Globalization

Globalization is the word used to describe the growing interdependence of the world’s
economies, cultures, and populations, brought about by cross-border trade in goods and services,
technology, and flows of investment, people, and information. Countries have built economic
partnerships to facilitate these movements over many centuries. But the term gained popularity
after the Cold War in the early 1990s, as these cooperative arrangements shaped modern
everyday life. This guide uses the term more narrowly to refer to international trade and some of
the investment flows among advanced economies, mostly focusing on the United States.

The wide-ranging effects of globalization are complex and politically charged. As with major
technological advances, globalization benefits society as a whole.

What is Globalization?
The word 'globalization' represents the integration of a national economy with the global
economy. It portrays the interdependence of economies, and cultures, in various countries.
Resultantly, it increases cross-border trade and investments and exchange of ideas, technologies
and increases the flow of information. Globalization as a term may be new, but countries have
built economic relationships with each other for centuries. This particular term gained popularity
in recent years, primarily due to the advent of technologies.

 Globalization is the spread of products, technology, information, and jobs across

nations.
 Corporations in developed nations can gain a competitive edge through globalization.
 Developing countries also benefit through globalization as they tend to be more cost-
effective and therefore attract jobs.
 The benefits of globalization have been questioned as the positive effects are not
necessarily distributed equally.
 One clear result of globalization is that an economic downturn in one country can create
a domino effect through its trade partners.

Globalization is a social, cultural, political, and legal phenomenon.

 Socially, it leads to greater interaction among various populations.

 Culturally, globalization represents the exchange of ideas, values, and artistic expression
among cultures.
 Globalization also represents a trend toward the development of a single world culture.
 Politically, globalization has shifted attention to intergovernmental organizations like
the United Nations (UN) and the World Trade Organization (WTO).
 Legally, globalization has altered how international law is created and enforced.
Pros and Cons of Globalization

Pros
 A larger market for goods and services
 Cheaper consumer prices
 Outsourcing can benefit both domestic firms and foreign labor
 Increased standard of living

Cons
 Concentrates wealth in richer countries
 Some poorer countries can be left behind
 Poorer countries can be exploited of their labor and physical & intellectual resources
 Cultures and the products consumed around the world can become homogenized

Pros

Proponents of globalization believe it allows developing countries to catch up to industrialized

nations through increased manufacturing, diversification, economic expansion, and
improvements in standards of living.

Outsourcing by companies brings jobs and technology to developing countries, which helps them
to grow their economies. Trade initiatives increase cross-border trading by removing supply-side
and trade-related constraints.

Globalization has advanced social justice on an international scale as well, and advocates report
that it has focused attention on human rights worldwide that might have otherwise been ignored
on a large scale.

Cons

One clear result of globalization is that an economic downturn in one country can create a
domino effect through its trade partners. For example, the 2008 financial crisis had a severe
impact on Portugal, Ireland, Greece, and Spain. All these countries were members of
the European Union, which had to step in to bail out debt-laden nations, which were thereafter
known by the acronym PIIGS.

Globalization detractors argue that it has created a concentration of wealth and power in the
hands of a small corporate elite that can gobble up smaller competitors around the globe.

Globalization has become a polarizing issue in the U.S. with the disappearance of entire
industries to new locations abroad. It's seen as a major factor in the economic squeeze on
the middle class.
For better and worse, globalization has also increased homogenization. Starbucks, Nike, and Gap
dominate commercial space in many nations. The sheer size and reach of the U.S. have made the
cultural exchange among nations largely a one-sided affair.

Globalization of Indian Economy

Globalization formally entered Indian market in 1991. During that time India was facing multiple
crises, our reserves were dry; fiscal deficit was very high and the Gulf war led to soaring oil
prices and crunch in foreign exchange reserves.
The introduction of globalization changed Indian society drastically. Globalization and the
Indian economy became interrelated, and next economic policies displayed a direct influence of
this change. Government shaped administrative policies according to it as well. The aim was to
promote business opportunities in this country, generate employment, and attract global
investments. Globalization of the Indian economy also witnessed an impact on its culture.
Introduction to other societies and their norms brought various changes to the culture of this
country as well. Furthermore, India is one of those countries that attain economic success after
the implementation of this concept. The introduction and growth of foreign investment in major
sectors of this country fuelled the rise of the Indian economy even further.
Impact of Globalization on Indian Economy
During this discussion of globalization and the Indian economy, a name that deserves special
mention is former Finance Minister of India Dr Manmohan Singh. He was at the forefront of this
movement and ensured a successful implementation of it. He also drafted the economic
liberalization proposal. Here are some quick statistics that will reflect the immediate effect of
globalization on Indian economy –After 1992, the average annual growth rate of GDP was
6.1%.In 1993-94, the export of India recorded an exponential growth of 20%. Also, in the
following financial year, it was at a healthy 18.4%.In 1995, the total export value of computer
services was about ＄11 billion, and in 2015 it recorded around ＄110 billion. These statistics
prove globalization and the Indian economy brought positive changes and fast-tracked India's
economic growth.
Benefits of Globalization of Indian Economy
The concept of globalization in India resulted in the following benefits that helped to transform
the Indian economy and the country as a whole –
1. More Employment Opportunities - The introduction of globalization brought an
influx of foreign investments and the favorable policies of the Indian government
also helped companies to set up units in this country. This has resulted in new
employment opportunities. Also, access to low-cost labor prompted foreign
businesses to outsource work to companies operating here. In a nutshell, the
employment opportunities in this country rapidly progressed after globalization
and Indian business merged.
2. Increase in per-capita Income - As a direct effect of more employment
opportunities, the per-capita income of Indian households also increased after
globalization. Resultantly, it altered their standard of living and improved the
purchasing power of an average Indian. This gave birth to a new middle-class and
recorded an increase in demand for consumer products in this country.
3. More Choices for Consumers - Globalization and the Indian economy provided
Indian consumers with a plethora of choices. Indian, as well as foreign
manufacturers, brought various products of the same kind, and consumers got a
chance to select their preferred one. This increase in competition prompted
manufacturers to create better products at a much lower price point.
4. Access to Untapped Markets - A noticeable benefit of globalization is that it
provides access to many untapped markets with huge potential. The globalization
of the Indian economy means it allowed foreign companies to operate in the
Indian market. Also, Indian businesses got an opportunity to operate on a global
scale. As a result, the import-export sector in India saw an astonishing rise after
1991.