Summarise the main effects of globalisation and discuss to what extent they are beneficial to global businesses.
Boonnueang S.
Over the past decade there has been a dramatic increase in world economic growth (International Monetary Fund, 2006). Some people believe that one of the key factors in contributing to this is globalisation. Whilst a variety of definitions of the term globalisation have been suggested by many institutes, for example, the Canadian Economy has defined globalization as ‘the increased mobility of goods, services, labour, technology and capital throughout the world’ (www.canadianeconomy.gc.ca) and the World Bank defined it as ‘the growing integration of economies and societies around the world’ (www.worldbank.org).The phenomenon of globalisation has had a widespread effect in many aspects and is widely believed to have brought a lot of benefits to the world economy, especially the financial markets, trade liberalisation and the emerging market economy. However, some critics argue that the vast benefits of globalisation have been delivered to only a group of multinational companies. (Anand S and Segal P, 2006).So this essay will look at the main implications of globalisation that might impact on the world economy, particularly the financial market, the emerging market economy and trade liberalisation and show the effects of globalisation on global businesses especially, global marketplaces and multinational companies, in particular, global brands.
The main implications of globalisation.
In the new global economy, the capital markets have become a central issue for many discussions and debates. And also Friedman (2006) claims that the era of globalisation has often been mentioned in the world’s financial markets because the global movement and trade of capital is now so simple, through the click of a mouse. Especially, making the value of currency intrinsically linked to the remarkable technology which connects trading rooms directly and enables investors in Singapore to trade in the Wall Street stock market, New York and vice versa.(Friedman T,2006) In a similar way, supporters suggest that globalisation has been a key factor in developing global capital flows. This is illustrated by time zones that have been replaced by the twenty four hour a day stock markets and foreign direct investment (FDI). According to Lasserre (2007), the report stated that the world capital flow has increased significantly from US$630 billion in 1982 to US$10,130 billion in 2005 by FDI. However, there are those too that claim that globalisation has brought many disadvantages to the financial markets, when for example, very large sums of funds are move from one stock market to another. This was exemplified by one of the most important events of the 1970’s, the Asian financial crisis, when a vast amount of capital flow was withdrawn from Asian stock market. This caused not only a big crash in terms of the Asian markets and businesses, with many firms going out of business because of the lack of financial policies in the region in countries like Korea, Thailand and Malaysia, but also impacted in the US and European stock markets. (Burgess and Connell, 2007)
There have been significant reports that show a rapid increase of wages in emerging countries, particularly China and India. This may be because of the movement of international firms that have set up their global production factories in developing countries and the vast amount of capital has been moved to Asian stock market. According to Zhang (2001), China, one of these emerging economic countries, has benefited greatly from globalisation as the gross domestic product (GDP) rose over 7.8 percent in 1998. On the other hand, even though many reports have shown the clear benefits of globalisation in emerging markets but some authors have argued that more negative effects are discovered here when the economic growth has risen rapidly. This is demonstrated again by examples in Asia, where huge gaps in wages have emerged between the rich and the poor. Moreover, the number of people living in poverty has also risen in these countries may be owing to the globalisation has been advancing too fast for societies to adapt and reform (Thirlwall, 2006).
The movement of peoples and commerce across the globe is now commonplace. Interestingly, nowadays people from the East of the world can easily trade with people in the West. This is the advantage of trade liberalization, which means decreasing the limitations on trade that countries around the world have built over a number of years. The example of benefits of trade liberalisation reported by the centre of economic policy research ‘Agricultural liberalisation is the key for poverty reduction constituting 28% of GDP in low-income countries and 2% in industrialised countries – but both developed and developing countries must liberalize.’ (McCulloch et al., 2001) Even though, the benefits of trade liberalisation have been contributed to by many countries. Some authors suggest that each country might attempt to ensure that domestic industries are protected from competition from foreign producers, for example, through tariffs and other non-tariff barriers such as regulations and legislation. (McGill, 2007)
The effects of globalisation on global businesses.
Whilst the globalisation of production and trade along with the rise of Multinational Corporations is part of the global economy, hence the majority of trade organisations seem to believe that globalisation has raised the global market capacity due to the free trade areas that have been established in many regions such as Europe and Asia-pacific. The consequence of these might be seen in many businesses, the case in point are computer, software industries, and food’s franchise, for example, Microsoft, Yahoo, Google, McDonald, and KFC have been available around the world and have been recognised as global brands. Those brands have been seen frequently in the global marketplace. Those examples above have suggested that the globalisation has brought a lot of advantages to global brands and multinational companies. In contrast, some reports revealed that the remarkable increase of multinational companies in the global market might cause some problems in developing countries. As Pilger (2006) reported that some factories in Indonesia treated the labour like a slave and the company’s code of conduct were not applied by local factories. (Pilger, 2006)
Conclusion
Globalisation has undoubtedly brought significant advantages which are clearly evident in many economic sectors around the world. As a consequence, free trade has lead to sharply rising incomes in developing countries and vast amounts of funds flowing easily around the world through foreign direct investment. Nevertheless, globalisation also brings some negative effects to society, which would suggest that the policy makers of the affected countries may be need to pay close attention to these issues that cause problems for their countries. Furthermore, multinational companies might be able to set up some policies that protect the labour from unfair employment. Then, globalisation could mean a bright future for us all.
Word-count: 1099 words
Over the past decade there has been a dramatic increase in world economic growth (International Monetary Fund, 2006). Some people believe that one of the key factors in contributing to this is globalisation. Whilst a variety of definitions of the term globalisation have been suggested by many institutes, for example, the Canadian Economy has defined globalization as ‘the increased mobility of goods, services, labour, technology and capital throughout the world’ (www.canadianeconomy.gc.ca) and the World Bank defined it as ‘the growing integration of economies and societies around the world’ (www.worldbank.org).The phenomenon of globalisation has had a widespread effect in many aspects and is widely believed to have brought a lot of benefits to the world economy, especially the financial markets, trade liberalisation and the emerging market economy. However, some critics argue that the vast benefits of globalisation have been delivered to only a group of multinational companies. (Anand S and Segal P, 2006).So this essay will look at the main implications of globalisation that might impact on the world economy, particularly the financial market, the emerging market economy and trade liberalisation and show the effects of globalisation on global businesses especially, global marketplaces and multinational companies, in particular, global brands.
The main implications of globalisation.
In the new global economy, the capital markets have become a central issue for many discussions and debates. And also Friedman (2006) claims that the era of globalisation has often been mentioned in the world’s financial markets because the global movement and trade of capital is now so simple, through the click of a mouse. Especially, making the value of currency intrinsically linked to the remarkable technology which connects trading rooms directly and enables investors in Singapore to trade in the Wall Street stock market, New York and vice versa.(Friedman T,2006) In a similar way, supporters suggest that globalisation has been a key factor in developing global capital flows. This is illustrated by time zones that have been replaced by the twenty four hour a day stock markets and foreign direct investment (FDI). According to Lasserre (2007), the report stated that the world capital flow has increased significantly from US$630 billion in 1982 to US$10,130 billion in 2005 by FDI. However, there are those too that claim that globalisation has brought many disadvantages to the financial markets, when for example, very large sums of funds are move from one stock market to another. This was exemplified by one of the most important events of the 1970’s, the Asian financial crisis, when a vast amount of capital flow was withdrawn from Asian stock market. This caused not only a big crash in terms of the Asian markets and businesses, with many firms going out of business because of the lack of financial policies in the region in countries like Korea, Thailand and Malaysia, but also impacted in the US and European stock markets. (Burgess and Connell, 2007)
There have been significant reports that show a rapid increase of wages in emerging countries, particularly China and India. This may be because of the movement of international firms that have set up their global production factories in developing countries and the vast amount of capital has been moved to Asian stock market. According to Zhang (2001), China, one of these emerging economic countries, has benefited greatly from globalisation as the gross domestic product (GDP) rose over 7.8 percent in 1998. On the other hand, even though many reports have shown the clear benefits of globalisation in emerging markets but some authors have argued that more negative effects are discovered here when the economic growth has risen rapidly. This is demonstrated again by examples in Asia, where huge gaps in wages have emerged between the rich and the poor. Moreover, the number of people living in poverty has also risen in these countries may be owing to the globalisation has been advancing too fast for societies to adapt and reform (Thirlwall, 2006).
The movement of peoples and commerce across the globe is now commonplace. Interestingly, nowadays people from the East of the world can easily trade with people in the West. This is the advantage of trade liberalization, which means decreasing the limitations on trade that countries around the world have built over a number of years. The example of benefits of trade liberalisation reported by the centre of economic policy research ‘Agricultural liberalisation is the key for poverty reduction constituting 28% of GDP in low-income countries and 2% in industrialised countries – but both developed and developing countries must liberalize.’ (McCulloch et al., 2001) Even though, the benefits of trade liberalisation have been contributed to by many countries. Some authors suggest that each country might attempt to ensure that domestic industries are protected from competition from foreign producers, for example, through tariffs and other non-tariff barriers such as regulations and legislation. (McGill, 2007)
The effects of globalisation on global businesses.
Whilst the globalisation of production and trade along with the rise of Multinational Corporations is part of the global economy, hence the majority of trade organisations seem to believe that globalisation has raised the global market capacity due to the free trade areas that have been established in many regions such as Europe and Asia-pacific. The consequence of these might be seen in many businesses, the case in point are computer, software industries, and food’s franchise, for example, Microsoft, Yahoo, Google, McDonald, and KFC have been available around the world and have been recognised as global brands. Those brands have been seen frequently in the global marketplace. Those examples above have suggested that the globalisation has brought a lot of advantages to global brands and multinational companies. In contrast, some reports revealed that the remarkable increase of multinational companies in the global market might cause some problems in developing countries. As Pilger (2006) reported that some factories in Indonesia treated the labour like a slave and the company’s code of conduct were not applied by local factories. (Pilger, 2006)
Conclusion
Globalisation has undoubtedly brought significant advantages which are clearly evident in many economic sectors around the world. As a consequence, free trade has lead to sharply rising incomes in developing countries and vast amounts of funds flowing easily around the world through foreign direct investment. Nevertheless, globalisation also brings some negative effects to society, which would suggest that the policy makers of the affected countries may be need to pay close attention to these issues that cause problems for their countries. Furthermore, multinational companies might be able to set up some policies that protect the labour from unfair employment. Then, globalisation could mean a bright future for us all.
Word-count: 1099 words
References
Anand, S. & Segal, P. (2006), ‘What do we know about global income inequality?’, University of Oxford and Nuffield College, Oxford.
Burgess. J, & Connell, J. (2007), ‘Globalisation and Work in Asia’, Chandos Publishing, Oxford, England.
Canadian Economy, ’Globalisation definition’, viewed 28 August 2008,
Friedman, T. L. (2006), ‘The World Is Flat [Updated and Expanded]: The Globalized World in the Twenty-first Century’, the Penguin Group, London.
Globalization, Growth and Poverty: Building an Inclusive World Economy, (2001), the Washington DC press conference, May, viewed 28 August 2008,
<http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPR%20RS/EXTGGP/0,,menuPK:477838~pagePK:64168092~piPK:64168088~theSitePK:477826,00.html.>
International Monetary Fund (2006), ‘World Economic Outlook, World Economic and Financial Survey’, September, <http://www.imf.org/external/pubs/ft/weo%20/2006/%2002/pdf/%20weo09%2006.pdf>.
Lasserre, P. (2007), ‘Global strategic Management,’ 2 nd edn, Palgrave Macmillan, New York p12.
McCulloch et al. (2001), ‘Trade Liberalization and Poverty: A Handbook’, centre for economic policy research, the UK Department for International Development, 15 October, viewed 28 August 2008,<http://www.cepr.org/PRESS/P144.htm>.
McGill, E. (2007), ‘Poverty and Social Analysis of Trade Agreements: A more Coherent Approach?’, viewed 25 August 2008, <http://www.bc.edu/schools/law/lawreviews%20/meta-elements/journals/bciclr/27_2/07_TXT.ht>.
Official Documents on Globalization, The University of Iowa, viewed 28 August 2008,
<http://www.uiowa.edu/ifdebook/issues/globalization/docs/global_docs.shtml.>
Pilger, J. (2006), ‘The New rules of The World’, BBC, 7 August, viewed 25 August 2008, <http://video.google.co.uk/videoplay?docid=-7932485454526581006&ei=GLaqSJqcEZSgiALvp5TWAQ&q=john+pilger&hl=en.>
Thirlwall A.P. (2006), ‘Growth & Development’, 8th edn, Palgrave Macmillan, New York, p14.
Wealth gap risk to Asian growth, (2007), BBC, April, viewed 28 August 2008, <http://news.bbc.co.uk/1/hi/business/6529091.stm.>
Webber, M. (2002), ‘The economic impact of global warming’, 14 October, viewed 28 August 2008, <http://news.bbc.co.uk/1/hi/business/2327795.stm.>
Weber, T.(2005) ,’Are you ready for Globalisation 2.0?’, 28 January, viewed 28 August 2008,http://news.bbc.co.uk/1/hi/business/4214687.stm.>
World Bank, ‘Globalisation definition’, viewed 28 August 2008,
Zhang, X. (2007),’The Impact of Globalisation and Labour Market Reforms in China’, In Burgess. J, & Connell, J. (eds), ‘Globalisation and Work in Asia’, Chandos Publishing, Oxford, England,(pp 49-66).
Burgess. J, & Connell, J. (2007), ‘Globalisation and Work in Asia’, Chandos Publishing, Oxford, England.
Canadian Economy, ’Globalisation definition’, viewed 28 August 2008,
Friedman, T. L. (2006), ‘The World Is Flat [Updated and Expanded]: The Globalized World in the Twenty-first Century’, the Penguin Group, London.
Globalization, Growth and Poverty: Building an Inclusive World Economy, (2001), the Washington DC press conference, May, viewed 28 August 2008,
<http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPR%20RS/EXTGGP/0,,menuPK:477838~pagePK:64168092~piPK:64168088~theSitePK:477826,00.html.>
International Monetary Fund (2006), ‘World Economic Outlook, World Economic and Financial Survey’, September, <http://www.imf.org/external/pubs/ft/weo%20/2006/%2002/pdf/%20weo09%2006.pdf>.
Lasserre, P. (2007), ‘Global strategic Management,’ 2 nd edn, Palgrave Macmillan, New York p12.
McCulloch et al. (2001), ‘Trade Liberalization and Poverty: A Handbook’, centre for economic policy research, the UK Department for International Development, 15 October, viewed 28 August 2008,<http://www.cepr.org/PRESS/P144.htm>.
McGill, E. (2007), ‘Poverty and Social Analysis of Trade Agreements: A more Coherent Approach?’, viewed 25 August 2008, <http://www.bc.edu/schools/law/lawreviews%20/meta-elements/journals/bciclr/27_2/07_TXT.ht>.
Official Documents on Globalization, The University of Iowa, viewed 28 August 2008,
<http://www.uiowa.edu/ifdebook/issues/globalization/docs/global_docs.shtml.>
Pilger, J. (2006), ‘The New rules of The World’, BBC, 7 August, viewed 25 August 2008, <http://video.google.co.uk/videoplay?docid=-7932485454526581006&ei=GLaqSJqcEZSgiALvp5TWAQ&q=john+pilger&hl=en.>
Thirlwall A.P. (2006), ‘Growth & Development’, 8th edn, Palgrave Macmillan, New York, p14.
Wealth gap risk to Asian growth, (2007), BBC, April, viewed 28 August 2008, <http://news.bbc.co.uk/1/hi/business/6529091.stm.>
Webber, M. (2002), ‘The economic impact of global warming’, 14 October, viewed 28 August 2008, <http://news.bbc.co.uk/1/hi/business/2327795.stm.>
Weber, T.(2005) ,’Are you ready for Globalisation 2.0?’, 28 January, viewed 28 August 2008,http://news.bbc.co.uk/1/hi/business/4214687.stm.>
World Bank, ‘Globalisation definition’, viewed 28 August 2008,
Zhang, X. (2007),’The Impact of Globalisation and Labour Market Reforms in China’, In Burgess. J, & Connell, J. (eds), ‘Globalisation and Work in Asia’, Chandos Publishing, Oxford, England,(pp 49-66).
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1 comment:
Lovely lovely :) but PJ's lovely teacher told him your self study is not going to be your essay :)
We need help guys ;)
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