Economic and Political Impacts of Globalization
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Economic and Political Impacts of Globalization
The nature of the current society has been influenced by a host of factors that stem from the forces of globalization. Fundamentally, globalization constitutes a continuous process through which the social, cultural, economic, political and environmental facets of the society become integrated over time. From a general point of view, globalization is likened to economic integration and it implies dissolution of national borders. The integration has diverse implications on the holistic functioning of the society. Seemingly, it as been necessitated by various factors that are both social and economic in nature.
Drivers of Globalization
According to Steger (2003), globalization has been driven by technological advancements. In this regard, innovations in technology and transportations systems have revolutionized all industries by enhancing free movement of goods, services and populations. In particular, invention of the jet air craft, telecommunications and area microprocessors have eased communications and computing. Most recently, the growth and development of the internet has led to development of e-commerce and e-business. Compared to other sectors of the society, the economic sector has benefited significantly from the technological changes. Notably, consumer products can move freely and very fast across the globe.
To a great extent, political changes have also contributed in different ways to this integration. In this regard, Stiglitz (2006) indicates that deregulated markets and liberalized trading rules have eased the flow of products and information across the globe. The relative lower tariffs allow for direct foreign investments in all countries across the globe. This has been made possible through the formation of various institutions to assume key oversight roles. Common examples include the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) amongst others. These play important oversight roles and enable countries, economies, populations and industries to interact with each other easily.
The nature of the markets has also been instrumental in offsetting and enhancing the process of globalization. In this regard, the saturation of domestic markets has led to the need for global expansion. Domestic markets have increasingly become concentrated thus limiting the opportunities for growth. To overcome this limitation, local industries are increasingly opting for expansion through exploration of other global markets. Factors pertaining to common consumer needs, transfer marketing and opportunities to explore global marketing channels have triggered the need to pursue internationalization.
Economic and Political Impacts of Globalization
Globalization has had diverse impacts on the economic wellbeing of the society. To begin with, free movement of goods and services across the globe has led to increased capital. This is because individuals and industries have been able to explore various markets for their wellbeing. As a result, financial returns from the sell of products in new markets have improved significantly. Globalization has also led to an increment in job opportunities especially in developing countries. This is attributable to increased internationalization that has led to expansion of various companies. International companies that explore market niches in developing nations such as India provide a host of job opportunities for the locals. Payment of local taxes by such companies also enhances the economic wellbeing of the developing nations.
Technological advancements have further increased the rate of resource exploitation. Besides increasing the output of products, technological advancements have led to an increase in the quality of the respective products. These developments have improved the standards of living of populations that benefit in different ways form the respective products. Furthermore, increased output has culminated in lower prices of the products. Likewise, this has contributed to the improvement of the quality of life of the consumers (Stiglitz, 2006).
Nonetheless, globalization has been implicated for increasing the gaps between the rich and the poor. This is because of its tendency to increase disparities between the incomes of the rich and the poor within as well as across nations. Arguably, globalization has benefited the rich more than the poor. This is because of the relative policies that favor the former. In this regard, current trends indicate that rich countries have a higher access to the natural resource base. They use their status, power and influence to develop policies that favor their wellbeing. Wealth and power in this regard is defined in light of the amount of capital, influence and the nature of technology that such countries have. This can be used to explain why there are great economic and political differences between countries like India and the United States.
From an economic point of view, India is a developing country that is less prosperous than the United States. Comparison of their purchasing power indicates that India has a lesser purchasing power than the US. Likewise, the gross domestic product of the United States is higher than that of India. This can be attributed to higher productivity, better infrastructure, more viable economic policies and higher investment potential that the United States has. There are also political disparities between the two countries (Steger, 2003). Unlike India, the United States has a well defined mode of governance that puts the needs of the citizens in consideration. The political leaders of the United States are more accountable than their counterparts in India. Most importantly, the electoral process of the United States is more transparent as compared to India’s that is in most cases marred by corruption.
Politically, Stiglitz (2006) argues that globalization has undermined the sovereignty of the nation state. To a great extent, this has also affected the autonomy of states as well as the overall diversity. This is attributable to economic expansion and creation of global policies to govern nation states. The inherent intrusion has prevented the nation state from making individual and autonomous decisions regarding wide ranging issues. More than ever, the economic wellbeing of the nation state depends highly on international trends.
How Managers can cope with Globalization Implications
At this point, it is certain that globalization has diverse impacts on the wellbeing of industries and the entire corporate world. Managers can use various strategies to benefit significantly from the opportunities as well as deal with the challenges of globalization. To begin with, Mamman and Baydoun (2009) indicate that managers can benefit by improving their competencies with regards to dealing with cultural issues. This is based on the recognition that various countries are expanding beyond their cultural boundaries. Lack of cultural competence undermines performance because of its ability to escalate cultural conflicts and prevent effective communication.
Managers can also address these concerns by improving their knowledge, taking measures to heighten political awareness, enhance market judgment, improve their ability to undertake strategic planning, improve their coordination and organization skills, pioneer and enhance innovative and creativity spirit and deepen their understanding of the social responsibility conception (Mamman & Baydoun, 2009). Arguably, the above mentioned measures would enable them to address challenges from a global point of view. Relative useful insights would also help them to seize opportunities for growth and development.
References
Mamman, A. & Baydoun, N. (2009). Managerial perspectives on the impact of globalization in an African commercial bank: Implications for strategy implementation. International Journal of Organizational Analysis, 1, 184-201.
Steger, M. (2003). Globalization: A very short introduction. New York: Oxford University Press.
Stiglitz, J. (2006). Making globalization work. New York: W.W. Norton.
