contempo

• Globalization is the increasing interaction of people, states, or countries through the growth of international flow of money, ideas, and culture
• Globalization focuses primarily on the economic process of integration that has social and cultural aspects
• It is the interconnectedness of people and business across the world that eventually leads to global, cultural, political, and economic integration
• Globalization allows for the free movement of goods, services, and people across the world in a seamless and integrated manner
• Refers to countries acting like magnets attracting global capital by opening up their economies to multinational corporations
• Historical Foundation of Globalization:
• Large-scale globalization began in the 1820s
• Connectivity of the world's economies and cultures grew quickly in the late 19th and early 20th century
• In the 1970s, the word "globalization" was coined
• In the early 1980s, it was used in its economic sense
• In the late half of the 1980s, Theodore Levitt popularized the term "globalization" by bringing it to the mainstream business audience
• Indicators and Nature of Globalization:
• Inventions of science and technology are attributed to the spread of globalization
• Development of infrastructure systems further interdependence in economic and cultural activities among nations
• Globalization processes affect and are affected by business and work organization, economics, socio-cultural resources, and natural environments
• It is a conglomerate of various multiple units located in different parts of the globe which are linked by common ownership
• Product presence is in different markets of the world
• Transactions involving intellectual properties such as copyrights, patents, trademarks, and process technologies are across the globe
• Merits of Globalization:
• Global competition and imports keep a lid on prices, preventing inflation from derailing economic growth
• An open economy spurs fast innovation with fresh ideas from abroad
• Export jobs often pay more than other jobs
• Unfettered capital flow keeps interest rates low
• Living standards go up faster
• Productivity grows more quickly when countries produce goods and services in which they have a comparative advantage
• Countries liberalize their visa rules and procedures to permit the full flow of people from country to country
• Results in freeing up the unproductive sector to investment and the productive sector to export-related activities, resulting in a win-win situation for the world economy
• Demerits of Globalization:
• Several people lose their jobs when companies import cheap labor or materials or shift production abroad
• Workers face pay cut demands from employers who often threaten to export jobs
• Unregulated globalization can cause serious problems to poor and developing countries in terms of labor force, wages, benefits, job termination, and others
• High foreign stake on industries where it is not necessarily needed could affect the economic growth of domestic enterprise
• Sovereignty of a country and company/institution may be at stake
• Theory of Comparative Advantages:
• States that countries that are good at producing particular goods are better off exporting them to countries that are less efficient at producing those goods
• Underlying assumption is that not all countries are good at producing all sorts of goods and hence they benefit by trading with each other
• Philosophy Underlying Globalization:
• Globalization is a complex and controversial process of building the world as a whole due to the creation of global institutional structures and global cultural forms like a free market
• Various ideological movements of resistance to globalization have been emerging in response to globalization
• Globalization is viewed as "a process of economic, social, culture, and political activity, which transcends nation-state borders and pertains to the world as a whole"