The emerging technologies have turned the world into a small global village where all the geographical barriers that existed before have completely been eliminated. The emergence of transport and communication technologies has made it possible for people to move and communicate easily irrespective of their locations around the world. In this paper, the researcher argues that globalization has a positive effect on the world economy.
The improvements in the field of communication have made it possible for multinational corporations to operate in many countries while having a central command where all instructions are issued. The advanced means of transport have made it possible for businesspersons and goods to move from one part of the world to the other as each country tries to share with the world what it produces in excess and get what its economy cannot fully provide. The exchange of goods and services and ideas among countries in the global society is very critical in achieving economic prosperity in modern society.
What is Globalization?
Globalization is defined by Rodrik as “the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange.”1 As shown in this definition, globalization refers to the interconnectedness of countries around the world through trade and cultural practices. In the past, it was almost impossible for events taking place in one kingdom to be known by people in far off kingdoms because of the geographic restrictions that made movements and communication very limited.
However, this is no longer the case in modern society. Globalization has made it possible for people to share information seamlessly and in real-time. An event that takes place in New York will be known to the global society in real-time as social and mass media compete to inform the world.
What are the impacts of globalization on the world economy?
Globalization has a massive impact on the world economy. According to Rodrik, a critical analysis of the trend that globalization has taken reveals that it has a massive positive impact on the global economy.2 Different countries are gifted differently based on factors such as geographic location, climatic conditions, population, level of technological developments, among other factors. As such, it is common to find cases where a country is forced to find a market for the products that it has in excess as a way of developing economically. Globalization has also made it possible for a country to buy resources that are available in limited amounts.
According to Rodrik, international trade is what is now defining the economic power of countries in the global community.3 China’s economy has experienced massive growth to become the world’s second-largest because it exports more than it imports. The Middle East is one of the driest regions on earth hence it cannot support agriculture. As Rodrik notes, one can easily argue that this region cannot have a sustainable economy because of the perceived hardship caused by limited rainfall and very high temperatures.4 However, it is strange that some of the countries in this region are richer than others in other parts of the world with favorable climatic conditions.
Qatar, for instance, has one of the best per capita incomes in the world, ahead of major powers like the United States, Japan, China, and the United Kingdom. This has been made possible because of globalization.
The economies of countries in the Middle East entirely rely on international trade. This region is richly endowed with oil, one of the most important commodities in the global society. Globalization has provided these countries with a wider market that needs the products that they have in excess. The same case applies to most of the African countries that are richly endowed with minerals and agricultural products. South Africa is a good example that demonstrates the positive impact of globalization. The country has the second-largest economy in Africa primarily because of its exports. It is richly endowed with gold, one of the most precious metals in the world. Gold earns the country’s foreign exchange that it uses for various developmental projects.
Soon after the Second World War, the United States economy surpassed that of the United Kingdom to become the world’s largest economy because of the globalized society. The United States was able to use its superior technological capabilities to improve its manufacturing sector.
It quickly became the world’s leading exporter of technology-based products. From cars, planes, ships, electronics, and pharmaceuticals to weapons, films, and the internet, the United States quickly became the focus of the world in terms of economic power, thanks to a globalized society. Japan was able to follow the footprints of the United States and it was the world’s second-largest economy before it was overtaken by China. Currently, it is ranked third after the United States and China.5
There is no single economy that can be considered independent in the modern globalized society. Imports are just as important as exports to a country’s economic growth. As mentioned above, the climatic conditions in the Middle East are not favorable for agriculture. Huwart and Verdier say that this region relies on imports from various parts of the world to feed its people.6 The economies of these countries are flourishing because the locals have enough food that comes from other parts of the world. Without the imports, it may force people to emigrate from this region despite the rich oil reserves. It would mean that the economy of these countries will be destroyed.
Africa is a region that is rich in minerals and most parts have a good climate that can support agriculture. However, it is lagging in technological advancements. As Picton notes, it does not mean that these countries cannot enjoy the benefits of technology that is available in other countries.7 Some of the top cars are driven in Africa thanks to globalization that makes it possible for the continent to import what it cannot produce. Africa is open to the rest of the world because of the improved communication system that is backed by Western civilization. Mobile phones are now playing a critical role in the development of Africa’s economy. Most of these phones are imported from the United States, China, South Korea, and Finland.
It is easy to believe that it is only the technologically-challenged countries that rely on importations to sustain the growth of their economies. Europe and the United States, which are believed to be the most developed regions around the world, still rely on imports for their economic development. The relationship between Japan and the United States’ aviation sector demonstrates this in the best way. It is often believed that planes are manufactured in the United States and Europe.8
What many people fail to understand is that parts of these planes are manufactured in other countries. Japan manufactures parts of Boeing’s engine and exports them to the United States. In this case, the United States will be importing these parts as a way of enhancing its aviation industry. Japan, on the other hand, is forced to purchase planes from the United States, and sometimes Europe, to support its aviation sector. The symbiotic relationship that is brought about by globalization is very important for the growth of various economies.
The benefit of globalization is not exhibited in trade alone. The sharing of cultures and ideas is also very important in the modern globalized society. According to Huwart and Verdier, the economies of countries around the world are now run by closely related concepts because of their ability to emulate the world’s best practice.9 A good example is the taxation system. The progressive tax system is a concept that was developed in Europe. It was considered appropriate because it protected the poor by making the rich more responsible for financing the government. It spread very quickly to other countries and currently it is the most common tax system in the world. The spread was made possible by globalization.
Some of the cultural practices in some parts of the world were considered retrogressive and against economic development. A good example is female genital mutilation and subsequent marriage of teenage girls in various parts of Africa. This practice denied many bright girls opportunities to get an education and gain economic independence in their communities. They would be stopped from going to school soon after this gruesome procedure.
This would happen when they were either in the lower or upper primary. Some of them were as young as 12 or 13 years. They would be forced into early marriage as second or third wives. Lakshmi says that such practices deny these girls the opportunity to play leading roles in the economic development of their countries.10 Through globalization, the plights of these girls have been brought to the attention of the global community. There has been a massive campaign led by local and international organizations in these regions to help stop this practice.
The efforts of global society are bearing positive fruits.11 These societies have come to realize that the practice is limiting their economic capacity and the economy of their country in general. These girls are now able to continue with their education to advanced levels and this is benefitting their economies as the number of skilled labor increases.
According to Tonkiss, globalization has transformed sports from a simple recreational activity to a major economic activity that is benefiting economies of various countries around the world.12 In the past, games like football and wrestling were events meant to pass time and entertain people during major events or leisure time. However, in the modern globalized society, footballers are some of the best-paid athletes. Most of the professional footballers earn more than top executives in the United States.
It means that an individual who would have been working as a laborer because of the massive physical strength and limited academic qualifications can now earn hundreds of thousands of dollars per week as a professional footballer. Football, and many other sports for that matter, is now a lucrative industry that is greatly benefitting countries such as United Kingdom, Germany, Spain, and France among others.
The economy of a country is just as strong as its education sector, especially the involvement of institutions of higher education in research. The world is now facing some challenges related to issues of technology, terrorism, and culture among others which directly affects development. Lakshmi warns that a country cannot rely on external solutions to solve all its internal problems. It must have its internal mechanisms developed based on local forces in the environment.13
That is why the development of the education sector is of great importance to the success of a country. Lakshmi states that globalization has played a critical role in the development of education in various parts of the world.14 Institutions of higher learning are now able to share scientific findings through various programs. Such institutions in the United States can easily share their scientific findings with others in Germany, the United Kingdom, France, or Japan. Using these globalized ideas, these institutions can then develop solutions for their local economy.
The findings from the lecture notes demonstrate that since globalization has had immense positive benefits, it is fair that some of its negative impacts are mentioned in such a critical paper as this. In the notes, there is the mention of the role of religion in championing what the extremists believe are their rights. In the English Revolution of 1642-1645, King Charles of England and Scotland was brutally murdered by protestant Christians, the Presbyterians, who felt that church was under massive control of the government.
They demonstrated to the global society that religion could be used to champion for radical views and to justify murder. Currently, a section of Muslims is using the same rhetoric to force their government to follow principles they feel are right. The consequences of such extremism have been evident in the destruction of many economies in the Middle East, especially in Iraq, Syria, Afghanistan, and Yemen.15
In the class notes, it is stated that Singapore is currently facing serious threats in the electronic markets that it dominated a few years ago because of the emergence of South Korea and Malaysia as major manufacturers and distributors of electronics. This statement shows that international trade, which is made possible by globalization, can sometimes be a threat to a country’s economy. Singapore once had the most vibrant economy in this region because it dominated the electronics market and other related industries. However, several Southeast Asian economies have strongly emerged and are subjecting the economy to very still competition. It means that the growth of the country’s economy has been reduced significantly.16
The class notes refer to Adams Smith’s money politics and how it affects the economy. In the modern highly globalized society, money politics have shifted from the national level that Smith was talking about to the global level. Financial syndicates led by top political class are using their political power to achieve personal and political interests. A good case is the recent Panama Paper leaks. This was a global problem that affected many countries from Europe to Asia, Africa, and the Americas.
The syndicate involved rich politicians who use their influential positions in government to commit an economic crime against their own countries. Globalization has made it easy for the political class to steal from their people and hide their loot in other countries, leaving their economies bleeding. This is one of the biggest problems that have hindered economic growth in Africa.
In the class notes several benefits of globalization, which are discussed above, are further emphasized. In the notes, it is stated that Singapore is now competing favorably with Australia in the global insurance market. The notes show that through globalization, the economy of Singapore has been highly diversified. The country no longer has to rely on the manufacturing sector alone that is now dominated by South Korea and Malaysia. It can take advantage of the service sectors that are yet to be flooded.
This study focused on globalization and its impact on the global economy. It is clear from the discussions and analysis of the literature that the world is increasingly becoming a small village where people can easily interact, trade, and share ideas for the betterment of their economies. The study shows that although there are a few negative implications of globalization, the benefits are more significant. No single country can claim to be independent of other nations irrespective of its level of economic and political development.
The concept of importation and exportation works well for both developed and developing economies in the globalized society. As such, countries need to come together and address some of the challenges that are associated with globalization, especially the problem of terrorism and economic crime which are becoming very common.
Huwart, Jean-Yves, and Loïc Verdier. Economic Globalization: Origins and Consequences. Paris: OECD, 2013.
Lakshmi, Narasaiah. Globalization and Economic Development. New Delhi: Discovery Pub. House, 2008.
Picton, Oliver. “Shrinking World? Globalization at Key Stage 3”. Teaching Geography 35.1 (2010): 10–14.
Rodrik, Dani. The Globalization Paradox: Democracy and the Future of the World Economy. New York: W.W. Norton & Co, 2011.
Seay, William. “The Origins of Political Economy ECON101”. Virginia Commonwealth University, 2016.
Tonkiss, Fran. Contemporary Economic Sociology: Globalization, Production, Inequality. London: Routledge, 2007.
- Dani Rodrik, The Globalization Paradox: Democracy and the Future of the World Economy (New York: W.W. Norton & Co, 2011), 41.
- Ibid, 44.
- Ibid, 49.
- Ibid, 52.
- Jean-Yves Huwart and Loïc Verdier, Economic Globalization: Origins and Consequences (Paris: OECD, 2013), 32.
- Ibid, 47.
- Oliver Picton, “Shrinking World? Globalization at Key Stage 3,” Teaching Geography 35.1 (2010): 11
- Ibid, 12.
- Ibid, 14.
- Narasaiah Lakshmi, Globalization, and Economic Development (New Delhi: Discovery Publishers House, 2008), 48.
- Ibid, 52.
- Fran Tonkiss, Contemporary Economic Sociology: Globalization, Production, Inequality (London: Routledge, 2007), 56.
- Ibid, 61.
- Ibid, 77.
- William Seay, “The Origins of Political Economy, ECON101,” Virginia Commonwealth University, 2016.