Globalization
Executive Summary:
The phrase “World has become a global village” is very common now a days.
The multinationals also stress upon “Think global”. These concepts relates to the globalization process that refers towards an ongoing process by which regional economies, societies, and cultures have become integrated through a globespanning network of communication and execution. The concept was first described by Charles Taze Russell in 1897 but the term was widely used after 1960s. There were four aspects of globalization as indicated by the presenters i.e. economic aspects are the economic integration of the world economies that is said to lead the world toward prosperity and economic excellence. Environmental aspects such as global warming etc also lead to the unification of the world to think about the whole world about environmental issues. Political aspects of the globalization stress upon the cross country political cooperation and understanding of other political systems of the globe and the last cultural and social aspects of the globalization relate to the understanding of the other cultural norms and social patterns. The history of the globalization is very much old indeed starting from the colonizing the people in other regions of the world as the British did. Australia and America were colonies of the Europe in the beginning. Moreover, golden Islamic age also laid the foundation for the globalization as the Muslim traders and preachers travelled across the world to trade and spread their ideology. In British Empire the East India Company and various other companies exploited the potential and richness of the sub continent but this thing also contributed towards the concept of globalization. After World War II, the evolution of the global financial institution such as IMF and World Bank also led towards the unification of the world. The recent developments include the inauguration of WTO and European Union. The things contributed towards the globalization also include free trade areas under different treaties as NAFTA, SAFTA etc; evolution of the custom unions and alliances; development of common markets and economic unions. European Union is the most popular example of all this. The global institutions supporting this concept are WTO main function of which is to liberalize trade, elimination of various quotas and settlement of trade disputes among the countries of the world; and IMF which formed 1944 as result of Bretton woods conference to oversee the monitory issues of the world and
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supporting the under developed countries by providing them loans; and UNCTD United Nations Conference on Trade and Development established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues Companies go global because they want to be reactive as to respond to the low trade barriers, customer demand in global market, local competition etc or some companies adopt proactive approach to exploit growth opportunities, economies of scale and recourse assess and cost saving such as utilizing the cheap labor force. The hurdles faced by the globalization process on its way are political and regulatory constraints of each country, currency and market differences, cultural and social disparity, ethical and environmental perspectives which largely are country specific. Some talk about the fruits of the globalization that can be reaped in the shape of economic and political excellence and other have some reservation regarding the destructive effects of the globalization on the world as it is argued that the all upsides are for the developed countries who are so called drivers of the globalization, moreover the biased role of the IMF and World Bank toward the less developed courtiers also raise the question. Some people are of the view that bubble of the globalization is a conspiracy of the Jews to take over the world and its resources which are concentrated in less developed Muslim countries.
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Globalization:
Meaning of Globalization:
Globalization is the process of making a transformation of things or
phenomena into global ones. It can be described as a process by which the people of the world are unified into a single society and function together. It also means erasure of national boundaries for economic purposes; international trade (governed by comparative advantage) becomes inter-regional trade (governed by absolute advantage). Precisely, it refers to an increasing interconnectedness of different parts of the world through common processes of economic, environmental, political and cultural change. In short Globalization is how our world is becoming more and more like one country each and every day. There are several meanings and all usually mention the increasing connectivity of economies and ways of life across the world. The Encyclopedia Britannica says that globalization is the "process by which the experience of everyday life is becoming standardized around the world." While some scholars and observers of globalization stress convergence of patterns of production and consumption and a resulting homogenization of culture, others stress that globalization has the potential to take many diverse forms.
Definition of Globalization:
Globalization is a term which has become very popular and is used in many different contexts in literature. There are many different definitions for Globalization. In the financial markets, it is known as blurring of the borders between different markets. Redding defines globalization as the integration between the markets for goods, services and capital. He also links globalization to the breakdown of the borders. It is quite evident that there are many different interpretation of globalization depending on the context and on the person who is talking about it. Though the precise definition is still unavailable, but there are few definitions that are worth viewing like: In economics, a broad definition is that globalization is the convergence of prices, products, wages, rates of interest and profits toward developed country
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norms. Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets. The International Monetary Fund [IMF] notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread diffusion of technology. According to Guy Brainbant, the process of globalization not only includes opening up of the world trade, development if the advanced means of communication, internationalization of the financial markets, migration of the people, growing importance of MNC’s, increased mobility of goods, data, capital, person and ideas but also infections, diseases and pollution. Therefore term globalization can be apparently inferred as the integration of the economies of the world through uninhibited trade and financial flows which are through mutual exchange of technology and knowledge. It also contains free intercountry movement of the labor.
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Drivers of Globalization:
The media and almost every book on globalization and international business speak
about different drivers of globalization and they can basically be separated into the following different groups:
1) Technological drivers:Technology shaped and set the foundation for modern globalization. Innovations in the transportation technology revolutionized the industry. The most important developments among these are the commercial jet aircraft and the concept of containerization in the late 1970s and 1980s. Without the rapid growth of air cargo services made possible by the introduction of wide-bodied jets, it would not have been possible for Israel to become a leading exporter of cut flowers to the United States or for Australia to become a leading supplier of fresh tuna to Tokyo’s sushi markets. Inventions in the area of microprocessors and telecommunications enabled highly effective computing and communication at a low-cost level. The rapid growth of the Internet is the latest technological driver that created global ebusiness and e commerce. Though it is still far too early to make a definitive judgement, it seems increasingly plausible that the internet and the technologies associated with it represent a discontinuity similar, in at least some ways, to electricity or the telephone. It is interesting to note that some of the technologies which have facilitated the rapid growth of international trade in goods are not especially new, but rather represent progressive extensions of previously known technologies to the point where they have lowered costs sufficiently to render feasible trade which was previously uneconomic. These new technologies have greatly expanded both the range of material which can be transmitted electronically from one point to another and the distance over which it can be transmitted; and they have drastically reduced the cost of transmission. Moreover, the number of people able to make use of these technologies has grown exponentially. Consider this example provided by Peter Drucker: “A mid-sized company in America’s industrial mid-west, founded in the 1920s, used to have some 60% of the market in inexpensive dinnerware for fastfood eateries, school and office cafeterias, and hospitals within a hundred-mile radius of its factory. China is heavy and breaks easily, so cheap china is traditionally
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sold within a small area. Almost overnight, this company lost more than half its market. One of its customers, a hospital cafeteria where someone went surfing on the internet, discovered a European manufacturer that offered china of apparently better quality at a lower price and shipped cheaply by air. Within a few months the main customers in the area shifted to the European supplier. Few of them, it seems, realize – let alone care – that the stuff comes from Europe.” Experiences such as this have become, if not ubiquitous, then at least common-place. Drucker goes on to conclude: “In the mental geography of e-commerce, distance has been eliminated. There is only one economy and one market … The competition is not local any more – in fact, it knows no boundaries.”
2) Tastes:Another key driver of the current experience of globalization – and one which is often overlooked by its critics – is the way in which people allover the world have acquired a generally increasing taste for the products and experiences of people in other parts of the world. Advances in transportation and communications – and reductions in their cost – have clearly played a role in this process, by making it possible for more people to experience more of more parts of the world, either personally through travel or vicariously via television, cinema, the internet and other media. For example, in 1978,290 million people or about 6½% of the world’s population took an international trip. By 1996, the number of international travelers had doubled, to over 10% of the world’s population. By 2020, this figure is expected to have increased to over 20%. Education has had a similar effect. Education increases people’s appetite for variety and diversity. It enhances their ability to make comparisons and choices between alternatives. It reduces their tolerance for shoddy or needlessly expensive goods and services. Almost inevitably, the search for alternatives leads people to look beyond the peripheries of their own nations – for products as basic as food and beverages or as complex as motor vehicles; for services ranging from films to accounting advice; and for different avenues for investment. In this sense, globalization is an extension of freedom: as John Micklethwait and Adrian Wooldridge note in their book about globalization, A Future Perfect, “globalization by its very nature helps to hand the power to choose to the individual”.
3) Political drivers:-
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By reducing barriers to the movement of goods, services and capital (though generally not people) across national boundaries, the governments have gave way to globalization. Liberalized trading rules and deregulated markets lead to lowered tariffs and allowed foreign direct investments in almost all over the world. The institution of GATT (General Agreement on Tariffs and Trade) 1947 and the WTO (World Trade Organization) 1995 as well as the ongoing opening and privatization in Eastern Europe are only some examples of latest developments.
4) Market drivers:As domestic markets become more and more saturated, the opportunities for growth are limited and global expanding is a way most organizations choose to overcome this situation. Common customer needs and the opportunity to use global marketing channels and transfer marketing to some extent are also incentives to choose internationalization. (Ferrier, 2004)
5) Cost drivers:Sourcing efficiency and costs vary from country to country and global firms can take advantage of this fact. Other cost drivers to globalization are the opportunity to build global scale economies and the high product development costs nowadays. (Ferrier, 2004)
6) Competitive drivers:With the global market, global inter-firm competition increases and organizations are forced to “play” international. Strong interdependences among countries and high two way trades and FDI actions also support this driver.
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Various aspects of Globalization affecting the world:
Below are the important aspects of globalization that affect the world in different
ways: ?
Industrial (alias Trans Nationalization) -: Emergence of worldwide
production markets and broader access to a range of goods for consumers and companies Financial -: Emergence of worldwide financial markets and better access to external financing for corporate, national and sub-national borrowers
? ?
Political -: Spread of political sphere of interests to the regions and
countries outside the neighborhood of political (state and non-state) actors and the potential formation of a global citizens’ movement
? ?
Informational -: Increase in information flows between geographically
remote locations.
Cultural -: Growth of cross-cultural contacts; advent of new categories of
consciousness and identities such as Globalism which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". Ecological -: The advent of global environmental challenges that can not be solved without international cooperation, such as climate change, cross-
?
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boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Thus, globalization has become identified with a number of large trends, most of which may have developed or accelerated since World War II. These include the greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement, greater international cultural exchange, spreading of multiculturalism, and better individual access to cultural diversity, development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones. Also witnessed is the increase in the number of standards applied globally; e.g. copyright laws, patents and world trade agreements. There is a push by many advocates for an international criminal court and international justice movements.
Historical Precedents:
The term "globalization' was coined in the latter half of the twentieth
century, and the term and its concepts did not permeate popular consciousness until the latter half of the 1980s. Various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods. The earliest written theoretical concepts of globalization were penned by an American entrepreneur-turned-minister Charles Taze Russell who coined the term 'corporate giants' in 1897. In the 16th century, Globalization in its largest extent began in Portugal. Portugal's global explorations in the 16th century linked continents, economies and cultures as never before. Globalization is a centuries long process, tracking the expansion of human population and the growth of civilization that has accelerated dramatically in the past 50 years. Earlier forms of globalization existed during the Mongol Empire, when there was greater integration along the Silk Road. Global integration continued through the expansion of European trade, as in the 16th and 17th centuries, when the Portuguese and Spanish Empires reached to all corners of the world. The effects on European industries were notable, e.g. the Silver Mining in
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Schwaz, Austria was partly abandoned, as silver was available from the Spanish colonies for lower prices. Globalization became a business phenomenon in the 17th century when the first Multinational was founded in The Netherlands. During the Dutch Golden Age the Dutch East India Company was established as a private owned company. Because of the high risks involved with the international trade, ownership was divided with Shares. The Dutch East India Company was the first company in the world to issue shares, an important driver for globalization. The 19th century is sometimes called "The First Era of Globalization." It was a period characterized by rapid growth in international trade and investment between the European imperial powers, their colonies, and, later, the United States. It was in this period that areas of sub-saharan Africa and the Island Pacific were incorporated into the world system. Since World War II, barriers to international trade have been considerably lowered through international agreements - General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, have included ? Promotion of free trade -: Reduction or elimination of tariffs; creation of free trade zones with small or no tariffs, reduced transportation costs, especially resulting from development of containerization for ocean shipping, reduction or elimination of capital controls, reduction, elimination, or harmonization of subsidies for local businesses ? Restriction of free trade -: Harmonization of intellectual property laws across the majority of states, with more restrictions. ? Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States) The Uruguay round (1984 to 1995) led to a treaty to create the World Trade Organization (WTO), to mediate trade disputes and set up a uniform platform of trading. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade. The world increasingly is confronted by problems that can not be solved by individual nation-states acting alone. Examples include cross-boundary air and water pollution, over-fishing of the oceans and other degradations of the natural environment, regulation of outer-space, global warming, international terrorist networks, global trade and finance, and so on. Solutions to these problems
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necessitate new forms of cooperation and the creation of new global institutions. Since the end of World War II, following the advent of the UN and the Bretton Woods institutions, there has been an explosion in the reach and power of Multinational corporations and the rapid growth of global civil society. The Global scenario group, an environmental research and forecasting organization, views globalization as part of the shift to a Planetary Phase of Civilization, characterized by global social organizations economies and communications. The GSG maintains that the future character of this global society is uncertain and contested.
Measuring Globalization:-
Looking specifically at economic globalization, it can be measured in different ways.
? ? ? ? Goods and services, e.g. exports plus imports as a proportion of national income or per head of population. Labor/people, e.g. net migration rates; inward or outward migration flows, weighted by population. Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population. Technology, e.g. international research & development flows; proportion of populations (and rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances such as the telephone, motorcar, broadband)
To what extent a nation-state or culture is globalized in a particular year has until most recently been measured employing simple proxies like flows of trade, migration, or foreign direct investment, as described above.
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A multivariate approach to measuring globalization is the recent index calculated by the Swiss Think tank KOF. The index measures the three main dimensions of globalization: economic, social, and political. In addition to three indices measuring these dimensions, an overall index of globalization and subindices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated. Data are available on a yearly basis for 122 countries.
Measuring Attitudes towards Globalization:
Measurement of attitudes toward globalization was sought after in a 2003 worldwide globalization study. The study focused on teenagers' perceptions towards globalization and globalism, because soon they will be the adults living out the results of today's policy. The study examined the thesis of: Teenagers are natural globalists & Teenagers are afraid of globalization. The sample for this study included two hundred teenagers between the ages of 14 and 18, from New York, Lebanon, Azerbaijan, and the Philippines. The locations were urban. There was a survey administered with input from Gene Ellis, a professor (Wirtschaftswissenschaft Seminar) at the Eberhard Karls University of Tuebingen, and global consulting principal, economist, and former World Bank employee Andrew Mack. Topics of globalization and globalism were grouped into sub-categories. Globalization categories included immigration, trade, and diplomatic relations. Globalism included consumption, personal freedoms, technology, and culture. The results of the research suggested that both American teenagers and international teenagers are natural globalists and are largely in favor of globalization. Teenagers in New York had higher levels of support for globalization than globalism. International teens were more globalists. Importantly, all teens were very positive towards technology, cultural exchange, trade, consumption of international goods, and immigration. The study suggested that the future of international technology, trade, and culture will depend on bringing the concepts of globalization and globalism together. More so, the Internet seems to be one of the most important tools in linking teenagers globally and this suggests that this sort of communication should be developed around the world at a faster rate. Finally, it was suggested that the future of culture and trade will depend on the rate of technological progress.
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Impact of Globalization on India:
India opened its economy in early nineteen century; it followed a major
crisis which led the economy near to defaulting on loans. After a long time passed, there has been a steady liberalization with the current account transactions. Numbers of new sectors were opened for the portfolio and foreign direct investments in roads, telecoms, airports, insurance and many other major sectors. The Indian tariff rates reduced rapidly over the decade from an average of 72.5% in 1991-1992 to 24.6% in 1996-97. Tariff went up slowly in late nineties and became 35.1% in 2001-02. Globalization in India has allowed companies to increase their base of operations, expand their workforce with minimal investments, and provide new services to a broad range of consumers. The process of globalization has been an integral part of the recent economic progress made by India. Globalization has
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played a major role in export-led growth, leading to the enlargement of the job market in India. One of the major forces of globalization in India has been in the growth of outsourced IT and business process outsourcing (BPO) services. The last few years have seen an increase in the number of skilled professionals in India employed by both local and foreign companies to service customers in the US and Europe in particular. Taking advantage of India’s lower cost but educated and Englishspeaking work force, and utilizing global communications technologies such as voice-over IP (VOIP), email and the internet, international enterprises have been able to lower their cost base by establishing outsourced knowledge-worker operations in India. As a new Indian middle class has developed around the wealth that the IT and BPO industries have brought to the country, a new consumer base has developed. International companies are also expanding their operations in India to service this massive growth opportunity. Notable examples of international companies that have done well in India in the recent years include Pepsi, Coca-Cola, McDonald’s, and Kentucky Fried Chicken, whose products have been well accepted by Indians at large. Globalization in India has been advantageous for companies that have ventured in the Indian market. By simply increasing their base of operations, expanding their workforce with minimal investments, and providing services to a broad range of consumers, large companies entering the Indian market have opened up many profitable opportunities. Indian companies are rapidly gaining confidence and are themselves now major players in globalization through international expansion. From steel to Bollywood, from cars to IT, Indian companies are setting themselves up as powerhouses of tomorrow’s global economy. Global comparisons describe India as a fastest growing country after China. Trade and investment are two of the very important reason of progress leading in lowering the rates of poverty and global inequality over the decades. The proportion of the world population living in poverty is continually declining. There are five major areas where India has to keep on concentrating in order to achieve this goal and those areas are:? Technological entrepreneurship
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? ? ? ? New business openings for small and medium enterprises Quality management importance Prospects in rural areas Privatization of financial institutions.
Steps Taken to Globalize Indian Economy:
Some of the steps taken to liberalize and globalize our economy were: 1. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to 19%. 2. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private sector. 3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as Insurance (26%), defense industries (26%) etc. 4. NRI Scheme: The facilities which were available to foreign investors were also given to NRI's.
GDP Growth Rate:
The economy of India is passing through a difficult situation. Output and demand conditions were highly affected by the poor performance in agriculture during the last two years. The economy globally recorded an output growth of 2.4%. The performance in the first quarter of the financial year is around 5.8% and in the second quarter is around 6.1%.
Export and Import:
The export of India in year 2001-02 extended to 32,572 and import extended to 38,362 million approximately. Indian companies became respectable companies in International market. Agriculture exports rose to 18% of the total annual export of the country. The largest contributor in the previous years to the total agricultural exports is the marine product which accounts to be the total of one fifth portion of the agricultural products. Oil seeds, rice, coffee, and tea are other prominent products which accounts in total of the agricultural products of 5 to 10%
A Comparison with Other Developing Countries with India:
? ? India’s share of world exports increased from 0.05% to 0.07% over the last 2 decades and China’s share has tripled to almost 4% over the same period. India’s share of the global trade is exactly similar to that of the Philippines, an economy which is 6 times smaller according to estimation of IMF.
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? FDI flows into India have averaged around 0.5% of GDP against 5% for China and 5.5% for Brazil over the past decade. FDI inflows to China now exceeds by US $ 50 billion annually. It is US $ 4billion only in the case of India.
Advantages of Globalization:
It is the advantages of Globalization which act to bring about economic welfare on
international levels, thereby benefiting the worldwide population. Mentioned below, are the advantages of Globalization which facilitate the development of world economies immensely: ? ? Free movement of capitals offers access to the foreign investments to many countries like the United States of America. The worldwide commercial market becomes so flexible due to the advent of Globalization, that transactions of the international companies are not restricted to geographical borders of the countries. Globalization enhances the flow of capital, permitting the investors to invest on the untapped resources of the developing countries.
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? Globalization of the mass media has reduced the global space substantially, keeping the people informed about all latest international happenings through different television channels. Improvement in global communication networks leads to easy flow of important information not only to individuals but at company levels as well. The democratic thoughts are rapidly spread among countries across the world, owing to Globalization. Globalization stresses on increasing mutual dependence among all the nation-states across the world. Globalization lessens the possibilities of warfare among developed countries to considerable extents. The developed countries display a tendency for working towards protecting their surrounding environments to large extents. Globalization enhances free international trades among countries across the world. The total output levels of a country increase when productions become competition-oriented. This means that to compete with the existing world market, the products must be of best qualities and they also improve the lifestyle of the overall population. Cheap imports and extensive competition on international level keep a check on the prices leading to lower inflation rates, which occasionally interrupt the economic growth and development of a nation. Economic Globalization ushers in the concept of Open Economy, where there is an extensive promotion of technological growth and inventions. This requires new topics and concepts to be imported from abroad. Employments in the export-oriented industries generally pay its employees approximately 15% more than the import-oriented jobs in a country. One of the positive effects of Globalization is the smooth and speedy transportation of people and commodities to different corners of the world. Globalization reduces cultural blockages and differences among nations, by encouraging fellow-feeling and mutual compassion.
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Disadvantages of Globalization:
Opponents of globalization point out to its negative effects. Some of them are listed
below. ? Developed nations have outsourced manufacturing and white collar jobs. That means fewer jobs for their people. This has happened because
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manufacturing work is outsourced to developing nations like China where the cost of manufacturing goods and wages are lower. Programmers, editors, scientists and accountants have lost their jobs due to outsourcing to cheaper locations like India. Globalization has led to exploitation of labor. Prisoners and child workers are used to work in inhumane conditions. Safety standards are ignored to produce cheap goods. Job insecurity - Earlier people had stable, permanent jobs. Now people live in constant dread of losing their jobs to competition. Increased job competition has led to reduction in wages and consequently lower standards of living Terrorists have access to sophisticated weapons enhancing their ability to inflict damage. Terrorists use the Internet for communicating among themselves. Companies have set up industries causing pollution in countries with poor regulation of pollution. Fast food chains like McDonalds and KFC are spreading in the developing world. People are consuming more junk food from these joints which has an adverse impact on their health. The benefits of globalization are not universal. The rich are getting richer and the poor are becoming poorer. Bad aspects of foreign cultures are affecting the local cultures through TV and the Internet. Enemy nations can spread propaganda through the Internet. Deadly diseases like HIV/AIDS are being spread by travellers to the remotest corners of the globe. Local industries are being taken over by foreign multinationals. The increase in prices has reduced the governments ability to sustain social welfare schemes in developed countries. There is increase in human trafficking. Multinational Companies and corporations which were previously restricted to commercial activities are increasingly influencing political decisions. Globalization has lead to environmental damage in India (as with many developing nations).Due to large-scale industrialization urban slums have formed, air and water pollution has dramatically increased. Multinational firms have exploited resources belonging to the country and lead to land degradation. Delhi for example is the 4th most polluted city in the world. Though foreign investment will promote economic development in the short term, the profits earned from the business venture move out of the country.
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? There is also a possibility that at times of recession investors (in portfolio investment) may withdraw their funds causing further problems. Domestic resources such as labor maybe exploited by large production based firms. These firms may also abuse natural resources and use them inefficiently. Domestic producer being overpowered my overseas giants, who already have competitive advantages over the domestic producers, and have more funds to invest. This will lead to the closure of many domestic owner firms.
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Concerns and Fears:
On the impact of globalization, there are two major concerns. These may be
described as even fears. Under each major concern there are many related anxieties. The first major concern is that globalization leads to a more iniquitous
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distribution of income among countries and within countries. The second fear is that globalization leads to loss of national sovereignty and those countries are finding it increasingly difficult to follow independent domestic policies. These two issues have to be addressed both theoretically and empirically. The argument that globalization leads to inequality is based on the premise that since globalization emphasizes efficiency, gains will accrue to countries which are favorably endowed with natural and human resources. Advanced countries have had a head start over the other countries by at least three centuries. The technological base of these countries is not only wide but highly sophisticated. While trade benefits all countries, greater gains accrue to the industrially advanced countries. This is the reason why even in the present trade agreements, a case has been built up for special and differential treatment in relation to developing countries. By and large, this treatment provides for longer transition periods in relation to adjustment. However, there are two changes with respect to international trade which may work to the advantage of the developing countries. First, for a variety of reasons, the industrially advanced countries are vacating certain areas of production. These can be filled in by developing countries. A good example of this is what the East Asian countries did in the 1970s and 1980s. Second, international trade is no longer determined by the distribution of natural resources. With the advent of information technology, the role of human resources has emerged as more important. Specialized human skills will become the determining factor in the coming decades. Productive activities are becoming “knowledge intensive” rather than “resource intensive”. While there is a divide between developing and the advanced countries even in this area – some people call it the digital divide - it is a gap which can be bridged. A globalized economy with increased specialization can lead to improved productivity and faster growth. What will be required is a balancing mechanism to ensure that the handicaps of the developing countries are overcome. Apart from the possible iniquitous distribution of income among countries, it has also been argued that globalization leads to widening income gaps within the countries as well. This can happen both in the developed and developing economies. The argument is the same as was advanced in relation to iniquitous distribution among countries. Globalization may benefit even within a country those who have the skills and the technology. The higher growth rate achieved by an economy can be at the expense of declining incomes of people who may be rendered redundant. In this context, it has to be noted that while globalization may accelerate the process of technology substitution in developing economies, these countries even without globalization will face the problem associated with moving
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from lower to higher technology. If the growth rate of the economy accelerates sufficiently, then part of the resources can be diverted by the state to modernize and re-equip people who may be affected by the process of technology up gradation. The second concern relates to the loss of autonomy in the pursuit of economic policies. In a highly integrated world economy, it is true that one country cannot pursue policies which are not in consonance with the worldwide trends. Capital and technology are fluid and they will move where the benefits are greater. As the nations come together whether it be in the political, social or economic arena, some sacrifice of sovereignty is inevitable. The constraints of a globalised economic system on the pursuit of domestic policies have to be recognised. However, it need not result in the abdication of domestic objectives. Another fear associated with globalization is insecurity and volatility. When countries are inter-related strongly, a small spark can start a large conflagration. Panic and fear spread fast. The downside to globalization essentially emphasizes the need to create countervailing forces in the form of institutions and policies at the international level. Global governance cannot be pushed to the periphery, as integration gathers speed. Empirical evidence on the impact of globalization on inequality is not very clear. The share in aggregate world exports and in world output of the developing countries has been increasing. In aggregate world exports, the share of developing countries increased from 20.6 per cent in 1988-90 to 29.9 per cent in 2000. Similarly the share in aggregate world output of developing countries has increased from 17.9 per cent in 1988-90 to 40.4 per cent in 2000. The growth rate of the developing countries both in terms of GDP and per capita GDP has been higher than those of the industrial countries. These growth rates have been in fact higher in the 1990s than in the 1980s. All these data do not indicate that the developing countries as a group have suffered in the process of globalization. In fact, there have been substantial gains. But within developing countries, Africa has not done well and some of the South Asian countries have done better only in the 1990s. While the growth rate in per capita income of the developing countries in the 1990s is nearly two times higher than that of industrialized countries, in absolute terms the gap in per capita income has widened. As for income distribution within the countries, it is difficult to judge whether globalization is the primary factor responsible for any deterioration in the distribution of income. We have had considerable controversies in our country on what happened to the poverty ratio in the second half of 1990s. Most analysts even for India would agree that the poverty ratio has declined in the 1990s. Differences may exist as to what rate at which this has fallen. Nevertheless,
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whether it is in India or any other country, it is very difficult to trace the changes in the distribution of income within the countries directly to globalization.
India’s Stance on Globalization:
What should be India’s attitude in this environment of growing
globalization? At the outset it must be mentioned that opting out of globalization is not a viable choice. There are at present 149 members in the World Trade Organisation (WTO). Some 25 countries are waiting to join the WTO. China has
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recently been admitted as a member. What is needed is to evolve an appropriate framework to wrest maximum benefits out of international trade and investment. This framework should include: (a) Making explicit the list of demands that India would like to make on the multilateral trade system, and (b) Steps that India should take to realize the full potential from globalization.
Where does Indian stand in terms of Global Integration?
India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag. ? Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of India Consider global trade - India's share of world merchandise exports increased from .05% to .07% over the pat 20 years. Over the same period China's share has tripled to almost 4%. India's share of global trade is similar to that of the Philippines, an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given its size, proximity to markets and labour cost advantages. It is interesting to note the remark made last year by the Governor of RBI. Despite all the talk, we are now where ever close being globalised in terms of any commonly used indicator of globalisation. In fact we are one of the least globalised among the major countries - however we look at it. As Amartya Sen and many other have pointed out that India, as a geographical, politico-cultural entity has been interacting with the outside world throughout history and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalised world which is distinguished from previous eras from by faster travel and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life.
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Consequences:
The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic
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developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.
Globalization - A Controversial Topic:
Those who support globalization point out that free trade enables
companies from the rich industrialized countries to invest in poorer countries, providing jobs to local citizens and improvements to infrastructure. Many multinational corporations now reduce labor costs by outsourcing portions of their
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Globalization
business operations to countries such as India and China. This has been particularly true of the manufacturing sector. Foreign companies also provide wealth to local economies in the form of foreign currency when they buy local products and services. In many cases, they have built schools, colleges and hospitals for the local residents, enhancing the quality of life. Advocates also contend that globalization allows for the mixing of people and cultures, further enabling the sharing of ideas, experiences and lifestyles. People can experience foods and other products not previously available in their own country.
Overall, supporters of globalization argue that it has brought improved standards of living and quality of life to several countries. They point to examples such as China. As a result of opening its markets to the world, China’s economy can claim an increase in per capita personal income from $1,420 in 1980 to $4,120 by 1999. In 1980, Americans earned 12.5 times as much as the Chinese per capita. By 1999, they were only earning 7.4 times as much. Supporters cite globalization as having benefited countries in a number of ways, particularly poorer ones. For example, the percentage of people in developing countries living below $1 per day has halved in only 20 years; life expectancy in the developing world has almost doubled since WWII and is closing the gap with the developed world; between 1950 and 1999 global literacy increased from 52% to 81%.
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But globalization has equally vocal opponents. In recent times, globalization has been blamed for a host of ills, including poverty in the Third World, job losses in industrialized countries and even the “Americanization” of other cultures. “Anti-globalists” contend that it operates only in the interests of the rich nations and multinational corporations. They argue that such corporations exploit workers in the developing world, subjecting them to poor working conditions in “sweat shops,” and paying them salaries that they would not be allowed to get away with back home. They contend that the multinational profits are repatriated and little is invested in the communities whose labor and resources they consume. These critics also say that the gap between the rich and poor nations is growing, and that globalization has not benefited poorer countries. Figures used frequently to back their position come from a variety of sources, including a report from the United Nations Development Program. For example, the gap in incomes between the 20% of the richest and poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995. By the late 1990s, the fifth of the world’s population living in the highestincome countries had: • 86% of the world’s gross domestic product—the bottom fifth just 1%. • 82% of world export markets—the bottom fifth just 1%. • 68% of foreign direct investment—the bottom fifth just 1%. • 74% of the world’s telephone lines—the bottom fifth just 1.5%. These anti-globalists say this rising inequality is the result of market forces. They say that given free rein, market forces give the rich the power to add to their wealth. Therefore, they argue that large corporations invest in poor countries only because they can take advantage of low wage levels or so they can access their natural resources.
The Future of Globalization:
So what does the future hold? What will be the result of the increasingly
interconnected state of the world’s nations?
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Globalization
While there are many opinions, there is only one source that can give us the true answer—the Holy Bible. In it, God accurately foretold the rise and fall of the major nations throughout history, including the Babylonian, Medo-Persian, Greek and Roman empires. He even prophesied the sudden rise of the American and British people to world prominence. And God has foretold today’s fast-paced interconnected world and its matchless advances in science and technology: “But you, O Daniel, shut up the words, and seal the book, even to the time of the end: many shall run to and fro, and knowledge shall be increased.” The Bible states that, in the future, a union of ten nations (or groups of nations) will arise, and replace America as the dominant world power. It will attack and defeat America and Britain, taking the survivors into captivity. This political, economic and military combine will be backed by a universal false church. It will become a world-leading trading bloc, possessing vast riches and trading all over the world in every product imaginable—even human beings! This politically influential religious entity, led by a charismatic figure, will usher in a temporary period of great wealth. Globalization will thrive during its reign to levels unseen in human history— prosperity will flourish, but not for all. However, shortly after the rise of this ten-nation union, it will be replaced by a world-ruling super government that will usher in lasting peace, prosperity and security for all. Upon His triumphant Return, Jesus Christ will take over all the governments of men, and administer His government—the kingdom of God— throughout the earth. At that time, the world will become truly “one”—one with God. True globalization will occur, but according to God’s just standards. No more inequality. No more poverty. No more exploitation. Peace will abound. What a wonderful picture—soon to become a reality!
Conclusion:
The conclusion can thus be made, that despite globalization contribution to
the increased levels of economic growth it did not contribute to the improvement in
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the skewed distribution of income between developed and developing countries. The problem is the skewed distribution of income can mainly be attributed to the limited participations of the developing countries in the process of globalization. The implications of globalization for an economy are too many. Globalization has competition and interdependence between the economies in the world market which reflects in the interdependence in trading of goods and services. They are influenced by both, domestic and international policies and also by the economic conditions. So, it is very clear that a globalizing economy, when evaluating its domestic policies, cannot afford to ignore the possible actions of the policies and developments in the rest of the world, the option of which is available to the government in decision making at a national level. The recent experience is that the country must carefully choose a combination of policies that enables it to take the opportunity by avoiding pitfalls. United States has been the largest economy in the world from over a century but many major developments have been taking place in the world economy since that time which has lead to shift the focus from US and other rich countries of Europe to the two Asian giant countries- India and China. The experts of the economies and various other studies conducted across the world envisage India and China to rule the world in the 21st century. The Indian economy was passing through a very difficult phase which is caused by so many unfavorable domestic and external developments. The largest contributor in the total agricultural exports is the marine products which account to be the total of the one fifth portions of the agricultural products. Oil seeds, rice, coffee, and tea are other prominent products which accounts in the total of the agricultural products of about 10%. India, which is now the fourth largest economy in terms of purchasing power parity, may overtake Japan and become third major economic power within 10 years. The economic impact of globalization in Vietnam and China demonstrate that globalization can be beneficial to the growth of developing countries and can furthermore enhance the sovereignty of domestic governments. While globalization can and does have negative side effects—some multinationals do exploit their workers, domestic institutions will face more risk from capital flows, and the threat of social instability may rise—the aims to trade are nonetheless supported by the majority of cross-country empirical data. While the manner in which developing countries can best utilize international capital and markets should remain an issue of concern and further study, the claim that globalization is merely a source of problems is unjustified given the analysis of Vietnam and China. It was indicated in
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the paper that it is important to differentiate the concept of globalization from internationalization and regionalization. It was also indicated that globalization had some specific effects on the economies of the developing countries of Africa. It was indicated that under certain circumstances globalization can lead to higher unemployment and an increasing skewness in the distribution of income between developed and developing nations. Globalization can play and very important role in solving the development problems of Africa. If countries in Africa are prepared to allow for trade liberalization and follow stable macro economic policy it will contribute to the development of the respective countries. The role of NEPAD as the solution to the development problems of Africa has also been evaluated. It was indicated that the developed countries is in favor of the NEPAD initiative, if the African countries can adhere to the principles embedded in the NEPAD documents. A concern can be raised about the fact that international trade is only favoring a few nations in Africa. Future research will have to investigate ways to promote the economic development in all the African countries. Therefore, one can evidently infer that Globalization means the integration of the economies of the world through uninhibited trade and financial flows which are through exchange of technology and knowledge. It has provided developing countries with a greater access to the markets and technology of the developing countries which has lead to a high living standard and a greater productivity. We come across the impact of globalization on developing countries in the above stated points which not only shows good but also bad impact of globalization on the countries especially developing countries. Globalization has increased the risks involved with it. Indian companies now have become respectable countries in International market. Agriculture went to 18% increase of the total annual export of the country. China and Vietnam also developed its economy through privatization and globalization. Thus, Globalization has played a very important role in every developed and developing country but mainly in developing countries. Though Globalization is very good for developing countries but in few places it has bad effects on those countries as well.
Websites visited: 30
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This report has been compiled after the collection and careful scrutiny
of information from the following websites:
? ? ? ? ? ? ? ? ? ? www.economywatch.com/economics-theory/globalization/effects.html www.buzzle.com/articles/negative-effects-of-globalization.html www.business.mapsofindia.com/globalization/india-industry/ www.bizcovering.com/business-and-society/globalization-and-its-impacton-india/ www.en.wikipedia.org/wiki/Globalization www.imf.org/external/np/exr/Key/global.htm www.globalpolicy.org/globalization.html www.tradechakra.com/indian-economy/globalization.html www.ris.org.in/Seminar_on_India_Globalization.htm www.realtruth.org/articles/070223-001-globalization.html
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doc_923696771.docx
Executive Summary:
The phrase “World has become a global village” is very common now a days.
The multinationals also stress upon “Think global”. These concepts relates to the globalization process that refers towards an ongoing process by which regional economies, societies, and cultures have become integrated through a globespanning network of communication and execution. The concept was first described by Charles Taze Russell in 1897 but the term was widely used after 1960s. There were four aspects of globalization as indicated by the presenters i.e. economic aspects are the economic integration of the world economies that is said to lead the world toward prosperity and economic excellence. Environmental aspects such as global warming etc also lead to the unification of the world to think about the whole world about environmental issues. Political aspects of the globalization stress upon the cross country political cooperation and understanding of other political systems of the globe and the last cultural and social aspects of the globalization relate to the understanding of the other cultural norms and social patterns. The history of the globalization is very much old indeed starting from the colonizing the people in other regions of the world as the British did. Australia and America were colonies of the Europe in the beginning. Moreover, golden Islamic age also laid the foundation for the globalization as the Muslim traders and preachers travelled across the world to trade and spread their ideology. In British Empire the East India Company and various other companies exploited the potential and richness of the sub continent but this thing also contributed towards the concept of globalization. After World War II, the evolution of the global financial institution such as IMF and World Bank also led towards the unification of the world. The recent developments include the inauguration of WTO and European Union. The things contributed towards the globalization also include free trade areas under different treaties as NAFTA, SAFTA etc; evolution of the custom unions and alliances; development of common markets and economic unions. European Union is the most popular example of all this. The global institutions supporting this concept are WTO main function of which is to liberalize trade, elimination of various quotas and settlement of trade disputes among the countries of the world; and IMF which formed 1944 as result of Bretton woods conference to oversee the monitory issues of the world and
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supporting the under developed countries by providing them loans; and UNCTD United Nations Conference on Trade and Development established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues Companies go global because they want to be reactive as to respond to the low trade barriers, customer demand in global market, local competition etc or some companies adopt proactive approach to exploit growth opportunities, economies of scale and recourse assess and cost saving such as utilizing the cheap labor force. The hurdles faced by the globalization process on its way are political and regulatory constraints of each country, currency and market differences, cultural and social disparity, ethical and environmental perspectives which largely are country specific. Some talk about the fruits of the globalization that can be reaped in the shape of economic and political excellence and other have some reservation regarding the destructive effects of the globalization on the world as it is argued that the all upsides are for the developed countries who are so called drivers of the globalization, moreover the biased role of the IMF and World Bank toward the less developed courtiers also raise the question. Some people are of the view that bubble of the globalization is a conspiracy of the Jews to take over the world and its resources which are concentrated in less developed Muslim countries.
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Globalization:
Meaning of Globalization:
Globalization is the process of making a transformation of things or
phenomena into global ones. It can be described as a process by which the people of the world are unified into a single society and function together. It also means erasure of national boundaries for economic purposes; international trade (governed by comparative advantage) becomes inter-regional trade (governed by absolute advantage). Precisely, it refers to an increasing interconnectedness of different parts of the world through common processes of economic, environmental, political and cultural change. In short Globalization is how our world is becoming more and more like one country each and every day. There are several meanings and all usually mention the increasing connectivity of economies and ways of life across the world. The Encyclopedia Britannica says that globalization is the "process by which the experience of everyday life is becoming standardized around the world." While some scholars and observers of globalization stress convergence of patterns of production and consumption and a resulting homogenization of culture, others stress that globalization has the potential to take many diverse forms.
Definition of Globalization:
Globalization is a term which has become very popular and is used in many different contexts in literature. There are many different definitions for Globalization. In the financial markets, it is known as blurring of the borders between different markets. Redding defines globalization as the integration between the markets for goods, services and capital. He also links globalization to the breakdown of the borders. It is quite evident that there are many different interpretation of globalization depending on the context and on the person who is talking about it. Though the precise definition is still unavailable, but there are few definitions that are worth viewing like: In economics, a broad definition is that globalization is the convergence of prices, products, wages, rates of interest and profits toward developed country
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norms. Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets. The International Monetary Fund [IMF] notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread diffusion of technology. According to Guy Brainbant, the process of globalization not only includes opening up of the world trade, development if the advanced means of communication, internationalization of the financial markets, migration of the people, growing importance of MNC’s, increased mobility of goods, data, capital, person and ideas but also infections, diseases and pollution. Therefore term globalization can be apparently inferred as the integration of the economies of the world through uninhibited trade and financial flows which are through mutual exchange of technology and knowledge. It also contains free intercountry movement of the labor.
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Drivers of Globalization:
The media and almost every book on globalization and international business speak
about different drivers of globalization and they can basically be separated into the following different groups:
1) Technological drivers:Technology shaped and set the foundation for modern globalization. Innovations in the transportation technology revolutionized the industry. The most important developments among these are the commercial jet aircraft and the concept of containerization in the late 1970s and 1980s. Without the rapid growth of air cargo services made possible by the introduction of wide-bodied jets, it would not have been possible for Israel to become a leading exporter of cut flowers to the United States or for Australia to become a leading supplier of fresh tuna to Tokyo’s sushi markets. Inventions in the area of microprocessors and telecommunications enabled highly effective computing and communication at a low-cost level. The rapid growth of the Internet is the latest technological driver that created global ebusiness and e commerce. Though it is still far too early to make a definitive judgement, it seems increasingly plausible that the internet and the technologies associated with it represent a discontinuity similar, in at least some ways, to electricity or the telephone. It is interesting to note that some of the technologies which have facilitated the rapid growth of international trade in goods are not especially new, but rather represent progressive extensions of previously known technologies to the point where they have lowered costs sufficiently to render feasible trade which was previously uneconomic. These new technologies have greatly expanded both the range of material which can be transmitted electronically from one point to another and the distance over which it can be transmitted; and they have drastically reduced the cost of transmission. Moreover, the number of people able to make use of these technologies has grown exponentially. Consider this example provided by Peter Drucker: “A mid-sized company in America’s industrial mid-west, founded in the 1920s, used to have some 60% of the market in inexpensive dinnerware for fastfood eateries, school and office cafeterias, and hospitals within a hundred-mile radius of its factory. China is heavy and breaks easily, so cheap china is traditionally
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sold within a small area. Almost overnight, this company lost more than half its market. One of its customers, a hospital cafeteria where someone went surfing on the internet, discovered a European manufacturer that offered china of apparently better quality at a lower price and shipped cheaply by air. Within a few months the main customers in the area shifted to the European supplier. Few of them, it seems, realize – let alone care – that the stuff comes from Europe.” Experiences such as this have become, if not ubiquitous, then at least common-place. Drucker goes on to conclude: “In the mental geography of e-commerce, distance has been eliminated. There is only one economy and one market … The competition is not local any more – in fact, it knows no boundaries.”
2) Tastes:Another key driver of the current experience of globalization – and one which is often overlooked by its critics – is the way in which people allover the world have acquired a generally increasing taste for the products and experiences of people in other parts of the world. Advances in transportation and communications – and reductions in their cost – have clearly played a role in this process, by making it possible for more people to experience more of more parts of the world, either personally through travel or vicariously via television, cinema, the internet and other media. For example, in 1978,290 million people or about 6½% of the world’s population took an international trip. By 1996, the number of international travelers had doubled, to over 10% of the world’s population. By 2020, this figure is expected to have increased to over 20%. Education has had a similar effect. Education increases people’s appetite for variety and diversity. It enhances their ability to make comparisons and choices between alternatives. It reduces their tolerance for shoddy or needlessly expensive goods and services. Almost inevitably, the search for alternatives leads people to look beyond the peripheries of their own nations – for products as basic as food and beverages or as complex as motor vehicles; for services ranging from films to accounting advice; and for different avenues for investment. In this sense, globalization is an extension of freedom: as John Micklethwait and Adrian Wooldridge note in their book about globalization, A Future Perfect, “globalization by its very nature helps to hand the power to choose to the individual”.
3) Political drivers:-
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By reducing barriers to the movement of goods, services and capital (though generally not people) across national boundaries, the governments have gave way to globalization. Liberalized trading rules and deregulated markets lead to lowered tariffs and allowed foreign direct investments in almost all over the world. The institution of GATT (General Agreement on Tariffs and Trade) 1947 and the WTO (World Trade Organization) 1995 as well as the ongoing opening and privatization in Eastern Europe are only some examples of latest developments.
4) Market drivers:As domestic markets become more and more saturated, the opportunities for growth are limited and global expanding is a way most organizations choose to overcome this situation. Common customer needs and the opportunity to use global marketing channels and transfer marketing to some extent are also incentives to choose internationalization. (Ferrier, 2004)
5) Cost drivers:Sourcing efficiency and costs vary from country to country and global firms can take advantage of this fact. Other cost drivers to globalization are the opportunity to build global scale economies and the high product development costs nowadays. (Ferrier, 2004)
6) Competitive drivers:With the global market, global inter-firm competition increases and organizations are forced to “play” international. Strong interdependences among countries and high two way trades and FDI actions also support this driver.
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Various aspects of Globalization affecting the world:
Below are the important aspects of globalization that affect the world in different
ways: ?
Industrial (alias Trans Nationalization) -: Emergence of worldwide
production markets and broader access to a range of goods for consumers and companies Financial -: Emergence of worldwide financial markets and better access to external financing for corporate, national and sub-national borrowers
? ?
Political -: Spread of political sphere of interests to the regions and
countries outside the neighborhood of political (state and non-state) actors and the potential formation of a global citizens’ movement
? ?
Informational -: Increase in information flows between geographically
remote locations.
Cultural -: Growth of cross-cultural contacts; advent of new categories of
consciousness and identities such as Globalism which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". Ecological -: The advent of global environmental challenges that can not be solved without international cooperation, such as climate change, cross-
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boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Thus, globalization has become identified with a number of large trends, most of which may have developed or accelerated since World War II. These include the greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement, greater international cultural exchange, spreading of multiculturalism, and better individual access to cultural diversity, development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones. Also witnessed is the increase in the number of standards applied globally; e.g. copyright laws, patents and world trade agreements. There is a push by many advocates for an international criminal court and international justice movements.
Historical Precedents:
The term "globalization' was coined in the latter half of the twentieth
century, and the term and its concepts did not permeate popular consciousness until the latter half of the 1980s. Various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods. The earliest written theoretical concepts of globalization were penned by an American entrepreneur-turned-minister Charles Taze Russell who coined the term 'corporate giants' in 1897. In the 16th century, Globalization in its largest extent began in Portugal. Portugal's global explorations in the 16th century linked continents, economies and cultures as never before. Globalization is a centuries long process, tracking the expansion of human population and the growth of civilization that has accelerated dramatically in the past 50 years. Earlier forms of globalization existed during the Mongol Empire, when there was greater integration along the Silk Road. Global integration continued through the expansion of European trade, as in the 16th and 17th centuries, when the Portuguese and Spanish Empires reached to all corners of the world. The effects on European industries were notable, e.g. the Silver Mining in
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Globalization
Schwaz, Austria was partly abandoned, as silver was available from the Spanish colonies for lower prices. Globalization became a business phenomenon in the 17th century when the first Multinational was founded in The Netherlands. During the Dutch Golden Age the Dutch East India Company was established as a private owned company. Because of the high risks involved with the international trade, ownership was divided with Shares. The Dutch East India Company was the first company in the world to issue shares, an important driver for globalization. The 19th century is sometimes called "The First Era of Globalization." It was a period characterized by rapid growth in international trade and investment between the European imperial powers, their colonies, and, later, the United States. It was in this period that areas of sub-saharan Africa and the Island Pacific were incorporated into the world system. Since World War II, barriers to international trade have been considerably lowered through international agreements - General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, have included ? Promotion of free trade -: Reduction or elimination of tariffs; creation of free trade zones with small or no tariffs, reduced transportation costs, especially resulting from development of containerization for ocean shipping, reduction or elimination of capital controls, reduction, elimination, or harmonization of subsidies for local businesses ? Restriction of free trade -: Harmonization of intellectual property laws across the majority of states, with more restrictions. ? Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States) The Uruguay round (1984 to 1995) led to a treaty to create the World Trade Organization (WTO), to mediate trade disputes and set up a uniform platform of trading. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade. The world increasingly is confronted by problems that can not be solved by individual nation-states acting alone. Examples include cross-boundary air and water pollution, over-fishing of the oceans and other degradations of the natural environment, regulation of outer-space, global warming, international terrorist networks, global trade and finance, and so on. Solutions to these problems
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necessitate new forms of cooperation and the creation of new global institutions. Since the end of World War II, following the advent of the UN and the Bretton Woods institutions, there has been an explosion in the reach and power of Multinational corporations and the rapid growth of global civil society. The Global scenario group, an environmental research and forecasting organization, views globalization as part of the shift to a Planetary Phase of Civilization, characterized by global social organizations economies and communications. The GSG maintains that the future character of this global society is uncertain and contested.
Measuring Globalization:-
Looking specifically at economic globalization, it can be measured in different ways.
? ? ? ? Goods and services, e.g. exports plus imports as a proportion of national income or per head of population. Labor/people, e.g. net migration rates; inward or outward migration flows, weighted by population. Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population. Technology, e.g. international research & development flows; proportion of populations (and rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances such as the telephone, motorcar, broadband)
To what extent a nation-state or culture is globalized in a particular year has until most recently been measured employing simple proxies like flows of trade, migration, or foreign direct investment, as described above.
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A multivariate approach to measuring globalization is the recent index calculated by the Swiss Think tank KOF. The index measures the three main dimensions of globalization: economic, social, and political. In addition to three indices measuring these dimensions, an overall index of globalization and subindices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated. Data are available on a yearly basis for 122 countries.
Measuring Attitudes towards Globalization:
Measurement of attitudes toward globalization was sought after in a 2003 worldwide globalization study. The study focused on teenagers' perceptions towards globalization and globalism, because soon they will be the adults living out the results of today's policy. The study examined the thesis of: Teenagers are natural globalists & Teenagers are afraid of globalization. The sample for this study included two hundred teenagers between the ages of 14 and 18, from New York, Lebanon, Azerbaijan, and the Philippines. The locations were urban. There was a survey administered with input from Gene Ellis, a professor (Wirtschaftswissenschaft Seminar) at the Eberhard Karls University of Tuebingen, and global consulting principal, economist, and former World Bank employee Andrew Mack. Topics of globalization and globalism were grouped into sub-categories. Globalization categories included immigration, trade, and diplomatic relations. Globalism included consumption, personal freedoms, technology, and culture. The results of the research suggested that both American teenagers and international teenagers are natural globalists and are largely in favor of globalization. Teenagers in New York had higher levels of support for globalization than globalism. International teens were more globalists. Importantly, all teens were very positive towards technology, cultural exchange, trade, consumption of international goods, and immigration. The study suggested that the future of international technology, trade, and culture will depend on bringing the concepts of globalization and globalism together. More so, the Internet seems to be one of the most important tools in linking teenagers globally and this suggests that this sort of communication should be developed around the world at a faster rate. Finally, it was suggested that the future of culture and trade will depend on the rate of technological progress.
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Impact of Globalization on India:
India opened its economy in early nineteen century; it followed a major
crisis which led the economy near to defaulting on loans. After a long time passed, there has been a steady liberalization with the current account transactions. Numbers of new sectors were opened for the portfolio and foreign direct investments in roads, telecoms, airports, insurance and many other major sectors. The Indian tariff rates reduced rapidly over the decade from an average of 72.5% in 1991-1992 to 24.6% in 1996-97. Tariff went up slowly in late nineties and became 35.1% in 2001-02. Globalization in India has allowed companies to increase their base of operations, expand their workforce with minimal investments, and provide new services to a broad range of consumers. The process of globalization has been an integral part of the recent economic progress made by India. Globalization has
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played a major role in export-led growth, leading to the enlargement of the job market in India. One of the major forces of globalization in India has been in the growth of outsourced IT and business process outsourcing (BPO) services. The last few years have seen an increase in the number of skilled professionals in India employed by both local and foreign companies to service customers in the US and Europe in particular. Taking advantage of India’s lower cost but educated and Englishspeaking work force, and utilizing global communications technologies such as voice-over IP (VOIP), email and the internet, international enterprises have been able to lower their cost base by establishing outsourced knowledge-worker operations in India. As a new Indian middle class has developed around the wealth that the IT and BPO industries have brought to the country, a new consumer base has developed. International companies are also expanding their operations in India to service this massive growth opportunity. Notable examples of international companies that have done well in India in the recent years include Pepsi, Coca-Cola, McDonald’s, and Kentucky Fried Chicken, whose products have been well accepted by Indians at large. Globalization in India has been advantageous for companies that have ventured in the Indian market. By simply increasing their base of operations, expanding their workforce with minimal investments, and providing services to a broad range of consumers, large companies entering the Indian market have opened up many profitable opportunities. Indian companies are rapidly gaining confidence and are themselves now major players in globalization through international expansion. From steel to Bollywood, from cars to IT, Indian companies are setting themselves up as powerhouses of tomorrow’s global economy. Global comparisons describe India as a fastest growing country after China. Trade and investment are two of the very important reason of progress leading in lowering the rates of poverty and global inequality over the decades. The proportion of the world population living in poverty is continually declining. There are five major areas where India has to keep on concentrating in order to achieve this goal and those areas are:? Technological entrepreneurship
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? ? ? ? New business openings for small and medium enterprises Quality management importance Prospects in rural areas Privatization of financial institutions.
Steps Taken to Globalize Indian Economy:
Some of the steps taken to liberalize and globalize our economy were: 1. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to 19%. 2. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private sector. 3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as Insurance (26%), defense industries (26%) etc. 4. NRI Scheme: The facilities which were available to foreign investors were also given to NRI's.
GDP Growth Rate:
The economy of India is passing through a difficult situation. Output and demand conditions were highly affected by the poor performance in agriculture during the last two years. The economy globally recorded an output growth of 2.4%. The performance in the first quarter of the financial year is around 5.8% and in the second quarter is around 6.1%.
Export and Import:
The export of India in year 2001-02 extended to 32,572 and import extended to 38,362 million approximately. Indian companies became respectable companies in International market. Agriculture exports rose to 18% of the total annual export of the country. The largest contributor in the previous years to the total agricultural exports is the marine product which accounts to be the total of one fifth portion of the agricultural products. Oil seeds, rice, coffee, and tea are other prominent products which accounts in total of the agricultural products of 5 to 10%
A Comparison with Other Developing Countries with India:
? ? India’s share of world exports increased from 0.05% to 0.07% over the last 2 decades and China’s share has tripled to almost 4% over the same period. India’s share of the global trade is exactly similar to that of the Philippines, an economy which is 6 times smaller according to estimation of IMF.
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? FDI flows into India have averaged around 0.5% of GDP against 5% for China and 5.5% for Brazil over the past decade. FDI inflows to China now exceeds by US $ 50 billion annually. It is US $ 4billion only in the case of India.
Advantages of Globalization:
It is the advantages of Globalization which act to bring about economic welfare on
international levels, thereby benefiting the worldwide population. Mentioned below, are the advantages of Globalization which facilitate the development of world economies immensely: ? ? Free movement of capitals offers access to the foreign investments to many countries like the United States of America. The worldwide commercial market becomes so flexible due to the advent of Globalization, that transactions of the international companies are not restricted to geographical borders of the countries. Globalization enhances the flow of capital, permitting the investors to invest on the untapped resources of the developing countries.
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? Globalization of the mass media has reduced the global space substantially, keeping the people informed about all latest international happenings through different television channels. Improvement in global communication networks leads to easy flow of important information not only to individuals but at company levels as well. The democratic thoughts are rapidly spread among countries across the world, owing to Globalization. Globalization stresses on increasing mutual dependence among all the nation-states across the world. Globalization lessens the possibilities of warfare among developed countries to considerable extents. The developed countries display a tendency for working towards protecting their surrounding environments to large extents. Globalization enhances free international trades among countries across the world. The total output levels of a country increase when productions become competition-oriented. This means that to compete with the existing world market, the products must be of best qualities and they also improve the lifestyle of the overall population. Cheap imports and extensive competition on international level keep a check on the prices leading to lower inflation rates, which occasionally interrupt the economic growth and development of a nation. Economic Globalization ushers in the concept of Open Economy, where there is an extensive promotion of technological growth and inventions. This requires new topics and concepts to be imported from abroad. Employments in the export-oriented industries generally pay its employees approximately 15% more than the import-oriented jobs in a country. One of the positive effects of Globalization is the smooth and speedy transportation of people and commodities to different corners of the world. Globalization reduces cultural blockages and differences among nations, by encouraging fellow-feeling and mutual compassion.
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Disadvantages of Globalization:
Opponents of globalization point out to its negative effects. Some of them are listed
below. ? Developed nations have outsourced manufacturing and white collar jobs. That means fewer jobs for their people. This has happened because
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manufacturing work is outsourced to developing nations like China where the cost of manufacturing goods and wages are lower. Programmers, editors, scientists and accountants have lost their jobs due to outsourcing to cheaper locations like India. Globalization has led to exploitation of labor. Prisoners and child workers are used to work in inhumane conditions. Safety standards are ignored to produce cheap goods. Job insecurity - Earlier people had stable, permanent jobs. Now people live in constant dread of losing their jobs to competition. Increased job competition has led to reduction in wages and consequently lower standards of living Terrorists have access to sophisticated weapons enhancing their ability to inflict damage. Terrorists use the Internet for communicating among themselves. Companies have set up industries causing pollution in countries with poor regulation of pollution. Fast food chains like McDonalds and KFC are spreading in the developing world. People are consuming more junk food from these joints which has an adverse impact on their health. The benefits of globalization are not universal. The rich are getting richer and the poor are becoming poorer. Bad aspects of foreign cultures are affecting the local cultures through TV and the Internet. Enemy nations can spread propaganda through the Internet. Deadly diseases like HIV/AIDS are being spread by travellers to the remotest corners of the globe. Local industries are being taken over by foreign multinationals. The increase in prices has reduced the governments ability to sustain social welfare schemes in developed countries. There is increase in human trafficking. Multinational Companies and corporations which were previously restricted to commercial activities are increasingly influencing political decisions. Globalization has lead to environmental damage in India (as with many developing nations).Due to large-scale industrialization urban slums have formed, air and water pollution has dramatically increased. Multinational firms have exploited resources belonging to the country and lead to land degradation. Delhi for example is the 4th most polluted city in the world. Though foreign investment will promote economic development in the short term, the profits earned from the business venture move out of the country.
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? There is also a possibility that at times of recession investors (in portfolio investment) may withdraw their funds causing further problems. Domestic resources such as labor maybe exploited by large production based firms. These firms may also abuse natural resources and use them inefficiently. Domestic producer being overpowered my overseas giants, who already have competitive advantages over the domestic producers, and have more funds to invest. This will lead to the closure of many domestic owner firms.
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Concerns and Fears:
On the impact of globalization, there are two major concerns. These may be
described as even fears. Under each major concern there are many related anxieties. The first major concern is that globalization leads to a more iniquitous
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distribution of income among countries and within countries. The second fear is that globalization leads to loss of national sovereignty and those countries are finding it increasingly difficult to follow independent domestic policies. These two issues have to be addressed both theoretically and empirically. The argument that globalization leads to inequality is based on the premise that since globalization emphasizes efficiency, gains will accrue to countries which are favorably endowed with natural and human resources. Advanced countries have had a head start over the other countries by at least three centuries. The technological base of these countries is not only wide but highly sophisticated. While trade benefits all countries, greater gains accrue to the industrially advanced countries. This is the reason why even in the present trade agreements, a case has been built up for special and differential treatment in relation to developing countries. By and large, this treatment provides for longer transition periods in relation to adjustment. However, there are two changes with respect to international trade which may work to the advantage of the developing countries. First, for a variety of reasons, the industrially advanced countries are vacating certain areas of production. These can be filled in by developing countries. A good example of this is what the East Asian countries did in the 1970s and 1980s. Second, international trade is no longer determined by the distribution of natural resources. With the advent of information technology, the role of human resources has emerged as more important. Specialized human skills will become the determining factor in the coming decades. Productive activities are becoming “knowledge intensive” rather than “resource intensive”. While there is a divide between developing and the advanced countries even in this area – some people call it the digital divide - it is a gap which can be bridged. A globalized economy with increased specialization can lead to improved productivity and faster growth. What will be required is a balancing mechanism to ensure that the handicaps of the developing countries are overcome. Apart from the possible iniquitous distribution of income among countries, it has also been argued that globalization leads to widening income gaps within the countries as well. This can happen both in the developed and developing economies. The argument is the same as was advanced in relation to iniquitous distribution among countries. Globalization may benefit even within a country those who have the skills and the technology. The higher growth rate achieved by an economy can be at the expense of declining incomes of people who may be rendered redundant. In this context, it has to be noted that while globalization may accelerate the process of technology substitution in developing economies, these countries even without globalization will face the problem associated with moving
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from lower to higher technology. If the growth rate of the economy accelerates sufficiently, then part of the resources can be diverted by the state to modernize and re-equip people who may be affected by the process of technology up gradation. The second concern relates to the loss of autonomy in the pursuit of economic policies. In a highly integrated world economy, it is true that one country cannot pursue policies which are not in consonance with the worldwide trends. Capital and technology are fluid and they will move where the benefits are greater. As the nations come together whether it be in the political, social or economic arena, some sacrifice of sovereignty is inevitable. The constraints of a globalised economic system on the pursuit of domestic policies have to be recognised. However, it need not result in the abdication of domestic objectives. Another fear associated with globalization is insecurity and volatility. When countries are inter-related strongly, a small spark can start a large conflagration. Panic and fear spread fast. The downside to globalization essentially emphasizes the need to create countervailing forces in the form of institutions and policies at the international level. Global governance cannot be pushed to the periphery, as integration gathers speed. Empirical evidence on the impact of globalization on inequality is not very clear. The share in aggregate world exports and in world output of the developing countries has been increasing. In aggregate world exports, the share of developing countries increased from 20.6 per cent in 1988-90 to 29.9 per cent in 2000. Similarly the share in aggregate world output of developing countries has increased from 17.9 per cent in 1988-90 to 40.4 per cent in 2000. The growth rate of the developing countries both in terms of GDP and per capita GDP has been higher than those of the industrial countries. These growth rates have been in fact higher in the 1990s than in the 1980s. All these data do not indicate that the developing countries as a group have suffered in the process of globalization. In fact, there have been substantial gains. But within developing countries, Africa has not done well and some of the South Asian countries have done better only in the 1990s. While the growth rate in per capita income of the developing countries in the 1990s is nearly two times higher than that of industrialized countries, in absolute terms the gap in per capita income has widened. As for income distribution within the countries, it is difficult to judge whether globalization is the primary factor responsible for any deterioration in the distribution of income. We have had considerable controversies in our country on what happened to the poverty ratio in the second half of 1990s. Most analysts even for India would agree that the poverty ratio has declined in the 1990s. Differences may exist as to what rate at which this has fallen. Nevertheless,
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whether it is in India or any other country, it is very difficult to trace the changes in the distribution of income within the countries directly to globalization.
India’s Stance on Globalization:
What should be India’s attitude in this environment of growing
globalization? At the outset it must be mentioned that opting out of globalization is not a viable choice. There are at present 149 members in the World Trade Organisation (WTO). Some 25 countries are waiting to join the WTO. China has
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recently been admitted as a member. What is needed is to evolve an appropriate framework to wrest maximum benefits out of international trade and investment. This framework should include: (a) Making explicit the list of demands that India would like to make on the multilateral trade system, and (b) Steps that India should take to realize the full potential from globalization.
Where does Indian stand in terms of Global Integration?
India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag. ? Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of India Consider global trade - India's share of world merchandise exports increased from .05% to .07% over the pat 20 years. Over the same period China's share has tripled to almost 4%. India's share of global trade is similar to that of the Philippines, an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given its size, proximity to markets and labour cost advantages. It is interesting to note the remark made last year by the Governor of RBI. Despite all the talk, we are now where ever close being globalised in terms of any commonly used indicator of globalisation. In fact we are one of the least globalised among the major countries - however we look at it. As Amartya Sen and many other have pointed out that India, as a geographical, politico-cultural entity has been interacting with the outside world throughout history and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalised world which is distinguished from previous eras from by faster travel and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life.
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Consequences:
The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic
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developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.
Globalization - A Controversial Topic:
Those who support globalization point out that free trade enables
companies from the rich industrialized countries to invest in poorer countries, providing jobs to local citizens and improvements to infrastructure. Many multinational corporations now reduce labor costs by outsourcing portions of their
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business operations to countries such as India and China. This has been particularly true of the manufacturing sector. Foreign companies also provide wealth to local economies in the form of foreign currency when they buy local products and services. In many cases, they have built schools, colleges and hospitals for the local residents, enhancing the quality of life. Advocates also contend that globalization allows for the mixing of people and cultures, further enabling the sharing of ideas, experiences and lifestyles. People can experience foods and other products not previously available in their own country.
Overall, supporters of globalization argue that it has brought improved standards of living and quality of life to several countries. They point to examples such as China. As a result of opening its markets to the world, China’s economy can claim an increase in per capita personal income from $1,420 in 1980 to $4,120 by 1999. In 1980, Americans earned 12.5 times as much as the Chinese per capita. By 1999, they were only earning 7.4 times as much. Supporters cite globalization as having benefited countries in a number of ways, particularly poorer ones. For example, the percentage of people in developing countries living below $1 per day has halved in only 20 years; life expectancy in the developing world has almost doubled since WWII and is closing the gap with the developed world; between 1950 and 1999 global literacy increased from 52% to 81%.
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But globalization has equally vocal opponents. In recent times, globalization has been blamed for a host of ills, including poverty in the Third World, job losses in industrialized countries and even the “Americanization” of other cultures. “Anti-globalists” contend that it operates only in the interests of the rich nations and multinational corporations. They argue that such corporations exploit workers in the developing world, subjecting them to poor working conditions in “sweat shops,” and paying them salaries that they would not be allowed to get away with back home. They contend that the multinational profits are repatriated and little is invested in the communities whose labor and resources they consume. These critics also say that the gap between the rich and poor nations is growing, and that globalization has not benefited poorer countries. Figures used frequently to back their position come from a variety of sources, including a report from the United Nations Development Program. For example, the gap in incomes between the 20% of the richest and poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995. By the late 1990s, the fifth of the world’s population living in the highestincome countries had: • 86% of the world’s gross domestic product—the bottom fifth just 1%. • 82% of world export markets—the bottom fifth just 1%. • 68% of foreign direct investment—the bottom fifth just 1%. • 74% of the world’s telephone lines—the bottom fifth just 1.5%. These anti-globalists say this rising inequality is the result of market forces. They say that given free rein, market forces give the rich the power to add to their wealth. Therefore, they argue that large corporations invest in poor countries only because they can take advantage of low wage levels or so they can access their natural resources.
The Future of Globalization:
So what does the future hold? What will be the result of the increasingly
interconnected state of the world’s nations?
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While there are many opinions, there is only one source that can give us the true answer—the Holy Bible. In it, God accurately foretold the rise and fall of the major nations throughout history, including the Babylonian, Medo-Persian, Greek and Roman empires. He even prophesied the sudden rise of the American and British people to world prominence. And God has foretold today’s fast-paced interconnected world and its matchless advances in science and technology: “But you, O Daniel, shut up the words, and seal the book, even to the time of the end: many shall run to and fro, and knowledge shall be increased.” The Bible states that, in the future, a union of ten nations (or groups of nations) will arise, and replace America as the dominant world power. It will attack and defeat America and Britain, taking the survivors into captivity. This political, economic and military combine will be backed by a universal false church. It will become a world-leading trading bloc, possessing vast riches and trading all over the world in every product imaginable—even human beings! This politically influential religious entity, led by a charismatic figure, will usher in a temporary period of great wealth. Globalization will thrive during its reign to levels unseen in human history— prosperity will flourish, but not for all. However, shortly after the rise of this ten-nation union, it will be replaced by a world-ruling super government that will usher in lasting peace, prosperity and security for all. Upon His triumphant Return, Jesus Christ will take over all the governments of men, and administer His government—the kingdom of God— throughout the earth. At that time, the world will become truly “one”—one with God. True globalization will occur, but according to God’s just standards. No more inequality. No more poverty. No more exploitation. Peace will abound. What a wonderful picture—soon to become a reality!
Conclusion:
The conclusion can thus be made, that despite globalization contribution to
the increased levels of economic growth it did not contribute to the improvement in
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the skewed distribution of income between developed and developing countries. The problem is the skewed distribution of income can mainly be attributed to the limited participations of the developing countries in the process of globalization. The implications of globalization for an economy are too many. Globalization has competition and interdependence between the economies in the world market which reflects in the interdependence in trading of goods and services. They are influenced by both, domestic and international policies and also by the economic conditions. So, it is very clear that a globalizing economy, when evaluating its domestic policies, cannot afford to ignore the possible actions of the policies and developments in the rest of the world, the option of which is available to the government in decision making at a national level. The recent experience is that the country must carefully choose a combination of policies that enables it to take the opportunity by avoiding pitfalls. United States has been the largest economy in the world from over a century but many major developments have been taking place in the world economy since that time which has lead to shift the focus from US and other rich countries of Europe to the two Asian giant countries- India and China. The experts of the economies and various other studies conducted across the world envisage India and China to rule the world in the 21st century. The Indian economy was passing through a very difficult phase which is caused by so many unfavorable domestic and external developments. The largest contributor in the total agricultural exports is the marine products which account to be the total of the one fifth portions of the agricultural products. Oil seeds, rice, coffee, and tea are other prominent products which accounts in the total of the agricultural products of about 10%. India, which is now the fourth largest economy in terms of purchasing power parity, may overtake Japan and become third major economic power within 10 years. The economic impact of globalization in Vietnam and China demonstrate that globalization can be beneficial to the growth of developing countries and can furthermore enhance the sovereignty of domestic governments. While globalization can and does have negative side effects—some multinationals do exploit their workers, domestic institutions will face more risk from capital flows, and the threat of social instability may rise—the aims to trade are nonetheless supported by the majority of cross-country empirical data. While the manner in which developing countries can best utilize international capital and markets should remain an issue of concern and further study, the claim that globalization is merely a source of problems is unjustified given the analysis of Vietnam and China. It was indicated in
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the paper that it is important to differentiate the concept of globalization from internationalization and regionalization. It was also indicated that globalization had some specific effects on the economies of the developing countries of Africa. It was indicated that under certain circumstances globalization can lead to higher unemployment and an increasing skewness in the distribution of income between developed and developing nations. Globalization can play and very important role in solving the development problems of Africa. If countries in Africa are prepared to allow for trade liberalization and follow stable macro economic policy it will contribute to the development of the respective countries. The role of NEPAD as the solution to the development problems of Africa has also been evaluated. It was indicated that the developed countries is in favor of the NEPAD initiative, if the African countries can adhere to the principles embedded in the NEPAD documents. A concern can be raised about the fact that international trade is only favoring a few nations in Africa. Future research will have to investigate ways to promote the economic development in all the African countries. Therefore, one can evidently infer that Globalization means the integration of the economies of the world through uninhibited trade and financial flows which are through exchange of technology and knowledge. It has provided developing countries with a greater access to the markets and technology of the developing countries which has lead to a high living standard and a greater productivity. We come across the impact of globalization on developing countries in the above stated points which not only shows good but also bad impact of globalization on the countries especially developing countries. Globalization has increased the risks involved with it. Indian companies now have become respectable countries in International market. Agriculture went to 18% increase of the total annual export of the country. China and Vietnam also developed its economy through privatization and globalization. Thus, Globalization has played a very important role in every developed and developing country but mainly in developing countries. Though Globalization is very good for developing countries but in few places it has bad effects on those countries as well.
Websites visited: 30
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This report has been compiled after the collection and careful scrutiny
of information from the following websites:
? ? ? ? ? ? ? ? ? ? www.economywatch.com/economics-theory/globalization/effects.html www.buzzle.com/articles/negative-effects-of-globalization.html www.business.mapsofindia.com/globalization/india-industry/ www.bizcovering.com/business-and-society/globalization-and-its-impacton-india/ www.en.wikipedia.org/wiki/Globalization www.imf.org/external/np/exr/Key/global.htm www.globalpolicy.org/globalization.html www.tradechakra.com/indian-economy/globalization.html www.ris.org.in/Seminar_on_India_Globalization.htm www.realtruth.org/articles/070223-001-globalization.html
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