The tendency towards globalization has become dominant at the rise of the 21st century. The idea of the shrinking world, deprived of any boundaries and limitations for its citizens, is gradually becoming the reality we live in. It has made an impact on different aspects of human life, including economy, politics and cultural life, and shifted them into the joint direction of the progressive development. However, the grounding and consequences of the tendency remain open for the heated debates. Is globalization exclusively beneficial for people and the quality of their lives or are there any threats that should not be overlooked in the process of merging different societies into one big community? To give a definite answer, we should delve into the essence of the issue and base our conclusions on the reasonable argumentation.
First of all, globalization is a defining feature of the modern economy, which makes different countries come closer to each other in this perspective. Business and trade become international and connect large commercial groups across the globe. As a result, the wide range of goods and services of the high quality becomes available for everyone at the favorable and competitive price. The increased trade opportunities help to overcome the national boundaries and ensure tight collaboration between separate markets. People get more options for successful employment and manufacturers benefit from the fast spread of experience and new technologies. However, to get the clear vision of the unfolding situation, we should consider as well the disadvantages that are inevitable in the process of economic globalization. The position of the developing and the third world countries can be suppressed by the leading countries that rule the world economy. The same concerns the small business enterprises which can hardly compete internationally and will be forced to go the backstage. All countries will be highly dependant on each other and the general situation can escalate in case of any unpredictable events unfolding in any member state of the world community.
Another aspect of human life that is directly influenced by the tendency towards globalization is connectivity of people across the borders. The advanced technology of the 21st century, i.e. personal computers, mobile phones and social networks, has become the thing without which we can hardly imagine our daily routine. These gadgets have boosted communication between people and made it go far beyond the borders of separate states. People from different corners of the world can get in touch instantly. Making friends with people from other cultures and forming long-term relationships with people, who have similar tastes and interests as you do, is not a problem any more. At this point, we can talk not only about the virtual world, which might seem a bit illusory for some people of the previous generations. Modern means of transport make traveling to remote destinations a piece of cake. People can meet each other in the context of their cultural community and learn more about their way of life. In the globalized world, people can break any established prejudice or biased attitudes to others through honest and engaging communication. Communicating with people across the globe will help us understand that all humans are similar in their needs and inner desires.
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Instead of supporting racial profiling practices, we can build a joint community on the scale of the globe. However, the danger of such close contacts between people consists in the assimilation of smaller cultural communities under the influence of the more popular ones and the neglect of the common historical heritage, which was transmitted from generation to generation.
To sum up, I would like to emphasize that the tendency towards globalization of the world affairs has numerous positive outcomes, which make it seem beneficial for the multiple parties of collaboration. I also support the opinion that the time of segregation and iron curtains between different countries has passed and we should focus on building the world around us by our joint actions. However, the globalization trend should not remain unrestricted because even the most decent intentions can lead to the irreplaceable loss of separate communities. Apart from the globalization trends, we should launch the governmental programs supporting cultural communities and small business. Only the wise usage of any tools can ensure the positive transformation of the world map.
The development of the world economy and international relations becomes vulnerable to the overwhelming impact of globalisation which affects all countries, even though they conduct isolationist policies, such as North Korea, for instance. Moreover, once started, the process of globalisation is likely to be irrevocable. Globalisation is the process of the international economic, political and cultural integration of nations. The economic integration is the major driver of the process of globalisation. Even though many researchers (Dunning, 1998) insist that globalisation has a positive impact on the economic development of the world because the emergence of international trade stimulates the economic growth worldwide, but long-run effects of globalisation may be negative, especially for the poor nations which cannot compete with well-developed nations in the global market.
Background of globalisation
Globalisation has started as the increasing economic cooperation between nations at the regional level and steadily evolved into the global trend. The economic cooperation between countries was the result of the accumulation of capital by leading companies operating in the national market. The accumulation of capital made national markets inattractive for companies because they have saturated them and they needed further export of capital and international market expansion. In such a situation, the international market expansion prior to the globalisation era was not always profitable because of high costs of such expansion. The high costs of international market expansion and, therefore, international economic cooperation between nations, was the result of high fiscal barriers, which local governments introduced to support their domestic economies. The process of globalisation emerged after the beginning of the elimination of fiscal barriers to developer free trade between countries. The free trade implied the elimination of fiscal barriers that stimulated companies operating in different countries expand their business internationally. At the dawn of globalisation, there were interstate agreements involving two or three states, as was the case of the NAFTA signed by the US, Canada and Mexico, but soon such agreements involved multiple parties and, today, free trade agreements involve the majority of nations. At this point, it is worth mentioning the EU as one of the most advanced and integrated international community that united European nations and evolved from the economic union into the supranational political union which unites European countries, members of the EU.
Therefore, the process of globalisation involves the elimination of fiscal barriers and limitations on the movement of capital, goods, commodities, and human resources. The increasing economic cooperation between nations stimulated the development of multinational corporations which operated globally. The overwhelming majority of multinational corporations were based in well-developed countries. Multinational corporations in their turn encouraged governments to eliminate fiscal barriers and develop free trade further to facilitate their further international market expansion. At the same time such policy resulted to the consistent strengthening of the process of globalisation which has become the mainstream trend in the contemporary economic development of the world.
Effects of globalisation on developed nations
Globalisation has had a considerable impact on developed countries. In this regard, one of the effects of globalisation was the development of trade between well-developed nations mainly. In fact, the trade between developed nations comprises the larger share in the total world trade. Moreover, developed nations focus on the trade with each other rather than with under-developed nations which they tend to use as suppliers of natural resources, such as fossil fuels, for instance.
The economic cooperation is beneficial for developed nations because they have technology, capital and well-qualified human resources which are key factors contributing to the competitive advantage of companies in the global market (Martin & Van Gunten, 2002). Developed nations and companies based in developed countries use their technologies to enter new markets and take the dominant position in international markets. They often take the leading position in the global market as is the case of Microsoft, for instance, and develop their business successfully. More important, globalisation involving the free trade opened large opportunities for companies based in developed countries to purchase natural resources and other basic supplies from developing countries. As a result, companies based in developed countries have got an opportunity to decrease costs of production due to the elimination of fiscal barriers and low price of supplies from developing countries. Moreover, they accelerated the consumption of natural resources and other basic supplies from developing countries but purchasing raw materials mainly they sold high tech products to developing as well as developed countries which price was often tenfold higher than the price of raw materials the products were made of.
Foreign direct investment flow also tends to the investment of capital into developed countries mainly, while investments in developing countries turn out to be secondary. Therefore, developed countries prefer to invest into other developed countries because they believe such investments and reliable and safe. In addition, investors investing in developed countries can count on low risk of investment and stable level of income. Such investments are stable and profitable.
Even emerging economies are secondary targets for investors from developed countries. Instead, the US investors prefer to invest into the EU economy, while the EU investors prefer to invest into the US economy. At this point, it is worth mentioning the fact that the investments between developed countries contribute to their accelerated economic growth that allows them to outpace the rest of the world consistently. Developed nations apparently benefit from such mutual investments because they stimulate their economic growth. One of the reasons why investors from developed nations prefer investing in developed economies than in emerging and developing economies is the risk of such investments. In fact, they do not want to take a risk and invest into unstable countries.
Globalisation essay part 2