Facts about Globalization

Globalization is the connection of different parts of the world. In

economics, globalization can be defined as the process in which
businesses, organizations, and countries begin operating on an
international scale. Globalization is most often used in an economic
context, but it also affects and is affected by politics and culture. In
general, globalization has been shown to increase the standard of
living in developing countries, but some analysts warn that
globalization can have a negative effect on local or emerging
economies and individual workers.
Globalization is not new. Since the start of civilization, people
have traded goods with their neighbors. As cultures advanced, they
were able to travel farther afield to trade their own goods for desirable
products found elsewhere. The Silk Road, an ancient network of trade
routes used between Europe, North Africa, East Africa, Central Asia,
South Asia, and the Far East, is an example of early globalization. For
more than 1,500 years, Europeans traded glass and manufactured
goods for Chinese silk and spices, contributing to a global economy in
which both Europe and Asia became accustomed to goods from far
away. Following the European exploration of the New World,
globalization occurred on a grand scale; the widespread transfer of
plants, animals, foods, cultures, and ideas became known as the
Columbian Exchange. The Triangular Trade network in which ships
carried manufactured goods from Europe to Africa, enslaved Africans
to the Americas, and raw materials back to Europe is another example
of globalization. The resulting spread of slavery demonstrates that
globalization can hurt people just as easily as it can connect people.

The rate of globalization has increased in recent years, a result

of rapid advancements in communication and transportation.
Advances in communication enable businesses to identify
opportunities for investment. At the same time, innovations
in information technology enable immediate communication and the
rapid transfer of financial assets across national borders. Improved
fiscal policies within countries and international trade agreements
between them also facilitate globalization. Political and economic
stability facilitate globalization as well. The relative instability of many
African nations is cited by experts as one of the reasons why Africa
has not benefited from globalization as much as countries in Asia and
Latin America.

Globalization provides businesses with a competitive advantage

by allowing them to source raw materials where they are inexpensive.
Globalization also gives organizations the opportunity to take
advantage of lower labor costs in developing countries, while
leveraging the technical expertise and experience of more developed
economies.

With globalization, different parts of a product may be made in

different regions of the world. Globalization has long been used by the
automotive industry, for instance, where different parts of a car may
be manufactured in different countries. Businesses in several different
countries may be involved in producing even seemingly simple
products such as cotton T-shirts.

Globalization affects services too. Many businesses located in

the United States have outsourced their call centers or information
technology services to companies in India. As part of the North
American Free Trade Agreement (NAFTA), U.S. automobile
companies relocated their operations to Mexico, where labor costs are
lower. The result is more jobs in countries where jobs are needed,
which can have a positive effect on the national economy and result in
a higher standard of living. China is a prime example of a country that
has benefited immensely from globalization. Another example is
Vietnam, where globalization has contributed to an increase in the
prices for rice, lifting many poor rice farmers out of poverty. As
the standard of living increased, more children of poor families left
work and attended school.
 Consumers benefit too. In general, globalization decreases the
cost of manufacturing. This means that companies can offer goods at
a lower price to consumers. The average cost of goods is a key
aspect that contributes to increases in the standard of
living. Consumers also have access to a wider variety of goods. In
some cases, this may contribute to improved health by enabling a
more varied and healthier diet; in others, it is blamed for increases in
unhealthy food consumption and diabetes.

Downsides

Not everything about globalization is beneficial. Any change has

winners and losers, and the people living in communities that had
been dependent on jobs outsourced elsewhere often suffer.
Effectively, this means that workers in the developed world must
compete with lower-cost markets for jobs; unions and workers may be
unable to defend against the threat of corporations that offer the
alternative between lower pay or losing jobs to a supplier in a less
expensive labor market.

The situation is more complex in the developing world, where

economies are undergoing rapid change. Indeed, the working
conditions of people at some points in the supply chain are deplorable.
The garment industry in Bangladesh, for instance, employs an
estimated four million people, but the average worker earns less in a
month than a U.S. worker earns in a day. In 2013, a textile factory
building collapsed, killing more than 1,100 workers. Critics also
suggest that employment opportunities for children in poor countries
may increase negative impacts of child labor and lure children of poor
families away from school. In general, critics blame the pressures of
globalization for encouraging an environment that exploits workers in
countries that do not offer sufficient protections.
Studies also suggest that globalization may contribute to income
disparity and inequality between the more educated and less
educated members of a society. This means that unskilled workers
may be affected by declining wages, which are under constant
pressure from globalization.

Regardless of the downsides, globalization is here to stay. The

result is a smaller, more connected world. Socially, globalization has
facilitated the exchange of ideas and cultures, contributing to a world
view in which people are more open and tolerant of one another.