Essay: Globalization and Its Consequences
Globalization is a process of integration and amalgamation of social, political and economic aspects. It is a process which relates to the integration of the inter-related national economies. Globalization is all about shrinkage of distances, where they are getting shorter, people are getting nearer and things are moving closer to each other (Gilpin R. M., 2000).
Globalization is a complex and a controversial issue which has remained a subject of controversy and one of the pressing questions which has brought benefits to our world and also disadvantages. Globalization in its wider context often interpreted as global inter-dependence of people in technological, social, economic and political aspect (Pettinger, 2012).
America and many other nations of this industrialized world have entered into an era of ‘Global Capitalism’ where economic and political systems of various nations are experiencing a profound revolution and transformation. With all these transformations, yet we have entered into the second great era of global capitalism (Gilpin R. M., 2000).
Globalization of the World Economy
The history of globalization dates back to the second half of the twentieth century, where due to development in communication technology have created a scenario where it is too limiting for the economic activity to appear on national borders. With the end of cold war, the unwanted collapse of the Soviet Union and the reunification of the Germany, where Germany again evolved as a dominant power in the European Union are affecting every aspect of international affairs. The period of the cold war describes the period of tension among two super powers i.e. Soviet Union and USA. During that time the globe was divided into three parts Soviet Union and its allies, United State and its allies while third world countries remain unaligned and uncategorized. This was an era of uneasy relationship between two hegemonic powers where each of them were competing for setting up their influence and extending their borders. With the end of cold war in 1989 resulting in the collapse of the Soviet Union, it ignited an international debate over the new world order system (Gilpin R. M., 2000).
In the latter half of the twentieth century, the participants of the cold war and their allies provided the conceptual framework around which economy of the world evolved. Later, that framework weakened resulting in the United States and its allies designed the framework leading to a greater paradigm shift in national priorities. With this, the major shift in national priorities and foreign policies has suggested some important ramifications which are quite imperative to the future world economy. The global economic turmoil of the century clearly warned that there are some serious implications for the health and stability of the global economy of the world (Gilpin R. M., 2000).
With this evolved globalization, which has distorted the cause of peace and fail to reconcile the fighting sides for example in South Korea and in Vietnam where U.S military have called a war. In spite of all this, UN secretary general couldn’t implement peaceful action after witnessing aggressor’s plan. Globalization has ultimately resulted in unwanted interventions of American forces on other developing nations (Gromyko, 1950).
Benefits of Globalization
There is no doubt that globalization has minimized social isolation and has increased mutual interaction among countries to seek benefit. One of the most important aspects of globalization is openness to international free trade, which has allowed many countries to thrive and prosper economically. In the past, due to trade barriers, developing countries were unable to upgrade their economy, which resulted in stunted economic growth in comparison to other developed countries. Thus, globalization has extended a helping hand to the developing countries in order to provide sufficient means of economic growth and compete with other developed nations in the global economic market. Furthermore, this has lowered down the prevalence of poverty in developing nations. It is noteworthy to understand the fact that international trade has greatly expanded its horizon and has become a significant and a vital factor in domestic and international economic affairs (Torres, 2012).
Additionally, it is globalization that has resulted in greater advancements in the field of health and education. Globalization act as a catalyst which allows people to acquire a higher set of skills and gain higher education. Both of these factors are directly related to the economic growth of a nation and also improve the social status of the people, thereby, raising the standard of living and increasing average life expectancy. According to the World Bank statistics of 2004, it is globalization which is responsible for 85% and greater than that, expected to live more than sixty years of age (Gilpin, 2001, p. 56).
Likewise, the noticeable benefits of globalization are improved quality of life, improved economies, improvement in health and education industry, increased investment, greater competitiveness and promotion of cultural diversity and pluralism.
Costs of Globalization
This increasing globalization has altered the structure and function of the world economy. There are numerous benefits of globalization but on the other hand there are some detrimental effects too. Firstly, the most important cost of globalization is due to free trade options which can harm the economies of developing countries which are still in their struggling phase. Free trade benefits developed countries mostly. Industries of developing countries are still in their infancy stage therefore need protection from free trade else cannot thrive. The participation of developing countries in globalization enable them to better use their comparative advantages thus strengthening global market and eliminating monopolistic competition but at the same time pose them to enormous number of risks(Gilpin R. M., 2000).
Furthermore, globalization has led to greater culture amalgamation which is substantially threatening the heterogeneity of cultures. This is generally due to mass migration in order to seek higher education, labor and other opportunities. Many critics argue that increased globalization is leading to fusion of different culture which has posed a serious question mark on the cultural identity of various nations across the globe (Gilpin, 2001).
Moreover, economic globalization pose a greater risk to the developing countries due to certain external factors which are unregulated including privatization, macroeconomic policies and fluctuating economic equilibrium. So, what is the most striking feature of globalization of economy is that it is not restrained to some regulations thus; globalized economy is now in a free and a drifting state (Shangquan, 2000).
Additionally, there are several other factors which are increasing the cost of globalization where developed countries are seizing the power. This has resulted in series of offensive missile bombarding. Similar situation was observed when America decided to attack Island of Cuba. What puzzled Kennedy was to determine the course of action which neither highlights the weakness of UN nor propel the countries to involve in a quarrel ultimately leading to war (Castro, 1962)
Many critics and economist argue over the fact that there are some high costs of economic globalization. This includes inequality of income among and within nations, high level of unemployment and widespread exploitation of economies due to unregulated financial flows. However, other critics argue it would be wrong to consider globalization as a primary factor for most of the world’s social, political and economic problem. This is apparently false and greatly exaggerated. It is not only globalization but, technological development, formulation of national policies which are responsible for these impacts. Unfortunately, due to greater disillusionment regarding the effects of globalization, it is considered that globalization has had a very negative impact on economies of nations and global politics. In a nut shell, for developing countries, globalization has brought more benefits than detrimental effect whereas this is reverse for developed countries (Pettinger, 2012).
Castro, F. (1962). President Kennedy’s Address to the American people, October 22, 1962.
Gilpin, R. (2001). Global Political Economy: Understanding the International Economic Order. New Jersey: Princeton University Press.
Gilpin, R. M. (2000). The Challenge of Global Capitalism: The World Economy in the 21st Century . New York: Princeton University Press.
Gromyko, A. A. (1950). On American Intervention in Korea, 1950.
Pettinger, T. (2012, November 27). Economics Help. Retrieved from Costs and Benefits of Globalization: http://www.economicshelp.org/blog/81/trade/costs-and-benefits-of-globalisation/
Shangquan, G. (2000). Global Political Economy: Understanding the International Economic Order. Beijing: State Commission for Restructuring the Economic System.
Torres, A. R. (2012). Globalization: Benefits and Problems. Oxforshire: Oxford University Press.