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Defining Globalization and Its Effects on Current Trade Essay


Introduction

Globalization began in the olden or ancient times as people migrated from Africa to other parts of the world in search of a better life. During those days, people moved freely with limited boundaries thus promoting trade among communities. The trading communities carried different trading items, such as precious stones, spices, foodstuffs and other commodities as they proceeded to carry out their commercial activities. This encounter promoted cultural influences from one trading community to another. Among the many agents who contributed to early globalization were explorer, missionaries, soldiers and most importantly, the merchants.

In the olden times, clothes made of silk attracted nearly all women in the Roman Empire. However, to access the precious clothing material, the empire had to import from China. This, therefore, led to the emergence of Silk Road – a trade route where Romans traded silk and other items with Chinese as well as other foreigners; this trade route spread to other parts of the world like Venice, Mesopotamia and even North Africa. However, the trade was not free, since the Roman government had imposed taxes and custom duties on the items that were imported. This process, however, was not without a few controversies; the then leaders feared that the silk clothes were wearing down the cultural values of the time. They argued that the clothes were transparent and thus there was no difference between them and a naked individual. The imported silk, however, hit other competing textile manufacturers economically with their markets reducing dramatically. In a significant capacity, this whole process signified globalization. (Goldstein 2007, p.3).

Body

Globalization is a common term, widely used by various individuals in dissimilar capacities thus leading to varied definitions of the term. Considering one of the many definitions, globalization is whereby world economies achieve a unified stance by eliminating international trade hindrances such as trade tariff, import duty and exporting fees (Bodreaux 2008, p.37). On the other hand, scholars such as McGrew and Held described the process as the spreading out of a system of capitalism around the world (Held & McGrew 2002, p.67). In addition to Mc Grew and Held’s ideologies, other economic scholars also defined globalization as free trade among countries, which incorporates elimination of tariffs and other obstacles to the liberated flow of labor, goods capital and services.

Due to globalization, countries develop economically, socially, technologically and culturally due to the existing nature of interdependence (Beck 2000, p.11). Since the human population is increasing significantly and that no country can suffice itself solely, international trade sets in as the appropriate solution to such situations. Therefore, from the above arguments, it is clear globalization is a sure depiction of the current world trade. This is evident by how globalization has brought the human race closer to varied goods and services, information, and culture exchange. Many parts of the world, for example, have had a better share of innovations and inventions that have made globalization process fast and thus promoting tremendous trade integration. Technological innovations have conquered or dominated today’s world particularly in developed nations or countries. These nations promote their newly developed products globally thus promoting global economic integration.

Factors promoting globalization

Several factors encourage globalization process, among them being transportation. For instance, during the exploration or ancient age, people invented the sea vessels to travel and look for new lands for colonization. Explorers such as Christopher Columbus used these vessels to search for countries with useful items such as gold in order to enrich their mother states. Eventually, this process ended up with strong European countries invading or colonizing other weaker countries that had valuable natural resources.

In the current world, numerous transportation networks have aided in the quick delivery or shipment of commodities and services various parts of the world. This has not only reduced cost but also saved time. Most countries, for instance, have international airports that ferry individuals to nearly all corners of the world daily. Additionally, current sea vessels are considerably large thus able to ferry bulky commodities in facilitation of international trade. Such worldwide transportation capacity has boosted international trade in an incredible capacity (Tiffin & Kissling 2007, p.7)

In addition to transportation, another major factor that has greatly contributed to globalization is technology. Technological advancements began after the Second World War whereby information and communication development improved significantly. However, in the recent times, telephone cables that transmitted analogue signals were replaced by integrated switches, which transmits massive volumes of information in digital form, cheaply and incredibly fast. The internet, conversely, has become a vital platform upon for traders to communicate efficiently from all corners of the globe. This is possible by the introduction of social network sites such as Facebook and Twitter, which promotes easy and fast global communication thus promoting trading activities.

In addition, Tele-conferencing has also helped many entrepreneurs share business ideas without having to hold meetings physically. These days online shopping has become rampant in many countries due to enhanced communication capacities. The media has also become a great tool in advertisements; a person only needs to watch television and read newspapers to know the availability of most goods. The media also informs people of the events happening around the world at the comfort of their homes (Eriksen 2007, p.40). Current examples of media communication include BBC and CNN, which their broadcasters situated in almost all worldwide countries.

Also, due to the advancement in technology, high quality goods are being produced in large volumes very fast. Japan, for example, the Toyota Company produces millions of vehicle faster and efficiently due to the inventions of robots and artificial intelligence. These vehicles find their market in every continental territory. The Nokia Company on the other hand, has invested in many countries and it has been one of the leaders in mobile phone production and sale across the globe.

Banks and other financial institutions have greatly helped both local and international trade; cash transactions are fast, safe and efficient. With the electronic funds transfers’ agents such as the Western Union and Money-gram, people are able to work abroad and still assist their families financially. Moreover, through worldwide economic entities such as the World Bank, countries are able to access loans and grants and hence steer their economic development. Qualified individuals can also acquire loans from their mother countries and invest in foreign countries as well.

Political revolutions have also been on the forefront in accelerating the globalization process. For instance, the former communist USSR collapsed and then formed independent countries that copied the West in their system of politics and economic aspects. This incorporated them to the global community. The introduction of regional and inter-state governing bodies has also geared globalization process in an extensive capacity (Martell 2010, p.216). Some of such bodies include the EU and the UN, which tend to bring member countries to a common political ground.

Democratic governments arose after the end of the cold war. As countries embraced democracy, they set up policies that promoted free trade. This was seen as a big leap in economic development because countries could acquire good and services that they did not have as well as trade excess products. Japan, for example, gave Kenya agricultural machinery in return of farm produce.

Since the inception of the capitalist system of economy in many states, people now privately own companies and thus work towards maximizing their profits. Their quest for profit maximization has therefore forced them to seek for markets abroad, which in turn enhances globalization.

Cheap labor has eased the progress of globalization. As great economies venture into developing countries, they enjoy low cost labor as compared to the ones provided by the natives. This acts as a motivation to their business endeavors and as a result, they maximize profits. Also due to the availability of resources, the raw materials are mostly cheap, whereas, the production output is usually high.

Market of goods and services is always available in foreign countries as opposed to mother countries. This occurs because countries are able to produce more than their country can consume, therefore, such surplus are often sold to foreign countries. As mentioned earlier, they also acquire what they produce in low quantities or do not produce at all. Additionally, due to the limitation of the local market, many companies see the need of the expanding their business outside their borders and thus take full advantage of their companies’ profitability. Moreover, stiff competition from local rivals has also made several companies look for ‘greener pastures’ in foreign countries where there is massive likelihood of market growth (Ali 2000, p.197).

Furthermore, there has been an influx of experts and intelligent local personnel. This has been brought about by the fact that more institutions of higher learning are being created and education opportunities are accessible to more people than before. As a result, job opportunities for the trained experts are limited and competitive. Consequently, these experts cross the borders of their nations to look for jobs or better pastures.

Globalization has not been without a fare share of negative factors that have hindered it. One of them is heavy import duty enforced by some governments. Countries that are opposed to globalization impose heavy tariffs on imported goods as a way of discouraging globalization. A good example is the Chinese government that has enforced a 200% tariff on imported vehicles in order to promote market for their locally manufactured vehicles.

To add to that, before a country ventures into a foreign country, it has to clear with so many legal documents that are costly and time-consuming thus discouraging globalization. Heavy taxes are also imposed on foreign investors as opposed to the local investors. Some foreign entrepreneurs also do not know where to get cheap labor and raw materials to aid in their production (Stegers 2009, p. 22). The host government fails to assist foreigners in a bid to promote local traders. This leads to investors incurring huge losses and thus discouraging them to invest further.

Moreover, political instability in nations may hinder globalization. Some countries, especially in Africa and the Middle East, have had civil wars for many years now. This has been brought about by tyrannical kind of governance and incumbent corruption. As a result, globalization process has been dented, as entrepreneurs are unwilling to invest in such countries. To curb this, international organizations such as the United Nations need to intervene and stop these political upheavals.

Culture has also significantly slowed the progress of globalization. Moreover, some countries have openly campaigned against globalization, since they think that globalization will wear down their valuable cultural values. In addition, globalization is viewed by some countries as a “western thing” imposed to their country. If the globalization process is to continue, these impediments must be done away with forthwith. Some cultures see the ‘western’ dressing, music and videos as being unethical.

Some even view technology as a threat that could scrape off their conserved cultural values and cannot embrace it. Another hindrance to globalization is the existing language barrier. Different nations have different national languages and thus effective communication is affected. This lowers productivity, as instruction giving is low. It may also lead to additional costs because there will arise the need for an interpreter.

There have been countless debates as to whether globalization is beneficial to people or detrimental. In spite of whatever conclusions, globalization is here to stay. Among the many positive effects of globalization are the excessively created job opportunities. Developing countries have limited access to capital, which encumbers development of local companies resulting to unemployment. Fortunately, as many companies from developed nations delocalize their coverage, foreigners benefit from the created employment opportunities. This in turn improves the living standards of the local populace.

Conversely, globalization has massively promoted the growth of healthy competition within commercial markets. Numerous companies offering similar products are being set up in most countries by foreign investors. This has made local companies to improve the quality of their products in order to compete with foreigners. Consequently, organization promotes the manufacture of quality commodities, which proves satisfactory to consumers (Bella 2010, p.24). Current example of such instances is the mobile phone firms Nokia and Samsung that compete in making “state-of-the-art” mobile phones, in order to, utterly, satisfy their customers.

Globalization has also encouraged specialization in various perspectives. Countries now embark on producing goods and services that they can best produce at the most limited possible time. Additionally, outsourcing has helped in the production of high quality goods. Privatization of many companies has greatly rescued many companies that were on the brink of collapsing. Investors have injected a lot of capital on these companies and thus improving their productivity and profitability. This has helped in creating employment for locals thus improving their living standards.

In an extensive capacity, globalization has extensively eased the access to information and cheap communication across the entire sphere. With the advancement of technology that has seen the introduction of mobile phones and the internet, people can share information when they are thousands of miles apart. This goes a long way in improving international understanding among nations.

As many foreign investors put up companies in a country, the flow of foreign capital increases (Weinstein 2007, p.39). This in turn increases revenue in a country. The country may use the gained capital to develop local companies and import up-to-date technology necessary for production thus promoting economic development. The investors to benefit from the huge profits gained.

Globalization has also promoted innovations, inventions and increased technical expertise (Hogan 2005, p.148). Major inventions are assumed to be only from the developed countries. However, with the investors venturing all over the globe, technological experts have now settled in developing countries. This, therefore, gives the local citizens the chance to make new inventions that improve their productivity.

As countries interact through trade, countries experience improved political ties. Such ties promote a common understanding that promotes the formation of worldwide organizations such as the United Nations, The World Trade Organization and the International Criminal Court, to help curb certain global issues. Such bodies have helped curb worldwide problems such as crimes against humanity with perpetrators prosecuted outside their country borders. There has also been an emergence of superpower countries such as the USA, which helps countries faced with political upheavals. This, in turn, has promoted justice and tranquil among nations thereby providing suitable ground for business to thrive thus raising economies globally. Countries have organized international conferences and passed decisions that are beneficial to people across the globe.

Through globalization, different world cultures have intermingled, thus making people learn and appreciate diverse ethnic groups. Consequently, this promotes love and trust among global communities. However, before globalization, people viewed foreigners as aliens, in the native lands, although, after cultural interactions, this has changed tremendously. Moreover, cultural habits like modes of dressing, foods, and even language are being imported to different communities. Consequently, market for such goods as crockery, clothing and agricultural products has expanded internationally (Ervin & Smith 2008, p.32).

Nevertheless, globalization has also come with numerous demerits, among the major ones being unemployment. With the invention of new and efficient machines in the global market today, most countries experience downsizing economic trend; former larger workforces are reduced to a much smaller number. As a result, slums have emerged especially in developing countries with people live in incredibly poor conditions. In addition, crime cases have shot up thus promoting security issues in a global capacity. Besides, as developed nations outsource jobs from developing nations that may be cheaper, the natives are rendered jobless. Competition has also increased as employers seek for the best-qualified personnel for their job. This means that an employee is never sure of retaining his/her job.

Moreover, with the advancement of technology, terrorists are able to use refined weaponry to torment their victims. Terrorists communicate using complicated systems that are not easily detected. An example of this may be the terrorist attack of the Twin Towers in the United States by the Al Qaeda (Steger 2009, p.7).

Globalization has also encouraged the exploitation of laborers. Some companies are employing children to provide cheap labor in order to increase their production and maximize profits (Robertson 2009, p.76). In other countries, prisoners work under extremely pathetic conditions. Human trafficking has also increased to an alarming rate. This is common in some African countries whereby school leavers are promised white-collar jobs opportunities in the Middle East only to realize that they were recruits for commercial sex.

Free trade has also seen the introduction of substandard products in the international market. This is mostly experienced in the third world countries where cheap and substandard goods substitute the standard ones. In addition, junk foods are being sold globally with the expansion of companies like McDonalds. This has had severe effects on populations making companies spend huge amounts of money in treating food-related diseases like obesity.

With the easy movement of people resulting from improved infrastructure, the spread of deadly diseases like HIV/AIDS is out of control. As well known, the first case of HIV/AIDS was initially noted in the USA, although the disease has now spread to nearly all parts of the world. This has made many governments use astronomical amounts of money trying to prevent or search its cure.

Most cases of global pollution have been attributed to globalization (Schirato, & Webb, p. 88). Rise in new companies has lead to increase in emission of harmful waste products such as the deadly gases, chlorofluorocarbons that are wearing down the ozone layer thus leading to global warming. In addition, deadly chemical wastes directed to water sources are a threat to aquatic life.

Conclusion

Conversely, if the globalization process is to continue, it is necessary to eliminate every negative aspect of globalization. Governments should come up with policies of dealing with pollution. This may be through restricting the importation of goods by thorough scrutiny of imported commodities, thus restricting the dumping of substandard commodities to other countries. Global countries must also co-operate to curb the grave issue of terrorism. This is possible by imposing tough penalties on countries that supports terrorism activities. This may be through sanctions to countries that collaborate with the terrorists. This may be through sanctions to countries that collaborate with the terrorists. Moreover, foreign migration should be controlled. Host governments should also be free of corruption. Globalization is here to stay and we all must work together in promoting it.

References

Ali, A 2000, Globalization of business: practice and theory, International Business Press, New York.

Beck, U 2000, what is Globalization?, Blackwell Publishing Inc, Malden.

Bella, L 2010, How globalization works. Rosen Publishing Group, Inc, New York.

Bodreaux, D 2008, Globalization, Greenwood Publishing Group, Westport.

Eriksen, T 2007, Globalization: the key concepts, Oxford International Publishers, New York.

Ervin, J, & Smith, Z 2008, Globalization: a reference handbook, ABC-CLIO, California.

Goldstein, N 2007, Globalization and free trade, Infobase Publishing, New York.

Held, D, & McGrew, A 2002, Governing globalization, Polity Press, Cambridge

Hogan, J 2005, Cultural Identities, Pluralism and Globalization, Library of Congress Catalogue-in-Publication, Washington.

Martell, L 2010, the sociology of globalization, Polity Press, Cambridge

Robertson, R 2009, Globalization, wages and the quality of jobs, World Bank Press.

Schirato, T, & Webb, J 2004, Understanding globalization, Sage Publication Ltd, London.

Stegers, M 2009, Globalization, Sterling Publishing Company, New York.

Tiffin, J, & Kissling, C 2007, Transport communication, British Library Publishers, London.

Weinstein, M 2005, Globalization: what’s new?, Columbia University Press, New York.

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