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GLOBALIZATION: WHAT, WHEN, WHERE & HOW

With the advent of technology, there has been a wave of globalisation that has ravaged businesses all over the world. Although the word has been generally used in the corporate world or academic circles, it carries a deep symbolic meaning which must be understood. According to Brown, McIlwraith and de González (2020), globalisation is the congregation of the various nations of the world through the resources, people, goods and services of the respective nation. Simply put, globalisation is the shared cooperation within the various nations of the world to co-create and develop through harmonious ways of exchange and mitigating restrictions of movement or business to grow together. The idea of globalisation has been to share the experiences and the knowledge of the business and the people to develop a network of operations that are responsible for the interchanges in culture and knowledge by removing the political and geographical barriers. The main impact globalisation has on the creation of equality among the various nations so that they are able to operate and function through shared interests and drives. The balance of the distribution of wealth and power is ancillary to the implementation of globalisation to enable the changes to be made (Verde, 2017). The international distribution of resources, business and culture, would enrich the resources and culture of the other nations due to globalisation. The co-dependencies of the nation’s amongst one another is responsible for the partaking of the purposive functioning to corporate and incorporate the idea of global initiatives to be followed for associated benefits.

Globalisation is characterised by the exchange and free flow of the various resources of the nations with others. According to Davis (2018), globalisation is supported by the respective four pillars which are technology, goods, labour and capital uniformly across the world so that the rate of development can be accelerated in some parts to elevate them with a standardised process of improvement. Globalisation has also implemented a shared sense of responsibility among the various nations so that sharing of knowledge, ideas and liberalisation has accumulated great impetus. While the intentional application of globalisation was to introduce uniformity among the international member nations, unfortunately, it has resulted in a greater disparity of economic strength. The accessibility and availability of the improved resources around have increased due to globalisation. While the standardisation process of the various businesses around the globe has been possible due to globalisation, globalisation has opened the door for dominant organisations to grab a considerable market share in other countries as well. Despite that, it can be claimed that the globalisation produced more positive impacts than negative and brought the various organisations, culture and people closer (Inglis, 2016). It has been effective in reducing differences and disparities to some extent so that integration of quality, employment, opportunities and other factors can be addressed. The sense of belongingness to culture and commonality between various businesses are the essence of globalisation. The shared resources, tools and knowledge are merely modes for the application of the idea of globalisation.

Evolution of the Process of Globalisation

It is very difficult to strictly determine the history of globalisation. The process of globalisation has been a gradual development for which a definite time in history cannot be ascertained. However, Julia, Ilya and Andrey (2017) opined that the contribution of the Roman Empire, Han Dynasty, the Parthian empire and others had been a significant contributor to the development of the initial stages of globalisation. They were responsible for the interchange of spices, silks and other commodities which were exported and imported. Another aspect for the development of globalisation is the Silk Road which was created primarily to globalise the sense of business and exchange between these empires. LaBianca and Scham (2016) have also claimed that the Islamic Golden Age is also responsible for furthering the idea of globalisation. The Muslim explorers and traders were responsible for the distribution of knowledge, crops, technology and trade to other parts of the world. These were the early markers of globalisation which snowballed and refined into the modern ideology of globalisation to be developed and constituted upon the entire world. These are early signs of the premature concept of globalisation which was not merely for the definitions which have been stated above but for the idea of exchange and cooperation within the participating nations to strengthen international bond and unity.

Globalization - world map depicted on hands - evolution, causes and consequences

On the other hand, Ergashev and Farxodjonova (2020) expressed that the modern concept of globalisation has started to form after the 2ndWorld War. Due to the immense destruction and problems faced by different countries across the world due to the world war, the impacts of straining resources and capabilities were beginning to show. Hence it was necessary for the various leaders of the country to be independent of others for support, resources and the possibility to avoid future war. The various agreements and treaties which were signed between the participating nations to create uniform grounds of development led to the modern concept globalisation to be formed. Antunes and Fatah-Black (2016) stated that the Bretton Woods Agreement is one such agreement which has significant impacts on globalisation. IMF (The International Monetary Fund), WTO (World Trade Organization) and several other global organisations were formed in order to maintain and govern the cooperative initiative between the different countries of the world. These organisations are also responsible for maintaining the balance of economic and social growth and development by removing the obstacles of cross geographical and cultural boundaries. These organisations are essentially responsible for providing economic freedom as well as formulate an effective communication channel within the member countries to ascertain their implications and abilities.

The main factors that have contributed to the development and the advancement of globalisation are technology, trade and integration, migration, offshoring and outsourcing, transportation and environment. The subtle nature of the relationships of the producers and the consumers of the international market was responsible for the adherence to the international globalisation to be accepted into the arguments for a fair and justified system of improvement. For example, we only have one environment, and the pollution produced by one country does not affect the people of that country only. The shared resources are one of the primary reasons due to which globalisation has been adopted by the organisation around the world to maintain uniformity. It is intended to enhance competitiveness among the different nations and equip the nations lagging with the necessary information, technology or any other resources required to produce similar standardised impacts of growth and development. Martell (2016) also said that the key activities of the ethical and logical operations of the business were also to be regulated due to which globalisation is necessary. Thus, globalisation has developed into a full-fledged idea for the continuance of the cooperation between the various nations who were impacted by the World Wars and the similarity of co-dependencies among the nations required participation and exchanges of ideas which were possible due to globalisation. It resulted in the shared responsibilities and nuances to bring the different corners of the world to be brought closer and a uniform system of production, business, economic activity and social or cultural uniformity to be created or the ease of operations and movement as well as the idea of collective responsibilities to be attributed to the nations.

CAUSES OF PRESENT-DAY GLOBALISATION

There are several reasons that can be attributed to the nature of the present condition of globalisation. These reasons are increasingly interdependent on one another, and it is necessary to contextualise them in order to understand them. According to O'Rourke (2019), the main reasons that have caused globalisation are technology, lower tariffs, labour mobility, capital mobility, multinational corporations, improved transport and others. Due to the rise in the ease of travelling around the world as well as the transport of goods and services to other parts of the world meant that globalisation was growing exponentially. On the other hand, the combined congregation of the countries to form treaties and agreements also reduced and removed geographical and political boundaries from preventing operations and business. The present scenario of globalisation has also come to the state due to fostering globalisation, three international organisations stand out prominently. These three together make and enforce the rules of the global economy and their policies are always in sync with one another.

WTO (WORLD TRADE ORGANIZATION)

Initially, this organisation was called GATT (General Agreement on Tariffs and Trade), and its mandate was to make rules for international trade with the aim to reduce national barriers to trade.

IMF (International Monetary Fund)

IMF aims to create international economic stability after the 2nd World War and to facilitate the exchange of one currency to another when trading across borders. It is also required to act as the lender-of-last-resort to countries that are low on cash.

World Bank (International Bank for Reconstruction and Development)

It was established to rebuild the economies of European nations which were destroyed during the 2nd World War. During the 1950's it started giving loans to developing countries from the global South also. It gives loans to member countries for developmental projects like dams, roads, airports, bridges, agricultural development and educational projects.

In the economic sphere, the most obvious example of globalisation is the creation of GlobalValue Chains (GVCs), wherein a single commodity is produced by combining parts from across the world. The GVC involves five basic steps viz. research and development, engineering, manufacturing, marketing and sales, and services, and each of these steps is outsourced to a foreign location in a globalised production process. This has snowballed the globalisation of the business to create an international market of equity and uniformity (Deese, 2017). In the age of globalisation, the bulk of industrial production takes place in MNCs. An MNC is a corporation which has its presence in two or more than two countries. Because of globalisation, the business prospects of MNCs have greatly enhanced because now they can easily sell their products globally without paying high taxes to governments and also due to enhanced means of transport and communication (Ciuriak, 2017). Outsourcing and off-shoring have become the new business model. Outsourcing means sending work across national borders to get it done at a lower price, whereas off-shoring means establishing factories in places where raw materials and human labour is cheap. Because the two factors are abundant in India, China, and Africa, the MNCs have been increasing their presence in these places. It is also one of the primary reason due to which globalisation has become the trend for any industry to reduce operational costs and increase profitability (Martell, 2016). The intent of international organisations to outsource their services to the selected developing nations like India for taking the advantage of the educated and skilled labour force which costs a fraction of the costs these firms need to pay in their domestic countries have been one of the major factors or reasons for globalisation to gain a centre stage today.

CONSEQUENCES OF GLOBALISATION

The consequences and the impacts of globalisation can be categorised primarily into two categories- good and bad. The positive impacts of globalisation are:

FOREIGN TRADE:

Due to globalisation, the volume of foreign trade has increased manifolds. Farooq et al., (2020) stated that foreign trade is responsible for the exchange of the goods and services that generate employment, foreign currency and comparative advantages. This was possible due to the shared market of globalisation, which made foreign possible and easy by establishing a global market for the sale of goods and services.

CROSS-CULTURAL MANAGEMENT:

Globalisation has resulted in intermixing of the cultures of different nations of the world. This has resulted in the reconstruction of the attitudes and the ideas of the people in improved societal context for consideration (Tjosvold, 2017). The human resources and the concepts of traditional culture and social construct has been homogenised due to the diffusion of the culture caused by globalisation. It has improved the structure of the society as well as dispersion of business without any issues in other parts of the world.

INTERNATIONAL MARKET:

The most important idea or concept which has been developed by globalisation is the creation of an international code of operations and conduct so that the businesses from different corners of the world can contribute and sell their products or services. Globalisation resulted in the boundaries to be eliminated or mitigated, which created opportunities for local operations to compete in an international market.

FDI:

A strong positive impact of globalisation is the opening up of the economies to foreign investments. The investors can pour money in a local business to provide them with the commercial viability and ability to scale the operations in an international market (Maiga et al., 2018). FDI is also responsible for the exposure of the business to the international standard created by globalisation to cooperate and incorporate the initiatives for better success.

RESOURCE SHARING AND COMPETITION:

The fundamental idea of globalisation is to create rounds for the sharing of the resources and the capabilities among the participants to ensure competitiveness in the industry. The shared knowledge is also responsible for the harmony of operation due to globalisation.
There are several negative impacts of globalisation as well, which are as follows:

JOB INSECURITY:

The balance of participation was meant to create jobs and livelihood for the people. However, due to globalisation, the people of the developed countries are losing their jobs due to the tendency of the companies to outsource their work to the workforce of the developing countries in order to cut prices of production and enhance profitability (Kalayci, 2019).

PRICE FLUCTUATIONS:

Due to globalisation, competitiveness in the industry has increased between the products of the developed and developing nations. The price of labour and the raw materials required for the production of the goods and services in developing countries is less high and so causes inadvertent lowering of the goods of the developed countries to lower their prices in order to compete. It is unhealthy for sustainability.

POLLUTION AND CO2 EMISSIONS:

Three-quarters of worldwide genetic diversity in agricultural crops has been lost since 1900. The oceans of the world are being filled with plastic. There is a global concern about the health of glaciers, ozone layer, and oceans. Governments from around the world are coming together in multilateral forums to tackle climate change (Bogatenko and Tarasova, 2019). Globalisation depends on the spread of capitalism around the world. And capitalism depends heavily upon those industries which extract a lot of minerals from the earth like coal, petroleum, gas, etc. Hence, we see that with more globalisation, there is an increase in industrialisation and increase in pollution.

DEPENDENCY ON OTHER COUNTRIES:

The shared economy of the countries, there is a close association among their economic activities. Hence, if one economy fails, then it is most likely to affect the economy of the other countries as well (Karataş, 2016).
Globalisation has structured the nations in a uniformity that causes ripple effects to be seen in other countries as well.

Also Read:
DECODING GLOBALIZATION
Catalyst Role of Tourism on International Relation
Domestic Financial Market Integration

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