Economic Globalization

Economic globalization is all about you, as an American citizen, using some electronic goods made in Taiwan, driving a car manufactured in Europe, or consulting a customer service executive from India to troubleshoot the problem with your laptop. While 'globalization' refers to the process wherein regional economies, societies and cultures come together on a common platform, 'economic globalization' - which is an attribute of the broad concept of globalization, refers to integration on the economic front with the developed, developing and under-developed economies coming together by means of international trade, foreign direct investments, etc.

What is Economic Globalization?

Economic globalization refers to increasing economic interdependence of countries as a result of a significant rise in the movement of goods, service, technology and capital, across international borders. Some sources also define it as globalization of markets - wherein the term 'market' aptly replaces the term 'village' in the concept of 'global village'. It has brought to the surface the concept of global marketplace or a single world market, as a result of which, a manufacturer based in one part of the world can sell his product to a consumer in some other part. It has also given rise to several new concepts - including the concept of transnational corporations, i.e. those corporations which are active in a number of countries at the same time, which has become quite prominent of late.

Globalization of national economies is not just restricted to trade relations between countries, but also encompasses foreign direct investment by companies from developed nations in developing nations. The large number of North American and European countries investing in Asian markets is one of the best economic globalization examples that you are likely to come across. While some may argue that it's the cheap labor that these countries promise that brings in the bigwigs from the developed countries to these parts of the world, one cannot deny the fact that it creates employment opportunities in these countries and helps their economy develop.

With due respect to the fact that coordination with each other is the need of the hour - several countries have come together on a common platform in what is referred to as the concept of 'alliance capitalism' more recently. This, in turn, has not just created but also strengthened the complex networks of production and capital in different parts of the world. Even various governments have taken a note of the need of integrating economies, and the formation of supranational organizations such as the International Monetary Fund (IMF) and the World Trade Organization (WTO) has been facilitated for this very reason.

Economic Globalization Pros and Cons

There is no doubt about the fact that concepts like international trade, foreign direct investments, alliance capitalism, etc., which are attributed to economic globalization, have been of great benefit for several people across the globe. At the same time however, you cannot ignore the fact that it has some negative consequences as well. These pros and cons of globalization have to be taken into consideration when determining whether the concept has really been helpful for the world as a whole or not.

Positives
The fact that the world has become a global market has come as a boon for many people. The significant rise in international trade and foreign direct investment over the last few decades has resulted in increase in employment opportunities as well as income. More importantly, economic globalization has also accelerated the rate at which development is taking place in various regions of the world. The fact that countries from Asia have developed in a relatively short span of time as compared to their western counterparts, highlights this fact very well. The giant strides in terms of technological advancement that we have taken over the last few decades has also contributed to this acceleration.

With increasing opportunities, the ability of individuals to generate enormous amount of wealth has also increased by a significant extent. Several corporations have set up plants in other countries of the world as it helps them evade the tariffs or quotas stipulated by those countries. This has also turned out to be quite helpful for end consumer as doing away with import duties has brought down the price of foreign goods by a great extent. With cheap labor at their disposal, these corporations can also afford to slash down the price of their goods without having to cut down on the profit margin - which is again a benefit for the end consumer.

Negatives
Alongside the numerous advantages mentioned above, there do exist some disadvantages of globalization which we can't afford to turn a blind eye to. While several people say that the interdependence between countries is a boon, critics argue that this interdependence that we get to see today is the biggest problem of economic globalization - as the domino effect of economic crisis in one country can result in some severe repercussions on various other countries with whom it shares economic ties. There is no dearth of such occurrences in the past - one of the most prominent one being the Late-2000s recession.

The fact that corporations from the developed countries invest in developing countries of Asia wherein they get cheap labor has not gone down to well with critics who call it exploitation of labor. The critics also cite that the alarming rate at which development is occurring is not coming easy on our natural resources either. There is a little doubt about the fact that economic globalization has also triggered political and ideological tensions in various parts of the world, and that's expected to escalate further as we inch away from the era of military superpower - towards the era of economic superpower.

Lastly, the argument that development of the world as a whole has been taking place has failed to impress the critics - who cite that the interdependence of nations has not done much to help poverty-struck countries of Asia and Africa to come out of this mess, with a significant portion of the world population still reeling under poverty in these countries. With all these arguments, the critics suggest that even though economic globalization is occurring, we are not heading in right direction and the statement from the Commission on Global Governance "a sophisticated, globalized, increasingly affluent world currently co-exists with a marginalized global underclass" supports this fact very well.