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Technology Shaping Economic Globalization

Introduction

Globalization unlike its former sister-word civilization has become common in the everyday life of many people of the world. Today, more people around the world are being connected irrespective of their distance. Therefore, what is being witnessed is the creation of a new world and society in which all things are being done in similar ways and what is being done in one part of the world is greatly affecting other people in other regions of the world (Lechner, 2009).

In basic terms, globalization refers to the growth of ties that span space, and according to Lechner (2009), globalization constitutes “a set of human actions that share a similar quality and point in the same direction” (Lechner, 2009, p.1). At the same time, in accordance with the definition of globalization as ‘ties that span space’ the concept, in essence, involves spreading or diffusing things or information, greater interdependence among more people, new forms of organization, and a wider awareness of commonalities. Hence, globalization has affected almost all sectors of society such as the economy, education, security, financial, communication, and many more (Lechner, 2009).

Debate on the Role of Globalization

Support for and against globalization has been viewed to be motivated by where people are located in the world (Arnold, 2008). As a result, the author notes that “globalization does not affect everyone in the same way, and often how it affects you determine how you feel about it” (Arnold 2008, p.748). Those who prefer and support globalization note that it is responsible for the current and continuing greater global economic wealth that has led to lower prices, more innovation, less poverty, and more benefits (Arnold 2008 ).

Benefits of globalization

According to a 2000 article by International Monetary Fund (IMF) titled, ‘Globalization: Threat or Opportunity’, it was highlighted that globalization has led to the availability of extensive opportunities that have resulted in the development of the world although such opportunities have not been evenly distributed (International Monetary Fund 2000). According to this view, the economies of most countries are getting integrated into the global economy and the countries that have realized this integration are realizing faster growth and reduced poverty (International Monetary Fund, 2000).

For instance, according to global reports globalization policies of outward-oriented have led to the dynamism and greater prosperity to the majority of East Asian countries, which is about forty years ago, was one of the poorest regions of the world (International Monetary Fund, 2000). Globalization has been accelerated by advancements in technology, which has made it easier for adopting countries to experience quicker opportunities in completing international transactions of trade and financial flow.

Michael D. Intriligator in his article titled, ‘Globalization of the World Economy: Potential benefits and costs and a net assessment’, observes that globalization is a dominant and influential aspect in the new emerging world system and has evolved to constitute the most influential force that will determine the future course of the globe (Intriligator 2003). According to the author, globalization has many manifolds dimensions cutting across economic, political, security, environmental, health, social, cultural, and many more (Intriligator 2003).

Globalization, within the precepts of policymakers, scholars, and social activists, has been seen as a force that the people around the world can use to advance the global economy; however, some sections have seen serious dangers in the world associated with globalization (Intriligator 2003).

Globalization has been reflected in worldwide trade and exchanges where the contribution of globalization has seen increased openness, integration, and borderless formation of the international economy (Intriligator, 2003). Globalization is remarkably responsible for the increasing international trade of goods and services and at the same time, being responsible for exchanges of currencies, capital movements, in technology transfer, all of which combine to indicate how globalization has led to increased volumes of international financial transactions (Intriligator, 2003). Moreover, globalization has been associated with technological advances, an aspect that has significantly led to the reduction of “costs of transportation and communication and dramatically lowered the costs of data processing and information storage and retrieval” (Intriligator, 2003).

Another useful aspect of globalization has to do with trade liberalization, which has significantly enhanced relationships in the international market in relation to commercial activities. As a result of this, liberalization there has been a drastic reduction in trade restrictions and protection policies and what the world has now is “a more liberal world trading system” (Intriligator, 2003). For instance, globalization has led to the formation of the General Agreement on Tariffs and Trade (GATT), which is an international body that has seen a reduction of trade tariffs and barriers especially to trade in goods and services. On the same note, globalization processes “have led to increased movement of capital and other important factors of production from one region of the world to the other” (Intriligator, 2003).

Another aspect of globalization has to do with increases in international, national, and local economic institutions. Technology has resulted in the advancement of communication channels, which in turn have utilized the opportunities available across nationals. This has led to the rise of many multinational corporations (MNCs) largely in developing economies. Indeed, evidence shows that such economies have experienced accelerated growth and development (Intriligator, 2003).

Globalization has further led to another benefit of global “financially interconnected world and a deeper degree of financial integration of developing countries with international financial markets” (Schmukler, 2004). The most notable aspect of this form of integration has been the evidence in most third world countries where there has been the enhancement of financial systems that have resulted in a “more complete, deeper, more stable, and better-regulated financial market” (Schmukler, 2004).

Reinforcing this concept is the observation that there have been increased capital flows to many nations of emerging economies resulting from the establishment of many MNCs subsidiaries in these economies. The increased capital flows have in turn stimulated developments in these countries, thus improving the lives of the general population. Next to this has been the internationalization of financial services, today, as a result of globalization, there is a wide presence of international financial intermediaries in world countries especially in developing economies an aspect that has led to an acceleration of those country’s economies (Schmukler, 2004).

Success stories of Globalization

Global examples of the positive role of globalization are numerous, with some writers expressing that as a result of globalization, there has been a tremendous reduction in poverty levels in countries like China and India. As a result of liberalization, they have undertaken initiatives that have included opening their economies to foreign direct investment, and their increased activities of involvement in the global trading system (Birdsall, 2003).

Observation of these writers is that because of China and India becoming part of global integrated systems, they continue to experience accelerated economic growth and this economic growth has translated into a decline in the number of people living in poverty (Birdsall, 2003).

The World Bank in the late 1990s estimated that globalization in the entire world had resulted in a reduction of the number of people living in poverty from the earlier number of 1.2 billion to 1.1 billion at that time a figure that has continued to go down (Birdsall, 2003). Another observation that has been made about the benefits of globalization has been that because of economic growth, poor countries have improved and reduced their level of poverty. Countries such as Japan, poorer countries in Western Europe, Korea, Indonesia, Chile, and many more countries are a testimony to the impact of globalization on global economies (Birdsall, 2003).

Critics of Globalization

Critics of globalization cite the skewed distribution of benefits of globalization and the major problem has to do with the equity in the distribution of the gains from globalization among the various diverse individuals, organizations, nations, and regions (Intriligator, 2003). The argument fostered is that many of these gains have been enjoyed by rich countries at the expense of poor countries and the net effect has been increased the creation of inequalities, which in turn has been the main source of conflict both at the national and international level (Intriligator, 2003).

Another relative negativity given with regard to globalization is that globalization processes and linkages are unstable and imply great instability, a situation that has made these global economies to be vulnerable. Untested theories claim that any global recession or depression can result in the disintegration of these economic interdependencies, which have resulted from globalization processes.

The consequences of such happenings would be evident in competitive devaluations, beggar-my-neighbor policies, escalating tariffs, and any other form of protectionism, and when such take place, then the result will be an experience of economic conflict, which in turn will result in economic warfare, and possible military conflict (Intriligator, 2003). As can be seen from these two major arguments against globalization, the hypotheses are pessimistic in nature hoping for something to happen. They do not provide adequate analysis or information to pass truth for their theories and as a result, the benefits of globalization outweigh the cost of globalization.

Conclusion

Globalization is a concept that is widening, deepening, and speeding up worldwide interconnectedness in all aspects of human life. Economic globalization has had a great impact on numerous economies of the world. From almost all regions of the world: East Asia, Latin America, Europe, Pacific, Africa, and to any part of the world, the wide evidence is striking, indicating that globalization has escalated economic and financial growth.

National economies are excelling making it for national and regional developments to increase. MNCs in developing economies as a result of globalization and internationalization of economies, which has further led to the growth of particular national economies of countries in which they operate. Overall it can be concluded that ‘It is pointless for economists to debate whether globalization is a positive or negative force – it promotes growth and growth is good for everyone, especially the poor’.

Reference List

Arnold, R. A., 2008. Economics. OH: Cengage Learning. Web.

Birdsall, N., 2003. Does Globalization Reduce Poverty? Cheerleaders, Cynics, and Worried Doubters (Global Agenda). Center for Global Development. Web.

International Monetary Fund. 2000. Annual report: 2000: making the global economy work for all. International Monetary Fund. Web.

Intriligator, M. D., 2003. Globalization of the World Economy: Potential Benefits and Costs and a Net Assessment. Milken Institute of the University of California. Web.

Lechner, F. J., 2009. Globalization: The Making of World Society. MA, Wiley-Blackwell. Web.

Schmukler, S. L., 2004. Benefits and Risks of Financial Globalization: Challenges for Developing Countries. Development Research Group, World Bank. Web.