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Definition of Globalization
Globalization is defined as interaction among different countries in order to develop global economy. It entails political, technological, cultural and political exchanges which are facilitated by infrastructure, transport and communication. Some of the traditional international theories of globalization include Ricardian theory of international trade, Heckscher-Ohlin model and Adam Smith’s model (Scholte, 2005).
Drivers of Globalization
For globalization to take place, it must be driven by certain factors. The first factor that drives globalization is competitiveness in the market, which focuses on aspects such as global competitors, interdependence among countries and high two-way trade. The second factor that drives globalization is the government.
The government drives globalization through regulation of marketing activities, provision of technical standards that are compatible and elimination of restrictions imposed on trade and investment procedures. The third factor that drives globalization is cost.
Cost in globalization deals with efficiency in sourcing activities, world economies and emerging technological trends. The fourth factor that drives globalization is market, which covers ordinary needs of customers, channels of world markets and marketing techniques that can be transferred to different regions.
Effects of Globalization
Globalization is associated with both positive and negative effects. Its first positive effect is that it makes it possible for different countries to exchange their products. The second positive effect of globalization is that it promotes international trade and growth of wealth as a result of economic integration and free trade among countries.
However, globalization is also associated with negative effects. Its first negative effect is that it causes unemployment. Since companies compete with their rivals in the market, sometimes they are forced to sack some of their employees in order to reduce salary costs and instead maximize profits. This is common in developing countries, where large numbers of unemployed people live in urban areas.
The second negative effect of globalization is that it promotes terrorism and criminal activities because people, food and materials are allowed to move freely from one country to the other. Individuals with evil intentions take advantage of this freedom and carry out terrorism activities and other crimes (Negative Effects of Globalization, 2013).
Negative Effects of Globalization. (2013). Web.
Scholte, J. (2005). Globalization: A Critical Introduction. New York: Palgrave Macmillan.