Essay: Global Trends

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Globalization is quite a highly complex and controversial complex, it is not a new phenomena but just a continuation of initial developments that have been going on for some time now. However, the current trend of the globalization of economic activities is qualitatively different but as the world has definitely stopped being a collection of economic agents that are relatively autonomous which are marginally connected and are more or less not affected by the events that occur in their neighborhoods. Presently, globalization involves various features but the main ones are; the internationalization of the production followed by changes in the production structures, the expansion of trade in both services and trade and finally the deepening and widening of international flows of capital ( Mrak,2004).People around the world are more connected to each other that it was before. Information and money now flow easily and quickly that ever before. Goods and services that are produced in one part of the world are now easily and readily available in all parts of the world. International trade is now a more common occurrence and international communication is a more common place now.

Globalization is now a process that is progressive and strongly so hence is unlikely to be reversed. Therefore this calls for analysis of future policy alternatives for various regions and countries which are in existence in the context of the global economy with the free trade of services and goods, the free movement of capital, skills and technology advancement and the improvement of both transport and communication links. Despite of the differences that exist among the regions of the world, there are some convincing arguments in existence that call each of these regions to come up with a design of its strategy on how the will deal with the challenges that come with globalization (Reich, 1998).

Globalization is quite a controversial process and it is generally claimed that globalization underpinned by liberization of each of the economic policies as well as advancements in technology comes with both benefits and challenges. Globalization is an economic tidal wave which is sweeping all over the world.it can not be stopped and with it there are both winners and losers .this paper will look at whether the cost of globalization outweighs its benefits.

We will first take a look at the benefits of globalization to the various countries in the world. The good side about globalization is the fact that it comes with a lot of efficiencies and opportunities that are created by the open markets. There is the ease of communication among businesses which is both efficient and effective with partners, suppliers, the customers and there is better management of inventories, supplies and the network of distribution. through globalization it is easy for local producers to sell their products in far away markets with the same speed and ease as it occurs in their own countries.an example is how Sony corporation (NYSE;SNE) can be bale to sell its TV and games with the same ease it sells in New York as well as Tokyo.in the same way Intel (NASDAQ:INTC ),Apple (NASDAQ:AAPL) are able to sell their high tech gear just with the same ease in Tokyo like in NewYork.at the same time with globalization comes the ease of credit and raising of leverage as the flow of money takes places easily across the national and local boundaries and the creditors do not despise or create a distinction between bad and good borrowers hence aggregate demand is boosted sThis sets the world economy into a virtuous cycle of both employment and income growth; and easy credit and the leverage of fuel financial bubbles which are channeled into a euphoria that encourages the virtuous cycle. Therefore globalization is seen as a promoter of economic growth, leads to creation of jobs, makes companies more competitive and leads to the lowering of prices for consumers all as a result of the world being turned into a global market due to globalization (Collins, 2010).

As we know a coin has two sides having looked at the first side of globalization which is the benefits it is only fair to also look at the challenges that come with globalization and after making a comparison between the two we will come out with a conclusion of whether or not the cost of globalization overweigh its benefits. The bad side of globalization pertains to the new risks and uncertainties that are brought about by the high degree of integration of the local and international markets, intensified competition, a high degree of imitation, swings of prices and profits and a general destruction of businesses and products. Corporations that have been enjoying the benefits associated with globalization are now faced with an unstable and unpredictable demand. Their business opportunities and products are quickly turning into commodities hence leaving them with very little or no power setting prices and they are under constant pressure by the new competitors who are making it almost impossible for them to make any profits (Collins, 2010).

Another bad side of globalization revolves around the tight credit, deleverage and the decline in flow of money across the local and national boundaries, this is due to the fact that creditors are tightening their credit on both the good and bad borrowers, there is a depressing aggregate of demand; this leads to the setting up of the world into a vicious cycle when it comes to employment and income declines; leading to the succession of the existing euphoria by pessimism as well as the busting of asset bubbles that perpetuates the downward spiral of the entire economy in the world.an ugly side of globalization is when the local and nations communities are trying to run away from this vicious cycle that has been created of declines in income and employment through simultaneous devaluations of currency and through raising of trade barriers which in essence put an end to globalization and gave rise to trade wars which was the case in the 1930 ( Fischer,2003).

Globalization is a process that is highly uneven and there are numerous facts that can be used to support this. For instance the growing of trade is not resulting to a more equitable distribution of the comparative advantages that are underlying. The DFI are quite concerned with the 10 developing countries that account for over three quarters of the inflows of FDI to this part of the world. These same inequalities exist when it comes to the generation of new knowledge where only a small number of countries still dominate most of the innovations.

There are those who win and those who loose when it comes to globalization and this applies to both different countries in the world and also the different population groups within the individual countries. There appears to be an increased growth in inequality among various countries as a result of the process of globalization. The fact that some countries are winners and other are losers in the process of globalization is a clear indication that there are significant differences that are in existence among these individual countries when it comes to their abilities to cope efficiently with the challenges that comes with globalization. For developing countries and countries that are undergoing transition, their performance when it comes to globalization is measured with their level and speed of integration into the global economy. There are two very crucial factors the first one is economic growth; a quarter of developing countries that had integrated most quickly before saw a growth of almost 3 percentage points as compared to the slowest integrating quarter. The second factor is quality of policies that are in existence in these countries. There are three types of policies that affect the speed of integration of; those that affect macroeconomic policies, FDI regimes… [END OF PREVIEW]

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