Economic Globalization

Topics: Globalization, Economics, Economy Pages: 8 (2249 words) Published: June 9, 2013
Introduction

Economic globalization has become the most important feature and a general trend of present world economic development. Globalization is a phenomenon and also a process of development of mankind and human society (Hamilton, 2008). It is the essential feature of the modern age. Globalization is the cross-border flows of capital and goods, including capital, labour, technology and natural resources (Bożyk, Misala & Puławski, 2002). Economic globalization is a historical process, and the germination of it could date back to the 16th century. After the industrial revolution, capitalist commodity economy, modern industry and transportation have been developing rapidly. The world market was fast expanded and the foreign trade was becoming more frequent. Since 1990s, the booming advanced technology, with the information technology revolution as its core, has fast developed. It has not only swept the national boundaries, but also reduced distances between nations and nations (Gills, B. & Thompson, W., 2012). The rise of Internet information technology and the globalization of transportation, information, science and technology and culture have lead to the all-round development of globalization. But Ghemawat (2007) noted that the idea of ‘flat’ world was wrong and the world was in the stage of semi-globalization. El-Ojeili and Hayden considerd economic globalization as the most debated topic within the literature on globalization (2006, p58). This essay will argue that the economic globalization do more harm than good and analyse the reasons and effects of economic globalization.

Bad Economic Effects of Globalization

Weakening of National Sovereignty

Economic globalization has weakened the national sovereignty of developing countries. Under the condition of economic globalization, the power of developing countries in world economic affairs was correspondingly reduced due to the increase of world’s market forces and the constantly expansion of multinational corporation. Especially as production structure is becoming global, actually it is hard for developing countries to fully control domestic production structure. It is obviously contrary to the idea of national sovereignty (Agnew, 2009). Worse, political sovereignty of countries is strongly shocked as well. It can be embodied by the enhancement of international intervention. The independence, safety and territorial integrity of developing countries could be interfered by some powerful developed countries such as the United States . Take China as an example. China formally joined the WTO in 2001. With China’s entering WTO, domestic economic policies were forced to be restrained by international trade rules. The average duty of agricultural products dropped to 15 percent. The average tariffs on industrial products was down to 8.9 percent. And the average tariffs on information technology products dropped to nearly zero (Plappert, 2010). Tariff concession would do harm to China’s competitiveness and lead to the negative protection for enterprises.

World Economic Instability

As business ties between the two countries have grown in the process of economic globalization, the interdependence among nations is unprecedentedly strengthened. Therefore, the ups and downs of the economy and the contagion of international crisis became avoidable. The internal imbalance of any country will reflect its external imbalance (Michie, & Smith, 1999). This kind of imbalance will soon influence those countries that have close trading and investment relationship with it. As a result, all the related countries will put into trouble and imbalance. The Southeast Asian financial crisis of 1997 can be taken as a good example (El-Ojeili, C. & Hayden, P., 2006 ). On July 2ed 1997, the Bank of Thailand was forced to float the baht under the great press of currency. Baht was devalued by 15 percent in one day (McBride, 2002). The currency devaluation stormed Southeast Asia such as...

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