Impact Of Globalization And Obstacles Faced By It Economics Essay

As a term globalisation is defined as the merging of the economies and societies all over the world. From the few hundred explanations we will see some of the definition concerned with the global overall economy and business point of view.

It can be defined as "is the closer integration of the countries and individuals of the world. . . brought about by the enormous reduced amount of costs of transport and communication, and the wearing down of artificial obstacles to the flows of goods, services, capital, knowledge, and people across edges" (Joseph Stiglitz, 2003, pg :22).

Expanding, growing, and accelerating of global interconnectedness is meant as globalisation (Held, 1999).

Globalisation "is a stylish word to describe trends identified to be considerably and relentlessly increasing links and marketing communications among people regardless of nationality and geography" (Tobin, 1999).

Globalisation trend before golden years

First thing that hits us about globalisation is the pointed development of the financial and trade market and the government declining in its vitality before 2 decades. But globalisation has undergone some different stages in the early eras. There are many levels of globalisation according to Alex MacGillivray (2006) which we will see at length in this section.

Iberian Carve up (1490-1815)

During this era the Spain and the Portugal with the support of the Pope started out the colonial competition across the world with the long distance trade.

Britannic meridian (1815- 1914)

During this era the English Empire leaded the imperial vitality which enforced the global gold standard and it created round the world shipping.

Sputnik World (1914-68)

This was period in this decolonization occurred which lead the USA and Soviet Union to have difficulties for the effect on the planet. There was an instant economic expansion along this period.

Global Supply String (1968-2001)

This was the real golden period of globalisation where the whole world was interconnected by supply-chains, internet and the cell phones. The global free market was growing speedily and effectively in this era of globalisation level.

Thermo Globalisation (2001- till time)

This is the current situation where in fact the countries are united and battling to prove their best in the competitive global market with the other countries. The global communication system and development in the global trade and commerce is blooming at very fast rate.

The recent tends of the effects of the Globalisation on the planet.

World - GDP - real development rate (%)

Table1: World GDP rate, (CIA 2010).

Figure 1: World Inflation rate, from 2000 to 2009 (CIA 2010).

The GDP development of world was increasing from the entire year 2002 to 2008 scheduled to increase in the globalisation tendency. Because of out sourcing of careers and increasing the decision in the merchandise in the global market the GDP rate of the each country increases. Even though the GDP growth increases overall however when we come to the GDP development when it comes to each and every country the developed countries is greater than the developing countries. The pay payed for the away sourced jobs are less in comparison to that paid in their own countries.

World - Inflation rate (%)

Table2: World Inflation rate, (CIA 2010).

Figure 2: World Inflation rate, from 2000 to 2009 (CIA 2010).

Due to the increase in the globalisation the inflation rate is decreased drastically and now it is preserved credited to increasing global market. The work rate is increasing due to globalisation are certain parts of the world and they even decrease the employment rates especially in developed countries. All these are described at length in the further sections of the newspaper.

CHAPTER 2

Is Globalisation a very important thing?

There is a heated debate about the real ramifications of globalisation of course, if it truly is such a good thing. Good or bad, though, there is not much argument concerning if it is happening. Let's go through the positives and negatives of globalisation, and you may choose for yourself whether or not it's the best thing for our world.

Positive impact of Globalisation

Globalisation has sea of positive aspects in the development and the improvement of the country's GDP growth, career rate and the entire world market. The paper will discuss about the positive factors of globalisation.

The global monetary resources are circulated worldwide which escalates the economical linkage. The commodity, services, capital and recruiting has a free of charge flow between the national restrictions. The free trade between countries are increased. Due to this there can be an upsurge in demand which in turn increases the development sectors. Since there is always a competition on the globe market the possibly of inflation is fairly less and the ground breaking ideas increase to meet the competition. The communication one of the countries is raises this builds up the understanding between countries and we've a cultural interchanges among countries (Burande 2006). There is a greater usage of foreign culture in the form of videos, music, food, clothing, and even more for this reason the global village desire becomes more sensible. We don't possess a single electricity ruling the planet after the upsurge in globalisation therefore the focus is segregated among all the countries on earth. The typical of moving into the producing countries increase due to the upsurge in the movement of money. The growing countries are able use the current technology without problems associated with the development of the technology. The warfare between the developed countries is lessens due to equality in electricity. The developed countries can increase the investment on the expanding countries anticipated to increase in the liquidity of capital (Poux 2007). Environmentally friendly conditions in developed countries are increased. The countries tend to move towards democratic policies. International trade and tourism increases anticipated to upsurge in globalisation. Because of free circulation of men and women from different countries is increased this in turn leads to cultural benefits. Global environmental problems like cross-boundary air pollution, over sportfishing in oceans, climate changes are solved by conversations. International criminal courts and International justice activities are launched to control the crime. The standards applied globally like the patents, the laws of copyright and the entire world trade contracts are increased and standardised. The neighborhood consumer products are exported in the global market which in turn escalates the GDP development of the countries. The subsidies for the neighborhood businesses are lowered. Free trade zones are formed which includes less or no tariff rates.

Challenges faced due to Globalisation

Globalisation has tons of difficulties to be encountered in the both developed and growing countries. It creates inequality in income and a lot of other issues that your newspaper discusses in this section.

The benefits associated with globalisation are not universal. The wealthy are receiving richer and the poor have become poorer. Due to globalisation the major concern is the outsourcing, which provides jobs population in one country and eliminates jibs from other countries which lead many without opportunities. Europeans lose their jobs as the task is being outsourced to the Asian countries. The cost of labour in the Parts of asia is low as compared to other countries. The high rate of income for the firms, in Asia, has led to a pressure on the used Europeans, who are always under the threat of the business being outsourced. Therefore has led to exploitation of labour. Prisoners and child employees are used to work in inhumane conditions. Safety standards are ignored to create cheap goods. Early people had secure, permanent careers. Now people reside in regular dread of burning off their jobs to competition (Lovekar n. d. ). Increased job competition has led to reduction in wages and therefore lower criteria of living. Local sectors are being taken over by overseas multinationals. The increase in prices has reduced the government's potential to sustain communal welfare strategies in developed countries. There is certainly increase in individuals trafficking. Multinational Companies and businesses which were recently restricted to commercial activities are ever more influencing political decisions. Large Western-driven organizations including the International Monetary Account and the entire world Loan provider make it possible for a growing country to obtain a loan. However, a Western-focus is often applied to a non-Western situation, resulting in failed improvement. Companies are as beginning their counterparts in other countries (Fischer, 2003). This ends up with transferring the quality of their product to other countries, thereby increasing the probability of depreciation in conditions of quality. The hazard that the corporate would rule the entire world is on high, as there is a great deal of money invested by them. It is argued that poor countries are exploited by the richer countries where in fact the employees is taken good thing about and low salary are implemented. Although different cultures from throughout the world have the ability to interact, they start to meld, and the contours and individuality of each begin to diminish. Bad aspects of foreign cultures are affecting the neighborhood cultures through Television set and the Internet. You will discover experts who believe that Globalisation is the cause for the invasion of communicable diseases and social degeneration in countries. There could be invasive species that may prove devastating in non-native ecosystems. You can find little international legislation, an unfortunate fact that could have dire effects for the safe practices of people and the environment. Companies have set up industries causing pollution in countries with poor regulation of pollution. Terrorists have access to sophisticated weapons enhancing their capability to inflict destruction. Terrorists make an online search for connecting among themselves.

Comparison between Benefits and Challenges

No.

Benefits of Globalisation

Challenges of Globalisation

1

Economies of countries that participate well with the international current economic climate have constantly cultivated much faster than those countries that make an effort to protect themselves. Well managed open economies have grown at rates that are normally 2 ratio points higher than the pace of progress in economies closed down to the forces of globalisation.

There are interpersonal and financial costs to globalisation. Trade liberalisation rewards competitive market sectors and penalises uncompetitive ones, and it requires participating countries to attempt economical restructuring and reform. While this will bring benefits in the long term, there are dislocation costs to grapple with in the immediate term, and the interpersonal charges for those influenced are high.

2

Countries which have had faster economical progress have then had the opportunity to improve living requirements and reduce poverty. India has trim its poverty rate in two before 2 decades. China has reduced the number of rural poor from 250 million in 1978 to 34 million in 1999. Cheaper imports also make a wider selection of products accessible to more people and, through competition, can help promote efficiency and productivity.

Some countries have been struggling to take advantage of globalisation and their standards of living are falling further behind the richest countries. The space in incomes between your 20% of the richest and the poorest countries is continuing to grow from 30 to at least one 1 in 1960 to 82 to at least one 1 in 1995.

3

Improved wealth through the financial profits of globalisation has led to improved access to health care and clean water which has increased life span. More than 85 percent of the world's people can expect to have for at least sixty years (that's twice as long as the average life expectancy 100 years ago!)

Increased trade and travel have facilitated the pass on of human, canine and place diseases, like HIV/Helps, SARS and bird flu, across borders. The AIDS turmoil has reduced life span in some parts of Africa to significantly less than 33 years and delays in dealing with the problems, brought on by economic stresses, have exacerbated the problem. Globalisation has also enabled the benefits of smoking cigarettes and cigarette to growing countries, with major negative health and financial costs associated recover.

4

Increased global income and reduced investment barriers have led to an increase in foreign immediate investment which has accelerated growth in many countries. In 1975, total overseas immediate investment amounted to US$23 billion while in 2003 it totalled US$575 billion.

The increasing interdependence of countries in a globalised world makes them more susceptible to financial problems like the Asian financial crisis of the late 1990's.

5

Improved environmental awareness and accountability has contributed to positive environmental outcomes by stimulating the utilization of more efficient, less-polluting technology and facilitating economies' imports of alternative substitutes for use in place of scarce local natural resources.

The environment has been harmed as agricultural, forest, mining and fishing industries exploit limited environmental codes and corrupt behavior in expanding countries. Agricultural seed companies are destroying the biodiversity of the earth, and depriving subsistence farmers of these livelihood.

6

Increasing interdependence and global institutions like WTO and World Bank or investment company, that control the pay out of government-to-government disputes, have empowered international politics and economic tensions to be solved on a "rules established" approach, alternatively than which country has the greatest economical or political power. Notably it has bolstered peacefulness as countries are improbable to enter discord with trading associates and poverty lowering helps decrease the breeding earth for terrorism.

The major monetary powers have a significant influence in the organizations of globalisation, like the WTO, and this can work up against the passions of the producing world. The amount of agricultural safety by rich countries has also been believed to be around five times what they offer in help to poor countries

7

Improved technology has dramatically reduced costs and prices changing what sort of world communicates, learns, will business and snacks ailments. Between 1990 and 1999, adult illiteracy rates in producing countries fell from 35 per cent to 29 %.

Trade liberalisation and scientific improvements change the current economic climate of the country, destroying traditional agricultural neighborhoods and allowing cheap imports of made goods. This may lead to unemployment if not carefully handled, as work in the original sectors of the current economic climate becomes scarce and folks might not exactly have the correct skills for the careers which may be created.

8

Modern marketing communications and the global get spread around of information have added to the toppling of undemocratic regimes and a growth in liberal democracies throughout the world.

Modern marketing communications have spread a knowledge of the dissimilarities between countries, and increased the demand for migration to richer countries. Richer countries have tightened the obstacles against migrant individuals, xenophobic concerns have increased and people smugglers have exploited susceptible people.

9

The voluntary adoption by global companies of office standards for their internationalised production facilities in growing countries has made an important contribution to value for international labour requirements. Income paid by multinationals in midsection- and low-income countries are normally 1. 8 to 2. 0 times the common wages in those countries.

Globalised competition can pressure a 'contest to the lower part' in wage rates and labour requirements. Additionally, it may foster a 'brain drain' of skilled individuals, where highly informed and qualified professionals, such as doctors, engineers and IT specialists, migrate to developed countries to benefit from the higher income and greater profession and lifestyle leads. This creates severe skilled labour shortages in expanding countries.

10

International migration has resulted in greater recognition of variety and value for cultural identities which is enhancing democracy and access to human privileges.

Indigenous and national culture and dialects can be eroded by the present day globalised culture.

Sources

Source: Aus AID, 2004, http://www. ausaid. gov. au/

Source: The World Loan provider, 2004, http://www. worldbank. org/

CHAPTER 3

Impact on developed countries

Advantages in Developed Countries

Diversification: The get varied in to the hi-tech industries due to the Globalisation and improvement in the global market.

Production: The productivity improves anticipated to more demand across the world on the planet market. The necessity for the merchandise increases which in turn increases the production.

Benefits: They become very beneficial since almost all of their needs are satisfied by the foreign markets which can cost more in the local market.

Disadvantages in Developed Countries

Losing of Jobs: The careers are used in the poorer countries so that the companies need not pay high income for the careers done. This in turn reduces the jobs opportunities in developed countries.

Reduction in taxes: The fees paid on the products are reduced anticipated to improve the sales in the world market which lessens their welfare benefits.

Difference in abundant and poor: The wealthy becomes higher in their standard of living and the poor remains the same or they might even get down in their standard of living.

Impact on expanding countries

Advantages in Growing Countries

GDP Increase: In the event the statistics are any indication, GDP of the developing countries have increased doubly much as before.

Per capita Income Increase: The wealth has had a trickling effect on the poor. The average income has risen to thrice just as much.

Unemployment is Reduced: This fact is quite evident when you look at countries like India and China.

Education has Increased: Globalisation has been a catalyst to the careers that want higher expertise. This demand allowed visitors to gain advanced schooling.

Competition on Even Platform: The companies all over the world are competing on a single global platform. This allows better options to consumers.

Disadvantages in Growing Countries

Uneven Circulation of Wealth: Wealth continues to be concentrated in the hands of a few individuals and one common man in a growing country is yet to see any major benefits of Globalisation.

Income Difference between Developed and Growing Countries: Wealth of developed countries is growing twice as much as the producing world.

Different Wage Specifications for Expanding Countries: A technology worker may get more value for his work in a developed country when compared to a employee in a growing country.

Reversal of Globalisation: In future, factors such as battle may demand the reversal of the Globalisation (as noticeable in inter world war years), current procedure for Globalisation that are impossible to reverse.

Conclusion

Globalisation has both negative and positive impact on all the countries on the planet market. Globalisation has lots of positive effect on producing countries like the increase in the GDP expansion, increase in occupation rate, diversification of products and services and substantially more. On developed countries also it has positive impact like the upsurge in quality lifestyle, purchase of international goods at cheaper rates compare to local market and many more. Though it has a lot of positive effect on every single economy it offers a larger amount of negative impact on the economies. The individualistic social and behavioural aspects of the market are terribly getting affected. The best goods produced in a country are exported, for making the maximum profit which in turn gives the local market another grade or the low quality products. The career rates in the developed countries lessens due to outsourcing of the jobs. Despite the fact that globalisation is vital and a required factor in everyday activity the negative impact than it affects certain elements of our own region. The benefits associated with it are not equally spread across the world and within the countries. When it is investigated more the problems caused scheduled to globalisation is more than the benefits of it. But at the same time globalisation is necessary for certain period of each one's life. So Globalisation is even more effective and more beneficial if all the areas of the world are considered as one. Which means this paper can be concluded by stating that globalisation must conquer all its obstacles to make it beneficial and best for the globe.

Case Study

Emergence of Globalization in India - History

In early 1990's Indian current economic climate was at major problems. It experienced major problems such as fiscal deficit was increasing; inflation was high at 17%; foreign currency reserves lowered to $1 billion; NRI's didn't spend money on India. When Shri P. V. Narasimha Rao became best minister of India in 1992, he required measures to help make the Indian current economic climate one of the quickest growing economies on the planet and applied the new economical model known as Liberalization, Privatization and Globalization in India (LPG).

Steps taken in LPG Model to Globalize Indian Economy

Some of the steps taken in LPG Model to build up Indian overall economy were: First of all, Indian currency was devaluated by 18 to 19% to resolve the balance of repayment problem. Secondly, to help make the LPG model work smooth lots of the public areas were sold to the private sector to increase government cash reserves. Thirdly, allowing FDI in a wide range of sectors such as Insurance (26%), defence market sectors (26%) etc. Fourthly, quantitative restrictions on imports were removed. Fifthly, the peak traditions tariff was reduced from 300% to 30%. Finally, facilities designed for foreign investors were open to NRI's.

Merits of Globalization in Indian Economy

Globalization led to the following improvements. They can be: Firstly, upsurge in FDI purchases helped in monetary reconstruction. Subsequently, faster exchange of information, partnering with other nations for joint ventures and cultural interaction helped India to globalise faster. Thirdly, changes in technical development upgraded Indian Overall economy. Fourthly, outsourcing careers to India increased employment opportunities. Finally, opening of international market created more opportunities.

Demerits of Globalization in Indian Economy

Few down sides during globalization were: firstly, threat of multinational organizations with immense electricity ruling the globe. Second of all, colonization for smaller producing nations while considering changes. Finally, it can lead to threat of social imbalance and spread of communicable diseases.

Contribution of Indian Business for Development of Indian Economy

The strength of Indian companies sometimes appears in recent times when Indian company's started out expanding their territories and acquisitions internationally. Phenomenal progress of it provided employment opportunities and drastically modified living standards. Currently realised by most multinational companies that India has huge probable has increased commercial improvements in India (Malik, 2009).

For, continuous expansion India should pay immediate attention to ensure quick development in education, health, agriculture and mainly infrastructure so that rural economical developments and industrial developments happen considerably faster. India still has the condition of poverty. The welfare of the country will not percolate from the very best, but should be built upon development from the bottom.

Conclusion

India gained highly from the LPG model as its GDP increased to 8. 8% 2010 (Trading Economics, 2010). According of market capitalization, India ranks fourth in the world. But even after globalization, condition of agriculture has not improved. The talk about of agriculture in the GDP is only 17%. The number of landless households has increased and farmers are still committing suicide. But experiencing the results of globalization, it can be said that very soon India will conquer these hurdles too and march highly on its course of development.

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