“Globalisation is a process in which the world
appears to be converging economically, politically and culturally”(Needle,2015). Nowadays, financial
markets, industry, and politics are all internationalized. The occurrence of
this has increased transfer of wealth across countries; it has increased
communication throughout the world, an increased importance of trade in the
economy and an increase in international trade policies. Globalization has had detrimental
effects on the economy has created many challenges around the world.
is cut into six main aspects; firstly there is international trade and the
creation of the global marketplace. Globalization can be viewed as an enhance
to the amount of international trade. There are globally organized production
and investment flows, Migration, communication flows, Cultural flows and rapid
technological change around the world. Globalisation integrates markets in the worldwide
economy, leading to the joining of national economies. Markets whereby
globalisation is particularly common include financial markets, insurance markets and product
markets, such as markets for electronics, motor vehicles and agriculture. The
globalisation of sport and entertainment is also a feature of
the late 20th and early 21st centuries.
Globalization has extended beyond its economic roots and has
proliferated into human rights, the environment and even national security.
Although these new initiatives do not look similar to the ones we are used to
seeing the difference is that today’s agreements come equipped with their own
governance structures. This has led to an astonishing shift of policy-making
prerogatives from individual nation-states to a host of new, higher level
political institutions. This is a cause for celebration the notion that
political institutions have come together to grow in size, importance and
boldness is today’s conventional wisdom.
There are three main competing views on globalization, each
discussing different positives and negatives impacts that are associated with
globalization. The three different perspectives are the neo-classical perspective,
the Marxist/Socialist perspective, and the Structuralist view.
The first competing view is the Neoclassical/neoliberal
perspective, this view argues that overall history and current economics have
joined together to form a new relationship where nations are uniting both economically
and politically. It’s very essential for countries to come collectively in both
of these aspects in order to be a success in the globalized world.
The neoclassical competing view shows that the world’s
economy is controlled more by the existing market. It shows that If trade was
so essential to expanding markets, thus allowing increased productivity it
would be very easy to show how trade around the world would be so beneficial (Adam
Smith, 1790). Foremost it gives an amount of funding that assists the increase in
the amount of money available to trade internally. Furthermore, it enables more
of a market development across the globe. An example of this could be two
countries selling two pairs of goods, if one country has an “absolute advantage”
in producing one set of goods and the other country has an absolute advantage
of producing their set of goods, they would each be specialized for their own
country for selling the goods they have.
The advantage of having this is that both countries will mainly
benefit from this provided that the trade is fair. In addition, trade and the
economic success enables many types of countries to both develop and profit
from a huge economic change into the markets overseas to be able to acquire
cheaper resources/materials. However, this could be a potential problem as countries
that are significantly better at producing and countries which are more
advanced would benefit from this whereas countries that aren’t as developed wouldn’t,
simply because of lack of growth and development and thus making it harder to
trade. David Ricardo refined Adam smith’s theory by arguing that from two
countries if one country was better than the other at producing, then that
country will be known for that particular produce. For example, David Ricardo uses trade between two countries being England and Portugal explain
how it assists Portugal to import cloth even if Portugal can produce cloth with
less labour than England. Current economists portray that England has a
comparative advantage in producing cloth. Ricardo states, “To produce wine
in Portugal, it must have 80 men for a year, and to produce the cloth in the
same country, it must have need of 90 men for the year also. Thus it would be
advantageous for them to export wine in exchange for cloth”(David Ricardo,
Due to globalisation rising alongside the increase in
accessible/useable technology and convenience of improved transportation,
technology has made it easier for people to communicate across borders, and has
also lead to a decline in the cost of transportation. It is now cheaper and
more efficient to transport goods from one place to another. Globalized
transportation has increased profitability and thus during the main growth
stages of globalization between 1970 and 1993 the increase in transport was up
by nearly fifty percent throughout Europe.
A major change with transportation costs has enabled businesses
to acquire greater profits. This is from changing ideas within the business by
moving the place they create products (Heshmati, 2003). In addition, Companies
can now transfer files via the internet, and this enables the possibility to
have meetings without every member being physically present. This has led to
lower long distance communication costs and the exchange of information is
drastically easier than ever before (Mukherjee, 2008). International businesses
can now telecommunicate with others through the use of email, telephone
conferences, and videoconferences. The increase in telecommunications
development had to do with a cause-effect relationship between technological
development and the deregulation of financial market policies. (Czaputowicz,
The second competing view is the Socialist/Marxist
perspective. They argue that globalization has led to an increase in the
inequalities of countries/nations. Marx has many contradicting viewpoints on
exactly how unequal nations are currently, and how big a factor globalization
is playing in the inequalities. Firstly, Marx was in agreement with smith that
capitalism led to unprecedented growth but he also made the point that there
was a huge flaw. He believed the social system of capitalism is very unfair, he
believed that owners of capital are able to exploit their advantage of certain
access to recourses and some political powers are in the hands of a few people.
The more wealthy nations are continuing to increase their status of wealth
whilst the poorest nations/countries are continuing to remain poor. It has been
established that 20% of the world’s richest population control 86% of world
gross domestic product, as well as 82% of world exports. In comparison to the
world’s poorest 20% population consume 1.3% .
countries will not be left out of globalisation due to the increased reduction
of trade borders throughout the world. Rising countries such as India and China
have reduced poverty and have shown an increase in economic growth since they took
on open economic policies in the 1990’s (Cheng and Mittlehammer, 2008). It is vital
to put these policies in place so that more countries will want to partake in
globalisation. In some parts of the world there
are no guarantees that the wealth from inward investment will assist the local
community of the less developed countries. Often, profits are sent back to the
MEDC where the TNCs are based. If it becomes cheaper to operate in another
country, the TNC might close down the factory and make local people redundant. However,
If developing countries
know that they will not have to suffer from inequalities they will want to join
globalization. A study found that foreign investment has had a positive impact
on economic growth when country-specific factors are taken into account
(Carkovic and Levine, 2002). These factors include; domestic financial
development, school attainment, and national income.
The final competing view is the Structuralist writer’s
perspective. This specific perspective differs from the other two perspectives
in various ways. Firstly, it is believed that there isn’t a main reason behind
globalisation. Globalisation is considered to have just progressed over the
years. Secondly, globalization could be very influential however it’s an
unknown occurrence and the predictions of its outcome will not be known for
many years down the road. After the Second World War, a development of
economics was created in belief that LDC’s (Less developed countries) could not
follow the same footsteps of the more developed countries. Additionally,
TNCs (transnational corporations) were to help bring wealth and foreign currency to local
economies when they buy local resources, products and services and therefore
the extra money created by this investment can be spent usefully on education,
health and infrastructure for them countries.
Many countries were led to develop distinctive non-market
policies to rapidly industrialize their economies. LDCs faced an already
developed capitalist world which needs time to be able to catch up on certain
policies and thus it was argued that some structures required for a sustainable
market system weren’t made in some of the developing countries and therefore
they had to be constructed before the integration of economies into the global system.
The positive effect globalisation can have is
the Inward investment by transnational corporations helps countries
by helping and providing new types of employment through jobs which requires different
skills for local people. Structualists
wouldn’t particularly agree with the way some of these problems are addressed
but they believe and argue that if the business environment is to be
constructed in such a way as to enable globalization to increase growth, stability
and development over time then those issues had to be addressed and resolved.
Structuralist writers further believe that the same common
changes have occurred from globalization but there isn’t a specific way of how
these changes came. This perspective believes that the range of factors
influencing processes of globalization is much greater, and the outcomes of
globalization are very vague. Also, the increases in technology and the trade
liberalization or governmental policies have lead to globalization benefiting a
lot of countries and this dire increase in globalisation has lead to an enhance
in inequality amongst nations, as well as an increase in the inequalities
between the development of individual countries.
In conclusion, globalisation can be defined in different competing
perspectives, the way it has changed policies in the world and how nations are
conducting business in the world are very important. Each individual competing
view has different viewpoints on what causes globalization and how
globalization impacts the world. There are also several theories of
globalization that need to be understood. It’s vital to have a clear
understanding of the trends and views of globalization to be able to understand
how it affects the modern business world and society as a whole.
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Theories of Globalization