Introduction
Globalization refers to the process of global integration of the economies of nations by allowing the unrestricted flow of goods, services, investments and currencies between countries. Globalization also means the free exchange of thoughts and ideas, and greater mobility of people. It is the result of forces for change that are deeply rooted in human nature: the drive for freedom and a better life, for new discoveries, and for a variety of outlooks. Many nations embraced this new philosophy in the hope that in will lead to prosperity and sustainable development. Many believed that globalization will bring agricultural modernization, industrialization, urbanization, and hyper-consumerism resulting in increases of per capita gross domestic product (GDP). Unfortunately, such developments have often been accompanied by increasing social and environmental destruction throughout the world. The process of globalization is having unprecedented impacts, both positive and negative in all aspects of living. Globalization encompasses a range of social, political, and economic changes.
Essence of Globalization
Globalization has started as the process of economic cooperation and integration of countries. The development of national economies and introduction of new technologies created the foundation for the construction of a totally new system of international economic relations. The introduction of technologies and improvement of logistics as well as the growing attractiveness of international markets for many companies, the formation of multinational corporations stimulated the trend to integration of economies of different countries and their growing interaction. The integration of national economies determined by objective needs to expand markets led to the elimination of fiscal barriers and the emergence of free trade accelerated further development of the process of globalization.
It is important to emphasize that the process of globalization is consistently more beneficial for multinational corporations and developed countries because the elimination of barriers, which actually stimulate free trade, opens markets of developing as well as developed countries to the expansion of multinational corporations and companies operating in developed countries. In these situation, each country attempts to take its own position in the international market. However, companies based in developing countries prove to be uncompetitive, especially in high-tech and knowledge based industries, where companies from developed countries and multinational corporations dominate. As a result, developing countries are forced to use either their natural resources which they supply mainly to developed countries or developed the main industry, which is not highly technological, such as the production of some agricultural goods.
Opportunities and Challenges of Globalization
In the industrialized countries, the real per capita income more than tripled in the second half of the 20th century. In some developing countries the increase was even more dramatic. In South Korea, for example, per capita income increased more than tenfold. Economic growth also brought about medical advances, for example: life expectancy rose by over a decade in industrialized countries and by over 20 years on average in developing countries. Some developing countries that have embarked on the road toward global integration, such as China, India, Malaysia, Brazil, Mexico, South Korea, and Thailand, now no longer export only raw materials, but also finished products, and services. In India, for example, IT exports alone account for nearly 40 percent of export earnings.
Globalization has its positive and negative effects. It all depends on what we make of it the extent to which we are able to exploit the opportunities and at the same time limit the risks. I believe that to alleviate world poverty, we need more, not less, globalization but above all a better globalization. In other words, globalization requires political management.
The major challenges of globalization is to make the global system deliver economic growth to reduce global poverty and in inequality in all nations through modernization and increase economic activity. Implementing of the right policies to provide better living conditions to the entire global population. Giving of international aid specifically by industrialized and developed countries to share their knowledge and technologies to developing countries to help them become competitive in the global market. Improving governance to promote a globally competitive environment and eliminating corruption.
Developing countries must struggle to be competitive in the global market because they lack technologies to create finished products. They will have to resort on trading their natural resources and land to international companies to be able to resolve the problems of globalization. Developing countries are also force to import human resources to other countries just to survive. Globalization has a positive vision in making all economies unite into one network that maintain the balance of trade but with lack of technological advances, many countries specially the developing ones will suffer in the global competition of products and services.
References
1. Center for Alternative Development Initiative, Globalization [Online] Available at: http://www.cadi.ph/globalization.htm [Accessed 24 Feb 2010]
2. Essence of Globalization [Online] Available at: http://www.globalnook.com/globalnook/2006/10/essence_of_glob.html [Accessed 24 Feb 2010]
3. International Monetary Fund, Horst Kohler, The Challenges of Globalization and the Role of the IMF [Online] Available at: http://www.imf.org/external/np/speeches/2003/051503.htm [Accessed 24 Feb 2010]
4. Stanley Fischer, Globalization and its Challenges [Online] Available at: www.iie.com/fischer/pdf/Fischer011903.pdf [Accessed 24 Feb 2010]
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