Effects of globalization: tie or tear

Effects of Globalization: Tie or Tear

The process of globalization affects practically all spheres of life and all countries of the world. In fact, even those countries that attempt to distance from global economic and political trends and tend to isolationism cannot fail to take into account the process of globalization. Nowadays, a country that develops international economic relations with other countries of the world gets inevitably involved in the process of globalization, which, to a significant extent, stimulates the cooperation between countries on all levels, including economic, political and socio-cultural. In such a situation, the question concerning possible effects of globalization arises. On the one hand, there are supporters of the process of globalization who sincerely believe that globalization accelerates the economic development on the global scale and, therefore, contributes to the progress and improvement of standards of life in all parts of the world. On the other hand, there is an absolutely different view on the process of globalization, as a tool of the expansion of well-developed countries that leads to the dramatic stratification of the contemporary world and growth of the gap between rich and poor.

In order to better understand possible effects of the process of globalization, it is primarily necessary to dwell upon the essence of this process. Basically, globalization has started as the process of economic cooperation and integration of countries. To put it more precisely, the development of national economies and introduction of new technologies created the foundation for the construction of a totally new system of international economic relations. The introduction of technologies and improvement of logistics as well as the growing attractiveness of international markets for many companies, the formation of multinational corporations stimulated the trend to integration of economies of different countries and their growing interaction (Gomory, 182). In this respect, the example of the EU is particularly noteworthy since the formation of the EU may be viewed as a model of the process of globalization on the regional level.

In this respect, supporters of the idea that globalization will tie the world together argue that the contemporary EU is a perfect example that proves benefits of economic integration of countries, which, by the way, resulted not only in economic but also political and even cultural integration of countries. The integration of national economies determined by objective needs to expand markets led to the elimination of fiscal barriers and the emergence of free trade accelerated further development of the process of globalization.

As a result, nowadays, the world economy is closely intertwined and largest companies of the world operate worldwide that basically decreases the significance of the national markets. At the same time, the internationalization of trade and economic relations led to the growing number of direct foreign investments that, according to supporters of globalization, is a positive trend (Van der Borght, 200). In such a context, globalization is supposed to facilitate the flow of capital, human resources and technologies worldwide. Potentially, this means that the world economy will be more balanced as international cooperation and competition stimulates leading companies expand their business and enter markets of developing countries, where they could build their plants, introduce their production facilities, establish their international standards of quality of production and work, etc. Naturally, in such a situation, it is possible to speak about the uniting power of globalization since people from different countries and cultures are working together and companies from developed countries are interested into the development of production and business in developing countries (Ogbu, 122). The latter should stimulate economic development of developing counties, which, by the way, also get access to markets of developed countries due to the emergence of free trade.

However, the actual situation is far from perfect and the process of globalization is not always positive, especially in relation to developing countries of the world. In this respect, it is important to underline that the process of globalization is consistently more beneficial for multinational corporations and developed countries because the elimination of fiscal barriers, which actually stimulate free trade, opens markets of developing as well as developed countries to the expansion of multinational corporations and companies operating in developed countries. In such a situation, each country attempts to take its own niche in the international market. However, companies based in developing countries prove to be uncompetitive, especially in high-tech and knowledge based industries, where companies from developed countries and multinational corporations dominate (Dunning, 231). As a result, developing countries are doomed to use either their natural resources which they supply mainly to developed countries or developed the main industry, which is, as a rule, not highly technological, such as the production of some agricultural goods, or diamonds, for instance.

As a result, the process of globalization makes markets of developing countries practically defenseless in face of the expansion of companies and multinational corporations from developed countries, while national companies become absolutely uncompetitive. In such a way, instead of tying the world together globalization leads to the pauperization of developing countries and enrichment of developed ones that widens the gap and polarize the world.

In order to better understand possible effects of the process of globalization, it is primarily necessary to dwell upon the essence of this process. Basically, globalization has started as the process of economic cooperation and integration of countries. To put it more precisely, the development of national economies and introduction of new technologies created the foundation for the construction of a totally new system of international economic relations. The introduction of technologies and improvement of logistics as well as the growing attractiveness of international markets for many companies, the formation of multinational corporations stimulated the trend to integration of economies of different countries and their growing interaction (Van der Borght, 2000, 187). In this respect, the example of the EU is particularly noteworthy since the formation of the EU may be viewed as a model of the process of globalization on the regional level.

In this respect, supporters of the idea that globalization will tie the world together argue that the contemporary EU is a perfect example that proves benefits of economic integration of countries, which, by the way, resulted not only in economic but also political and even cultural integration of countries. The integration of national economies determined by objective needs to expand markets led to the elimination of fiscal barriers and the emergence of free trade accelerated further development of the process of globalization.

As a result, nowadays, the world economy is closely intertwined and largest companies of the world operate worldwide that basically decreases the significance of the national markets. At the same time, the internationalization of trade and economic relations led to the growing number of direct foreign investments that, according to supporters of globalization, is a positive trend (Van der Borght, 2000, 200). In such a context, globalization is supposed to facilitate the flow of capital, human resources and technologies worldwide. Potentially, this means that the world economy will be more balanced as international cooperation and competition stimulates leading companies expand their business and enter markets of developing countries, where they could build their plants, introduce their production facilities, establish their international standards of quality of production and work, etc. Naturally, in such a situation, it is possible to speak about the uniting power of globalization since people from different countries and cultures are working together and companies from developed countries are interested into the development of production and business in developing countries (Van der Borght, , 2000,122). The latter should stimulate economic development of developing counties, which, by the way, also get access to markets of developed countries due to the emergence of free trade.

However, the actual situation is far from perfect and the process of globalization is not always positive, especially in relation to developing countries of the world. In this respect, it is important to underline that the process of globalization is consistently more beneficial for multinational corporations and developed countries because the elimination of fiscal barriers, which actually stimulate free trade, opens markets of developing as well as developed countries to the expansion of multinational corporations and companies operating in developed countries. In such a situation, each country attempts to take its own niche in the international market. However, companies based in developing countries prove to be uncompetitive, especially in high-tech and knowledge based industries, where companies from developed countries and multinational corporations dominate (Van der Borght, , 2000, 231). As a result, developing countries are doomed to use either their natural resources which they supply mainly to developed countries or developed the main industry, which is, as a rule, not highly technological, such as the production of some agricultural goods, or diamonds, for instance.

At the same time, it is important to underline that, along with the development of free trade, economic and political integration which affects international relations and national policies, the process of globalization affects consistently the life of ordinary people. In this respect, it should be said that the modern world becomes more homogeneous. What is meant here is the fact that cultural identity of people tends to disappear and give in to the formation of a new cultural identity defined by the dominant western culture. As a result, the modern world grows more and more westernized since people representing different cultures gradually cultural values and standards of the western civilization.

As a result, the process of globalization makes markets of developing countries practically defenseless in face of the expansion of companies and multinational corporations from developed countries, while national companies become absolutely uncompetitive. In such a way, instead of tying the world together globalization leads to the pauperization of developing countries and enrichment of developed ones that widens the gap and polarize the world. In fact, the process of globalization contributes to the dramatic change of the national policies since countries become more concerned with their integration into world economy to take an advantageous position, while on the international level the emergence of international organizations facilitating free trade, such as the WTO, NAFTA, and others, emerges. Moreover, even individuals are affected by globalization and often they face a risk of losing cultural identity being affected by western culture.

Works cited:

Dunning, John ed. Globalization, Trade and Foreign Direct Investment. OXford: Elsevier, 1998.

Gomory, R.E. Globalization: Causes and Effects. New York: Touchstone, 2002.

Martin, Hans-Peter and Schumann, Harold. The Global Trip, Globalization & The Assault on Democracy & Prosperity. St. Martin's Press, New York, 1997.

Ogbu, J. U. "Differences in cultural frame of reference." International Journal of Behavioral Development, 16, 1993, 483-506.

Van der Borght, K. Essays on the Future of the WTO: Finding a New Balance. London: Routledge, 2000.

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