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Tuesday, 16 February 2016

How does Globalization shape any Economy

Globalization is the new buzzword that has come to dominate the world since the nineties of the last century. Globalization in its literal sense is the process of transformation of local phenomena into global ones. It is a process in which the people of the world are united into a single society and perform their respective roles and functions. The process of Globalization is a combination of economic, socio cultural, technological, and political forces. Through the process of globalization the national economy is integrated into the international economy through trade operations including the process of import and export, flow of capital into the country, foreign direct investment, migration and spread of technology.

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Globalization implies to opening out beyond local and nationalistic perspectives to a broader outlook. It has brought in new opportunities to developing countries. It has improved productivity and increased the standards of living. The trade and investment policy acted as a barrier to the process of globalization within the Indian economy. Liberalization of trade, investment policies, capital and cash flows developed in the nineties has gradually lowered the barriers to competition and increased the pace of globalization.

When globalization is used in an economic context it refers to the reduction and removal of barriers in terms of trade facilities and investment policies between national borders in order to facilitate the flow of goods and services, capital and labor. The main cause of globalization is influenced from other, more developed, countries. It is a historical process that results from human innovation and technological progress. Globalization means adopting a global outlook in manufacturing, marketing, financing, human resource management and all other areas of business. The factors that led to the development of globalization are enlisted below:

• Due to large flow of funds between the countries the national capital markets are growing into global capital markets.
• There is an increase in similarities of countries in terms of infrastructure, marketing strategies and distribution centers.
• Technological restructuring has reshaped the national market into a global market.
• There has been an increase in competition due to various emerging domestic markets into global markets.
• Growing international competition. In order to survive in the global market the firms should have enough efficiency to improve the operations, reduce costs and also improve the quality.

Globalization is much like fire, it itself is neither good nor bad. If used properly it can cook food form iron and heat our homes but if used carelessly fire can destroy many lives, towns in an instant. Globalization also has dangers and a dark side but it can also bring tremendous opportunities and benefits to an economy. Globalized economies grow faster than inward looking economies; they can progress more quickly to higher income levels where they can enjoy better environmental outcomes. Globalization is ultimately good for the world economy.


Article by Anisha Dutta
She is a content evangelist who believes that the Science of today is the Technology of tomorrow. 
She can be reached at https://twitter.com/Anisha_Dutta29

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