Globalization and its effects

Answer 1

Globalization is a broadly used term. The extent of meanings attached to it seems to be rather growing than decreasing over time, taking on cultural, political and economic aspects.

One of the factors that suggest the trend towards globalization is the lowering of trade barriers that enables the free flow of goods, services and capital from one country to another. Producers are specialized in the manufacturing and export of goods and produce their goods more efficiently without governmental intervention or impose of tariffs, quotas and duties. Thus, the mobility of labor and capital is increased leading to production gains as the amount of commodities made available to consumers increase due to product specialization. Foreign investment is encouraged, while capital market liberalization lowers the cost of capital enabling firms to borrow lower and create job opportunities through foreign direct investment.

On the other hand:

a) The developing world does not have the same opportunities for production and specialization like the developed countries. Developing world cannot export their goods at the same prices that the developed world does because they don't have the facilities to do so.

b) Manufacturing jobs in developed countries are destroyed because of globalization.

c) In the absence of adequate regulations and policies to protect labor and the environment, the developed world moves its manufacturing facilities to less developed countries in order to avoid the costs associated with regulations of environmental protection that they have to face in their countries.

d) Globalization enables the quick shift of economic power away from national control and towards supra-national organizations such as the World Trade Organization (WTO), the United Nations (UN) and the European Union (EU).