History of Globalization

History of worldwideizationINTRODUCTION Historical Background of GlobalisationFor create countries, globalisation means integration with the world parsimoniousness. In simple stinting terms, globalization refers to the process of integration of the world into one huge market. much(prenominal) unification calls for the removal of all package barricades among countries. Even semipolitical and geographical barriers become irrelevant.At the society level, globalization means two things (a) the company commits itself heavily with several manufacturing locations around the world and offers growths in several change industries and (b) it also means the ability to compete in domestic markets with distant competitors. In the popular sense, globalization refers mainly to multi-plant operations.International Monetary pedigree defines globalization as the growing economic interdependence of countries worldwide done with(predicate) change magnitude volume and variety of cross border transactions in goods and services and of multinational capital flows and also through the much quick and widespread diffusion of locomotiveering.Charles Hill defines globalization as, the shift towards a more integrated and interdependent world economy. globalization has two main components- the globalization of market and the globalization of production.Interdependency and Integration of individual countries of the world whitethorn be called as globalization. Thus globalization integrates not only economies entirely also societies. The globalization process includes globalization of markets, globalization of production, globalization of technology and globalization of investment. globalisation encompasses the followingDoing or planning to expand, business globally. with child(p) up the distinction between the domestic facilities on a condition of the global outlook of the business.Locating the production and other(a) physical facilities on a consideration of the glob al business dynamics, irrespective of national considerations.Basing product development and production planning on the global market considerations.Global sourcing of factors of production, i.e., raw frameworks, components, machinery/technology, finance etc., are obtained from the best source anywhere in the world.Global orientation of organizational structure and management culture.A company, which has departed global, is called a Multinational (MNC) or a transnational (TNC). An MNC is, therefore, one that, by operating in more than one country, gains through Research and ripening (RD), leading to substantial production, marketing and financial advantages in its cost and written report that are not avail adequate to(p) to purely domestic competitors. The global economy views the world as one market, minimize the importance of national boundaries, raised capital and market wherever it apprize do the job best.To be specific, a global company has three characteristicsi) It is a conglomerate of forum multiple units (located in incompatible parts of the globe) but all linked by plebeian ownership.ii) Multiple units draw on a common pool of resources such as money, credit, information, patents, trade names and control trunkiii) The units respond to some common strategy.Nestle International is an example of an opening move that has become multinational. It sells its products in most countries and manufactures in some(prenominal) another(prenominal). Besides, its manager and shareholders are from many nations. The other MNCs whose names fuel be mentioned here are IBM, GE, McDonald, Ford, Shell, Philips, Sony, and Uniliver.Stages of globalisation/globalization processGlobalization does not take place in a single instance. It takes place gradually through an evolutionary approach. gibe to Ohamae, globalization has five stages. They are1) Domestic company exports to external countries through the dealers or distributors of the home country.2) In the se cond stage, the domestic company exports to exotic countries directly on its own.3) In the third stage, the domestic company becomes an international company by establishing production and marketing operations in motley key foreign countries.4) In the fourth stage, the company replicates a foreign company in the foreign country by having all the facilities including RD, full-fledged human resources etc.5) In the fifth stages, the company becomes a certain foreign company by serving the needs of foreign customers conscionable like the host countrys company serves.6) Thus, globalization means globalizing the marketing, production, investment, technology and other activities.ECONOMIC ENVIRONMENT sparing globalization refers to the increasing economic interdependence of the national economies across the world through the fast increase in the cross-border movement of goods, service, technology and capital. Whereas, it is centered on the diminution of international trade regulations as well as the tariffs, taxes, and other impediments that suppresses global trade, it is the process which increasing economic integration among countries, leading to the emergence of a global market or single world market. Depending on the paradigm, economic globalization brush off be viewed as either a positive or a negative phenomenon.Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries. Current globalization trends can be largely accounted for by real economies integrating with less developed economies, by means of foreign direct investment, the reduction of trade barrier as well as other economic reforms and, in many cases, immigration.As example, Chinese economic reform began to open China to the globalization in the 1980s. Scholars find that China has attained the degree of openness that is strange among the large and populous nations, with competition from foreign goods in almost any sector o f the economy. Foreign investment helped to greatly increase quality, knowledge and standards, curiously in heavy industry. Chinas experience supports the assertion that globalization greatly increases wealth for poor countries. As of 2005-2007, the Port of Shanghai holds the title as the Worlds busiest port.Economic liberalization in India refers to ongoing economic reforms in India that started in 1991. As of 2009, nearly 300 million flock-equivalent to the entire population of the U.S-have escaped uttermost(prenominal) leanness. In India, business process outsourcing has been described as the primary engine of the countrys development over the next few decades, contributing broadly to gross domestic product growth, employment growth, and poverty alleviation.SUPPORT AND CRITICISMIn general, corporate businesses, especially in the area of finance, globalization as the positive force in the world. Many economists cite statistics that seem to support such positive impact. For ex ample, per capita pure(a) Domestic Product (GDP) growth among post-1980 globalizing countries accelerated from 1.4 part a class in the mid-sixties and 2.9 percent a year in the s veritable(a)ties to 3.5 percent in the 1980s and 5.0 percent in the 1990s. This acceleration in growth seems even more remarkable given that the rich countries power saw steady declines in growth from the high of 4.7 percent in the 1960s to 2.2 percent in the 1990s. Also, the non-globalizing underdeveloped countries seem to fare worse than the globalizes, with the reasons annual growth rates falling from highs of 3.3 percent during the 1970s to only 1.4 percent during the 1990s. This rapid growth among the globalization is not simply due to the well-knit performances of China and India in the 1980s and 1990s-18 out of the 24 globalizers experienced increases in growth, many of them quite substantial.Economic liberals generally argue that higher degrees of political and economic throw inhandeddom i n the form of tolerant trade in the developed world are ends in themselves, producing higher levels of overall material wealth. Globalization is seen as the beneficial spread of liberty and capitalism. Jagdish Bhagwati, a former adviser to the U.N. on globalization, holds that, although there are obvious problems with overly rapid development, globalization is a very positive force that lifts countries out of poverty by causing a virtuous economic cycle associated with sudden economic growth. Economist Paul Krugman is the staunch supporter of globalization and free trade with a record of disagreeing with many critics of globalization. He argues that many of them leave out a basic understanding of comparative advantage and its importance in todays world.EFFECTS OF GLOBALISATIONGlobalization is both beneficial and harmful for different stakeholders. Globalization has both benefits and limitation.Benefits of Globalization(1) sluttish flow of capital Globalization helps for free the flow of capital from one country to the other. It helps the investor to get a fair interest rate or dividend and the global companies to acquire finance at humiliate cost of capital. Further, globalization increases capital flows from surplus countries to the innocent countries, which in crack increase the global investment.(2) Free Flow of engine room As stated earlier, globalization helps for the flow of technology from advanced countries to the developing countries. It helps the developing countries to implement new technology.(3) Increase in Industrialization Free flow of capital along with the technology enables the developing countries to boost-up industrialization in their countries. This ultimately increases global industrialization.(4) Lower Price with High Quality Indian consumers have already been getting the products of high quality at lower prices. Increased industrialization, speed up of technology, increased production and consumption level enables the companies to produce and sell the products at lower prices.(5) Cultural exchange and enquire for a variety of products Globalization reduces the physical distance among the countries and enable people of different countries to acquire the culture of other countries. The cultural exchange, in turn makes the people to demand for a variety of products which are being consumed in other countries. For example, demand for American pizza in India and demand for Masala Dosa and Hyderabadi Birayani and Indian styles garments in USA and Europe.(6) Increase in Employment and Income Globalization results in shift of manufacturing facilities to the low wage developing countries. As such, it reduces job opportunities in advanced countries and alternatively creates job opportunities in developing countries. For example Harwood Industries (US fabric manufactures) shifted its operation from US (paying wages $ per hour) to Honduras (wage rate was 48 % per hour).However, advanced countries can specialize in p roducing high technology product resulting in sweetener of employment opportunities. For example, Microsoft Cell Phone in USA.(7) Higher Standards of Living Further, Globalization reduces prices and thereby enhances consumption and living standards of people in all the countries of the world.though the globalization process produces a variety of benefits/advantages, developing countries including, India have acrimony experiences. These acidic experiences are due to the disadvantage of Globalization.Limitation of Globalization(1) heterogeneousness of Problems A major hurdle in the path of globalization is the absence of a universally accepted set of solution of the problems which have to be tackled. Some of these problems happen to be political and social ones, but even their solutions have economic implications. Frequently, the proposed solutions are such that some countries view them as more harmful than beneficial. Usually, the developed countries are not ready to share the ga ins of globalization with developing ones on an equitable basis and this hinders a silver transition to globalization.(2) Reluctance of Developing Countries The developing countries, on their part, have the bitter experience of being forced into giving trade and non-trade concessions to the developed countries at the cost of their own interest. They realize that, with them, the developed countries want to have free trade and not fair trade. The developed countries keep finding sporting reasons for adding to the trade disadvantages of the developing countries.(3) Non- Economic Hurdles Any form of economic integration, by its very nature, necessitates a corresponding compromise of national reign and it is more so in the case of global economics integration. This poses a very difficult and often unacceptable choice for national presidencys. For example, a national governing may find itself forced to abandon measures for providing nutrition shelter, or jobs during a natural calami ty, etc.(4) Factor Mobility Globalization necessitates unhampered international factor mobility. Developing countries feel that unrestricted mobility of capital and finance can be damaging for them while developed countries are perceptive about the effects of unrestricted immigration of low wage labor. In other words, while globalization is expected to bring about free factor mobility and factor price equalization, most countries are apprehensive about such phenomena.(5) Social Security With globalization, it becomes increasingly difficult for a government (particularly of a developing country) to create and finance a social security system. Such like provisions tend to lose their priority in a market-oriented globalization.(6) Risks and Uncertainties Progress towards globalization is also hindered by uncertainties relating to a mathematical shift in political and economic philosophy of some appendage countries the fear of nationalization by the MNCs, the resistances to cultural invasion associated with unrestricted inflow of foreign capital and enterprises, and so on.(7) Infrastructure Provision of economical and cost-efficient infrastructure is essential for economic development. However, the responsibility of providing it remains essentially with the government of country. Therefore, there is a risk that a poor country, which is not able to provide infrastructure for inviting foreign investment capital, may remain perpetually poor and suffer from inferior terms of trade in the bargain.