Essay Topic: How globalization affects the economy
We definitely cannot deny the fact that economic globalization is one of the most important aspects of globalization. It differentiates between the era before and after globalization took place. We can define globalization in general as the basic interaction between people, company or firms in terms of providing goods as well as services at a reasonable rate. Also helping firms across the world to increase the trafficking of goods to make them grow.
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It has been observed that globalization accelerated from the 18th century, how people from across the world communicated with each other not only for their profit but for the whole community or country. This way gradually it benefitted many firms that stand strong today in the market, spread across the world. And that’s what economic globalization is all about, increasing the overall growth of the economy through communication and implementation of different and fresh ideas. That will not only help the companies but also the users or consumers of that firm. The overall growth in the economy is all that matters in this.
It came brightly into the limelight in the early ’90s where people started to know the drastic change it could bring into the work. They started implementing that in their business and the result can be seen now, the vast network of services that can be availed from anywhere across the whole world. The most helpful tool for economic globalization was the technology that keeps improving day by day. And now in this fast-moving world every day there is a new opportunity or idea through this, which just needs attention and will lead to the success of a lifetime. It mostly helped the people in such a way that people started improving their creativity instead of leading to the same monotonous way followed for ages.
The key elements of globalization:
- The keys elements that are the base of economic globalization would be the gross domestic product (GDP), human development index (HDI), and industrialization.
- GDP is referred to as the gross production of final products as well as services within a country in a year contributing to the countries’ total economic output.
- HDI comprises three things life expectancy of a country, education, and per capita income.
- Industrialization is implementing technology and other effective ideas; be it social change and others to improve the whole company and then the whole country.
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The advantages of economic globalization on the economy of the whole world
The benefits from the economic globalization with the areas where government and the people should be prepared and taken care of, according to the 2003 report of the Milken Institute’s “Globalization of the World Economy” are as follows:
- Innovation of technology- Globalization’s greater competition aids in the creation of new technology, especially with the rise in Foreign direct investment, which helps in boosting economic production by making the preparation part more productive.
- Economies of Scale- Globalization helps multinational businesses to reach efficiencies of scale, reducing the costs and prices, allowing for further economic growth. That being said, many business owners attempting to compete nationally will suffer as a result of this.
- Foreign Direct Investment- Foreign direct investment (FDI) continues to expand at a much faster pace than foreign trade, assisting in industrial development, industrial transformation, and global company expansion.
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As we know with benefits there always some drawbacks, some are:
- Equity Distribution- Globalization’s advantages may be skewed disproportionately in favor of wealthy nations or individuals, resulting in greater economic disparities.
- National Supremacy- The growth of the country, multi-national corporations, and other international organizations have been viewed by some as a challenge to supremacy. Finally, some members could become nationalistic or hateful as a result of this.
- Interdependence- If local exchange rates affect a wide range of people that rely on them, the interconnection between the countries can cause national or international instabilities.
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A systematic, and probably first large-scale, inter-study of water, energy, and ground protection in 180 nations that connects national and sector utilization to sources revealed that countries and industries are highly vulnerable to over-exploited, unstable, and degraded such services. Hence the economic globalization containing its gradual and steady benefits also has flaws. But with the help of new technologies ruling the world and the knowledge of many economists will only increase the benefit from it. The worldwide nations have adapted the globalization and many have emerged as the biggest economic country. So, the moving and fast-improving world has come up with globalization and likely to increase more and more through this.