Positive Effects Of Globalization Economics Essay

To day of the month, the construct of globalisation still sparks assorted reactions in the public sphere. Skeptics of globalisation believe that globalisation is bad for economic systems, and that should be controlled. However, others maintain that it is a great thing to hold happened to the universe ‘s states as therefore should be seen as a positive move in the right way. This essay acknowledges that although there are costs associated with globalisation, the end point benefits clearly outweigh the costs to society. Therefore, this paper contends that attempts to increase globalisation should be promoted.

Globalization, harmonizing to Schmidt and Weitzel, consequences from increased international integrating ( Schmidt and and Weitzel ) . Harmonizing to them, globalisation consequences from a host of factors, amongst them technological promotion, political alterations, and pick of economic policies. Technological promotion makes production, communicating, and logistics and transport much cheaper and faster than earlier. Economic policies promoting liberalisation and unfastened economic systems to FDI ‘s besides encourages globalisation ( Schmidt and and Weitzel ) . Political alterations expose economic systems that were antecedently isolated into the international market, promote regional axis, and support reforms that support the regulation of jurisprudence therefore, promoting investings in infrastructural sector. Globalization brings with it both positive and negative effects.

Positive effects of globalisation

The additions from globalisation are as a consequence of its consequence on the flow of thoughts, information, engineerings, capital, fundss, goods, services and people. The additions are usually triggered by cross boundary line integratings ensuing from globalisation, which have several dimensions-economic, societal, cultural and political ( Nistor ) . Therefore, in the analysis of the benefits from globalisation, there are three channels through which the benefits accrue. The channels include ( a ) motion of capital ; ( B ) trade in goods and services and ( degree Celsius ) fiscal flows. Besides, there is besides a channel through motion of people.

Motion of capital

Technological promotion and the attendant infrastructural development, globalisation has opened up states to transport out international trade. The net consequence of the economic integrating and liberalisation has enhanced capital flows between different states. The capital flows across these states has served the of import function of heightening the capital base. This was really much evident in the 19th and the twentieth centuries. With capital flows, it is possible to administer the entire universe nest egg among states with high investing potency. The easiness of capital flows ensures that growing and development of a state is non constrained by its ain domestic nest eggs. For case, most of the East Asiatic states are donees of foreign capital influx. Capital flow can take either the signifier of foreign direct investings ( FDI ) or portfolio investings. For developing states, they benefit more from the FDI ‘s than from portfolio investings and therefore, most of them will put limitation to portfolio investings due to their volatile nature. Capital flows increases the rate of growing of states beyond their domestic potency, a status that would non otherwise be achieved, except with globalisation.

Increased trade in goods and services

Globalization opens up economic systems to international trade in goods and services, which consequences in the allotment of resources consistent with their several comparative advantages. Globalization hence, promotes specialisation therefore, heightening the states ‘ productiveness. Globalization facilitates the remotion of restrictive trade that impedes growing. Technological promotions from globalisation allows states to bring forth what they are best endowed, in footings of resources, engineering and labour. In bend, these states will profit from what they can non bring forth from elsewhere. Specialization enhances productiveness, efficiency and promotes good dealingss across boundary lines.

Fiscal flows

One of the major features of the globalisation procedure is a quickly turning capital market. The growing in both foreign exchange and capital market facilitates the transportation of resources across states. The most important result of the growing in the flows of capital and foreign exchange markets is the gross turnover in the foreign exchange markets. Harmonizing to Frankel, the gross turnover is estimated to be about $ 1.5 trillion worldwide, per twenty-four hours ( Frankel ) . The turnover is in the order of 100 times greater than the volume of goods and services traded. Therefore, currency trade has become an terminal in itself. However, an enlargement of the capital markets and foreign exchange markets is a critical requirement for effectual capital transportation.

Negative effects of globalisation

Refering the impacts of globalisation, two major concerns originate on the reference of the phenomena ( Nistor ) . This are frequently described as frights of globalisation. The first and major concern of globalisation is that it leads to unequal distribution of income and other resources amongst states. Second, is that globalisation infringes on the sovereignty. That globalisation makes it hard for states to follow their domestic policies ( Centre for Economic Policy Research ) . Most of the accounts given for these concerns are echt while others are farfetched.

Iniquitous income distribution

This statement is premised on the fact that since globalisation topographic points more accent on efficiency, the phenomena will in most instances benefit states that are favourably endowed. Skeptics, though justified to some extent, globalisation benefits, every bit much as they accrue on the most endowed states as claimed, these states have had their ain just portion of benefits. Developed states have a head start in footings of technological base, natural every bit good human resources as compared with the developing states. The skewed advantage comparatively eats off the benefits of developing states from trade, capital flows, and fiscal flows every bit good as specialisation benefits. While the benefits from trade benefits all states, much of the additions accrue to the advanced economic systems. This is possibly one of the grounds while commissariats for discriminatory intervention are catered for in today ‘s trade understandings.

The loss of province liberty in chase of economic policies is another concern raised in respect to globalisation. With the increased grade of economic integrating, it is true that one state can non prosecute autonomously, policies which are non in consonant rhyme with the general worldwide tendencies. With globalisation, some degree of forfeit with respects to national sovereignty becomes inevitable. Hus, with respect to globalisation issues, restraints to prosecuting domestic policies should be acknowledged.

Further concerns over increased globalisation, involve the fright of deteriorating national and international security, cultural eroding, drug trafficking, and other societal immoralities. There is loss of workmanship as a consequence of increased usage of engineering. Globalization has served to increase dependance of provinces on other provinces over indispensable merchandises that heightening the economic exposure.


The parts of globalisation to the developments witnessed today can non be ignored. Globalization has led to increased development of the universe economic systems, diffused technological promotions and improved people lives. Its function, in heightening production, productiveness and efficiency every bit good take downing production costs of economic systems is good clear. These developments, besides holding greater benefits, they have their ain negatives. However, a compendious reappraisal of the benefits against the costs, it is without a uncertainty that globalisation has made the universe a better topographic point. With the relevant steps being put in topographic point to extenuate the costs originating from globalisation, this essay concludes that, although there are costs to Globalization, the benefits clearly outweigh the Costss to Society. Therefore, attempts to increase Globalization should be promoted.