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Globalization advantages and disadvantages. When talking about advantages and disadvantages of globalization, it is very much depend people see it, where people see it from, or what interest party people represent? Therefore, the answer to the globalization could be very different, and some feature of globalization could be both advantages and disadvantages. The answer below will be taken various different of view to look at globalization. Advantages of Globalization: * The availability of diverse commodity and goods.
The very beginning of the globalization could be pursuing back to early 14 century, when Columbus took his first voyage. After that, as the development of the sea travel, people in different continent become connected, and they often bring goods or commodity from the country of their origin to the destination country for exchange or living purposes, therefore, their behaviors made the goods and commodity which from different part of the world become available for people living in another country, such as: Plant, meat, vegetable, material and etc, all been exchanged through globalization process.
Outsource, the availability of human resource. Since the beginning of globalization, people were tried to find the appropriated location to fill their production needs. One very important factor in production is human resource. Any manufacturer and company are looking for cheap labor with appropriated skillet to make their product competitive. However, when they facing high labor cost in their local area or country, in order to make their product price cheaper than others, they will try to relocate their factory to country where labor cost is low.
China, India, Brazil, and Turkey are good example for cheap labor cost, and hey are also the countries which have a lot of manufacturer factory from all around the world. * Incentive and encourage of innovation. As more and more country been connected together, people have wider vision than before. They have better understand of needs and wants from another country, culture or human as whole. Therefore, people have incentive to create product, tool and solution to meet those needs and wants or solve the problem for another group or human as whole.
That is why people try to innovate and that is how globalization encourages innovation. For example: the invention of the radio or telegraph helps people from all different part of world to communicate message in an efficient way than letter. * Improve relation between country and regime. The globalization also brings better relation between different countries, as counties or regimes have gain better understanding through communication.
The international trade become another important concerns for regime when there is a conflict between them, they will start take count of how their decision to against another country will affect the economic activity in his country, will it stop their export, will it affect import, and will it affect investment from another country, and all hose question is very much link to their tax collection, and their country images. For example: organization like APACE is not Just an organization concentrate on economic out also Touches Improves relation among countries. Business activity.
Lower target encourage Because, the globalization process, the business activity was increasing, as governments lower their tariff to meet the trade agreement between various blocks or organizations. As those countries which signed those trade agreements, they will lower their tariff, and that will help business to export their goods and service to other country, and increase their production. For countries, it will attract investment to their country as their tariff is low, and it will help their economic growth. Disadvantages: * Increase the gap between poor and rich.
Some people argue that the globalization shift wealth from one country to another, which they pay low salary to the lower skill worker who at the low level of the profit link, but on the other hand, the corporation collect the big part of the profit from the sell, which result poor become poorer and rich become richer. For example: People who assemble Apple product only earn very small percentage of sell profit. * Environment damage. As the productivity increase rapidly, because globalization. It result serious concerns about environmental issue.
As the economic activity increase, it is very hard to preserve environment at same time, because, a lot of industry work will produce waste material or gas to pollute the water, oxygen, or result globe warming. Increase trade war. The globalization help increase trade between different countries, but, it also produce trade war, as some countries feel other sell significant cheaper product than their own production, which affect their own business activity, than the country urge o increase the tariff of specific item, or try to sell other item to another country in very low price.
Trade war will hurt business and consumers in both country, as the business may suffer decrease of sales as their product price is force to push high, and for consumer, they will not be about to pay more for a product. * Increase unemployment or some country. The globalization help business to outsource their labor Job to oversea where the labor cost is cheap. However, for the country who outsource Job to other country, their low skill worker will lose their Job, as their Job now shift to oversea, which indirectly result increase of unemployment rate of the country. * Product safety and copy right issue.
Because the globalization process, more and more product now is produce in oversea, therefore, the quality and safety control of the product is not as easy control as if it produce by local manufacturer. First, because, different country has different product quality standard or check process it may not fit the oversea company’s expectation. Second, the product may damage during the transportation, and it may raise the quality concern. Last, as the product been producing in oversea, it is very art to keep the copyright of the product, as lack of the law protection, and product security. . Virtuous circle An Internal or external advantageous sun as technological Innovation affect an economic positively, and then as the advantageous receive by the population through learning. The advantageous could help the improve productivity which lead to lower price of merchandises. As price of merchandise decreasing, and productivity increasing, it lead to strong consumption and increase of output, which lead to extra learning and research to produce new advantageous, therefore, a new cycle has starting.
Examples: * Hong Kong In the 20 century, Hong Kong was colonized by Britain for almost one hundred years. As the unique geography location, under influence of open market policy and low tax rate, Hong Kong has quick attracted a lot of foreign investment from all around the world, and the rate of the return on investment is one of the best around the world, and because of that the capital market of Hong Kong is one of the strongest market in Asia.
A lot of international company choose to finance their company or trade their company in Hong Gong’s stock market. Therefore, as more and more people in Hong Kong invest in stock, those companies will have capital to develop their business, and they will found Hong Kong is good place to finance their company, and more money they will put in to Hong Kong, and at same time new company will choose to invest in * Singapore Hong Kong.
Singapore have invest a lot of their money into their education system, their citizen have in title to the country free education, and even some of the secondary education. Therefore, their labor force usually can generate more value because their education level, they, they from their income Singapore government can collect ore tax, and eventually spend more budget on education. * America The Silicon Valley is another example for Virtuous cycle.
Since the technology cluster first emerge in the Silicon Valley, the both America and California government have generate a lot of policy and lower the tax of that region, more and more individual and technology company have move to Silicon Valley or located their headquarter to there, which result the technology cluster and the local economic develop in a fast pace, which lead to more tax income for the government and increase the competitive of America in global market.
Vicious circle: The Vicious circle usually spark by an internal or external incident, such as: suddenly increase of commodity price result high inflation or over spending result the massive government debt.
As there is inflation exist, more people will try to spend their money fast to avoid inflation, or apply a loan in order to purchase an item, and as the government increase the interest rate rapidly try to keep the inflation in control, the capital link been broken, which bring the economic to recession, and the government need to lower their interest again to encourage the economic activity, which may lead o the inflation again in the end, this is Vicious circle.
Example: * Zanzibar The country have suffering serious inflation between 1999-2008, even the reason are various, however, the government try to solve their economic crises by print out more money, which result more inflation than before. Thailand In ten Declining AT ten EYE to III/ ten country, Decease, ten export style economic scale, the country develop in a fast pace, which result a certain inflation, plus the global skeptical investor massive buying their stock and currency, the inflation been push to a new high, and at 1997 the country faced a serious economy crisis and lead o their currency to a new low, which lead to the country economic growth to the negative, but, the government has no way to lower their interest rate, as they affair their currency will further depreciated. Grace The country was one of the European member, which has modest strong economic, however, the reckless government spend lead the country to a great deficit, now, as they are one of the member of European union, they can’t not print money to solve their deficit problem, but, more borrowing will mean austerity plan and long more debt in the long term, which is a vicious cycle.