How Does Globalization Affect Me – Globalization refers to the spread of financial products, goods, technologies, information and jobs across national borders and cultures. Economically, it describes the interdependence of nations around the world that have developed through free trade.
Corporations gain competitive advantages on several fronts through globalization. They can reduce operating costs by manufacturing abroad, buy raw materials cheaply due to the reduction or elimination of tariffs and, above all, gain access to millions of new customers.
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How Does Globalization Affect Me
On the one hand, globalization has created new jobs and fueled economic growth through the cross-border flow of goods, capital, and labor. On the other hand, this growth and job creation is not evenly distributed across industries and countries.
How Does Globalization Affect Me As A Student?​
Specific industries in certain countries, such as textile production in the United States or corn farming in Mexico, have suffered significant disruption or outright decline as a result of increased international competition.
The motivations for globalization are idealistic as well as opportunistic, but the development of the global free market has benefited large corporations based in the Western world. Its impact remains mixed for workers, cultures and small businesses in developed and developing countries around the world.
Globalization is not a new concept. In ancient times, merchants traveled great distances to buy rare and expensive goods that could be sold in their own countries. The Industrial Revolution in the 19th century brought advances in transportation and communication that facilitated trade across borders.
The Peterson Institute for International Economics (PIIE), a think tank, says that globalization stalled after World War I and turned to protectionism as states imposed import taxes to tightly control their industries after the conflict. This trend continued until the United States played an important role in the restoration of international trade during the Great Depression and World War II.
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Globalization has accelerated at an unprecedented rate, with changes in public policy and innovations in communication technology cited as two major driving factors.
One of the important steps towards globalization was the North American Free Trade Agreement (NAFTA) signed in 1993. One of NAFTA’s many effects was to encourage American automakers to move some production to Mexico, where they could save on labor costs. NAFTA was replaced in 2020 by the United States-Mexico-Canada (USMC) agreement.
Governments around the world have cobbled together a free market economic system over the past 20 years through fiscal policies and trade agreements. The basis of most trade agreements is the elimination or reduction of tariffs.
This evolution of economic systems has increased industrialization and financial opportunities in many countries. Governments are now focusing on removing trade barriers and promoting international trade.
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Proponents of globalization argue that it allows developing countries to catch up with industrialized countries by increasing production, diversifying, expanding their economies, and improving living standards.
Outsourcing companies bring jobs and technology to developing countries and help grow their economies. Trade initiatives increase cross-border trade by removing restrictions on supply and trade.
Globalization has also advanced social justice on an international scale, and advocates report that it has brought attention to human rights around the world that might otherwise be largely ignored.
An obvious consequence of globalization is that the economic decline of one country can cause a domino effect through its trading partners. For example, the 2008 financial crisis hit Portugal, Ireland, Greece and Spain hard. All of these countries were members of the European Union, which they were forced to join in order to bail out their debt-ridden nations, then known by the acronym PIIGS.
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Demonstrators of globalization argue that it has led to the concentration of wealth and power in the hands of a small corporate elite who can crowd out smaller competitors around the world.
Globalization has become a polarizing issue in the United States, with entire industries disappearing to new locations overseas. This is seen as a major factor in the economic pressure on the middle class.
For better or worse, globalization has also increased homogenization. Starbucks, Nike and Gap dominate the commercial space in many countries. The sheer size and reach of the United States made cultural exchange between nations a largely one-sided affair.
Basically, globalization means that the world is becoming more and more interconnected. Today, countries are more connected than ever thanks to factors such as air travel, container shipping, international trade agreements and legal agreements, and the Internet. In the business world, globalization is associated with trends such as outsourcing, free trade, and international supply chains. Globalization is important because it increases the size of the world market, allows more and more variety of goods to be produced and sold at lower prices.
Changes In Globalization
Globalization is also important because it is one of the most powerful forces affecting the world today, so it is difficult to understand the world without understanding globalization. For example, many of the world’s largest and most successful corporations are truly multinational organizations with offices and supply chains around the world. Without the complex network of trade routes, international legal agreements, and telecommunications infrastructure made possible by globalization, these companies would not exist. Important political events, such as the trade conflict between the US and China, are also directly related to globalization.
It depends. Proponents of globalization point to the sharp decline in poverty that has taken place around the world over the past few decades, which many economists attribute in part to increased trade and investment between countries. Similarly, they argue that globalization has allowed products and services such as cell phones, airplanes, and information technology to spread more widely around the world. On the other hand, critics of globalization point to the negative impact it has had on certain countries’ industries, which may face greater competition from international firms. Globalization can also negatively impact the environment due to economic development, industrialization, and international travel.
Globalization has had a major impact on societies around the world, leading to mass migration from rural to industrial or urban areas and the rapid growth of cities and commercial centers. This has led to an overall increase in income and overall living standards, but also to problems of urbanization, including crime, domestic violence, homelessness and poverty. Notions of national identity, culture and consumption patterns are also changing as goods around the world become increasingly available and at lower prices. The competitiveness of global capitalism can lead to more individualistic ideals that conflict with the cultural orientations of certain collectivist societies.
A simple example of globalization is a car manufactured in the United States that receives parts from China, Japan, North Korea, Sri Lanka, and South Africa. The car is then exported to Europe, where it is sold to a driver who fills the car’s fuel tank with gasoline refined from Saudi Arabian oil.
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The World Economic Forum’s annual meeting in Davos in January is usually a quiet affair: well-wishers exchange notes on global business opportunities or powder conditions on local ski slopes, champagne and canapés. Very rich and sparkling wine is back this January, but by all accounts the mood is one of anxiety, defensiveness and self-deprecation.
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The future of economic globalization, which the men and women at Davos see themselves as guardians, has been shaken by a series of political earthquakes. “Globalization” can mean many things, but one particularly questionable one has been the long-standing project of increasing the free trade of goods across borders. Last summer, Britain voted to leave the world’s largest trading bloc. The surprise victory of Donald Trump, who vowed to withdraw from major trade deals in November, appears to have threatened trade relations with the world’s richest nation. The upcoming elections in France and Germany suddenly seemed to create an even better chance for anti-globalization parties. The Barbarians hadn’t yet arrived at the gates of the ski lifts – but they weren’t very far.
At a panel titled “Governing Globalization,” economist Dambisa Moyo, otherwise a well-known proponent of free trade, immediately asked the audience to accept that “there have been significant costs” from globalization. “I don’t think we can fix them under the current infrastructure,” he said.
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