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Advantages of globalization
The gains from globalization can be cited in the
context of economic globalization:
• Trade in Goods and Services - From the
theoretical aspect, international trade
ensures allocating different resources and
that has to be consistent. This specialization
in the processes leads to better productivity.
We all know from the economic perspective
that restrictive trade barriers in emerging
economies only impede growth. Emerging
economies can reap the benefits of
international trade if only all the resources
are utilized in full potential. This is where the
importance of reducing the tariff and non-
tariff barriers crop up.
• Movement of Capital - The production
base of a developing economy gets
enhanced due to capital flows across
countries. It was very much true in the 19th
and 20th centuries. The mobility of capital
only enabled savings for the entire globe and
exhibited high investment potential. A
country's economic growth doesn't, however,
get barred by domestic savings. Foreign
capital inflow does play an important role in
the development of an economy. To be
specific, capital flows either can take the
form of foreign direct investment or portfolio
investment. Developing countries would
definitely prefer foreign direct investment
because portfolio investment doesn't have a
direct impact on the productive capacity
expansion.
• Financial Flows - The capital market
development is one of the major features of
the process of globalization. We all know that
the growth in capital and mobility of the
foreign exchange markets enabled better
transfer of resources cross borders and by
large the global foreign exchange markets
improved. It is mandatory to go in for the
expansion of foreign exchange markets and
thus facilitate international transfer of capital.
The major example of such international
transfer of funds led to the financial crisis -
which has by now become a worrying
phenomenon.
Thus, globalization has the fair and rough share
of its impacts and thus we can surely hope for
more advancement in the global economy due
to this process
DEFINITIONS AND MEASURES
To most economists ‘globalisation’ means the closer
integration of economies via trade and factor
flows. But this permits many interpretations of how
this can be measured. To some, globalisation is
indicated by relative commodity prices between
trading nations; O’Rourke and Williamson (2000)
call the convergence of relative prices the ‘central
manifestation of globalisation’. But some measure
globalisation by growth trade and factor (but capital
rather than labour) flows, while others see it
primarily as the policy process – economic
liberalisation – that facilitates closer economic
relations.
Some have narrower definitions: the organisation and
governance of global production systems (or
value chains). In his new book on globalisation,
Stiglitz (2002) addresses the international
“institutions of globalisation”, the IMF, the World
Bank and the WTO. Economic geographers mean
by globalisation the shifts in the location of economic
activity subsequent upon shrinking economic
distance
3 Outside economics, there is an even greater variety
of definitions of globalisation; in popular critiques it
is taken to be synonymous with capitalism, big
business and multinational corporations
Benefits of globalization