Globalization is the process of enabling financial and investment markets to operate internationally. This is as a result of deregulation and improved communication. On the other hand, economic globalization refers to the interdependence of national economies across the world through a rapid increase in cross-border movements of goods, services, technology and capital (Held and MacGrew 4). It is also the process of increasing economic integration between countries, leading to the emergence of global markets.
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Globalization has shown a paradigm shift in economic activity from agriculture to service in both developed and developing countries. The kinds of growth noted have been in total as well as per capita GDP (Gross Domestic Product) mainly in the OECD (Organization for Economic Co-operation and Development) or the developed countries (Munck 21). In spite of this growth, freeing other parts of the world from poverty has been a great challenge.
Before the global economy came into being, the world economy was ruled by the United States, however with industrialization of many powerful countries, the monopolistic nature of the United States has reduced to about 20%.The United Kingdom has one of the greatest open economies in the Europe. About two decades ago, foreign exchange trade controls were removed and the financial markets have since then been gradually deregulated (MacKinnon et al. 1).
Impact of Globalization on the British Economy
Advantages of Globalization
The advantages are as follows:
- High levels of direct foreign investment. Basically the UK has been favored by overseas direct investment. This has been due to favorable tax system and a high trust on industrial relations (Tompkins 1).
- Structural change in Industry. The issue of unemployment in textile industry and other manufacturing industries has been solved by the global economy in that, the immobile output that has accumulated for years is being be traded globally. This has not just revived the industries but also provided much income and employment opportunities.
- Rising level of import penetration. This has been beneficial in areas where comparative advantage had been lost. Such loss was evident in the manufacture of low value adding electronic products. Hence, more sophisticated imports from various countries worldwide were increased.
- Efficiencies in production. Globalization has resulted to increased efficiency in resources allocation. Efficient use of resources results to high productivity which consequently increases the total domestic output of goods and services. In addition, increased competition promotes innovative methods which employ advanced technology in marketing and product distribution (Tompkins 1).
- The consumers in various countries are also able to obtain greater supply of a variety of goods and services. Increased competition also ensures goods and services are offered at lower prices. This mostly benefits the consumers.
- The countries that are involved in free trade experience rising living standards, increased real incomes and higher rates of economic growth. This has resulted from increase in productivity and efficiency in competitive industries.
There are great effects of globalization on the lives of individual citizens in every country. These effects have been noted especially in the lives of young people (Held and MacGrew 20). Globalization has had a lot of influence on young people in various aspects. These are both negative and positives.
In the area of social and media outreach, globalization has lead to an awakened youth in both UK and other countries in the wider globe. This shows that there is a large percentage of well educated and politically endowed youths worldwide. These youths are able to channel their energy into protests for better change. This is due to the uneven distribution of costs and benefits through globalization in the trading sector.
Disadvantages of Globalization
- There has been a notable increase in the cost of living in the UK. This has seriously affected citizens who are living on low incomes. Thus, a reliance on family and local support.
- Due to media globalization, events happening in other countries are normally infiltrating in almost all countries media stations at a greater speed.
- The issue of free trade may result in unemployment in the near future. This may impact the economy negatively as the government will have to go an extra mile so as to save its citizens from poverty (Tompkins 1).
- Lower incomes, Gross Domestic Product, domestic demand and falling export incomes as a result of recession may affect the economy. This is because of increased instability in domestic economy. Therefore, globalization predisposes businesses, employees and consumers to downturns.
- Foreign debts may be accumulated by countries that deal majorly on agricultural products. This is due to low export income that is incomparable to high import payment. These import prices result from the so called high value added imports (Munck 50).
- Competition in a highly flooded market is at times very challenging. Thus, development of new industries may be hard with lack of short term protection policies (Tompkins 1).
- Terrorism. As the world reflects or is actually a global village, it becomes easier to access various countries. This is very dangerous in terms of terrorist’s attacks. Such wars can destabilize the economy and can ruin a country through fateful suicidal attacks. In the current news, there was a discussion between the US embassy and the UK officials on the need to provide Olympic security inputs for the 2012 Olympic Games. It was reported that the UK had been working on issues of security matters and that no one had given substantial information about security status that could result to a check up. This was said after there were claims by the American embassy on a terrorism plot come 2012 (MacKinnon et al. 1).
Since various countries have experienced a better part of many downturns, some countries have come up with effective ways to counteract the negative effects. For instance, in ensuring positive effects on poverty and communities, the UK has decided to change its labor markets and employment practices.
In addition, it has also reverted to digging deep into research. This has been done by the UK Government to ensure that its people are empowered with job creation capabilities instead of depending on the external market for jobs. In this research, the UK also is planning to find new ways of combating the issue of competitive markets.
This is by dealing in more sophisticated goods and services. Globalization is one of the risky steps that the worldwide countries decided to agree on, but each country needs to be careful and focus on the future rather than the present. It will be safer to be caught a wares in future in case of any downturns than to be caught unawares. Therefore, each country should be heads up to monitor the global economy.
Held, David and Anthony McGrew. Globalization/Anti-Globalization: Beyond the Great Divide. Cambridge: Polity Press, 2007.
MacKinnon, Danny, et al. Globalization, Labor Markets and Communities in Contemporary Britain. Joseph Rowntree Foundation, 4 March 2011. Web.
Munck, Ronaldo. Globalization and Social Exclusion: A Transformational Perspective. West Hartford: Kumerian Press Incorporation, 2005.
Tompkins, Wayne. “Benefits of Global Economy Uneven”. Courier-Journal. 2005. Print.