic competition: The pool has simply widened.
 With this in mind, some firms, industries, and citizens may elect governments to pursue
protectionist policies designed to buffer domestic firms or workers from foreign competition.
Protectionism often takes the form of tariffs, quotas, or non-tariff barriers, such as quality or
sanitation requirements that make it more difficult for a competing nation or business to justify
doing business in the country. These efforts can often be detrimental to the overall economic
performance of both parties.
 “Although we live in an age of globalization, we also seem to be living in an age of anti-
globalization,” Reinhardt says in Global Business. “Dissatisfaction with the results of freer trade,
concern about foreign investment, and polarized views about immigration all seem to be playing
important roles in rich-country politics in the United States and Europe. The threats in Western
democracy to the post-war globalist consensus have never been stronger.”
  EXAMPLES OF GLOBALIZATION
Examples of globalization include:
1. Intergovernmental organizations. Globalization has made it possible for international
organizations to be created through treaties between many different countries. Examples
include the European Union, the United Nations, the World Bank, the World Trade
Organization (WTO), and the International Monetary Fund (IMF).
2. Intergovernmental treaties. Many governments across the world have engaged in treaties
or trade policies to make it easier for international investment and trade. These treaties,
called free-trade agreements, include the North American Free Trade Agreement (NAFTA)
and the Comprehensive Economic and Trade Agreement (CETA).
3. Multinational corporations. A multinational corporation is an organization that does
business in many different countries. Globalization is the reason that multinational
businesses exist. For example, globalization allows major US corporations to sell their
products to Mexico, Europe, and China.