The Advantages and Disadvantages of Globalization

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The Advantages and Disadvantages of Globalization

Prepared by
Ummul Wara

November 2012

Content
1. Introduction - What is Globalization?............................................1 2. Advantages of globalization……………………………………….…2 3. Disadvantages of globalization………………………………….…..4 4. Conclusion – to globalize or not to globalize……………………….6 5. References

Introduction - What is globalization?
Globalization can be defined as ‘international integration’, which can be described as the process by which the people of the world are unified into a single society and functioning together. This process is a combination of economic, technological, and political forces (dictionary.com).  In simple words, globalization means barrier less trade and investment between countries all over the world. It is a free transfer of capital, goods and services across nations creating an interconnected world. Globalization refers to the process whereby social relations acquire relatively distance less and borderless qualities, so that human lives are increasingly played out in the world as a single place. (Jan Aart Scholte) Globalization refers to all those processes by which the peoples of the world are incorporated into a single world society, global society. (Martin Albrow) 1

The idea of globalization is not new, it is been there from centuries when people started moving out from their own country and spread around the world. Following the practice through all these years the barriers are now lowered to facilitate the exchange of goods and ideas. In modern days, globalization got a new level and became easier because of technological development and improved information technology. It helped to grow both interconnectedness and interdependence. Today globalization is “farther, faster, cheaper, and deeper. This increasing 'globalization' has enriched life but also created new problems. Advantages of Globalization –

Globalization has many benefits, like – it can be seen as alleviation of poverty. Globalization creates job all over the world. Factories, industries in developed countries move to poorer, third world countries because of low production cost. As a result jobs are created in those countries and poor people are earning to run proper livelihood. Poverty level is declining and economy is rising in those countries because of the foreign investment. Globalization let countries do what they can do best. If a country is good with technology that country can focus on developing technology and provide it to the world, if a country is good with farming it can focus on that field and make their products available through the world. A country can specialize on its own strength without trying to produce all products by it self which might be expensive. By resource sharing countries can produce at low cost and make products available to customers at lower price. The producers can earn more profit by economies of scale and consumers get benefit of low price and high quality. Companies around the world get wider access to markets. They can invest their fund or expand their outlets in different countries with much greater opportunities, like- greater number of consumer, higher demand and need of the product, more profitability and renewed product lifecycle which is expired in home country etc. 2

Companies can diversify their risk as well in wider market. If something happens to their home country like economy breakdown, expiration of product life cycle, drop of share price the companies do not fall into major risk because they can still earn from their international sections which probably running in a good condition and not exposed to same risk at same time. As companies go global consumers get more options to make purchase decision. They can choose the best product at best price. With globalization the competition between companies (global and local), who target the same market, gets tougher. To survive in the...
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