Essay on Globalisation
Globalisation is a diverse term and it takes a little effort to understand the whole concept but fear not, in this essay, I will talk about various aspects of the same such as the meaning of the term globalisation, its causes, impacts, advantages and disadvantages. By the end of this essay, you will have read a step by step approach to understanding a concept so complex in an easy and organized way.
The term globalisation refers to expanding and converging of the economic world market including all the international competitors. In simpler words, it means relations and interactions among countries with respect to production, trades and financial status of transactions.
There are various parameters on which we can try to understand the underlying principle of globalisation. One such parameter is the allowance of the free flow of goods and services between two countries. In other words, it means removal of taxes and other trade barriers between the countries. An environment should be created so as to ensure the flow of capital or income between the countries. Free and uninterrupted technology transfer is another beneficial factor while studying globalisation. However, the most important factor remains to be the free transfer or movement of labour between the two countries. When people move, they carry their values, ethics, code of conduct, religion, nationality and sense of union where they go which makes the world into a global village. All four factors are necessary for the development and initiating smooth globalisation.
However, the current generation of economists does not consider the fourth parameter in the official definition of globalisation. The traditional definition contains only trade flow, capital flow and technology transfer. As discussed above, the fourth parameter happens to be the most important one and hence, the course of modern globalisation should change and so should its definition.
The importance of globalisation has been subjected to a lot of criticism but in an easy way, you can learn that the policies of globalisation can help the people of lower strata increase their livelihood and boost the underdeveloped and developing countries’ economy on a large scale.
Globalisation dwells on certain characteristics which are specific to the topic.
- Liberalisation- Globalisation allows the businessmen, merchants, industrialists to flow their goods and services representing their respective countries in exchange for foreign goods, currency, technology and
- Economics activities- According to the rules and themes of globalisation, economic activities are controlled and circulated via domestic and international markets. The economy is also established nationally and internationally.
- Free Trade- This means the easy and unrestricted flow of services and products without any governmental control over the mediums
- Connectivity- Globalisation enhances the connecting links of society, culture, caste, national and international entities. People learn about new communities and choose to study or practice any of the themes they are interested in.
- Borderless globe- This concept was introduced by Kemichi Ohmae when he talked about breaking barriers in respect of currencies, cultures and nationalities in exchange of ideas, knowledge and technology.
- A composite process- Globalisation is known to be a composite process which means the occurrences of political, cultural, technological, commercial, financial and economic joints. In other words, it crafts a world without boundaries.
- A multidimensional process- Just as the name suggests, this process refers to the operation of national markets, free trades, flow of labour, capital and technology. It also means, in terms of politics, a controlled way of powers and functions of state and freedom granted to individual and community empowerment. It also means the exchange of cultural values and ethics between two or more societies, communities, and countries. Basically, it means the difference of politics as well as the promotion of liberalisation and capitalism.
- A top-down process- It talks about the level of the hierarchy of globalisation which begins at MNCs in developed countries along with technological, capital and products flowing to the developing and underdeveloped countries exchanging their currency. Globalisation is an important process or phenomenon for developing countries which need to get adapted with different socio-economical situations.
The mentioned characteristics of globalisation imply that there is an exceptional need for global interaction and connection to enhance and level up the economy as well as social economic scenarios.
There are many advantages of globalisation which are growing day by day towards the ultimate global connection. I have listed almost all the efficient ones below.
- Globalisation enhances the average growth rate of the long run economy. This may even help in short-term in certain situations. As the growth increases, the economy of the particular sector in both countries is affected.
- Globalisation improves the allocation and later efficiency of resources. It also affects the labour productivity in the short as well as long-term The capital-labour ratio is also reduced as the efficiency of resources includes capital output too.
- Globalisation incurs all the expenditure and removes inefficiency in the production and organisation The excessively protective scene in the absence of a proper system should be attained using the ethics of globalisation.
- Globalisation attracts foreign goods, services and most prominently, foreign people who are interested in investing the country’s products or technology. Tourism is also enhanced exponentially due to increased globalisation
- Globalisation changes with the course of time but always stands with respect to production and trade where mostly labour and goods rights are favoured along with techniques and expansion of trade and services.
- Following the globalisation rules, the domestic industries of developing countries to be more conscious about price reduction, product quality and improving their standards to match the foreign competition.
- Globalisation helps to achieve cost-effectiveness for the developing and underdeveloped countries without affecting the net gross domestic profit of the developed countries.
- Globalisation also affects farmers via agriculture sector along with the industrialist sector. The growing need of the consumer good also increases the employment of labour and capital in both the sectors thus balancing the overall economic scenario. This results in an instant reduction of the population ratio living below the standard poverty line.
- Globalisation impacts the banks during all the transaction in every sector due to the huge sums of money involved. Moreover, the currency rates and exchange procedures also lend the banks enormous amounts of profits which in turn manages to balance the sectors economically and efficiently.
As the clichéd branch suggests, every coin has two sides. Similarly, globalisation too has some shortcomings or disadvantages in its plate. Some of which, I have mentioned below.
- Globalisation happens via the distribution and redistribution of economic and financial power at various levels of a hierarchy. This may many times lead to the domination of developed countries over underdeveloped and developing countries. The balance is very difficult to achieve due to the various complex factors involved.
- Generally, economists notice that the concept of globalisation involves more of imports and comparatively less of exports again leading to an economic national unbalance.
- Though globalisation is expected to give out clear technological ideas and changes with respect to the growth of the country, in real practice globalisation usually leads to more of increased unemployment and ultimately increases the chances of a recession. This may prove to be a huge setback especially for a developing country such as India.
- Globalisation does not segregate the profit of small scale and large-scale industries and hence, the small-scale industrialist and the labour working under them face extreme competition from the large-scale multinational companies which have huge turnovers in net worth of the organisation.