The Pros and Cons of Globalization
Globalization refers to an agreement made by different countries to open their doors for trading and other business relations. Through globalization countries lacking a specific raw material or services can simply ask other countries for help with the promise of financial compensation. Although there could be some restrictions on trade and additional fees such as tariffs, globalization is still achieved as countries open their resources to each other for mutual advancement.
But globalization is not just about trading raw materials and business transactions. This also refers to the fusion of education, cultures and even beliefs. As one country opens its doors to other countries, they can be influenced on a certain level.
Although globalization is practiced by almost every country in the world, it is still a popular topic for debate. Although it has some advantages, many economists and even those who are simply observing could point out the possible negative effects of globalization.
Types of Economic Globalization
In terms of economic globalization where intricate policies for transactions are created, four types of transactions are created:
Trading of goods
Raw materials and products could be imported and exported between countries. Each country could stipulate their respective restrictions and additional fees but they would increase the availability of certain materials per agreement.
People
Countries can also agree on certain conditions on the services they will require from various professionals. They can agree not only on how many they can send or receive but also on certification programs.
Investments
Countries could also agree on capitalization of certain businesses. This usually happens between a well developed country and a country still in development.
Research and Technology
Each country could also share technology and research for mutual development.
Aside from economic globalization, countries also share key political decisions and cultural influences. For this reason, experts believe that globalization is not only opening themselves for business reasons but countries also open themselves for influence in political and cultural matters.
Negative Effects of Globalization
Some critics of globalization have pointed out some negative effects of globalization:
Brain drain
While sharing of research and technology is a possibility for countries that have prior agreement, some countries focus on getting people over with the promise of better opportunities. As experts on various industries leave the country, the intellectual capability of a country decreases. Experts who migrate to another country ultimately offer their services to the other country instead of using their skills in a much needed environment.
Abuse of manpower
Because countries can easily trade with each other, businesses would often demand products at a very affordable rate. To limit production costs, manufacturers from the county that provides the products in demand lower the wages of their workers. Sweatshops were created because the demand was so high but the expected prices are very low.
Bad Impact on Environment
As already indicated, there is a demand for increased supply but only on products created through sweatshops. Raw materials will also experience increase in demand as trading is opened for two countries. These raw materials could be easily extracted from their natural environment but their growth may not be as fast as the demand.
The common consensus among the critics of globalization is that the poorer country is always at the disadvantage in globalization. Richer counties can easily cause brain drain as they can entice experts in poorer countries with better financial rewards. Although investments increase in poorer countries, these investments are made to benefit the richer countries.
Not only poor countries are seeing the bad effects of globalization. Employment problem in richer countries could easily increase because of outsourcing. Because of technology, companies can simply set-up their business processes outside the country. They can have the business process in other countries with lower labor costs. Instead of generating local jobs, some companies now operate in other countries due to lower labor costs compared to labor costs in richer countries.
Outsourcing has become a multi-billion dollar industry as companies move out their operations from richer countries to poorer countries. They can easily attract good employees because the financial compensation they offer is more than enough in their local setting. Since the cost of living is considerably lower, companies could offer a better salary which is still lower compared to richer countries.
Arguments of Advocates for Globalization
On the other hand, those who advocate globalization point out to the mutual improvement of both countries. As free trade improves between countries, resources can be shared. Employment will also improve as certain services and could be offered to other countries. As more people are employed, the standard of living improves. In the end, both counties will enjoy the benefits of globalization.
Advocates of globalization argue that certain conditions exist because of the lack of a powerful governing body. A governing body, not limited to one country, should be established so that they can oversee labor and trade practices of every country. Many of the advocates for globalization are supporters for free trade and limitation of government intervention. However, their support for a governing body is not necessarily from a specific government and they are there to make sure the trade practices are followed.
Globalization is always a hot topic of conversation because of its pros and cons for developed and underdeveloped nations. Many are against globalization because the poorer nations become susceptible to exploitation and the rich nations lose jobs. Those who support globalization see it as a necessity to improve the economy of every nation.