interdependence of countries worldwide through increasing volume and variety of crossborder transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology. •
According to Dr. Ismail Shariff, globalization is the worldwide process of homogenizing prices, products, wages, rates of interest and profits
The term “globalization” is used to refer to these collective changes as a process, or else as the cause of turbulent change.
Globalization relies on three forces for development:
the role of human migration
international trade, and rapid movements of capital integration of financial markets.
The Pros and Cons of Globalization
Productivity grows more quickly when countries produce goods and services in which they have a comparative advantage. Living standards can go up faster.
Global competition and cheap imports keep a lid on prices, so inflation is less likely to derail economic growth.
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An open economy spurs innovation with fresh ideas from abroad. Export jobs often pay more than other jobs. Unfettered capital flows give the U.S. access to foreign investment and keep interest rates low.
Millions of Americans have lost jobs due to imports or production shifts abroad. Most find new jobs–that pay less.
Millions of others fear losing their jobs, especially at those companies operating under competitive pressure.
Workers face pay-cut demands from employers, which often threaten to export jobs. Service and white-collar jobs are increasingly vulnerable to operations moving offshore.
U.S. employees can lose their comparative advantage when companies build advanced factories in low-wage countries, making them as productive as those at home.
Aspects to Globalization
There are 4 aspects to globalization. 1. We are global in our information exchange–obviously the internet is the best example of this. 2. We are also global in our travel–with airplanes and also cars, people move all over the place, and we get to see other countries across the world. 3. Thirdly, we are global in our resource depletion. No society can isolate itself from global environmental degradation.Problems such as air pollution, acid rain, and climate change don’t respect international boundaries. 4. Finally, we are global in our economy. There are 3 aspects to this global spread of capitalism: 1. Production 2. Finance 3. Markets With regards to production, the products we buy are better traveled than we are! There are many social and environmental impacts from this practice of producing goods in the third world for sale in the first. This practice is called the global integration of production. The second aspect to the global spread of capitalism is that of finance–financial trading is now a global practice. For example, you can buy stocks from a company anywhere in the world. The third aspect is that of markets. Nowadays, a seller sees its market as not just Canada, but as North America. The same products are being sold all around the world. Conversely, you can go anywhere in the world and buy the same things; McDonalds is everywhere. This has led to global way of living, but it really has lead to the standardization of life.
1) What is likely to happen to local employment and income distribution when a DC chooses to open (or becomes exposed) to globalization? As is obvious from the discussion in the previous sections, both the theory and the empirical evidence did not give us black and white, clear-cut results, but rather nuanced research outcomes. If one is to be found, a general result is that the optimistic HO/SS predictions do not apply to the current wave of globalization; indeed, neither employment creation nor the decrease in withincountry inequality...