THE GROWING IMPORTANCE, MERITS AND DEMERITS OF GLOBALIZATION

Overview: Globalization is the elimination of barriers to trade, communication, and cultural exchange. It implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. The theory behind globalization is that worldwide openness will promote the inherent wealth of all nations However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately. As the above statement suggests globalization has both good and bad sides to it. Below is an elaborate illustration of the conflicting impacts of globalization.

Pros & cons: Pros Globalization promotes global macroeconomic growth. The concept of globalization lies on combined development of all nations of the world through reduced commercial and economic constraints. The poorer nations of the world are supposed to be able to take advantage of the thriving economies of the richer nations by having a free and bigger market for their domestic goods. Cons Globalization further widens the gap between the rich and the poor: Most international trade and investment is concentrated in North America, Europe, and East Asia. States that have already prospered from globalization continue to do so, while othersBangladesh, Bolivia, Belize, Burmaare left behind. Inequality has increased dramatically over the last 20 years, and the share of global income of the poorest people on earth has dropped from 2.3% to 1.4% in the last decade. A recent United Nations report found that 6.2 percent of the global labor force is unemployed. The report also found that the gap between rich and poor nations has widened, with countries representing 14 percent of the worlds population accounting for half the worlds trade and foreign investment. Globalization increases inequality within a country: China, Mexico, India, Nigeria, and other countries that have liberalized their economies and have taken advantage of economic

Globalisation increases employment: India, Bangladesh and such countries with big labour forces have gained from globalization as companies abroad outsources more and more

of their operational activities to such economies. This ensures a good way of utilizing the huge manpower of such nations, that is otherwise unutilized. Globalization helps international trade flourish. Economic globalization is a process that leads to the reduction in official obstacles to cross-border economic transactions. This often makes it as inexpensive to do business with foreigners as it is to do business at home, thus reducing the advantages held by domestic businesses.

globalization have also seen dramatic increases in inequality within their countries.

Greater sensitivity means greater integration: When countries are integrated economically, it means that each of them are liable for each of the others success or downfall. In order to safeguard own interest, the countries will make sure that pro-active actions are taken to shield economic disasters which will ultimately result in lesser economic breakdown. In case of breakdowns occurring, countries will help each other out to get out of the turmoil for their own benefit. Globalization allows for specialization Reducing tariff barriers and other impediments to the free movement of goods and capital, which makes it easier for countries to trade with each other, lifts the wealth of all states by allowing them to concentrate on those things in which they have greatest expertise. In general, poor countries that have lowered their tariff barriers have seen overall increases in employment and national income because labor and capital shifts to capital-generating export industries. In addition to providing jobs, foreign companies moving to developing countries often bring with them higher wages and better working conditions compared with those offered by domestic companies.

Globalization jeopardizes growth of domestic industries: Open competition results in dominance of products in local markets of third world nations, from countries that have superiority in technology and resources. This ultimately hinders the growth of local industry. An example would be that of Chineses dominance in the production of goods worldwide, when even U.S.A is feeling threatened and is doubting the capability of its own production capabilities. Countries like Bangladesh and India, which are outsourcing hubs, are losing their business to China as it can now produce cheaper goods at a larger scale. Globalization increases market sensitivity. Each actor in the international system is tied together more closely and in numerous ways. As a result, each becomes more sensitive to the decisions or actions of others and more vulnerable to the effects of others choices and actions. Our economies are becoming more interdependent, and thus more sensitive and vulnerable.

Globalization undermines social welfare programs. Structural adjustment programs often force countries in the developing world to streamline the economy and redirect spending away from social welfare and toward export sectors and other profit-yielding enterprises. This can lead to a reduction in or elimination of many social welfare programs such as health, food, and housing subsidies.

Globalizations allows for foreign direct investment. Foreign direct investment (one of the pillars of globalization) is closely linked to transmission of ideas and technical information, creation of new jobs, as it serves as a boost for ailing economies. Globalization helps eradicate poverty and provides scope for labor trade. Over the past 20 years, 200 million people have left absolute poverty, defined as living on the equivalent of less than $1 a day. As a result of globalization, increases in cross boarder labor trade has been possible which not only reduces the unemployment rate but also increases remittance. It also creates a mode of diversion of population from overpopulated countries to lesser populated ones. Foreign competition boosts innovation. In order to survive in the increasingly competitive global economy, the nations focus on creating value through innovations and differentiation which help them gain competitive advantage.

Globalization accelerates the "race to the bottom". Multinational companies tend to "seek the lowest level of regulation and taxation, forcing competing governments to lower their standards of labor, human rights, and environmental protection, taxation, and other regulation. Globalization can lead to a "brain drain. For developing countries, the reduced cost of movement across borders to access jobs or education has lead to a brain drain, as the best minds and most educated leave their country for greater opportunities or rewards elsewhere.

Globalization has enabled us to solve global problems. Had it not been for globalization, we would be bereft of international organizations and institutions that allow for more effective decision-making on a global scale.

Globalization can cause higher unemployment and wage stagnation This could happen for three reasons: the out-migration of capital, in-migration of labour, and competition from low-wage foreign workers via their exports of cheaper consumer goods and services to developed nations." Financial liberalization is difficult to implement. Lacking mature financial sectors, emerging nations are unable to float their currencies if they wish to attract foreign capital because exchange rate volatility would reduce foreign investment inflows. Financial liberalizations by developing countries might lead to financial collapse. Although greater economic and financial integration permits diversification from narrow production bases, it also induces greater specialization in production and makes countries susceptible to external economic shocks. We are "forced" to give up national sovereignty. As it is impossible to isolate ourselves from globalization and international organizations, we have to "go with the flow" and thus - in exchange for possible economic benefits - to give up a little bit of our national sovereignty (such as members of the EU, WTO, etc.)

Globalization helps democracy thrive. Governments also have a harder time controlling the flow of information and ideas in a more globalized world. It is harder to hide human rights abuses when survivors can go online to share stories, or when CNN cameras let us witness the aftermath of demonstrations or riots, or when satellites pick up the existence of mass graves.

Globalization is a liberating force. The integration of rich and poor nations is not a zero-sum game where the gains of one come at the expense of the other. Driven by the rapid democratization of information, technology, and finance, globalization is turning out to be a remarkably progressive, liberating force. On common grounds the benefits can be enjoyed by both the poorer and the richer nations. Whenever there is a major technological breakthrough all the people of the world have the liberty to enjoy the benefits including the nation giving birth to it. Global government bodies can take controversial yet necessary steps. Since the decision making bodies of international organizations is formed of leaders from various nationalities they can take necessary actions which are to serve the most balanced common purposes.

Globalization has made it more difficult to ensure safety and stability. Countries have less control than ever before over the flow of people, communicable diseases, pollution, drugs, arms, hazardous materials, and even terrorist activity. Terrorists such as Al Qaeda are stateless and have acquired the knowledge, resources, and support to employ destructive capability using the same technology through which you or I might place a phone call home or check stock prices. Terrorists, arms dealers, and drug cartels all operate as underground cross-border networks, moving money, people, or contraband across borders with greater ease than ever before. Globalization can lead to state disintegration It can often lead to violence, ethnic conflict, civil war, or secessionism. Examples abound, from the influence of terror networks on the secessionist war in Chechnya to the uprising in Chiapas in 1994, sparked in part by the signing of the North Atlantic Free Trade Agreement (NAFTA).

Institutions of global governance mean a democratic deficit, meaning that "international institutions of governance represent elites and governments rather than individuals or groups, and are thus not able to be held accountable for their actions. Thus, unlike politics at the national level in a democratic system of governance, there are few if any avenues through which global citizens may articulate their interests via conventional politics." Globalization harms the environment. Globalization and subsequent "industrialization leads to more emissions, contributing to global warming and a deterioration of air and water quality. In addition, profitable resource-based industries such as oil drilling, forestry, mining, and fisheries exploit resources of countries with little regard to the environmental cost."

Globalization has improved the status of women. Globalization has rapidly improved the social and economic status of women in the developing world. In a competitive, globalized world, the role of women becomes ever more valuable. Cultures that exclude women from full participation (e.g., Saudi Arabia) fall ever further behind.

Globalization is the biggest promoter of women rights. Cultural integration is the leading cause of women leaving their traditional restrictive place in society and rebel and succeed in obtaining a better life for themselves. Globalization can help preserve traditions and cultures. "...paradoxically, the new global media have proven a powerful means of projecting traditional culture and values, as well as the ideas of radical opponents of globalization. It is also a medium through which cultural practices and ideas otherwise unknown outside a local area are also transmitted globally." "Globalization helps break the regressive taboos responsible for discriminating against people on the basis of gender, race, or religious beliefs. It is an antidote to the intolerant fundamentalism that oppresses millions of the worlds poorest." Globalization helps eradicate child labour. Child labor declines as a countrys income increases. As trade promotes economic growth, globalization results in less child labor over time. In 1960, children made up 32 percent of the labor force in low-income countries. Forty years later, following the massive expansion in international trade, child labor in the same countries had declined to 19 percent.

On the whole, women have been harmed more than men by globalization. Structural adjustment programs often force countries in the developing world to streamline the economy and redirect spending away from social welfare and toward export sectors and other profit-yielding enterprises. This can lead to a reduction in or elimination of many social welfare programs such as health, food, and housing subsidies. Women on average are poorer than men and, as such, are the majority of those dependent on social welfare programs. Therefore, elimination or reduction in these programs affects them disproportionately to men." Foreign subsidized agriculture or foreign imports undermine womens traditional livelihoods as subsistence farmers or small producers in many developing countries. Put out of work by global competition, many women then face cultural barriers when looking for alternative occupations." Globalization is a threat to traditions. Globalization means "many cultural changes, the loss of traditional existence, the marginalization of indigenous groups, and the problems associated with rapid urbanization and industrialization pollution, increased crime rates, dramatic inequalities, and a location for a hotbed of social and political instability and upheaval." Globalization equals loss of individualism. Globalization is, in effect, a process in which people give up individualism in exchange for homogenization, or belonging. As popular culture spreads, creativity and individual values disappear.