Globalization involves the free trade of goods and services across international borders. It is a process of increasing global connectivity and international interdependence. Advancement in technology, telecommunication and infrastructure facilitates Globalization. On the economic front globalization consists of two important policies privatization and deregulation. Governments of many countries invite national as well as multinational private firms to invest in the various sectors thereby boosting the economy of the country in turn creating a free economy. As governments across the world realize that they cannot produce enough and stay competitive, instead they decide to focus on governance itself. For this purpose governments cautiously regulate or de-regulate trade policies for business at the same time maintain the socio economic balance in the country. In today’s times globalization is a powerful phenomenon with its own merits & demerits. Further to understand Globalization it is important to first understand the meaning of an open and closed economy.
Closed economy traditionally known as’ autarky’ is a state of self sufficiency and independence. An economy which does not work together with other economies of the world and forbids international trade is termed as a closed economy. It is considered to be a glitch in the current times and may lead to economic isolation. It is an economic approach which concentrates only on internal transactions. All the possible natural resources, physical and intellectual capabilities available within the country are employed to fulfil the needs and desires of the people. As it is an independent economy there is no trepidation of intrusion or intimidation from other countries. Transportation cost such as shipment costs are mitigated in an isolated economy. So, more income is left with the internal economy. Rules and restrictions on goods produced internally are relatively less. Safe products can be ensured as no check...
Please join StudyMode to read the full document