Globalization Notes

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INTRODUCTION
Globalization matters because it affects and impacts a wide range of areas such as politics, economics and technology. These affected areas in turn have interconnected implications on countries and firms. In this essay we will explore the pros and cons of globalization on the areas which it affects and what these implications have on firms and countries. Benefits of globalization -There is evidence, from countries of different sizes and regions that as countries "globalize" their citizens benefit, in the form of access to a wider variety of goods and services, lower prices, more and better-paying jobs, improved health, and higher overall living standards. It is probably no coincidence that as countries have been more receptive to global economic forces, the percentage of the developing world living in extreme poverty has been reduced by half. [http://www.imf.org/external/np/exr/key/global.htm] Benefits -Brings about the flow of money. For most of the first decade of the 21st century, international capital flows fueled a global expansion that enabled many countries to repay money they had borrowed from the IMF and other official creditors and to accumulate foreign exchange reserves. The global economic crisis that began with the collapse of mortgage lending in the United States in 2007, and spread around the world in 2008 was preceded by large imbalances in global capital flows. Global capital flows fluctuated between 2 and 6 percent of world GDP during 1980-95, but since then they have risen to 15 percent of GDP. In 2006, they totaled $7.2 trillion—more than a tripling since 1995. The most rapid increase has been experienced by advanced economies, but emerging markets and developing countries have also become more financially integrated. http://www.imf.org/external/np/exr/key/global.htm Proponents of Globalization The risks are not a reason to reverse direction, instead we should embrace policy changes to build strong economies and a stronger world financial system that will produce more rapid growth and ensure that poverty is reduced. [http://www.imf.org/external/np/exr/key/global.htm] However there are also conflicting perspectives on globalization Such as Hyper-globalist who say that nation states are no longer significant, consumer taste and cultures become homogenized, time and space is compressed, the unrestrained mobility of capital and technology flows and the local is transcended by the global. Skeptics who argue that globalization is a convenient myth that legitimizes the neo liberal project. (Hirst & Thompson) draws on quantitative evidence from nation states to assert that we do not have a fully globalized economy. Instead current trends indicate internationalization growing links between discrete national economies or societies and the regionalization or triadisation with the geographical clustering of cross boarder and economic exchanges. It’s not tangible but more of an ideological construction, neo-liberal free market (Thompson, 2000) According to Hirst & Thompson genuine TNCs (Transnational corporations) are rare; most firms are nationally based and trade internationally. The mobility of capital has only just begun shifting investments and employment from the developed countries to LDC’s and it’s only a few of emerging economies that are benefitting. Therefore bulk of the trade is between developed countries instead of it being between developed and developing countries. Major economic powers, centered on the G8 with China and India , retain the capacity to exert powerful governance pressures over international financial markets and other economics tendencies-Economic power is concentrated on a few big countries and also regulated by them (Thompson,2000)Further evidence to back Thomson’s claim is that the processes of localization of economic activities remain very powerful as the clustering or geographical concentration of activities not only persists but is the norm.[...
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