Globalization is a process that affects people's lives and nations' economies. It is something that is almost on everybody's lips these days. But did you know that globalization started in 1492, according to many historians?
A working paper created by Kevin H. O’Rourke and Jeffrey G. Williamson for the National Bureau of Economic Research was published in 2002. They said that many historians around the world believe that significant events in globalization started when Christopher Columbus sailed in 1492 and found the Americas. It was followed by the voyage of Vasco de Gama in 1498 that disrupted the spice trade monopoly of Venetian and Arab traders when he sailed around Africa.
Other historians believe that globalization started long before the first voyage of Christopher Columbus. For them, it started when people from Africa moved to other locations around the world. Whether they traveled long or short distances, these people, either migrants or merchants shared their products, customs and ideas to the people they interacted with in their destinations. The newcomers and the residents of the lands they found borrowed, adapted and melded their cultures.
According to the paper, the most credible opinion regarding the beginning of globalization is what happened during the 19th century, a time when international trade made an economic impact on the economy worldwide.
Globalization is not a new idea
Whichever way you look at it, globalization is not a novel idea. It's been around for millennia. Merchants of old traveled the globe to find commodities that during those times were rare, like gold, spices and salt that they could sell for high prices.
The Industrial Revolution of the 19th century brought about developments in transportation and communication, increasing trade across borders and opening/removing borders in many places.
In recent times, business expansion became the impetus for the unprecedented growth of globalization.
What is globalization?
If you do a search online, you can find several definitions of globalization. Some of them include the following:
- Globalization is a process wherein organizations or businesses build influence internationally or start their operation in various locations around the world.
- Globalization can mean the merging of national economies through technology, migration of labor force, flow of capital, investment and trade.
- Globalization can also mean the dissemination of technology, values and practices that have a worldwide impact on the lives of many people.
- Globalization can be the process that is driven by different needs and purposes. It results in the increase in the flow and exchange of culture, information, people, money, services and goods across geographical borders.
The benefits of globalization
For many people, globalization is a beneficial process. Nobel Prize winner Amartya Sen, an economist, said the globalization brought economic benefits to many people and provided cultural and scientific enrichment worldwide. The United Nations predicted that poverty could be eradicated in the 21st century due to globalization. Globalization has many benefits and some of the more important ones are here.
- Globalization comprises the integration of cultures, information technology, investment and international trade. Several countries created government policies to help open their economies internationally and domestically with the objective of boosting the development in emerging and poor countries so they can lift their standards of living.
- Corporations acquire a competitive advantage through globalization. It helps them lower their costs of operation. They are able to open new markets and earn access to other raw materials. They are able to buy, sell and manufacture goods around the world.
- Governments worldwide incorporate free market economic systems due to foreign trade agreements and their economic policies. The new system has brought international financial opportunities and industrialization. They have become more open to international trade by removing many of the barriers that used to make trading with foreign countries difficult.
- Globalization has increased awareness among global consumers of different opportunities for investment, economic trends and new products. The development of information and communication technologies helps facilitate awareness of these opportunities. Technology likewise made the transmission and channeling of financial assets quicker and simpler.
- Socially, globalization provides populations around the world better interconnectedness. Culturally, it promotes the increase in the exchange of values and ideas. It boosts the political activities of nations toward a global level through coordination with intergovernmental organizations. Globalization brings about the changes in the creation and implementation of international laws.
- Globalization enables developing countries to draw level to industrialized countries via the increase of economic expansion, diversification and manufacturing. It brings improvements in the countries' standards of living.
- Globalization gives the outsourcing industries a big boost, bringing technology and more jobs to other countries.
- It encourages many companies to specialize, increase their capital, improve their research and development efforts and help them innovate.
- It provides more employment opportunities, especially in the export and import sectors.
- The household income gains an increase through globalization. It reduces inflation rates and increases the take home pay of workers because the cost of consumption is lower.
- Globalization allows many goods to be more affordable and available to more parts of the world.
- It helps improve productivity, cut back gender wage discrimination, give more opportunities to women and improve working conditions and quality of management, especially in developing countries.
These are the most important benefits of globalization. It is still not a very exhaustive list but it allows you to see the changes that globalization brings to the global community. While the benefits are many, globalization likewise has its disadvantages.
The downsides of globalization
It is understood that globalization, like other things, can have advantages and disadvantages. Free market economics critics like American Joseph Stiglitz and South Korean Chang Ha-Joon, both economists from Columbia University and the University of Cambridge, respectively, think that globalization causes the continuation of inequality. In 2007, the International Monetary Fund (IMF) said that foreign capital investment in other countries and the introduction of new technology might have brought about inequality levels.
Some developed countries like France, for example, do not trust globalization. They believe that globalization makes employers take jobs away from them and move them to overseas locations where the cost of labor is cheaper.
Here are more disadvantages:
- Globalization is a threat to national and local economies. Global companies coming into emerging and developing nations have the tendency to impose their ways, practices and culture onto the target nations. They can take advantage of the situation to engage in wage wars.
- It can lead to the implementation of foreign concepts and ideas. In countries where Islamic culture dominates and other countries with different practices and beliefs, imposing Western culture and ideas could be detrimental. In some cases, it can lead to the question of national identity.
- Although globalization exposes other languages to more people, it can also lead cause some minority languages to disappear. Since most global companies speak major languages such as English, German, French or Spanish, speakers of the minority languages have no choice but to abandon their native tongues and learn the widely spoken languages used in business.
- Automation and technological advancements displaced workers, leaving them unemployed.
- As more cities, communities and countries become industrialized due to globalization, it also brought about the loss of biodiversity, growth of the local population, and climate change as well.
- Free trade poses greater risks to small, family-owned and private companies that are competing in the global market. They have to face stiff competition from companies with huge resources.
The aspects that are positively affected by globalization has also some of the aspects adversely affected by the process. These effects clearly demonstrate the need for balance and careful policing to make globalization more effective, especially in developing and emerging economies.
What's the future for globalization?
Due to the rise in nationalism, there are opposing views on what the future holds for globalization. Some believe that it will slow down while others think that it is going to accelerate.
Some believe that globalization will continue, but the pace of growth will be slower. This involves revisiting the positive lessons and failures in the past and prepare for a cycle of ups and downs. There should be better political systems and international governance to monitor cross-border trading.
In last year's World Economic Forum, globalization was a hot topic. For the founder of Bridgewater Associates, Ray Dalio, he sees a point where nationalism and provincialism will come to the surface and overtake globalization.
President Xi Jin Ping of China sees globalization as having an open future because of the economic benefits that will allow many people to rise out of poverty. He said that while globalization brought many problems, it is still a process that requires guidance and nurturing and nations should cushion globalization's negative impact and share the benefits it brings to many nations.
Despite the problems globalization has brought to several countries, it still has a bright future. Countries may review their economic and political policies in light of what they have learned and experienced. There could be a new stage in the development of policies for international economic and political relations that will mold the future development of globalization.
Partner with us for effective communication
All things have good sides and bad sides. There's no denying the fact that globalization has affected cultures, peoples and industries worldwide. Globalization has made the world smaller, but there is still the matter of mutual understanding. As many parts of the world become open, the more proper communication is needed. For paperwork, you need translation services. For verbal discussions, you need interpreting services. And to serve the needs of new local markets, you need localization services.
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