8/28/2015 Impact Of Globalization: The Good, The Bad, The Inevitable

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Impact Of Globalization: The Good, The Bad, The Inevitable

MAY 7, 2014 BY WILL GEMMA

Globalization is not a new concept in the world. It may be

farther along and advancing at a faster rate than ever before,

but globalization has been around for hundreds and,

arguably, thousands of years. The Silk Road spanned one-

sixth the diameter of the planet – literally connecting the

West and the East – and began during the Han Dynasty

(roughly 200 B.C.).

Integrating a global economy is nothing new, but the modern

implications in global business are bigger and stranger than

ever before. Below we examine what it means to play a part

in a global market, but you can bring yourself up to speed with this course on the geography ofglobalization and how it simultaneously shapes our cultures and economicrelationships.

What, Exactly, Is Globalization?There are two ways of looking at globalization. One is as an accidental or inevitable affect of economic growth;

industry, technology, communication, etc. As the economy grows, it is only natural for a global market to become

established in previously local areas. For this to happen, free trade and the free movement of capital are essential.

Globalization is not just expansion; it is, as Merriam-Webster nots, “an increasingly integrated global economy.”

For integration to occur, economic freedom is necessary. Expand your knowledge of our global economy with

this five-star course on finding success in global business.

The second way of looking at globalization is as a deliberate process, and this is almost certainly more accurate.

Yes, there is a degree of inevitability involved, but this is due in large part to the agreements made between

nations, between corporations, etc. Business wants globalization and it has almost single-handedly caused it to

happen. The Silk Road was not a humanitarian effort. It was about a vision of business. And these visions become

grander and more easily conceived as technology and politics progress so fast that globalization does, after all,

seem inevitable.

Globalization: A PurposeThere is not one purpose of globalization; there are many, many more than I can list. But from this point forward

I want to abandon this general talk of globalization and focus solely on the economy; or, more specifically,

globalization and business.

So why do businesses actively work to make globalization happen? An initial answer is easy: cheaper production

costs and more consumers to sell to. Globalization has a hand even in the smallest businesses (at least, in first-

world countries). And where do these businesses go for cheaper production costs? China is the cliche example,

but other popular options include India, Brazil, Russia, Mexico, Bolivia, Indonesia and a number of Eastern

European countries.

The first company I worked for when I lived in New York employed about 15 people, yet all of our production was

out-sourced to China. Even a small business can benefit from the incredible production savings to be found

overseas, and this (along with the obvious fact that there are more people to sell to) is why businesses actively

and aggressively promote globalization.

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In the end, globalization is all about competition. Lower production costs? That’s a competitive advantage. More

consumers? Another competitive advantage. Untapped markets, different services, investment opportunities . . .

all competitive advantages. As soon as the first company went global, everyone else had to follow suit to keep up.

Globalization is about growth, sure, but it is also about establishing the ultimate competitive position: diverse

resources, diverse interests, diverse markets, diverse acquisitions; in a word, a portfolio so diverse it can only be

attacked piece-meal, i.e. the proverbial “unsinkable ship.”

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8/28/2015 Impact Of Globalization: The Good, The Bad, The Inevitable

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If you’re anxious to learn how to create your own competitive advantage, check out this post featuring 7competitive positioning tips and strategies.

The Benefits Of GlobalizationFor some people, globalization is synonymous with world destruction. In the end – who knows – maybe this will

be true. But in reality there are many good things that have resulted from globalization. In this section, I will still

focus on the economy, but I would also like to touch on some social advantages, as well. For more information

regarding the positive impact of globalization, check out this blog post on the benefits ofglobalization in the modern era.

More Efficient Markets

Many Americans do not appreciate how efficient our markets are (efficiency here meaning supply and demand).

These efficient markets allow economies to grow, and in a global world, when one economy grows, it spurs

growth in all the other economies that are connected to it. In this way, reverberations of success are felt across

the world, even when they are most profound in one area. Needless to say, this is a very good thing.

Wealth Equality

This is partially a result of what I just mentioned, but wealth equality around the world goes much deeper than

that. Perhaps a better phrase than wealth equality is “standard of living.” Globalization does several things nobody

can deny: it creates jobs, it improves infrastructure and it allows more people to live at a higher global level every

day (access to medicine, clean water, food production, housing, etc.).

Friends With Benefits

Globalization results in partnerships between countries and organizations. This makes relations much more

stable between both. Agreements are agreed to, and as long as these are upheld, a kind of world-cooperation is

sustained. Having these friends with (economic) benefits provides both stability and security for countries that

wish to remain peaceful and prosperous.

This course taught by Dr. Bentkowska (PhD Economic Sciences) focuses on theresearch of legendary economist Paul Krugman and how international tradecreates and affects a new geographic economy.

New Solutions

Globalization allows important processes to happen more efficiently and important ideas to become reality.

There is a certain irony involved in this, however. For example, globalization is going to allow the world to work

together to (hopefully) solve our apocalyptic environmental predicament; but of course, this predicament is

a result of globalization.

Still, it allows the human race to push forward, which at this point we must recognize as a necessity of our

species. Progress is written in our DNA, and globalization has allowed us to accomplish truly incredible things

(the International Space Station being one of the most far-reaching).

The Disadvantages Of GlobalizationBecause globalization is 100% inevitable, we must tell ourselves that the benefits outweigh the disadvantages. But

do they? It depends where you’re coming from, but let us first take a look at what these disadvantages are before

we form an opinion. Get a different opinion from this post by Nick Gibson on the pros and consof globalization.

Competition: Someone Has To Lose

Unfortunately, while competition is generally thought to be a good thing, it does not come without a sour side. If

I were to say, “Some companies won’t survive because of globalization,” then you might say, “Then they don’t

deserve to survive; that’s the beauty of it; the companies worth sticking around usually do.”

I won’t deny the truth in that, but what about the borderline monopoly that the largest companies in the world

have created for themselves? Apple, Exxon, Google, etc. Whereas they were once innovators, they are now so big

that politics and strategy are more important than innovation. The result of this is that smaller companies with

innovative ideas have an incredibly difficult competing. And how can they? If they’re lucky, they’ll be bought out

and walk away with a pay check; if not, they’ll just be crushed, often purposefully, by a competitor that is literally

a billion times bigger than them.

8/28/2015 Impact Of Globalization: The Good, The Bad, The Inevitable

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a billion times bigger than them.

For tips on navigating international relations, invest in this International Relations 101 coursethat approaches the subject from a strategic economic perspective.

When The Home Team Loses

I was raised in what was once the Apple Capital of the World: Winchester, VA. Over the last two or three decades,

this title has (inevitably) been stripped from us; first it was by Pennsylvania, but then Pennsylvania had it stolen

by China.

So now China is the Apple Capital of the World. They produce the cheapest apples, which account for roughlyhalf the world’s supply of apples. A lot of people up and down the East Coast lost their jobs, but

here’s the kicker: China isn’t allowed to export apples to the U.S. This might change soon, but for the time

being, China is able to put a lot of people on the East Coast out of business without even selling apples in the

same country.

The lesson of the story is that another country can do what you do better and put you out of business without

even looking you in the eye. That’s globalization. But to be fair, the damage we’ve done to China and the benefits

we took advantage of (cheap labor) are vastly more significant. Sorry, did I say “to be fair”?

Environmental Devastation

I hardly need to spell this out, but I will add a thought or two. Globalization has created a global-sized need for

energy and industry, and this need has been abused and ignored to the extent that the future of life as we know it

has been brought into question. You may or may not believe in global warming, but you cannot deny the

existence of the conversation. Does the fact that this conversation is happening not say something in itself?

Have we bulldozed our planet into trouble? Obviously, yes. The argument against this fact is that we

could not possibly have caused so much destruction to our enormous planet. The facts say otherwise: we’velogged over half of the world’s tropical forests. And as far as how difficult it would be to

change the composition of the atmosphere? The atmosphere ends a mere 60 miles above the surface of the Earth.

It’s just not that voluminous. It’s not limitless. It’s actually small, and when we work together globally, even the

negative side effects of all the amazing things we accomplish are, in a word, globalized.

Good, Bad, InevitableUnfortunately, or maybe fortunately, globalization is simply and utterly good, bad and inevitable. Hopefully the

good will out-weigh the bad, but the continued existence of both is inevitable. Because of this, we are better off

accepting the truth and, like we do best, moving forward. But make no mistake: environmentalism is gaining

speed. Whether you want to join the cause or just be on the front lines of a new opportunity, this course onenergy, economics and the environment can help you make your choice.

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