BE267: International Business Environment

 

 

Introduction

Globalization refers to the word used to describe the growing interdependence of the economies of the world, civilization, and populace, majorly developed by the international trade in product or services, knowledge, and investment flows, people, and information. However, the world has been impacted by globalization in a great manner, which is complex and politically charged. Communities have been benefited technologically as a whole and have developed into an advanced world. However, globalization has impacted the overall world positively as well as negatively.

Therefore, the overall assignment will be focusing on globalization and its impact on societies and the overall world economy. The essay will be discussing the issues generated by globalization lately on the world. It will be illustrating the economic arguments as well as political arguments on the statement, ‘Globalization contains the seeds of its own destruction.’ It will also include the literature review, which will elaborate on the overall facts, knowledge as well as information regarding globalization. There will be a discussion on the theoretical concepts, approaches, and issues in the essay that will highlight all the relevant facts of globalization and its impact on the world and its economies. In simple words, the overall assignment will be about Globalization and its impacts on the world economy.

Globalization

Economic Argument

In general, the main motive of globalization is to benefit individual economies around the world by enabling markets to be more efficient, increasing competition, preventing military clashes as much as possible, and spreading wealth more equally. However, in the recent world of industries and markets, globalization has created higher opportunities for firms, even in less industrialized countries, to tap into more access to capital flows, technologies, human capital, etc.

Along with all the benefits created by globalization in the world economy, there has been a huge level of disadvantages as well, as the recently developing countries often face difficulties and hazards in competing with the developed countries (Globalpolicy.org, 2020).

Political Argument

It is a fact that globalization, as a new paradigm in the world, has caused beneficial changes in the world politically from the past half-century. Due to globalization, world politics has changed, and the government in various countries has changed in a better way. However, in political scope, globalization has made many negative impacts on the world, such as it has weakened the overall role and hegemony of states in illegitimate controlling of nations and changes in the political theories in national as well as international scopes.

Literature Review

As per the article (Amadi 2020), globalization is nothing but the development of the world into a new and advanced era through an approach involving the interaction of the economic and political factors of the world. The political economy aims to connect the economic analysis with the practical policy to address problems related to development. Most of the authors and researchers have identified that the process of globalization has changed the scenario of the world economically as well as politically and has introduced a few innovative elements in it. Therefore, the statement ‘Globalization contains the seed for its own destruction’ is true because, in the recent world, the increment in globalization has been causing more troubles and difficulties in different sectors of industries and firms. It is because globalization has provided advancement and benefits to the industries but has also involved threatening it to a certain level. Globalization refers to both the active process of the expansion of the corporate sector as well as the structure of international border facilities. Therefore, free trade globalization might sometimes yield economic benefits, and in both the process and economic-political regime, it is aiding to introduce threats in the progressive ends. However, the researchers have found out the globalizing process to not be a homogenous framework or structure, as it demands the emergent of the desterilized rules of markets combined with the cosmopolitan and liberal democracy provided by transnational institutions (NORUZI and VARGAS-HERNÁNDEZ, 2020).

As per (Brunet-Jailly 2019), Globalization has been a key factor for every developing country, wherein it provides many opportunities for the industries and firms and enabled them to dive into advanced firms. However, the authors of this article have found that globalization includes various threatening factors and disadvantages that can lead the firm to face struggles in the long run in the market. It is because the developing countries face difficulties to compete with the countries that have already developed, and it is argued that free trade and globalization provided more benefits to the developed countries as compared to the developing countries. Hence, the developing countries somehow lack to be benefited by the globalizing in the world to come extent. With the review of this article, there has been identified that the industries in developing countries require a higher level of security and protection from free trade to be able to develop. It is because the developing countries and the industries in such countries are often harmed by tariff protection.

Figure 1: Globalization

Source: (DESILVER, 2020)

Therefore, according to most of the researchers, articles, and reports, it has also been assumed that the latest growth of the world economy has increased with an extreme rising rate as shown in the figure above with almost 80% if the rise in the income rates in the emerging markets. However, there has been a massive downfall of the developed world middle class. Therefore, it can be assumed that the recent globalization, i.e., from 1988 to 2008, has a fluctuating rate, which means the globalization has augmented the world economy and has also caused a downfall because of the various risks and hazards associated with the globalizing process in the world.

Figure 2: Globalization Trends

Source: (Seidel, 2020)

Theoretical Concepts

Globalization is associated with several theories, among which few theoretical concepts have been explained below:

Theory of Liberalism

The mentioned theory visualizes the process of globalization in the form of a market-led extension of modernization.  In general, it has resulted from the innate human wants and needs for economic welfare and political liberty. As per this theory, the process of globalization is introduced with certain needs and wants of the population, and it functions with the ongoing needs and wants of the people. This theory connects globalization with the liberalism of the world population and eventually associates humanity across the planet. They pollinate as technical progress, predominantly in the parts of transportation, appropriate lawful and institutional agreement to make the markets and liberal democracy able to broaden on a transworld scale (politicalsciencenotes.com, 2020).

Theory of Political Realism

As per the mentioned theory, globalization is associated with several factors of political realism, such as the pursuit of national interest and conflict between states. As per the theorists, states are intrinsically acquisitive and self-serving and looking forward to predictable antagonism of power. However, most of the theorists stand for a balance of power, where any attempt by a single state attains world dominance is countered by collective resistance from other states. As per this theory, globalization also involves cultural, ecological, economic, and psychological elements, which cannot be reduced to power politics (politicalsciencenotes.com, 2020).

Theory of Marxism

Marxism refers to the theory that is chiefly associated with the modes of manufacture, communal utilization through undeserved allocation, and communal liberation through the transcendence of capitalism. As per the Marxists, globalization takes place due to the trans-world association increases opportunities for earning profits and surplus accretion. There is always a negative response of both liberalist and political realist justifications of globalization. The theory of Marxism of globalization aims to discover the individualities and examine connotations (politicalsciencenotes.com, 2020).

Theory of Constructivism

As per this theory, globalization also takes place because of the changes in the mentality of people and the way it has developed the communal world with a specific symbol, verbal communication, representations, and explanation. As a whole, it is the consequences of meticulous forms and dynamics of awareness (politicalsciencenotes.com, 2020).

Approaches

There are three approaches to globalization, which are Internationalist, Transformation, and Globalist.

Internationalist

The view of internationalist for globalization argues that the process of globalization is nothing but a myth. The internationalist believes that most financial and communal activity is provincial rather than worldwide. As per them, nation-states are viewed as blocks of territory with fixed borders, and hence in globalization, these boundaries are not considered the essential factors as they use to be because of globalization.

Transformationalist

As per the transformationalist, the effect of globalization has been overstated by the view of globalists and claims the globalist view of globalization to be stupid as they reject the concept of out of hand. Therefore, this theoretical position of globalization must be explained as a complex set of intersecting associations through which power functions indirectly. As per the transformationalist, the process of globalization can be turned around at the time of it being negative, that it can be controlled (Revisesociology.com, 2020).

Globalist

The view of globalists in terms of globalism can be optimistic view as well as the pessimistic view. In general, the optimistic view can be described as globalization includes more excitement and the creation of a more diverse community. It means that most of the globalist view globalization as a combination of creativity and exciting things that can develop the world into a better place. Whereas, the pessimistic view of globalization is that it will introduce more risks and difficulties in the global environment (UKEssays.com, 2020).

Issues

In general, globalization is associated with various issues that lead the world to face many difficulties politically as well as economically. Globalization is mainly associated with the creation of a framework for corporation among nations on a range of non-economic issues that contain cross-border implications, such as immigration, the environment, legal issues. Globalization is assumed to be looked at as unmitigated “good” by economists. Therefore, most economists have identified the following are the main issues of globalization:

Inequality

Globalization is highly associated with the increasing inequalities in income as well as wealth. For example, the most rising rural-urban divide in countries such as China and Brazil. It leads to political as well as social problems and financial instability that will constrain expansion. Therefore, most of the people belonging to the poverty of the world population do not have access to basic technologies and public products, which are the major issues of globalization.

Inflation

Globalization refers to the development and advancement of the global environment, which leads to a high demand for food and energy, due to which there has been an extreme increment in the price of the goods. Therefore, inflation in the rice of the major issue of globalization lately, and it has placed huge amount of poor people to face hunger issues that can also lead them to die at extreme case.

Threats to Global Commons

Globalization has destroyed the overall damage to ecosystem, land degradation, deforestation, loss of bio-diversity and many more. It has caused threat of a constant crisis of water in the world in an increasing rate (tutor2u.net, 2020).

Conclusion

The overall outcome of the essay is the identification that globalization has caused many developments in various countries around the world. However, the research also states that globalization is associated with many risk and threats that can harm many industries and firms, especially in the developing countries. As per the overall research, it has been identified that the developing countries faces major problems because of the free trade and the globalization as compared to the countries that has already been developed. The competitor between the industries of developed countries and developing countries become vast and therefore, the developing countries always remains backward in terms of development.

As a whole, the overall essay is all about the justification to the statement ‘Globalization contains seeds to its own destruction’, which means globalization is associated with various risks and issues that can harm firms and industries from different countries all over the world. As a result, the globalization helps to increase the world economically as well as politically but in that process, it also brings destructive disadvantages to the world economy that might hamper most of the firms and industries.

 

 

Bibliography

Amadi, L (2020), ‘Globalization and the changing Liberal international order: A review of the literature’, Research in Globalization, p. 100015.

Brunet-Jailly, E (2019), ‘Border Politics in a Global Era: Comparative Perspectives (book review)’, Borders in Globalization Review, vol. 1, no. 1, pp. 139–140.

DESILVER, D., (2020). Chart Of The Week: How Two Decades Of Globalization Have Changed The World. [online] Pew Research Center. Available at: <https://www.pewresearch.org/fact-tank/2014/01/24/chart-of-the-week-how-two-decades-of-globalization-have-changed-the-world/> [Accessed 30 November 2020].

Globalpolicy.org, (2020). The Threat Of Globalization. [online] Globalpolicy.org. Available at: <https://www.globalpolicy.org/globalization/defining-globalization/47948-the-threat-of-globalization.html> [Accessed 30 November 2020].

‌NORUZI, M. and VARGAS-HERNÁNDEZ, J., (2020). (PDF) A Literature Review Of Global Economy And Globalization Era. [online] ResearchGate. Available at: <https://www.researchgate.net/publication/47348022_A_literature_Review_of_Global_Economy_and_Globalization_Era> [Accessed 30 November 2020].

‌Politicalsciencenotes.com, (2020). 8 Theories Of Globalization – Explained!. [online] Political Science Notes. Available at: <https://www.politicalsciencenotes.com/articles/8-theories-of-globalization-explained/642#:~:text=ADVERTISEMENTS%3A,of%20them%20carries%20several%20variations.> [Accessed 30 November 2020].

Revisesociology.com, (2020). The Transformationalist View Of Globalization. [online] ReviseSociology. Available at: <https://revisesociology.com/2015/09/24/transformationalist-globalization/> [Accessed 30 November 2020].

Seidel, L., (2020). Is Globalization’S Second Wave About To Break?. [online] Brookings. Available at: <https://www.brookings.edu/research/is-globalizations-second-wave-about-to-break/> [Accessed 30 November 2020].

tutor2u.net, (2020). Globalisation – Benefits And Drawbacks | Business | Tutor2u. [online] tutor2u. Available at: <https://www.tutor2u.net/business/reference/globalisation-benefits-and-drawbacks> [Accessed 30 November 2020].

UKEssays.com, (2020). Approaches Of Contemporary Globalization. [online] UKEssays.com. Available at: <https://www.ukessays.com/essays/sociology/approaches-of-contemporary-globalization.php#:~:text=There%20are%203%20approaches%20to,the%20optimistic%20or%20positive%20globalist.> [Accessed 30 November 2020].