Before we proceed, let us understand the meaning of the word Globalization.
As defined in the Cambridge Dictionary globalization means “the increase of trade around the world, especially by large companies producing and trading goods in many different countries”.
Thus, Globalization is the process through which Business or other organizations creates and expands international benefits or begins operating on an Global scale. It affects business in the developing countries giving more opportunity to capital flows, technology, human capital, cheaper imports, and larger export markets.
Economic Globalization on the other hand helps cross border business of commodities and services, flow of international capital and expanded with fast movement of technologies.
The truth remains that Globalization has resulted in living standards and life expectancy of people in developing countries by means of economic gains. Moreover, as a result of foreign direct investment the economic expansion of the wealthy countries directly has had the better growth effect thereby creating increase in Trade and FDI which affected the higher growth rate. Furthermore, the corruption rate and lower increase level of government outlays and taxes is the outcome.
If the company manufactures with cheaper cost and sales with less price the market area expands leading to high competition. It is linked with product and service cost and price, target market, technological adaptation, quick response, quick production by companies etc.
Now, let us understand some major effects of Globalization on economy on economy in details:
1. Lowering of Transportation Cost:
With Globalization the goods are produced in random and in huge quantity throughout the world. The shipment to broader areas (i.e. China to U.S.A , Europe ) has brought about innovative method of shipment like containerization which in return reduced the shipping cost drastically.
2. Job Hike:
The huge trades in different countries have forced countries like U.S.A and Canada to outsource the production and services. This they cater to the developing countries like India and China. India thus benefitted in hiring more people for its internal call centres to cater to this need thereby creating a lot of job opportunities in their country. It is the result of Globalization, of course.
3. Increase in Manufacturing:
The Globalization has created bulk orders. This is termed as “ Consolidation of Capital “ which indicates that there are more necessity of plenty of workers and few small businessmen to fulfill the level of huge worldly demands. Thus, large infrastructural investment is required to ship around the globe. So, Globalisation has minimized the growth of small scale manufacturers in America.
4. Intellectual property:
With the Globalization, the pirated American movies had increased in 2011 compared to 1960’s thereby reducing the value of intellectual property. This increase in supply has reduced the demand and with it the value of that property.
What we can understand by the above discussion that Economic Globaliazation has brought about a very marginal and impressing change in socio cultural activities and politics. The exchange of cultural activities among the countries and the blessing of the internet availability there is a decrease in national ethnicity and culture and a mingling of innovation in human way of life and foundation to a better living in this beautiful god created Universe.