Globalization: An Opportunity Or A Threat?

What is Globalization?
According to International Monetary Fund, Globalization refers to the increasing integration of economies around the world, particularly through trade and financial flows. The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders. In addition, there are also broader cultural, political and environmental dimensions of globalization.

The four basic aspects of globalization identified by the International Monetary Fund are

• Trade and transactions,

• Capital and investment movements,

• Migration and movement of people and the

• Dissemination of knowledge

Further, environmental challenges such as climate change, global warming, cross-boundary water, air pollution, and over-fishing of the ocean are also linked with globalization.

Globalization as an Opportunity:

• Greater Opportunity: Global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports, and larger export markets.

• Cross-cultural Integration: Liberalized nations offer multiple avenues for higher education, tourism and jobs to the immigrants of different countries resulting in cross culture Integration.

• Prosperity:Globalization has helped lift hundreds of millions to escape poverty over the past decades. Populous countries like China and India have enjoyed phenomenal growth, improved standards of living, life expectancy, literacy and employment rates.

• Outward-oriented policies brought dynamism and greater prosperity to much of East Asia, transforming it from one of the poorest areas of the world 40 years ago.

• According to International Monetary Fund, 20^thcentury saw unparalleled economic growth, with global per capita GDP increasing almost five-fold.

• Competition:One of the most visible positive effects of globalization is the improved quality of products at competitive price. As the domestic companies have to fight out foreign competition, they are compelled to raise their standards and customer satisfaction levels in order to survive in the market.

• Foreign investment:Multinational corporations are a result of globalization. They occupy a central role within the process of globalization as evidenced through global foreign direct investment inflows.

• Technological Innovation. Increased competition from globalization helps stimulate new technology development, particularly with the growth in FDI, which helps improve economic output by making processes more efficient.

• Global Challenges: Globalization helped attenuate the major environmental challenges we are experiencing today. Some national and international agreements such as UN Framework Convention on Climate Change, The Kyoto Protocol etc. aim to attenuate the negative effects of globalization on the environment.

Threats that globalization offers:

• Unemployment:Due to globalization immigration of labor from developing countries to developed countries has become much prominent and easier. This has resulted in unemployment for the native citizens.

• The historic withdrawal of United Kingdom from the integrated market of European Union fearing job loss due to immigration and protectionism towards national sovereignty is a case in point.

• Inequality: The story of the 20^thcentury was of remarkable average income growth, but it is also worth noting that the progress was not evenly dispersed. The gaps between rich and poor countries, and rich and poor people within countries, have grown.

• According to the World Inequality Report by the World Inequality Lab, because of high and rising inequality within countries, the top1%richest individuals in the world captured twice as much growth as the bottom 50% individuals since 1980.

• Trade wars: The US is running large trade deficits with the EU as well as China. In addition to significant trade deficits in goods with Mexico, Japan, and Canada, Mr. Trump believes the trade deficit of US is proof that all its trading partners are unfair to America. As a protectionist measure, Donald Trump, pushed through a metal tariff plan that puts 25% tariff on imports of steel and 10% tariff on import of aluminium.

• The international atmosphere is full of threats of retaliation and it appears likely that major trading partners with the US like the EU and China will hit back by setting their own import barriers against US.

• Tax heavens: With different taxation norms in different countries citizens park their illicit or unaccounted money in tax heavens and avoid taxation from their home countries. The revelations made by Panama offshore leaks and Swiss bank case are case in point.