Economic Globalization Term Paper

Pages: 7 (2327 words)  ·  Bibliography Sources: ≈ 11  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics

Economic Globalization

Today the world is much different than what it was 50 years back. We have entered a new phase where the world is aiming to become a global village. Markets, business and consumers have changed and the competition is no longer at a national level, rather it has stepped to an international level. Organizations, firms have to deal with other similar manufacturing or service organizations from across the globe. "Globalization can be described as '...a widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual'" (Anonymous). Economic Globalization in other words refers to two factors which are "economic integration" and "market deregulation."

Economic integration: lowering national barriers to trade and investment. Goods, services and money move more freely throughout the world.

Market deregulation: reducing the role of governments in regulating economic activity. Another term for this is economic liberalization." (Anonymous)

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In economic globalization there should be free trade or what we can call "flow of goods or services." Moreover there should be migration i.e. flow of people and hence the flow of technology and capital. These forms of flows are on the rise today and hence economic globalization is widely seen. Economic globalization has brought with it many benefits with a comparatively less downfall. With the increase of trade and flow of goods from one end of the globe to another, markets from the East are effectively becoming active in the West. To the consumers this becomes beneficiary because due to low labor costs, the manufactured product is much cheaper than its counterpart produced in the United States. Hence the competition increases and a high quality product at a high price comes into market right next to a low priced yet same quality product from the eastern firms.

Term Paper on Economic Globalization Assignment

Trade is an important factor for the economical strengthening of the nations across the globe. The exports would be the input of the money into the country where the imports are described as the output of money of a country or nation. Moreover, due to international trade, the consumers in America have the chance to buy the same goods which the local producers make, at relatively cheap prices which do not affect the quality of the product. It is the trade of one good that a country specializes in with a good that another specializes in. Therefore both import and export are necessary and one cannot exist without another. International trade also reduces the inflexibility of an economy and enhances its flexibility and thus enables it to respond to the changing of the economic condition. Competition increases with trade and thus every organization aims at producing better quality products at lower prices. In practical this is seen in the case of Japan, who in a small time frame has successfully produced low-priced yet high quality products as compared to other competitors from across the globe (John N. Pearson, Jeffrey S. Bracker, Richard E. White., p.20). Import duties and import and export licenses are all forms of trade barriers. Trade barrier is basically any policy formulated by the government or any government regulation which in effect causes restrictions in international trade. Tariffs, quotas and subsidies are more forms of trade barriers and non-Tariff barrier is a type of trade barrier that is not in the usual form of tariff (Wikipedia). Trade barriers tend to raise the cost price of the product and eventually that gives rise to the market price. This is not beneficial to the consumers but it beneficial at times to the local producers. If the import duty is really high then that would bring a significant rise in the product being imported into a country. To explain it in simpler terms; if China produces product "A" at a much lower cost price than our organization, high import duties can increase the market price of the product at a higher price than our locally produced product. This would then cause the consumers to opt for a locally produced product rather than the Asian counterpart. However, generally trade barriers decrease overall economic efficiency. Barriers like quotas are put in importing goods and it limits the quantity of goods that can be imported. This is important in cases where it is feared that trade without this barrier would lead to increased import than export which would affect the overall economy. Tariffs also reduce the amount of goods imported due to the taxes on the goods. If the tariff is high then importing goods would be avoided and domestically produced goods will be used. Removing such barriers is what economic globalization is about.

However, economic globalization also comes with downfalls. It is said that "the underlying anthropology of economic globalization views humans as individuals rather than as persons in community, human beings as essentially competitive rather than cooperative, and human beings as materialist at the exclusion of the spiritual. Economic globalization threatens the diversity of cultures. It has even affected churches, introducing a consumer-based religion and entrepreneurial style of ministry" (World Council of Churches). This is the outlook that some present regarding economic globalization and thus consider it to be a negative effect rather than a positive one. Corporations and organizations today are more powerful as compared to the countries in which they exist and hence they are not answerable to anyone (Sarah Anderson, and John Cavanagh). As a result these corporations formulate their own trade policies and also interfere in national policies. Moreover they also express and exert financial power during election campaigns and try to make sure that politicians beneficial to them come out victorious. Being undemocratic in nature, such organizations also prefer to work in undemocratic countries (R.C. Longworth). In the early 1980s, the model and concept of economic globalization came into effect. The aim for this was to lower inflation and to keep it suppressed. It also equated a country to a household where it cannot spend more than it has and has to keep a positive account balance. Of course many view these to be only theoretical and do not feel that such objectives are being followed. The negative effects occur from rules stating that the barrier of tariffs and quotas should be eliminated. What happens then is that local business get pulverized by the multinational organizations. In 1994 Mexico signed the NAFTA (North American Free Trade Agreement) and as a result farmers growing corn were ruined as they could not compete with the multinational agribusiness in the United States. These then dominated to market and local businesses were destroyed (Tim Weiner). There were accelerated import of corn of cheap value and the United States become the supporter of Mexico for its one-fourth basic grain consumption. Interestingly it was noted that because approximately one million workers became jobless, there was no reverse in the decline in per capita food consumption (Anonymous). This was seen as a downside to economic globalization as multinational take over and small business shutdown due to the high competition. People lose their jobs and many become homeless.

Another major downfall in economic globalization is the concern for jobs. This is due to the fact that with increasing economic globalization, jobs have started to move out of the United States because of the availability of cheap labor in other Eastern countries. Although this has decreased the prices of consumer goods, it has had a negative impact on job opportunities. As a result wage growth has slowed in the United States and has reduced the wages of people who do not possess a college degree. Such workers make up 70% of the labor force of the United States (Mishel, Lawrence, Jared Bernstein, and Sylvia Allegretto., p.178). Subsequently there has been an increase in unemployment. NAFTA alone was the cause of major loss of jobs by the end of the year 2002. With the rise in Off-shoring it is observed that even a college degree does not give any job security. People within the United States are becoming jobless day by day which has very harsh effects on the society and endangers the safety of civilians.

Economic globalization has its perks and downfalls. For consumers it brings the opportunity of purchasing an equally high quality product at much lower prices. For the organizations it creates tougher competition where the aim is to lower the prices further without any compromise in the quality. However as seen, in places like Mexico, economic globalization meant disaster for small local businesses and on the other hand for the United States it is proving to be harmful because of increasing unemployment due to the shift of jobs from within the United States to other countries where cheap labor is available. As a whole economic globalization is inevitable and is also not something "bad." The factors which makes it something negative is its disregard for a civil society, equality of people, environmental protection and the development of democracy. In itself it is not evil but the… [END OF PREVIEW] . . . READ MORE

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How to Cite "Economic Globalization" Term Paper in a Bibliography:

APA Style

Economic Globalization.  (2005, November 10).  Retrieved November 25, 2020, from

MLA Format

"Economic Globalization."  10 November 2005.  Web.  25 November 2020. <>.

Chicago Style

"Economic Globalization."  November 10, 2005.  Accessed November 25, 2020.