Introduction
In the current day, we are living in an economy that is globalized and this is evident. The whole world is transforming at a very high speed as time goes by Krueger (1994) observes that,
Local, national, and regional economies once relatively insulated from each other are engaged in a seemingly inexorable process of global integration characterized by expanding trade and competition, private sector-driven investment, market-friendly government fiscal and monetary policies, the expanding embrace of science and modern technology, and the global spread of a common, cross-cultural mass consumer products-driven culture (p13).
While it is established that the process of globalization commenced hundreds of years ago, on the other hand, the speed at which this process has been moving has just increased in the last century (twentieth century) and in this new century, the speed is seen to be increasing even more. International corporations are playing a major role in speeding up the rate at which globalization is taking place.
Just until in recent times, people lived in a world that was highly divided in which there was capitalism and communism and the world was also being greatly militarized, with each nation going its way. However, in the present day, things are different and have greatly changed. In the current world, every country is striving to derive some political and economic benefits coming from economic growth which is liberal and market-driven.
This paper is going to consider the extent to which globalization of the economy has taken place. It is going to be established that, globalization of the economy is currently at a higher level as compared to the globalization of the economy in the last century. It is also going to be indicated that, the global economy is going to be at an even higher level in the coming twenty years and also beyond this time.
The Extend to which the economy is globalized
According to the Association of Chartered Certified Accountants (2010), in the current day, the global economy is at a tipping level. This association points out that “the previous interpretations of success, growth and global stature has been based on movement in Fortune, CAC, FTSE, DAx and Hang Seng indices, tracking multinationals based in a few dominant countries” (p. 6). An interpretation like this one is changing at a radical pace to make recognition of the strengths that are based in the regions which are having market strengths that are not similar but are rather diverse. These diverse strengths are going to define the global economy in the time to come.
The Association of Chartered Certified Accountants (2010) observes that globalization will still go on in the future and this will bring about a world of “flatter”. According to their understanding, globalization which is constantly undergoing evolution will gain shape resulting from these strengths in the diverse markets that are being perceived in the various regions of the world.
At the corporate level, it is expected that there will come up a world of what is referred to as “shopkeepers” and fresh business federations and this will come along with those collaborations that are greater among the markets, community, and also among businesses. The support for this cooperation will originate from the support that is going to be offered by increasing regulations in harmonization. Following this, the global business’ future is seen to be more complex and not very much clear-cut.
At the present, the global debate is being dominated by a larger group formed by the countries in the world. The Association of Chartered Certified Accountants (2010), points out that, ”originally steered by the G5 – France, Germany, Japan, the U.S and the U.K- the global economy was increasingly influenced by Canada, Belgium, Italy, the Netherlands, Sweden, and Switzerland, leading to G11” (page 6). However, making recognition of the developing nation’s impact has resulted in the leaders all over the world having acceptance of the G20 countries as the fresh global foundation. Following this acceptance, the world leaders have embraced an ever-broader group in the debate regarding the global economy while there is spreading of economic influence to several regions.
In the future, there will be much powerful competition for natural resources. This will call for the need to have an international approach that will have to be coordinated at a higher level to realize access to adequate resources as well as secure these resources. Among resources are oil, being the most important one, food, water, and minerals.
It is also projected that there will be the growth of the global market in ways that are varied and this growth will be dependent upon the availability of resources, the regions, and the partnerships that will be formed. There will be a convergence of the regulations governing finances across the markets all over the world and at the same time there will be going on of the world regulatory cooperation. From this, there will be facilitation in bringing about an increase in the availability of the sources of finances and also an increase in capital flow volumes as well as the values of this capital.
The role that will be played by each government in the future is defined by emphasizing private business facilitation. Careful governance is quite crucial while globalization of the economy goes on. In the future, new systems will be set up to ensure putting the world of shopkeepers in a better position (Association of Chartered Certified Accountants, 2010).
There is changing of the world stage and this is resulting from globalization and growing of the markets that are coming up. It is projected that by the year 2030, this trend will have brought about a flattering of the economic setting (Association of Chartered Certified Accountants, 2010). In the future, a smaller number of the limitations on globalization will bring about much more competition. However, this competition that is projected to come up will not be looked at as being a battle. The nations in the world are seen to be sharing among themselves wealth and assisting one another in the course of the competition.
Therefore, in the future, competition will not be looked at as being a game in which there will emerge losers and winners but rather as a case in which all the participants in the game are playing in one team with those economies that are developed and those that are coming up sitting on the same table to share ideas as well as capital and the best ways of carrying out business.
The Association of Chartered Certified Accountants (2010), quotes the director of PriceWaterCoopers, Malaysia in which he says that there will be balancing again of the global economy while it tries to adjust to the crisis (financial) by turning out to be heavily reliant on the United States of America. The director hopes that the economies that are emerging will come up with the market clusters that are new and this will have to boost an economic prospect that is two-way between the United States of America and other countries with which they trade. Therefore, there will be the promotion of the trade-in which there is a two-way flow of goods and services instead of having a world in which the goods are transported to the United States of America and at the same time capital is taken to the East.
Based on this is information, it is expected that globalization will no longer be driven by the multinational corporations that have roots in the economies that are developed but rather it will as well be driven by the international business organizations that are based in those markets that are coming up or emerging (Jagdish, 2004).
The indicators or rather, the signs of the rising maturity are being seen in the current days at an increasing level. In the course of the last ten years, the total number of multinational corporations based in emerging economies in the Fortune Global 500 has gone up by more than three times. For instance, in the year 2008, there were over 70 multinational companies from the emerging markets and the share of these markets is increasing together with the significance they have in the world equity markets.
There had been recovered from the financial crisis of the 1990s. The financial crisis that commenced from the year 2007 has emphasized the process by pointing out the weaknesses of the financial structures of some developed economies and at the same time pointing out the strengths of the financial structures of the economies that are emerging.
There will be a situation where there will be a shift in the economic power but this power will be stronger in the economies that are already developed in the current day and these already developed economies would go on portraying their power of being innovative. The stability in the economy, as well as the political stability the developed economies have, would bring back growth and this will maintain these economies at the topmost level of the value chain. These economies will go on being the setters of the ideas. And on the other hand, the economies that are emerging will go on following the Western consumerism model (Todaro & Smith, 2003).
While the model of Western consumerism goes on dominating globally, those Western economies that are smaller would raise the level of taking part in the global economy, making the G grouping larger. These economies in the West that are smaller will adopt the entrepreneurial spirit and an increase in the political power will assist them to emerge above the dominance that is exercised on them by the bigger Western economies (Todaro & Smith, 2003).
According to Python Market Focus (2009), the global crisis that came up in recent times was evidence enough that we are living in a globalized economy. It was proof that we are living in an economy that is interconnected to a level that changes in the rates (exchange and interest), the prices of stocks as well as the prices of goods and services have influences in most of the world. It has been realized that we are living in a global economy Pythes Market Focus (2009), making an emphasis that no person or group of people that are in their right senses can not have a belief in the benefits that are derived from global integration. These benefits are such benefits as a division of labor at an international level, the moving of innovations at a quicker speed from one region of the world to the other, having freedom of coming up with choices regarding the transfer of capital, goods, and services internationally as well as free movement of ideas from one country to the other in the world.
Pythes Market Focus (2009), pose a question about those who support the Laissez-faire doctrine, which is – “free markets are self-sustaining and market excesses will correct themselves provided the governments or regulators do not intervene in the market place” (Page, 2) as to whether or not they are supposed to be justified. They go further to pose another question concerning the issue of whether or not the Laissez-faire doctrine is taken as a failure or not in the existing global crisis.
There is less or sometimes no support for state intervention on the issues concerning the economy by Laissez-faire philosophy. This philosophy gives support to particular types of liberties that are negative in opposition to the liberties that are positive like the redistribution of wealth by the nation. This opposition by the Laissez-faire philosophy is based on the belief that distribution of wealth facilitates taking away of wealth from those sectors that are much more productive and allocating them to those sectors that are not much productive and this brings about a reduction in productivity and a decline in the motivation to work (Peter, 2001).
Pythes Market Focus (2009) present an idea that Laissez-faire goes ahead to give an argument that whatever temporary equality of results that are achieved from redistribution would fail with speed with no coercion for the reason that individuals do possess varying degrees of motivation as well as the native capabilities and would come up with varied decisions based on the values they have that are different among them.
More so Laissez-faire presents an argument that inequality that is material is an essential result that comes from the freedom to make choices about which actions to engage in without imposing these actions on other people. This turns out to favor those that are neutral concerning the varied competing interests which groups that seek to have power (political), as well as privileges in a nation, have for any likely intervention that is made by the government. The government interventions that are sought from the government according to Pythes Market Focus (2009 include “regulation, creating legal monopolies, competing laws, or taxes, protectionism, maximization of economic utility” (Page 2).
Pythes Market Focus (2009), presents a question as to whether or not the global economic system is getting uncontrolled on an increasing level due to the absence of suitable regulations. They put it that the lack of the ability by the makers of policies to carry out the enforcement of regulations that are existing by bringing in those that are more strict and even more complex will bring about chaos and a regulatory system that is multi-level and having much more bureaucracy. This will be at the cost of capital movement and anything else that is positive that results from it.
Every society requires having some common values that ensure there is holding together. Without a doubt, there is a need for society to have institutions to be put in place to assist in realizing such social goals as social justice as well; as political freedom (Dani, 1996).
However, among some countries, these social institutions have been put in place and the big question is why such institutions have not been put in place in the global society. It is true in saying that global society development has moved at a very slow pace in comparison to the global economic growth. We are living in a global society that has varied customs as well as traditions and religions, different classes of people dominated by racism in which even if there are claims of having respect for human rights, this society remains to lack perfection (Stiglitz, 2003).
Causing what is referred to as a “freer global market economy” turning out to be less free through bringing in more restrictions and complex procedures is quite “poisonous”. It is a good decision to put much focus on what brought about the existing economic crisis. And this cause was a lack of the ability by the policymakers to ensure the enforcement of adequate current law and not ignore the law by coming up with more legislation that will, in an automatic manner, kill the movement of capital in a free manner.
Conclusion
Globalization began hundreds of years ago but the speed at which this process has been moving has just increased in the last century and even in this century this speed is seen to be increasing even more. International corporations are playing a major role in speeding up the rate at which globalization is taking place. The global crisis that came up in recent times was clear evidence that we are living in a globalized economy. It was proof that we are living in an economy that is interconnected to a level that changes in the rates (exchange and interest), the prices of stocks as well as the prices of goods and services have influences in most of the world. It has been realized that we are living in a global economy in which people, goods, and capital can move freely.
Globalization of the economy will still go on in the future and this will bring about a world of “flatter”. The globalization that is constantly undergoing evolution will gain shape resulting from the strengths in the diverse markets that are being perceived in the various regions of the world. At the corporate level, it is expected that there will come up a world of what is referred to as “shopkeepers” and fresh business federations and this will come along with those collaborations that are greater among the markets, community, and businesses. The support for this cooperation will originate from the support that is going to be offered by rising regulations in harmonization. Following this, the global business’ future is seen to be more complex.
It is expected that globalization will no longer be driven by the multinational corporations that have roots in the economies that are developed but rather it will as well be driven by the international business organizations that are based in those markets that are emerging. The indicators of the rising maturity are being seen in the current days on an increasing level. In the course of the last ten years, the total number of multinational corporations based in emerging economies in the Fortune Global 500 has gone up by more than three times. Taking an example, in the year 2008, there were over 70 multinational companies from the emerging markets and the share of these markets is increasing together with the significance they have in the world equity markets.
It has also been seen that there will be a situation where there will be a shift in the economic power but this power will be stronger in the economies that are already developed in the current day and these already developed economies would go on portraying their power of being innovative. The stability in the economy, as well as the political stability the developed economies have, would bring back growth and this will maintain these economies at the topmost level of the value chain. These economies will go on being the setters of the ideas. And on the other hand, the economies that are emerging will go on following the Western consumerism model.
References
Association of Chartered Certified Accountants, 2010, Where next for the global economy? A view of the world in 2030. Web.
Dani R., 1996, Understanding Economic Policy Reform. The Journal of Economic Literature 34, no. 1 (March 1996): 9-41.
Jagdish B. 2004, In Defense of Globalization. New York: Oxford University Press.
Krueger G. (1994), Can we have global ethics in a global economy? International Journal of Value-based management.7 (1): 13 – 21.
Peter K., 2001, The International Financial Architecture: What’s New? What’s missing? Washington DC: III.
Pythes Market Focus, 2009, Laissez-faire, the Freer Global Market Economy, the investment banks and the policymakers. Web.
Stiglitz, J., 2003, Globalization and its Discontents. New York: Norton Publishers.
Todaro M., and. Smith S, C, 2003, Economic Development. London: Addison Wesley.