Globalization: the Good, Bad and the Ugly

Topics: Economics, Globalization, Developing country Pages: 7 (2310 words) Published: April 19, 2012
Globalization: The Good, Bad and the Ugly
Submitted By: Group 6
G11003, G11024, G11044, G11055
Batch: GMP 2011-12

The Good
As we know from the simple principle of microeconomics that” people face trade off”. We are better off when we trade off. People have to give up something which they have to get something which they do not have. What globalization has done to the human kind is beyond imagination. We have the access to resources which one could not even think of before globalization. There are five factors of production, land, labor, capital and organization. These are the resources which are leveraged to optimize the production of goods and services. After globalization market has become free and every country has access to each others’ resources. There are two things which work, one the country is benefitting because of export and the country is able to generate goods, services and employment by exploiting other country’s resources. So both of them are complementing each other and participating in mutual development. If you look at the tag on your shirt, chances are you would see that it was made in a country other than the one resides. What's more, before it reached your wardrobe, this shirt could have very well been made with Chinese cotton sewed by Thai hands, shipped across the Pacific on a French freighter crewed by Spaniards to a Los Angeles harbor. This international exchange is just one example of globalization, a process that has everything to do with geography. As more money is poured in to developing countries, there is a greater chance for the people in those countries to economically succeed and increase their standard of living. Global competition encourages creativity and innovation and keeps prices for commodities and services in check. Developing countries are able to reap the benefits of current technology without undergoing many of the growing pains associated with development of these technologies. Governments are able to better work together towards common goals now that there is an advantage in cooperation, an improved ability to interact and coordinate, and a global awareness of issues. There is a greater access to foreign culture in the form of movies, music, food, clothing, and more. In nut shell we can say that the world has more choices. After the industrial revolution, the availability of "capital" or investible resources became the most dominant source of comparative advantage. Globalization is a country’s participation in international capital flows, particularly Foreign Direct Investment (FDI). As we know, annual flow of FDI across the globe is more than $ 1 trillion. Same is true of Foreign Institutional Investment (FII). Availability of capital and productivity are still crucial in determining a country’s growth rate. However, there has been a dramatic change in the global mobility of capital, and national boundaries are no longer important determinants of sources and uses of capital. A dramatic illustration of this is the fact that the most developed country in the world, which enjoyed unprecedented growth during the 1990s, is actually a capital-importing country, i.e. the United States. Similarly, the fastest growing developing country, i.e. China, is one of the largest recipients of capital from outside. Economic integration is a powerful force for raising the incomes of poor countries. In the past 20 years several large developing countries have opened up to trade and investment, and they are growing well — faster than the rich countries. There is no tendency for income inequality to increase in countries that open up. The higher growth that accompanies globalization in developing countries generally benefits poor people. Since there is a large literature linking income of the poor to health status, we can be reasonably confident that globalization has indirect positive effects on nutrition, infant mortality and other health issues related to income. Globalization is good not...
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