How Globalization Affects Developed Countries
Along with its societal effects, globalization has a lasting impact on the environment—and typically not a positive one. Businesses that compete globally must develop strategies to balance the rights and interests of the individual and the community. This change enables businesses to compete worldwide and signifies a dramatic change for business leaders, labor, and management.
The international “faculty club”
Globalization leads to increased competition because you’re no longer just competing with Bob down the road. Businesses are now competing with other businesses from the other side of the world (Erixon, 2018). This mobility benefits migrants through better opportunities, the companies by linking them up with the best possible employees, and also contributes to the cultural and economic dynamism of the host countries (Dumont, Rayp & Willemé, 2012). This means every country now has access to the most productive machineries, making the whole world more productive. Under these two approaches, it is common to distinguish between ‘traded merchandise’ and ‘traded goods’. Such differences between positive and negative impacts of globalisation sources can also be found in rich countries where statistical agencies tend to follow international reporting guidelines more closely.
Capital Flight and Brain Drain in Other Countries
Globalization is the increased flow of goods, services, capital, people, and ideas across international boundaries according to the online course Global Business, taught by Harvard Business School Professor Forest Reinhardt. It creates jobs for people in developing countries who provide cheaper manufacturing jobs. For example, many companies are setting up in India and China because wages and manufacturing jobs are cheaper there which means fewer opportunities in developed worlds. Globalization has led to increased production for businesses in order to meet global demand. Increased production means more natural resources are used and this can be used up before they are regenerated leading to a negative impact on the environment. Through globalization countries and companies have access to a bigger consumer base.
The book presents two other anti-globalization narratives that focus on threats that come from the high global interdependence that globalization generates. The Geoeconomic Narrative argues that the main benefactor of globalization has been China at the expense of the West. It contends that economic interdependence with China is a dangerous gamble and calls for economic decoupling, a topic that has also received growing attention in IB research (Cui et al., 2023; Evenett & Pisani, 2023). The Global Threats Narrative worries that economic interdependence has exposed our societies to systemic threats such as global warming and pandemics. Seeing globalization as a lose-lose scenario, Global Threats proponents call on policymakers to develop a more resilient and sustainable future that is regenerative and distributive.
This planet-first approach has created a healthier environment, new job opportunities, and a better quality of life for its citizens. After enrolling in a program, you may request a withdrawal with refund (minus a $100 nonrefundable enrollment fee) up until 24 hours after the start of your program. Please review the Program Policies page for more details on refunds and deferrals. If your employer has contracted with HBS Online for participation in a program, or if you elect to enroll in the undergraduate credit option of the Credential of Readiness (CORe) program, note that policies for these options may differ.
Exports and imports in real dollars
- IB researchers, thus, should reflect more on the concept of narratives as part of informal (supranational) institutions (Hartmann et al., 2022)—because what people say matters.
- Specific impacts include lower production outputs, increases in manufacturing costs and end-use prices, and significant losses.
- The effects of trade extend to everyone because markets are interlinked, so imports and exports have knock-on effects on all prices in the economy, including those in non-traded sectors.
- NAFTA was replaced in 2020 by the United States-Mexico-Canada Agreement (USMC).
Globalization is simply the process of sharing ideas, goods, and services among countries. However, it’s essential to understand the positive and negative effects of globalization as it shapes economies, cultures, and societies worldwide. These investments by these multinationals or foreign countries also help strengthen the economies of these countries with the foreign exchange they bring in. With an increased number of investors looking for investment opportunities around the globe, country economies will benefit wherever they invest. Through globalization economies of different countries are becoming more connected to one another since they depend on each other for trade. Roberts and Lamp also discuss three distinct anti-globalization narratives that are rooted in the perception of unequal distributional implications arising from globalization.
A working paper by Fredrick Erixon of the European Centre for International Political Economy highlighted the specific macroeconomic benefits of economic globalization. His report noted that it has boosted output in the Western economy by enabling businesses to specialize while increasing innovativeness and expanding access to capital. Advancements in long-distance transportation, developments in telecommunication, and other advances in science and technology have enabled the integration and interdependence across global economies. The obvious advantage of economic globalization centers on its positive contributions to economic progress across the world. Germany supports its SMEs by providing financial assistance and access to international markets. Some economists suggest that businesses are not investing across borders to build capital infrastructure.
Richards involving 189 countries revealed that economic globalization has affected the security of global supply chains due to the overexploitation of land, water, and energy resources. Countries that participate in international trade exhibit greater exposure to resource risks. Globalization has integrated most of the economies of the world into a single global economy. Even China has recognized the need to participate in the global markets and international trade after learning from its failures during the early years of Chinese communism and the disastrous outcome of its Great Leap Forward economic program.
Nowadays, a phone, instant message, fax, or video conference call can easily be used to connect people throughout the world. Additionally, anyone with the funds can book a plane flight and show up halfway across the world in a matter of hours. In short, the “friction of distance” is lessened, and the world begins to metaphorically shrink. Competition from different countries drives firms to improve their products.
This then changed over the course of the 19th century, when technological advances triggered a period of marked growth in world trade – the so-called “first wave of globalization”. As global awareness of certain issues has risen, so too has the number of organizations that aim to deal with them. So-called non-governmental organizations bring together people unaffiliated with the government and can be nationally or globally focused. Many international NGOs deal with issues that do not pay attention to borders (such as global climate change, energy use, or child labor regulations).
