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Global Economics of South America Essay

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Updated: May 30th, 2019

Introduction

William Shakespeare, the famous writer and poet referred to the world as a stage where all of us are merely players (Dimitrova, 2002). These words seemed to be sophisticated because of the difficulty in understanding what he really meant. However, as time has passed by, the words have become clearer to us. The world has become very informed.

There is a smooth flow of information from one corner of the world to the other. At the same time, the boundaries that separated nations are now permeable. People travel easily from country to country. At the same time, the production of goods and services has also expanded. The world has a variety of goods and services from which a consumer can choose from to ensure that he/she can get maximum satisfaction.

Lastly, the economy of the world has grown and expanded beyond the physical borders. Countries from far and wide can now trade with one another at ease. With the advancements in technology, a person in South America can strike a deal with another one in Russia without the two of them coming into physical contact.

The question that comes into mind is what makes all these possible. What makes the world to operate at a global scale? Who controls it? Who sets the rules that governs it? Many people have been asking themselves these questions so that they can understand how the global economy now operates. These factors are effective at all the corners of the world; affecting every aspect of our lives.

A simple word has been used to describe all this; Globalization. It is due to the effect of globalization that the world is operating at a global scale. It brings people together to work as a team in order to achieve certain goals and objectives and finally ensures that there is socioeconomic and political development in all states of the world.

Globalization has made the world to be uniform due to the synchronization of social, cultural, technological and commercial aspects of life that originate mainly from western countries and spread to the rest of the world.

Globalization has transformed the manner in which the worlds economy operates. Businesses have been able to operate across borders, investors are now able to invest in almost all the corners of the world and indeed, globalization has increased the employment rate of the world especially by providing jobs to millions of people in developing countries.

However, like any other advancement, there are some advantages and disadvantages that are associated with the development. This paper therefore critically analyzes globalization from the point of view of its advantages and that of its disadvantages. The paper will also highlight on the possible status of globalization within the next ten years and the impacts it might have during that time.

Economic Impacts of Globalization

Globalization is an advancement that has brought about tremendous changes in the manner in which the world operates. It has created networks and linkages via the ease of flow of information, individuals, goods and services that has resulted due to the technological advancements that the world is currently enjoying.

This has in turn resulted to equitable allocation of resources, increase in the level of production and output, higher rates of employment and the reduction in the prices of goods and services. These are the major indicators of economic growth.

The level of trade has grown remarkably over the last few decades as a result of the advancements that are being experienced in the field of information, communications and technology (ICT) (Jovanovic, 2011). These advancements have also increased the number of tradable services in the field of IT and ICT that have made the offshoring and outsourcing of services to be much easier.

The ease in the tradability of these services coupled with the increased independence of the location has contributed to the offshoring of services by many companies in the west (Kapila, 2009). Companies are now outsourcing services such as support, customer care, research and consultancy.

The main reason behind this is that outsourcing for services is much cheaper and the end result is desirable. The development in IT and ICT has led to the globalization of services all around the world.

With the revolution in IT and ICT, the location of companies is not of a high concern as it used to be. The advancement in technology has made the transmission of inputs and outputs to be much easier. These processes can now be conducted digitally and transmitted via electronic means. Companies have therefore offshored much of their services especially white-collar jobs to improve their sustainability and efficiency.

The customer care for the giant computer manufacturer Dell, for example is located in India (Kurtz, 2010). When local residents call the customer care, they are being served with an operative who is located in India. Many employers have embraced this move and replaced much of their staff in the US and UK to reduce their operating expenses.

Globalization has also influenced the manner in which companies market their products and interact with their customers. They have embraced the use of technology in order to survive the stiff competition in the market. Some of them, for example, have incorporated the use of social networks and brand communities as a communication strategy of reaching and engaging customers.

This because social networks and brand communities are the easiest and most efficient ways through which consumers can be reached as a result of technological changes that the world is currently facing. Most organizations and business companies therefore have stopped using outdated methods of reaching out to consumers. Some have incorporated the old methods with the latest ones.

Developing countries are the states that have experienced the greatest impacts of globalization over the years (Dimitrova, 2002). Through globalization, these nations have been able to develop strong ties with developed nations. As a result, they have been recipients of loans and grants.

Some of the nations have used this aid to develop their infrastructure, boost local industries, improve on transport and communication, provide a better health care to their citizens, improve the education sector and provide loans to middle and small-scale entrepreneurs. This has led to massive economic growth and increase in the standards of living in these nations.

However, there are some of those countries that have used these funds selectively hence, not all the citizens have benefited from such a programme. This has been due to corruption and misappropriation of funds.

In most cases, these acts result in tension between the government and its citizens as a result of economic stagnation and prevalence of poverty. In addition, tension may develop between the state and its donors. As a result, such nations has not benefited from globalization.

Globalization has also made developed and developing countries to have an easy access to international markets. Corporations such as Coca Cola, IKEA, Toyota, and Microsoft have been targeting their entire globe. Consequently, corporations and industries from developed countries now have access to their local and international markets.

This therefore ensures that the level of production and revenue of all these corporations would increase. Due to the high number of entries by new organizations in the international market, the level of competition shall increase. This may impact negatively on already established companies and reduce their revenue.

However, from a different point of view, a consumer will have alternatives to choose from and this will greatly reduce the price of products and increase his/her level of satisfaction.

Finally, globalization has made outsourcing and offshoring possible. At the present moment, the location of an organization is not of primary essence. This move has made multinational companies to shift their operations in regions where they will incur minimal operating costs.

As a result, most companies have shifted their operations to India and South East Asia where there is availability of cheap but skilled labor while they still target overseas markets. This has greatly reduced their operating costs and increased their revenues. This move has however had negative impacts on the employment levels in developed countries.

As a result of outsourcing, many individuals have been left jobless in developed countries. In spite the fact that globalization has increased the rate of employment in developing nations, most of these employees work for minimum wage while experiencing poor working conditions. These multinational corporations do not consider the labor laws of the host nation and normally use shady means to find their way.

As a result of the influence they have on the host nation, the host government has little authority to ensure rules and regulations are followed. This has resulted in employees working in poor conditions and massive environmental degradation. Nike Inc. has on several occasions been criticized of providing poor working conditions to its employees in China (Dimitrova, 2002).

The Future of Globalization

In the monetary economy that the world is based on, globalization is playing a critical role in ensuring that the system is effective, efficient and sustainable. Therefore, despite the negative impacts that have been associated with this phenomenon, the impacts of globalization will continue to be felt in many years to come. All the governments in the world, corporations and entrepreneurs have discovered that change is inevitable.

It is thus wise for them to embrace and benefit from these changes. Through globalization, many corporations have been able to increase their market share. This has in turn led to an increase in their revenue. As a result, most of the organizations in the world are aiming at going global.

IKEA is a prime example that shows the development and future of globalization. Started in 1943, the company was based at remote areas of Sweden. It only dealt with the delivery of furniture, flowers and other home based products. At the present moment, IKEA is the leading retailer of furniture in the world. The future goal of the company is to expand its operations into many more countries.

It is projected that IKEA will expand into Japan, South, Korea, India and North Africa by opening 20-25 stores annually by the year 2015 (Schein, 2005). This will guarantee the sustainability of the company in the long run. Many other companies and organizations are following the trends of IKEA.

Therefore, in the next ten years, globalization will have reached a new level where the physical and theoretical barriers to business shall be broken. Business shall be conducted on a global scale. This will lead to the growth and development of the global economy into new heights.

Conclusion

From the discussions, it is evident that globalization has brought about a lot of developments in the world. It has improved the social, political and economical aspects of our lives. This has been achieved through the ease of production, transport, communication and other factors of the economy. This has made it easier for individuals to cross the national borders and interact with anyone all around the world.

However, globalization could not have enjoyed this success if it was not for the rapid advancement that is being experienced in technology. These advancements have facilitated many aspects of life by making them to be much easier and convenient; unlike previous times.

As a rational individual, it will be critical for me to embrace the role played by globalization in ensuring that the life we live in at the present moment is better and convenient.

To ensure that globalization is sustainable in future, it will be necessary to ensure that the there is an agreement between those people who are for globalization and those who are against it so that we can work together and ensure that the world is a better place and viable for business.

References

Dimitrova, A. (2002) Challenging Globalization: The Contemporary Sociological Debate About Globalization. Web.

Jovanovic, M. (2011) International Handbook on the Economics of Integration: Competition, Spatial Location of Economic Activity and Financial Issues. Sacramento: Edward Elgar Publishing.

Kapila, U. (2009) Indian Economy since Independence. New Delhi: Academic Foundation.

Kurtz, D.L. (2010) Contemporary Marketing 2011. New York: Sage.

Schein, E.H. (2005) Organization Culture and Leadership. Jossey-Bass, New York.

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IvyPanda. 2019. "Global Economics of South America." May 30, 2019. https://ivypanda.com/essays/global-economics/.

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IvyPanda. (2019) 'Global Economics of South America'. 30 May.

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