Examples of globalization became quite relevant in the 90s of the last century, despite the fact that various aspects of this process were already very, very seriously discussed by scientists around the world back in the 60-70s. However, to date, you can meet a fairly large number of people who do not know what it is.
What it is?
The examples of globalization of the world economy showed us how the planetary space is transformed into a single zone where various goods, services, information, capital are absolutely free to move, and ideas together with their carriers are freely distributed, creating motivation for the development of modern institutions, as well as establishing close interaction.
Globalization provides for the formation of a single international legal, economic, as well as cultural and information space. Thus, the examples of globalization, in principle, go beyond the standard economic framework, as it ultimately affects significantly the most diverse spheres of social activity, including culture, politics and ideology. Undoubtedly, this process will play an extremely important role in the global economy of our time, giving a sufficiently powerful impetus to the creation of a completely new system of political and economic international relations.
What causes it?
First of all, examples of globalization are formed due to objective factors of world development, and this is due to the deepening of MRI (international division of labor), as well as significant scientific and technological progress in the field of communications and transport, which ensures a reduction in the economic distance between all countries.
Providing the opportunity to always get the right information in real time from anywhere in the world, and at the same time make decisions quickly enough, modern telecommunication systems incredibly facilitate the organization of global capital investment, as well as the coordination of marketing and production. If we consider the conditions of information integration of the world, the borrowing of the experience of other countries in terms of management, as well as the transfer of important technologies, is significantly accelerated. Among other things, the processes of globalization are forming, which to date by their nature were exclusively local, and they should include the possibility of obtaining higher education far from the advanced world educational centers.
Economy
The next source of globalization is trade liberalization, as well as all sorts of other types of economic liberalization, which provoked a significant restriction of protectionism policies, as well as providing much greater freedom for world trade. Thus, tariffs were significantly reduced, and other barriers to trade in both services and various commodity products were completely eliminated. Other liberalization measures ultimately led to an acceleration of capital flows, as well as other important production factors.
One of the important sources of the internationalization process, as well as one of the most important sources of globalization, is the phenomenon of transnationalization, within the borders of which a certain part of the country's production, import and export, as well as consumption and income directly depends on the decisions of specialized international centers located outside this state . In particular, all kinds of leading forces multinational companies which can be called both the main actors of internationalization, and its result.
Effects
The consequences of globalization affect the state of the economy of any country, because in itself it directly affects the production of various services and goods, the use of labor, technology and their distribution, as well as investment, which is also important. All this ultimately directly affects the overall production efficiency, competitiveness and labor productivity. It is worth noting the fact that it was the consequences of globalization that caused a serious aggravation of international competition.
How is she going?
In itself, the globalization of the economy has accelerated significantly over the past few decades, while different markets, including markets for goods, capital and technology, have become increasingly interconnected and integrated into a network of multinational companies. Despite the fact that a number of such companies operate in the standard trading sector, in general, international organizations are in favor of promoting the industrial restructuring of most developing countries through the formation of new industries, including petrochemical, automotive, electronic, engineering and many others. In addition, quite important is the constant modernization of traditional industries, including food and textile.
Modern global corporations, unlike those that existed earlier, operate mainly in the financial and information markets. Recently, there has been an active planetary unification of all these markets, and a holistic financial and informational world space has been created. Thus, the role of such global corporations is increasing, as well as supranational economic organizations and structures closely connected with them, including the International Monetary Fund, the International Finance Corporation and many others that have a significant impact on globalization processes.
Why are they so important?
Today, approximately 80% of all the most advanced technologies are created by transnational corporations, the profitability of which in most cases is higher than the gross national income available to fairly large countries. It’s enough to say that in the list of the top 100 largest economies in the world more than half of the positions are occupied by just such companies, while the field of activity of most of them is directly related to the development of all kinds of hyper technologies, including the most advanced computer programs, network computers, organizational computers and many others. It is the developers, as well as the owners of such technologies, who are today the controlling force of financial markets, which determines how the world economy will look.
Few people think that about a fifth of the income of industrialized countries, as well as a third of the income of developing countries, directly depends on the volume of exports. Thus, according to expert estimates, more than 45% of organizations engaged in the manufacturing industry, as well as about 12%, engaged in the service sector, are directly or indirectly associated with export trade, which today is the main means of redistributing the world income.
Moreover, certain influences and problems of globalization deserve special attention.
Influences and problems
First of all, it is worth saying, of course, about a significant increase in foreign direct investment, which significantly exceeds the general growth rate of world trade.Such investments play an extremely important role in the transfer of various technologies, the formation of global enterprises and industrial restructuring, which ultimately directly affects the national economy.
Also, do not forget about how rapidly the pace of various technological innovations is developing. As mentioned above, new technologies are one of the main driving forces of globalization, and it, in turn, increasing competition between companies, stimulates their constant development and distribution.
In addition, as a result of globalization, trade in services, including information, legal, financial, managerial, as well as many other so-called invisible services, which become the main factor in international trade relations, is significantly increasing. If back in 1970, no more than a third of foreign direct investment was connected with the export of services, today today it contains more than half of investment capital, intellectual capital ultimately became the most important product in the current global market.
However, in fact, there are globalization problems that are projected for the future.
The interaction of economies
An important result of the internationalization process is the active interaction, as well as the interdependence of the economies of various countries. In particular, this can be perceived or even interpreted as the integration of several states into a single structure, which is close to a single international economic system. Despite the fact that the bulk of the global product is actively consumed in various producing countries, national development is increasingly associated with various global structures and is becoming more diverse and multifaceted in comparison with the state in which it was previously.
The globalization of the economy takes place in a fairly polarized world economic system in terms of economic opportunities. This situation is a potential source of a wide variety of conflicts, risks and problems. Thus, a certain number of advanced countries gained control over a significant part of consumption and production, without using any economic or political pressure. At the same time, their internal guidelines and priorities ultimately affect all the largest areas of internationalization.
The overwhelming majority of transnational corporations (about 90%) are based in various advanced countries, but recently such corporations have begun to form in those states that are just starting to develop. By the end of the 90s, among the 50 largest TNCs in developing countries, the majority were in eastern countries, while it is worth noting that such well-known companies as Daewoo and Samsung at that time were just beginning to develop and fight for a place on the world market .
Over time, all nation-states have to reckon more and more with global companies as sufficiently powerful partners or even rivals in the struggle for influence on the existing national economy. In the end, agreements concluded between national governments and global organizations on the terms of such cooperation became the rule.
Much broader perspectives also opened up for non-governmental organizations, which, like global companies, eventually went global or multinational. Even a completely different global role is now played by organizations such as the WTO, IMF, UN and others.Thus, both state and private companies eventually became the main actors in the global economy.
Global unanimity
World globalization has also emerged as a result of unanimity in assessing the current market economy, as well as the free trade system. Initially, this began to appear after the reform was announced in China in 1978, after which the most diverse economic and political transformations began to appear in the countries of Eastern and Central Europe, as well as, of course, the collapse of the USSR. All these processes eventually led to ideological convergence, because instead of the recent contradictions present between the socialist western and the market eastern economies, an integral unity of views was formed on how the market system of the economy should look. Thus, the impact of globalization has allowed all former socialist countries go to a market economy, while in certain countries of Europe and in the USSR, such a transition was only partially successful.
The government of the countries, as well as the forces that supported them from Western countries and various international organizations, were concentrated on the three main conditions for such a transition to the market. It:
- macroeconomic stabilization;
- privatization of state enterprises;
- price liberalization.
Moreover, all the spheres of globalization that were affected did not take into account the importance of creating specialized market institutions, as well as the need to create conditions in which competition would develop, and at the same time, some special role of the government in a mixed modern economy was ignored.
Development
An important source of globalization are the features of cultural development. The era of globalization was formed due to the emergence of a trend towards the formation of similar media, pop culture, art, as well as the widespread use of international English as a means of communication.
At the same time, one should not forget that an important feature of globalization is the significant development of financial markets in the last years of the last century. The role of globalization and the role of financial markets over the past few years has significantly changed the architecture of the current global economy. Just a few decades ago, the most important goal of financial markets was to ensure the functioning of the real sector of the economy, but over the past few years they have begun to show self-sufficiency.
In this regard, the increase in the volume of this market has increased several times, which is a consequence of a fairly wide range of various speculative operations provoked by the liberalization of economic relations. In other words, modern globalization has greatly simplified the process of obtaining money due to the fact that the need to produce certain services or goods was completely eliminated from this process. Over time, various speculative operations with a wide variety of derivative financial instruments came to replace production, including options, futures, as well as playing on the difference between world currencies.
It is worth noting that, despite all the minuses and advantages of globalization, this process is the most advanced and complex from the point of view of internationalization. It is the result of a significant deepening of financial ties between countries, as well as liberalization of investment flows and prices. In terms of growth in the international capital market, the volume of loans over the past 10-15 years exceeded by more than 60% the volume of foreign trade, as well as more than 130% of the gross world product. In addition, the total number of international investment companies is significantly increasing.Considering the disadvantages of globalization, many often notice the reasons for the growth of speculation, as well as the fact that with speculative goals capital is distracted from production and the creation of new jobs.
Advantages and disadvantages
Of course, this process has brought a lot of advantages. Globalization in Russia and around the world has created the following:
- Aggravation of international competition. The emergence of competition, as well as the constant expansion of the market, leads to a significant deepening of specialization, as well as the international division of labor, which stimulates the active growth of production both on the national and world markets.
- Savings on the scale of production. This potentially leads to a significant reduction in prices and costs, as well as stable economic growth.
- Benefits of mutually beneficial trade. This satisfies all parties, including both individuals and large companies, countries, all kinds of trade unions, and in some situations even entire continents.
- Labor productivity growth. This is due to the rationalization of production and the significant spread of advanced technologies, as well as constant competitive pressure, which leads to the need for continuous implementation of all kinds of innovations.
Thus, the factors of globalization provide an improvement for all partners who have the opportunity to increase production and, therefore, raise the general level of living standards and wages.
The disadvantages are as follows:
- some sectors lose significantly due to globalization, as capital and labor flow out of them;
- there is a de-industrialization of the economy;
- the gap in the salary level of unskilled and qualified employees is significantly widening, while the demand for qualified specialists in various enterprises is increasing;
- the transfer of companies from countries where there is a fairly high labor cost to countries with not so high wages;
- labor mobility and, as a result, unemployment and the risk of global instability;
- mass urbanization;
- impact on the global ecosystem;
- the possibility of future conflicts due to improper use of the ecosystem (struggle for resources).
The factors of globalization in themselves expand, accelerate and deepen the worldwide interconnection, as well as the interdependence of people in all spheres of public life, but it has both positive and negative sides. However, whatever one may say, but this is an objective process that needs to be adapted.
