It is often said that the internet has made the world a much smaller place. People are able to connect with others all around the globe life in a way that has never been possible in the past. Money can instantly transfer from an account in Singapore to an account in London. Companies are able to product goods or perform services in a multinational way. In many ways, economic globalization is already here… and it is growing.
The trend of economic globalization has some definite advantages to it, but there are some disadvantages that must be considered as well so that as the world grows even smaller, the economic opportunities continue to grow larger.
What Are the Pros of Economic Globalization?
1. It promotes local growth by stimulating overall growth.
The theory of trickle down economics works if it is implemented properly. That’s because it is all about spending. Multinational businesses spend through national businesses. National businesses spend through local businesses. Local businesses provide jobs and dollars to their community. If a business hoards their cash, the whole system comes tumbling down, but the theory is good on the whole.
2. It would create higher levels of mutual trust.
The only way business opportunities can grow is if different people are able to trust one another. Different corners of the world have different opinions as to what equates to right or wrong. By working together and learning from the different opinions that people have, the colonial aspects of a growing business empire can be reduced because people will be working with other people to lift each other up.
3. A global community requires a global economy.
Goods and services are already being purchased from a global perspective. A worldwide market exists online thanks to a number of sites that allow individuals to market their goods or services to anyone who has access to a computer or mobile device. This means that someone with a home computer and a broadband hook-up can be just as competitive as the large multinational corporation when it comes to the initial first impression.
4. It forces us all to share financial considerations.
Instead of having segmented pots of cash that are used for personal needs, economic globalization creates one big pile of cash that can be used for the benefit of all. There will always be local spending that happens, but the emphasis will shift to helping meet the world’s needs first instead of meeting national needs first from a business perspective once true globalization occurs.
5. It gives undeveloped countries a chance to join the developed world.
Many countries are struggling to keep pace with the global changes that are happening today. Economic globalization would undoubtedly bring about a new wave of outsourcing, bringing in new revenues to nations that could use a burst of cash to work on their infrastructure and other internal needs. Over time, it could create a level of equality in development that hasn’t been seen since the Roman Empire ruled over much of the known world.
6. New innovations would create new technologies in a number of fields.
If a global audience needs to be reached for true business success, then many companies will need to focus on investment and innovation to make that happen. Whenever innovation happens, new technologies in a number of different fields happen as well. The end result is a better standard of living for everyone involved with the development process.
What Are the Cons of Economic Globalization?
1. It gives businesses more power to influence civil government.
As businesses grow in wealth, they have the ability to better influence political elections. They can lobby for laws that benefit their company because of their cash flow. In the past, foreign companies were restricted from influencing domestic elections, but recent rulings from the US Supreme Court and other legal entities have made it so businesses have more power than ever before.
2. It removes the emphasis of local cultures.
There is no doubt that the American business revolution is taking over the lead role on economic globalization. There are other multinational companies that exist in Europe, the APAC region, and the Middle East, but is the US that dominates the business world. This means as globalization continues, the emphasis on local culture will be extinguished. There will only be the 3 regions providing influence from a business perspective instead.
3. It encourages the development and spreading of disease.
Having a globalized economy means that there will be more people traveling internationally than ever before. As the 2014 ebola outbreak showed, an illness can spread quickly when people hop onto airplanes and can travel anywhere in the world in 2 days or less. With more people doing this, more diseases are going to spread into places of the world where they generally aren’t seen today.
4. Most of the world gets ignored in economic globalization.
The richest 20% of the world is believe to consume about 85% of the world’s total resources. That means as the world grows smaller, the undeveloped world is just going to be left behind. Poor nations when combined only get 15% of current resources as it is and as business opportunities take on a global calling, that inequality is likely to continue growing over time.
5. Worker exploitation would likely increase.
Because economic globalization is ultimately a quest for bigger profits, there will be a need to exploit the workers in undeveloped nations who make nowhere near a livable wage. Why pay someone $20 per hour to fabricate parts when a worker can be paid $0.25 per hour instead? Most of the workers in the world today live on just $2 or less in daily wages. That will continue to increase as this becomes a business world.
6. It would shift where unemployment and poverty happen to be.
If jobs are being outsourced in a global economy, then eventually a global maximum output is going to be achieved. There will no longer be any room for growth. That means outsourced jobs will create unemployment and possible poverty in developed nations, switching who holds the power in the global economy. Businesses don’t care about borders. They care about profits. The ideas of social welfare or benefit programs could completely cease to exist.
The economic globalization pros and cons show that we would need laws in place to govern and monitor business actions. If a business has more control than a government does from a global perspective, then how the world is governed could become very different. By weighing these pros and cons, we can all take the right path toward globalization that benefits everyone.