Globalization has become a compelling aspect in the new world system. O’Meara (3) asserts that globalization is one of the most important aspects in the determination of the world’s future due to its multifaceted nature. Globalization entails political, environmental, health, economic, security, cultural, and social dimensions.
The term globalization refers to a phenomenon whereby the world becomes more integrated, open, and borderless to the international economy (Intriligator 4). Increased globalization has led to significant growth in international trade due to increased mobility. Additionally, globalization has also stimulated increased capital movements, exchange of currency, ideas and technology transfer (Lechner 6).
A number of sources have been associated with the growth of globalization. Some of these include increased technological advancement, especially with regard to information communication technology, hence lowering the cost of communication and transportation. Increased trade liberalization also explains the high rate of globalization.
Thirdly, the high rate at which institutions are expanding into the international market has also played a critical role in stimulating globalization. The growth of globalization has presented several benefits and costs to society. This paper defends the proposition that although there are costs to globalization, the benefits outweigh the costs to society; therefore, efforts to increase globalization should be promoted.
Firstly, globalization encourages production of goods and services due to increased freedom of trade. Through trade liberalization, consumers in different economies can access a wide range of products and services given the fact that globalization leads to the elimination of trade barriers such as tariffs that restrict movement of products across borders (O’Meara 3).
Consequently, producers face the challenge of satisfying the growing market demand. The ability to access a wide range of products and services culminates in the consumers attaining their desires utility levels. On the other hand, manufacturers are capable of accessing a broad market.
The high rate of globalization being experienced in the 21st century is beneficial with regard to increasing production and efficiency for globalization stimulates competition across countries. In a bid to deal with the increment in the intensity of competition, firms in different economies have to ensure that they institute optimal operational strategies such as division of labor and specialization to nurture their competitiveness.
Additionally, globalization can also stimulate firms to attain economies of scale in the course of their operation. High economies of scale is usually associated with reduction price and cost reduction, which stimulate economic growth (Disselkamp 101). Due to increased mobility, the probability of the global society developing a high level of cohesion increases.
This assertion hinges on the fact that individuals can develop a high level of understanding with regard to other individuals’ cultures and experiences through increased individual contact and interaction. The cohesion developed amongst societies in different countries due to globalization is also paramount in dealing with the global challenges currently being experienced.
Some of these challenges relate to the increased rate of “climate change due to carbon emission, which leads to global warming” (Intriligator 4). The high rate of interaction and contact amongst individuals of different cultural backgrounds contributes towards the exchange of ideas hence nurturing growth in human capital in the society.
For example, the contact can contribute towards exchange of skills and knowledge that can help towards a high level of efficiency, competitiveness, and productivity. Thus, globalization aids in eliminating cultural barriers.
Globalization also presents entrepreneurs with an opportunity to access the business opportunities presented across their national borders (Intriligator 4). Through sufficient identification of viable business opportunities in the international market, investors can effectively exploit such opportunities in order to attain a high level of profitability.
This aspect presents an opportunity for the host countries to increase the volume of their foreign currency reserves, for example, through taxation. Additionally, a high rate of foreign direct investment culminates in the improvement in the living standards of the host country’s citizens, for example, through the creation of employment to the locals.
Despite the benefits above, there are a number of costs associated with globalization. The first cost emanates from who accrues the potential benefits of globalization. Lack of equity in distribution of the benefits of globalization can result in conflicts amongst countries due to the creation of inequalities.
Developed countries are more likely to accrue the benefits of globalization compared to developing countries, which can create potential international and national conflicts. The inequality associated with distribution of the benefits of globalization culminates in the poor countries becoming more marginalized, which leads to the creation of divergence rather than convergence (Intriligator 4).
The interdependence emanating from globalization can lead to the creation of global instabilities. Such situations can lead to global crises and impacts as well illustrated by the recent global economic recession that swept across Europe and the US. Additionally, globalization forces the less developed and emerging economies to lose their sovereignty to more powerful countries (Intriligator 4).
The analysis above illustrates that the benefits of globalization outweigh the demerits. Consequently, it is paramount for governments in both developed and developing economies to institute policies that foster globalization to achieve a high level of prosperity.
Works Cited
Disselkamp, Marcus. Eurobands: Development strategies and managerial issues in the European food industry, New York: GRIN Verlag, 2002. Print.
Intriligator, Michael. Globalization of the world economy: potential benefits and costs and a net assessment, Los Angeles: University of California, 2003. Print.
Lechner, Frank. Globalization: the making of the world society, Bloomington: Indiana University Press, 2009. Print.
O’Meara, Patrick. Globalization and the challenge of a new century: A reader, Bloomington: Indiana University Press, 2000. Print.