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Globalisation isn’t something that started yesterday; infact, it has been existing ever since humans started moving from one place to another in the world. With that said, globalisation has become rapid recently, and it has become global advancement all thanks to technological growth that has facilitated the increase of globalisation around the world.
It is no hidden fact that globalisation has had an impact on almost all parts of modern life, most notably in regards to the global economy.
Put simply, globalisation is seen as the phenomenon which aims to increase business operations on a global scale, and it is facilitated by technological, political, and environmental advancements which create a favorable platform worldwide. The impacts of globalisation on the world economy is quite evident when it comes to buying and selling. Take, for instance, in the US, close to 36 percent of all shoes, and clothing is made in China, with only about 4 percent made within the shores of the country.
Impacts of Globalisation
Increased competition
When there are multiple producers competing for a stake in the economy, it is always a positive sign for consumers, as such competition will bring about the production and delivery of quality goods and services. This means better products at a competitive price.
Foreign direct investment
Globalization leads to more foreign direct investment. Since trade among different economies occurs at a more favorable rate, FDI tends to increase and benefit from it.
Technology development
One of the by-products of globalisation is an increase in competition, and competition doesn’t just bring out the best in people, it also brings out the best in nations as well. Improved competition as a result of globalisation helps to bring about technological innovation, most especially when there is an increase in foreign direct investment — all of these help to enhance economic output via efficient processes and method of production.
If you ask most economists about the impact of globalisation on the world economy, they will echo the same thing that it offers a massive benefit to economies in the world. It achieves this by creating a more efficient market, enhancing competition amongst individual economies, and facilitating an increase in wealth among economies in the world.
Yes, globalisation might look like a costly venture, but the long-term benefits, and sometimes the short-term benefits are essential to economic growth. This is part of the reason why the consensus among economies is that globalisation is beneficial to individual economies in the world, and as such, it should be welcomed by individuals, businesses, corporations, and government as a whole.
Positive effects of Globalisation
- Free trade opportunities between countries help avoid business complications. Moreover, this effort supports economic growth in developing countries.
- Knowledge sharing and technology transfer between nations have become easier.
- Localisation opportunities provide direct benefits for developing countries to scale technology rapidly.
- Mix/Match high-cost country units and new economy units to control the cost of goods/services and directly benefit the end customer.
- Helping developed countries to continue to focus and invest in research, technology development and innovation.
- Precise and specific responsibility matrices between developed and developing countries fetch long-term benefits.
Negative effects of Globalisation
- Employment threats to developed countries over skilled and unskilled resources.
- Manufacture of harmful products by developing countries that do not support the environment. (e.g. products such as leather, castings, batteries, surface treatments, etc.)
- The quality level of products and services will always be a difficult issue that developing countries will have to deal with until they reach the required maturity level.
- Cultural differences among countries working together on globalisation.
- Changes in foreign exchange, national policies and regulations affecting globalisation goals.
Bottom line?
Globalisation has had its impact not just on individual economies around the world, but also on lives, businesses, and corporations. Its impact on a global scale has led most economists to agree that it is beneficial to the world economy.
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