The Impact of Globalization on Economy - Essay Sample

Because of high competition in the market majority of companies are thinking of the way to increase their market share. One the most adopted strategy is expansion through globalization. Globalization is a term use to define the integration between services, good, capital and breakdown of borders. Globalization process does not only include venturing the world market, technological advancement such communication, multi-national corporation ( MNCs) growth, financial market internationalization, migration of persons and the general increase in mobility of persons, capital, goods, ideas, and information but also critical challenges such as pollution, diseases, and infections CITATION Jia08 \l 1033 (Jianzhong).

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Therefore, many businesses view globalization as borders between nations, government, communities and the economy, increasing openness and liberalization of the market through the elimination of trade barriers and integration of financial markets. In other words, the term globalization explains the process where the connectivity of ideas, goods, services capital and individuals are transferred from one nation to another. As a popular culture for many companies, globalization has its good side of it and negative impact. Before the company thinks of taking it product outside it country boundaries, it should examine on the benefit and the disadvantages.

Positive impact

The process of globalization creates avenues for employment opportunities in the country where the multinational corporations take their production activities. As result of globalization, many people in the developing countries have been offered job opportunities. A good case of Coca-Cola companies that have opened several bottle production plants in Africa hence creating million of jobs.

Availability of Multinational Corporation determines the lever to which technology is transferred from one country. MNCs will maintain a high level of technology to be able to compete globally. Most of the developing countries are not able to produce their technology, as they have not invested more in research. Therefore, for an international company to be able to compete in the foreign country, they need to send the new technology to their subsidiary CITATION Bou08 \l 1033 (Bouquet and Birkinshaw.). The technology share is the distributed to other firms in the host country and hence allowing for technological advancement.

Globalization plays a significant role in enhancing the economic development by changing how the business is done. Globalization has reduced the trade barriers including the free flow of labor, goods, and services from one nation to another. Through taking advantage of commerce, the developing countries can increase their gross domestic product hence stabilizing their economy CITATION Dav11 \l 1033 (Davis and Harrigan).

.The bad impact of globalization

Despite having the advantages, globalizations have its drawbacks that every multinational corporation should take consideration before venturing in a foreign country. Because of globalization, the host countries start competing among themselves deregulating their policies for the purpose of attracting multi-national corporations and foreign direct investment. Therefore reducing taxes and wage rate at the advantage of investor so as to avoid losing them.

Studies have shown that when the developing countries increase the minimum wage and the labor safety standard for the local works the foreign investor relocate to other countries where wages are low. Globalization allows many nations to lower they labor standard, which promotes low wages, lack of labor union and violation of legal protection CITATION Jen08 \l 1033 (Jensen). There are also cases of labor abuse by foreign companies such child labor.

Globalization has affected social aspect of the host nation largely including; career, community, families and living standards. Globalization has reorganized the people way of life such as communication among individuals, assimilation, government and the entire world. Due to the integration of different people, there has been the erosion of culture many people wanting to adopt the foreign culture which may not be good. The have the decay of morals due to globalization.

Globalization has led to rising in the capital flow to the host countries. The rise inflow has caused an increase in inflationary pressure and exchange rate, which have a direct impact on the current account the country. In other words, globalization may play a fundamental role in stopping the economy progress unless the foreign companies have a production plant in the host country hence ensuring there is a balance of payment. If the foreign country produces its products home, then it means that the import will be more than the export hence affecting the exchange rate CITATION Ehr10 \l 1033 (Ehrenreich).

Conclusion

However, globalization has a significant impact on the growth and development co countries it also has similar challenges to the nation and organization and can lead to the collapse of an economy. Many scholars have stated that the benefit of globalization outdoes the cost associated with it. To be able to compete in the today competitive market globalization is something every nation should adopt. It is, therefore, the responsibility of the government to carry out thorough research before venturing in a foreign country or allowing MNCs in its territories.

Work Cited BIBLIOGRAPHY \l 1033

Bouquet, Cyril, and Julian Birkinshaw. ""Managing power in the multinational corporation: How low-power actors gain influence." " Journal of Management 34.3 (2008): 477-508.

Davis, D. R., and J. Harrigan. "Good jobs, bad jobs, and trade liberalization. ." Journal of international Economics, 84(1), (2011): 26-36.

Ehrenreich, Susanne. ""English as a business lingua franca in a German multinational corporation meeting the challenge." ." Journal of Business Communication 47.4 (2010): 408-431.

Jensen, Nathan M. . "Nation-states and the multinational corporation: A political economy of foreign direct investment." 2008.

Jianzhong, Zha. ""Strategy of Engineering Education Reform in the Era of Economic Globalization [J]."." Research in Higher Education of Engineering 1 (2008): 007.