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Globalization definition and its implications for working in the new economy
Produced by : Ahmed Khalid Hassan Work position : District Manager Place : Adwia pharmaceutical company

Globalization became too widely used term that can be defined in a number of different ways

General definition:Globalization is the increased global relationship of culture, people and economic activity.

Economic definition:Globalization is the global distribution of the production of goods and services through reduction of international trade such as Tariffs, Export fees and Import quotas.

History of globalization:The term was first employed in a publication entitled Towards New Education in 1930 In 1960 the term began to be used by economists. In 1980 the term reached the main stream press.

Aspects of globalization:1- Economics:Survival in the new global business market required companies to upgrade their products in order to survive increased competition. International trade in goods increased more than 100 times from $95 billion to $ 12 trillion between 1955 and 2007.

2- Brain drain:Opportunities in rich countries attracted skilled workers from poor countries leading to brain drain.

3- Working conditions:Applying laws and regulations like in USA, the National Labor Committee proposes the Decent Working Conditions and Fair Competition Act which legally requires companies to respect human and workers rights by prohibiting the import, sale or export of goods from companies violate the No Child Labor, No Forced Labor or Freedom of association Leads to the improvement of working conditions in many other countries all over the world.

4- Business process outsourcing:-

It enabled in rich countries cheaper services but displaced some service sector jobs. In lower cost countries like India it s the primary engine of the country s development over the next few decades.

5- Income equality:World Bank indicates that the number of people living on less than $ 1 per day dropped from 1.25 billion in 1990 to 986 million in 204. However, the Globalization of job market has positive and negative consequences in Developed countries where white collar workers were able to compete successfully in the world market while production workers and service workers were unable to compete directly with those of Developing countries. This leads to what is known by Income Inequality especially in rich countries like USA where it started to rise in the late 1970 and accelerated in the 21st century to reach a level comparable with that found in many Developing countries.

6- Consumption:Consumer goods exports such as Radios, Textiles and televisions fueled the economic expansion of Asian tiger economics. $ 157 billion USD in October 2011 from exports of goods and services, constituted 39.7% of China s GDP at that year. The increasing US trade deficit with China cost 2.4 million American jobs between 2001 and 2008. Also, that was for the Developing countries as well, the influx of Chinese textile goods in South Africa made in April 2005 300,000 textile workers to lose their jobs.

7- Drug trade:In 2010 the UNODC ( United Nations of Drug and Crime ) reported that the global drug trade generated more than 320 billion dollars a year in revenues.

8- Political:European union, the WTO or the international criminal court replaced national functions with international agreements.

9- Cultural:Islam, Christianity & Buddhism have taken roots and influenced endemic cultures in places far from their origins



Challenges such as Climate changes, cross boundary water and air pollution and over fishing of the oceans, require global solutions. State of the world 2006 report said India and China s high economic growth was not sustainable. So, Globalization and free trade may increase pollution and impact on precious fresh water resources. Some Developing countries lower their environmental and resources protection laws to attract foreign capital, ( Race to Bottom )theory. Agencies like United Nations now must be the global regulators of pollution whereas before regional governance was enough.

Public opinion:- ( after financial crisis of 2007 ) United States:

According to a 1997 poll, 58 % of college graduates said that Globalization had been good for the US. By 2008 only 33 % thought it was good.

Other Developed countries:

Although US workers were more impacted by automation and outsourcing than the Europeans and income inequality is much higher than in EU, however, opposition of Globalization increased in 2008 in the European countries as they see that proceeding too rapidly in Globalization is directly correlated to growing economic insecurity and inequality.

Developing countries: (Third world)

They see globalization as a positive force that lifts countries out of poverty. However, much of the criticism comes from the middle class levels especially in industrialized countries.

From all the above, the Globalization effects and the different opinions for different kinds of countries, it is obvious that the process of Globalization was dramatically speeded up the last 2 decades, leaving behind a serious of advantages and disadvantages affecting the Developed as well as the Developing countries where positives and negatives of Globalization could be seen in the same country at the same time in different economical fields. That s why Pro-globalization groups like WTO (world trade organization) and World economic forum appeared to set rules to govern global trade, capital flows and supervise their member countries to ensure that the rules are being followed.

5 On the other hand, Anti- globalization lobbies appeared like Friends of earth, Green peace and G-77 of Third world, to emphasis on there are a lot of countries which are not currently capable of functioning within the increased competitive pressure, and as there are Gains out of Globalization there are also Pains behind its rapid applications in unprepared countries.

Globalization in EGYPT market:

Egypt was quite exposed to shocks in economy but was somehow protected from Financial shocks as the Egyptian financial system is poorly integrated into the world s financial system as well as the Egyptian Bank with the international system. In that sense, Egypt has been fairly isolated. However, shocks from tourism revenues, oil crisis and actual FDI (foreign direct investments), have dramatic effects on the Egyptian income the last few years. 70% of the Egyptian foreign exchange earning comes from services like tourism and suez canal. As Tourism is going to be hit hard by the slowdown in the western and European economies then those flows is going to be effected quite strongly. Suez canal will be effected if the activity of world trade declines and there is fewer revenues. Remittances from Egyptian workers abroad depends on oil prices. Growth of exports that has driven the current economic expansion may be also affected by the slowdown of the western and European economy as well.

New economy and multinational companies in Egypt:Transportation, low cost telecommunications and rapid advancing in information (IT) are the main features for the term New Economy where it describes the result of the transition from a manufacturing-based economy to a service-based economy. As multinational companies started working inside Egypt as a direct application of Globalization, Egypt started to face dramatic changes in all fields of business. Computers, cell phones, IT departments and many others transformed factories, banks and companies to more rapid and efficient ones. New evolution in technology directly exposed the Egyptian market to the worldwide markets. All these changes created too many opportunities and challenges for the Egyptian labors and companies. The basic requirements for employment have been changed to fulfill the international challenges and competitions. English, computer skills and higher postgraduate studies became essential for gaining elite managerial positions in Multinational companies. For all these reasons where Egypt became internationally exposed to what is known by Globalization and new economy, companies and every one going for a business, must acquire new and higher skills and education than before to face challenges and competition of the new widely opened market of now a days.