Economic globalization has a profound influence on developed and developing nations. It involves the growing interconnectedness of the world through trade, financial flow, and knowledge exchange. In today’s globalized era, communication plays a vital role in facilitating the exchange of goods and capital, thereby enhancing material prosperity. However, there are differing opinions on this topic. Despite its evident benefits, it is crucial to acknowledge the drawbacks of economic globalization. This article will explore both sides of the debate.
The positive impacts of economic globalization are remarkable. One notable benefit is the increase in job opportunities in developing countries due to outsourcing. Numerous companies opt to establish their businesses in third world nations like China and India, where workers receive lower wages and fewer health benefits compared to those in developed countries. Consequently, this results in decreased costs and augmented profits (Reich, 1992). Additionally, Jagdish (2005) asserts that the global economy generates a market for products from cottage industries, thereby creating additional opportunities.
Moreover, transnational corporations have a vital impact on promoting the integration of production and capital. This results in the consolidation of the global division of labor, where nations utilize their distinct capabilities in trade to achieve optimal results. This strategy has successfully increased productivity (Malia, 2008). A notable instance is exemplified by the Boeing Company, which collaborates with various partners across the globe to obtain aircraft assembly components. Furthermore, transnational corporations also make substantial contributions to technological progress, as evidenced by advancements within the logistics industry.
Enhancing and modernizing the commodities system is necessary for its effectiveness and convenience. The logistics industry has become crucial to the national economy of developed countries, but economic globalization has brought disadvantages, particularly job loss in these nations due to outsourcing. Workers in production and service industries are at a disadvantage compared to their counterparts from third world countries, resulting in unemployment.
Between 2001 and 2008, the United States lost 2.4 million jobs because of its trade deficit with China, as stated by the Economic Policy Institute (2010). South Africa also faced a decrease in employment for 300,000 textile workers due to an influx of Chinese goods, as reported by Asia Times on April 26, 2005. Furthermore, Joseph (2008) highlights the importance of recognizing that the global market’s interconnectedness leads to financial interdependency. Thus, if one region experiences an economic collapse, it can have severe consequences and potentially devastate other regions’ economies.
The subprime mortgage market collapse in the US caused the global financial crisis and recession (Paul, 2008), while economic expansion has contributed to environmental degradation. This could entice investments from developing nations as they have less stringent pollution regulations. Although China experiences rapid economic growth, it also suffers from severe pollution and environmental deterioration. In recent news, an Ecuadorian court mandated Chevron Crop to pay a penalty of 95 billion.
The toxic substance in the effluent led to the doubling of cancer incidences in this area. In essence, economic globalization has a dual nature. It can generate wealth and lift countries out of poverty, while also promoting productivity and indirectly fostering technological advancements. However, economic globalization also brings about negative consequences such as job market reduction in developed nations, environmental deterioration in developing countries, and the global financial crisis. It is crucial for people to maximize its benefits while being mindful of its drawbacks.
