The reasons and the consequences of globalization

Topics: European Union, United Kingdom, Slovakia Pages: 5 (1518 words) Published: April 27, 2014

The reasons and the consequences of globalization

Nowadays the process of globalization involves the majority of countries throughout the world. As any other occurrences, it has reasons and entails consequences, which can be as useful for some countries as destructive.

The globalization in a general word sense is known to be the process of the world economic, political and cultural integration and unification [10]. I am going to use the term in this aspect.

What factors have given occasion to globalization development? Of course, I will not embrace all the reasons; let me stop on major points only.

The first item I would note is enhanced technology access. Humanity has developed exponentially that has been accompanied with new invented technologies. It goes without saying that, having become more available, they are not a luxury index now. For example, the Internet. Even 10 – 15 years ago, mostly rich people and developed countries were able to afford to have it. I suppose that the Internet has the impact for globalization in many fields.

Firstly, people have an ability to communicate with foreigners too simpler than without it. Many international social networks exist, such as Twitter, Facebook etc.. Also the program ICQ and its analogues are known to be popular among Internet users.

Secondly, the Internet affects business. Most of all, companies enter into transactions with the help of the Internet that is faster and cheaper. People also use the Internet to make purchases [11].

Thirdly, the Internet is the biggest data base which transplaces libraries gradually [11]. To my mind, these knowledges concern all the countries and people from all of them have the access to these human learnings.

However, the globalization had started before the Internet became popular, of course. In the essay I am speaking about dramatic globalization growth occurred after the Second World War.

After the War, new technologies led to fast overseas, rail and air cargo

transportations [6], that speeded up commodity circulation. In addition, it should be named as the second reason of globalization, because new technologies in this field have become conditions (I mean increased commodity circulation) for multinationals developing, but how? I consider, that companies try to reduce their expenses looking for a cheap labour, usually in other countries, especially when their local market becomes saturated. Increased commodity circulation in this case makes producing of goods more intensive.

I would like to give an example. In 1991, the profit of Adidas AG reduced twice. This period was a crisis for the enterprise until Robert Louis-Dreyfus became the new CEO of the company and output the fabrication beyond Germany in Indonesia, China and Thailand where the labour was cheaper. New technique availabilities allowed Adidas AG to transport some parts of production from developing countries in other states whose markets demanded their products in a short time [1]. I suppose, it in turn served to increase commodity circulation and possibility to compete the company in a global market.

I think that everyone cannot but agree with me that multinationals developing is an integrated part of globalization, because, to my mind, global company comes in a host country opening affiliates and (or) acquiring subsidiaries. However sometimes global companies affect country of operation economy negatively. It is one of destructive consequences that globalization causes.

Most often, I believe, that they pose a real threat to local businesses, which are not able to compete with their guests. For example, since early 2000-s some Russian washing powder manufacturers admitted their unability to compete with multinationals that operate in Russia. These native firms do not live and do not develop in Russian market: they just try to survive. Particularly, the «Stupinsky chemical factory» whose brand is «5-plus» could conquer in 2007 only...
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