At present, economy globalization, which can be defined as the expanding world integration through trade, financial flow and knowledge, has significant effect on developed and developing countries. We are living in a world where people can communicate efficiently and enjoy the freedom of exchange of goods and capital. Due to the economic globalization, the material life today is more colorful than before. However, there are also some arguments about this issue. The advantages of it are pleasing while the disadvantage should not be ignored at the same time.
In this essay, the both sides of economic globalization will be discussed.
The positive effects of economic globalization are awe-inspiring. There are some primary advantages. Firstly, it creates plenty of jobs for developing countries. As the result of outsourcing, many companies set up their business in the third world countries, such as China and India, where the wage and the health benefit of workers are much lower than these in their own countries.
That leads to the cost reduction and the profit growth (Reich, 1992). According to Jagdish (2005) the global economy provides a market for the products of cottage industry, providing more opportunities.
Secondly, the transnational corporations facilitate the integration of production and capital. The international division of labor is consolidated. Different countries play their own parts in the process in the trade and produce the best possible results. In this method, the productivity has been improved (Malia, 2008). For example, the Boeing Company has many cooperative partners around the world who supply the components to assemble the airplane. The third advantage is its impetus to the technology. The logistics industry is a good case in point.
A more efficient, convenient and high-tech system for the commodity is necessary. At present, in some developed countries the logistics industry has become a pillar industry of the national economy. The disadvantages will be discussed in this section. The first drawback of economic globalization is the job loss in the developed countries. As the result of outsourcing, the production worker and service workers are forced to face the problem that they will lose their jobs, for they have no superiority in the competition with the workers in the third world countries.
According to the Economic Policy Institute (2010), along with the growing trade deficit with China, the US had lost 2. 4 million jobs between 2001 and 2008. Another example is thanks to the influx of Chinese goods, there were 300,000 textile workers in South Africa had lost their jobs (Asia Times. April 26, 2005). Meanwhile, the financial interdependency is also one of the disadvantages. If the economy of one area collapses, the negative effects will spread to and destroy the economy of other areas owing to the interconnectedness of the global market (Joseph, 2008).
It is not exaggerative to say that the collapse of subprime mortgage market in US caused the global financial crisis and recession. The third is that the environmental degradation caused by the expansion of economy (Paul, 2008). The lower pollution regulation can attract the cooperation to invest in the developing countries. Despite the high economic growth in China, the severe pollution is blamed for the deterioration of the environment. Recently, a court in Ecuador announced that the Chevron Crop has to pay a penalty of 95 billion in total.
The toxic substance in the effluent caused the incidence of cancer in this area doubled. In summary, economic globalization has its “dual character”. On one hand, it can create wealth and left the country out of poverty. It also raises productivity and indirectly encourages the development of technology. On the other hand, the reduction of the job market in the developed countries, the environmental degradation in the developing countries and the global financial crisis are the passive effects of economic globalization. People should make the best use of its advantages and pay more attention to the disadvantages.
Cite this Discussion on the Advantages and Disadvantages of Economic Globalization
Discussion on the Advantages and Disadvantages of Economic Globalization. (2017, Mar 14). Retrieved from https://graduateway.com/discussion-on-the-advantages-and-disadvantages-of-economic-globalization/