What Is Globalization

What Is Globalization?
Globalization is a process of interaction and integration among the

people, companies, and governments of different nations, a process
driven by international trade and investment and aided by information
technology. This process has effects on the environment, on culture,
on political systems, on economic development and prosperity, and on
human physical well-being in societies around the world.
Globalization is not new, though. For thousands of years, people—and,

later, corporations—have been buying from and selling to each other in
lands at great distances, such as through the famed Silk Road across
Central Asia that connected China and Europe during the Middle Ages.
Likewise, for centuries, people and corporations have invested in
enterprises in other countries. In fact, many of the features of the
current wave of globalization are similar to those prevailing before the
outbreak of the First World War in 1914. .
Map of the Silk Road
But policy and technological developments of the past few decades

have spurred increases in cross-border trade, investment, and
migration so large that many observers believe the world has entered
a qualitatively new phase in its economic development. Since 1950, for
example, the volume of world trade has increased by 20 times, and
from just 1997 to 1999 flows of foreign investment nearly doubled,
from $468 billion to $827 billion. Distinguishing this current wave of
globalization from earlier ones, author Thomas Friedman has said that
today globalization is “farther, faster, cheaper, and deeper.”
This current wave of globalization has been driven by policies that
have opened economies domestically and internationally. In the years
since the Second World War, and especially during the past two
decades, many governments have adopted free-market economic
systems, vastly increasing their own productive potential and creating
myriad new opportunities for international trade and investment.
Governments also have negotiated dramatic reductions in barriers to
commerce and have established international agreements to promote
trade in goods, services, and investment. Taking advantage of new
opportunities in foreign markets, corporations have built foreign
factories and established production and marketing arrangements with
foreign partners. A defining feature of globalization, therefore, is an
international industrial and financial business structure.
Technology has been the other principal driver of globalization.

Advances in information technology, in particular, have dramatically
transformed economic life. Information technologies have given all
sorts of individual economic actors—consumers, investors, businesses
—valuable new tools for identifying and pursuing economic
opportunities, including faster and more informed analyses of
economic trends around the world, easy transfers of assets, and
collaboration with far-flung partners.
Globalization is deeply controversial, however. Proponents of

globalization argue that it allows poor countries and their citizens to
develop economically and raise their standards of living, while
opponents of globalization claim that the creation of an unfettered
international free market has benefited multinational corporations in
the Western world at the expense of local enterprises, local cultures,
and common people. Resistance to globalization has therefore taken
shape both at a popular and at a governmental level as people and
governments try to manage the flow of capital, labor, goods, and ideas
that constitute the current wave of globalization.
To find the right balance between benefits and costs associated with
globalization, citizens of all nations need to understand how
globalization works and the policy choices facing them and their
societies. Globalization101.org tries to provide an accurate analysis of
the issues and controversies regarding globalization, especially to
high-school and college students, without the slogans or ideological
biases generally found in discussions of the topics. We welcome you to
our website.
Globalization
The human society around the world, over a period of time, has
established greater contact, but the pace has increased rapidly since
the mid 1980’s.The term globalization means international integration.
It includes an array of social, political and economic changes.
Unimaginable progress in modes of communications, transportation
and computer technology have given the process a new lease of life.
The world is more interdependent now than ever before .Multinational

companies manufacture products across many countries and sell to
consumers across the globe. Money, technology and raw materials
have broken the International barriers. Not only products and finances,
but also ideas and cultures have breached the national boundaries.
Laws, economies and social movements have become international in

nature and not only the Globalization of the Economy but also the
Globalization of Politics, Culture and Law is the order of the day. The
formation of General Agreement on Tariffs and Trade (GATT),
International Monetary Fund and the concept of free trade has boosted
globalization.
Globalization in India
In early 1990s the Indian economy had witnessed dramatic policy
changes. The idea behind the new economic model known as
Liberalization, Privatization and Globalization in India (LPG), was to
make the Indian economy one of the fastest growing economies in the
world. An array of reforms was initiated with regard to industrial, trade
and social sector to make the economy more competitive. The
economic changes initiated have had a dramatic effect on the overall
growth of the economy. It also heralded the integration of the Indian
economy into the global economy. The Indian economy was in major
crisis in 1991 when foreign currency reserves went down to $1 billion
and inflation was as high as 17%. Fiscal deficit was also high and NRI's
were not interested in investing in India. Then the following measures
were taken to liberalize and globalize the economy.
Steps Taken to Globalize Indian Economy
Some of the steps taken to liberalize and globalize our

economy were:
1. Devaluation: To solve the balance of payment problem Indian

currency were devaluated by 18 to 19%.
2. Disinvestment: To make the LPG model smooth many of the public

sectors were sold to the private sector.
3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a

wide range of sectors such as Insurance (26%), defense industries
(26%) etc.
4. NRI Scheme: The facilities which were available to foreign investors

were also given to NRI's.
Merits and Demerits of Globalization
The Merits of Globalization are as follows:
• There is an International market for companies and for

consumers there is a wider range of products to choose from.
• Increase in flow of investments from developed countries to
developing countries, which can be used for economic
reconstruction.
• Greater and faster flow of information between countries and
greater cultural interaction has helped to overcome cultural
barriers.
• Technological development has resulted in reverse brain drain in
developing countries.
The Demerits of Globalization are as follows:
• The outsourcing of jobs to developing countries has resulted in

loss of jobs in developed countries.
• There is a greater threat of spread of communicable diseases.
• There is an underlying threat of multinational corporations with
immense power ruling the globe.
• For smaller developing nations at the receiving end, it could
indirectly lead to a subtle form of colonization.
Summary
India gained highly from the LPG model as its GDP increased to 9.7% in
2007-2008. In respect of market capitalization, India ranks fourth in the
world. But even after globalization, condition of agriculture has not
improved. The share of agriculture in the GDP is only 17%. The number
of landless families has increased and farmers are still committing
suicide. But seeing the positive effects of globalization, it can be said
that very soon India will overcome these hurdles too and march
strongly on its path of development.
Well international trade is the exchange of goods or services or both between two
countries, across their boundaries. Where as globalization is not restricted to trade and
business only. It includes interaction of people, businesses, governments of different
countries. The interaction can be in terms of business, media, tourism etc. So you can say,
international trade is a sub-set or a part of globalization. Globalization is a vast term.

What Is Globalization

Uploaded by

Copyright:

Available Formats

What Is Globalization

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

What Is Globalization

Uploaded by

Copyright:

Available Formats

What Is Globalization?

Globalization is a process of interaction and integration among the

Globalization is not new, though. For thousands of years, people—and,

Map of the Silk Road

But policy and technological developments of the past few decades

Technology has been the other principal driver of globalization.

Globalization is deeply controversial, however. Proponents of

The world is more interdependent now than ever before .Multinational

Laws, economies and social movements have become international in

Steps Taken to Globalize Indian Economy

Some of the steps taken to liberalize and globalize our

1. Devaluation: To solve the balance of payment problem Indian

2. Disinvestment: To make the LPG model smooth many of the public

3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a

4. NRI Scheme: The facilities which were available to foreign investors

Merits and Demerits of Globalization

The Merits of Globalization are as follows:

• There is an International market for companies and for

The Demerits of Globalization are as follows:

• The outsourcing of jobs to developing countries has resulted in

You might also like