Globalization Comparative Essay - Pros and Cons (Using Harvard Citation Style)

Topics: Economics, Developing country, Developed country Pages: 5 (1658 words) Published: November 23, 2012
From the 20th century to today, with advanced communication and transport possibilities, grows the ratio of companies and countries providing wide scale of investments and business activities internationally. Moreover, the number of people migrating across the globe is significantly increasing. In other words, the world as we know it today, is different than the world of yesterday. Thus, it is changing into one huge, global, village. The term ‘globalisation’ interprets “worldwide integration and development.” ( 2012) Like every change, especially those of such a massive volume, also the model of globalised and integrated world is dividing society, not only academic, into two different argumentative positions. Proposition and opposition. Many people believe that the globalisation causes more negatives than positives on the economies of countries in the world. This essay discusses various impacts of globalisation on economies considered from two common points of view. Primary are compared positives and negatives caused by integration of countries worldwide. Subsequently, it is necessary to realize the importance of the ‘Third world’ in the process of globalisation, therefore this essay also investigates the case of developing countries and various benefits for them as well as the crucial damages caused by liberalisation of their economic environment and entrance of powerful multi-national corporations into local markets. One of the basic characteristics of an integrated world is that countries are more likely to help each other in the case of economic problems, because they are interdependent. Companies invest internationally, governments cooperate and sign bilateral or multilateral international agreements and establish unions (Commonwealth, NAFTA, EU,…) to simplify trade and flow of capital. Moreover, bank sector operates with the assets all around the world. All these examples belong to the category of international trade. With the formation of world market and multinational investments is strongly connected the sharing of interests spread worldwide. Therefore, “international trade is taken to be an indicator of interdependence, its high and with some interruptions rapidly growing values are accepted as evidence of the increasing interdependence of nations.” (IMF 2001) If conditions in countries are sound and economic environment healthy, businesses are making profit, export goods and pay income tax and CLO fees. On the other hand, if one country has various financial or debt problems, economic performance of particular region is weak. Businesses are making loss or are less likely to enter the market and international trade decreases. This fact motivates states to protect each other from the bankrupt and keep economic environment healthy. For example in European Union is established European Financial Stabilisation Mechanism for the purposes of protecting states from the bankrupt and keeping economic performance satisfactory. “This mechanism provides financial assistance to EU Member States in financial difficulties.” (European Commission 2012) Globalisation leads to increase in rich-poor gap. In terms of rich-poor gap is meant the difference in wealth between ‘rich north’ and ‘poor south’, in other words, developed and developing countries. Only wealthy companies can provide financially demanding investments across the borders. Considering fact that firms are profit-maximisers, substantive reason for investing of capital and resources in developing countries is expense reduction; consequently they are enlarging profit. Costs of labour and production intakes, as well as taxes, are not inconsiderably lower than in developed countries. However, all the profit made in developing world flows back to the developed world. According to United Nations Conference on Trade and Development, in year 2007 was net inflow of capital into developing countries 196.9 bill. USD and overall export of capital was...
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