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This article discusses how first world countries can experience manufacture loss, or increased unemployment. This also has to deal with foreign competition. Workers in a rich country - America, for instance - go through unfair job competition; they must compete with other workers in the world who work at a cheaper rate. This can lead to major job loss. It may even become so significant that industries will have to shut down too; statistics show that America has lost about  42,400 factories since 2001. Occupations in manufacturing has also gone down remarkably in the last decade or so. Because of the encouragement of globalization, richer industries have also moved their branches out of the U.S. for cheaper production costs. Due to these factors, the United States is gradually deindustrializing, which can continue to put people out of work and potentially lower the standard of living.

Source:
Why Globalization is Bad for America

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Globalization Can Lead To A Monopolistic World

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Globalization Can Lead To A Monopolistic World

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This article argues how globalization can lead to such strong power that society will live in a monopolistic world; specifically ruled by the United States. The author states that America has grown too powerful from globalizing, and could potentially dominate the global economy. A country underneath such power will have to deal with new world problems arising before older problems can be solved. Meanwhile, a world with several leaders would handle these situations much easier. Within the possibility that globalization can lead to a monopolistic world, one single power also cannot oversee every danger in the economy. Things such as drug trade, counterfeiting, and terrorism can slip by without such a strong notice. With multiple nations in charge, each could monitor separate dangers and prevent them before they occur. Lastly, one single power means that other opponents would try and overthrow that power, leading to violence instead of negotiation. Other countries would attempt to shift the single power away by using nuclear weaponry or counterfeit. Thus, if America were to become the supreme ruler of globalization, there would be major consequences.

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The world today is more dangerous and less orderly than it was supposed to be. Ten or 15 years ago, the naive expectations were that the "end of history" was near. The reality has been the opposite. The world has more international terrorism and more nuclear proliferation today than it did in 1990. International institutions are weaker. The threats of pandemic disease and climate change are stronger. Cleavages of religious and cultural ideology are more intense. The global financial system is more unbalanced and precarious.

It wasn't supposed to be like this. The end of the Cold War was supposed to make global politics and economics easier to manage, not harder. What went wrong? The bad news of the 21st century is that globalization has a significant dark side. The container ships that carry manufactured Chinese goods to and from the United States also carry drugs. The airplanes that fly passengers nonstop from New York to Singapore also transport infectious diseases. And the Internet has proved just as adept at spreading deadly, extremist ideologies as it has e-commerce.

The conventional belief is that the single greatest challenge of geopolitics today is managing this dark side of globalization, chipping away at the illegitimate co-travelers that exploit openness, mobility, and freedom, without putting too much sand in the gears. The current U.S. strategy is to push for more trade, more connectivity, more markets, and more openness. America does so for a good reason - it benefits from globalization more than any other country in the world. The United States acknowledges globalization's dark side but attributes it merely to exploitative behavior by criminals, religious extremists, and other anachronistic elements that can be eliminated. The dark side of globalization, America says, with very little subtlety, can be mitigated by the expansion of American power, sometimes unilaterally and sometimes through multilateral institutions, depending on how the United States likes it. In other words, America is aiming for a "flat," globalized world coordinated by a single superpower.

That's nice work if you can get it. But the United States almost certainly cannot. Not only because other countries won't let it, but, more profoundly, because that line of thinking is faulty. The predominance of American power has many benefits, but the management of globalization is not one of them. The mobility of ideas, capital, technology, and people is hardly new. But the rapid advance of globalization's evils is. Most of that advance has taken place since 1990. Why? Because what changed profoundly in the 1990s was the polarity of the international system. For the first time in modern history, globalization was superimposed onto a world with a single superpower. What we have discovered in the past 15 years is that it is a dangerous mixture. The negative effects of globalization since 1990 are not the result of globalization itself. They are the dark side of American predominance.

THE DANGERS OF UNIPOLARITY

A straightforward piece of logic from market economics helps explain why unipolarity and globalization don't mix. Monopolies, regardless of who holds them, are almost always bad for both the market and the monopolist. We propose three simple axioms of "globalization under unipolarity" that reveal these dangers.

Axiom 1: Above a certain threshold of power, the rate at which new global problems are generated will exceed the rate at which old problems are fixed.

Power does two things in international politics: It enhances the capability of a state to do things, but it also increases the number of things that a state must worry about. At a certain point, the latter starts to overtake the former. It's the familiar law of diminishing returns. Because powerful states have large spheres of influence and their security and economic interests touch every region of the world, they are threatened by the risk of things going wrong - anywhere. That is particularly true for the United States, which leverages its ability to go anywhere and do anything through massive debt. No one knows exactly when the law of diminishing returns will kick in. But, historically, it starts to happen long before a single great power dominates the entire globe, which is why large empires from Byzantium to Rome have always reached a point of unsustainability.

That may already be happening to the United States today, on issues ranging from oil dependency and nuclear proliferation to pandemics and global warming. What Axiom 1 tells you is that more U.S. power is not the answer; it's actually part of the problem. A multipolar world would almost certainly manage the globe's pressing problems more effectively. The larger the number of great powers in the global system, the greater the chance that at least one of them would exercise some control over a given combination of space, other actors, and problems. Such reasoning doesn't rest on hopeful notions that the great powers will work together. They might do so. But even if they don't, the result is distributed governance, where some great power is interested in most every part of the world through productive competition.

Axiom 2: In an increasingly networked world, places that fall between the networks are very dangerous places - and there will be more ungoverned zones when there is only one network to join.

The second axiom acknowledges that highly connected networks can be efficient, robust, and resilient to shocks. But in a highly connected world, the pieces that fall between the networks are increasingly shut off from the benefits of connectivity. These problems fester in the form of failed states, mutate like pathogenic bacteria, and, in some cases, reconnect in subterranean networks such as al Qaeda. The truly dangerous places are the points where the subterranean networks touch the mainstream of global politics and economics. What made Afghanistan so dangerous under the Taliban was not that it was a failed state. It wasn't. It was a partially failed and partially connected state that worked the interstices of globalization through the drug trade, counterfeiting, and terrorism.

Can any single superpower monitor all the seams and back alleys of globalization? Hardly. In fact, a lone hegemon is unlikely to look closely at these problems, because more pressing issues are happening elsewhere, in places where trade and technology are growing. By contrast, a world of several great powers is a more interest-rich environment in which nations must look in less obvious places to find new sources of advantage. In such a system, it's harder for troublemakers to spring up, because the cracks and seams of globalization are held together by stronger ties.

Axiom 3: Without a real chance to find useful allies to counter a superpower, opponents will try to neutralize power, by going underground, going nuclear, or going "bad."

Axiom 3 is a story about the preferred strategies of the weak. It's a basic insight of international relations that states try to balance power. They protect themselves by joining groups that can hold a hegemonic threat at bay. But what if there is no viable group to join? In today's unipolar world, every nation from Venezuela to North Korea is looking for a way to constrain American power. But in the unipolar world, it's harder for states to join together to do that. So they turn to other means. They play a different game. Hamas, Iran, Somalia, North Korea, and Venezuela are not going to become allies anytime soon. Each is better off finding other ways to make life more difficult for Washington. Going nuclear is one way. Counterfeiting U.S. currency is another. Raising uncertainty about oil supplies is perhaps the most obvious method of all.

Here's the important downside of unipolar globalization. In a world with multiple great powers, many of these threats would be less troublesome. The relatively weak states would have a choice among potential partners with which to ally, enhancing their influence. Without that more attractive choice, facilitating the dark side of globalization becomes the most effective means of constraining American power.

SHARING GLOBALIZATION'S BURDEN

The world is paying a heavy price for the instability created by the combination of globalization and unipolarity, and the United States is bearing most of the burden. Consider the case of nuclear proliferation. There's effectively a market out there for proliferation, with its own supply (states willing to share nuclear technology) and demand (states that badly want a nuclear weapon). The overlap of unipolarity with globalization ratchets up both the supply and demand, to the detriment of U.S. national security.

It has become fashionable, in the wake of the Iraq war, to comment on the limits of conventional military force. But much of this analysis is overblown. The United States may not be able to stabilize and rebuild Iraq. But that doesn't matter much from the perspective of a government that thinks the Pentagon has it in its sights. In Tehran, Pyongyang, and many other capitals, including Beijing, the bottom line is simple: The U.S. military could, with conventional force, end those regimes tomorrow if it chose to do so. No country in the world can dream of challenging U.S. conventional military power. But they can certainly hope to deter America from using it. And the best deterrent yet invented is the threat of nuclear retaliation. Before 1989, states that felt threatened by the United States could turn to the Soviet Union's nuclear umbrella for protection. Now, they turn to people like A.Q. Khan. Having your own nuclear weapon used to be a luxury. Today, it is fast becoming a necessity.

North Korea is the clearest example. Few countries had it worse during the Cold War. North Korea was surrounded by feuding, nuclear-armed communist neighbors, it was officially at war with its southern neighbor, and it stared continuously at tens of thousands of U.S. troops on its border. But, for 40 years, North Korea didn't seek nuclear weapons. It didn't need to, because it had the Soviet nuclear umbrella. Within five years of the Soviet collapse, however, Pyongyang was pushing ahead full steam on plutonium reprocessing facilities. North Korea's founder, Kim Il Sung, barely flinched when former U.S. President Bill Clinton's administration readied war plans to strike his nuclear installations preemptively. That brinkmanship paid off. Today North Korea is likely a nuclear power, and Kim's son rules the country with an iron fist. America's conventional military strength means a lot less to a nuclear North Korea. Saddam Hussein's great strategic blunder was that he took too long to get to the same place.

How would things be different in a multipolar world? For starters, great powers could split the job of policing proliferation, and even collaborate on some particularly hard cases. It's often forgotten now that, during the Cold War, the only state with a tougher nonproliferation policy than the United States was the Soviet Union. Not a single country that had a formal alliance with Moscow ever became a nuclear power. The Eastern bloc was full of countries with advanced technological capabilities in every area except one - nuclear weapons. Moscow simply wouldn't permit it. But today we see the uneven and inadequate level of effort that non-superpowers devote to stopping proliferation. The Europeans dangle carrots at Iran, but they are unwilling to consider serious sticks. The Chinese refuse to admit that there is a problem. And the Russians are aiding Iran's nuclear ambitions. When push comes to shove, nonproliferation today is almost entirely America's burden.

The same is true for global public health. Globalization is turning the world into an enormous petri dish for the incubation of infectious disease. Humans cannot outsmart disease, because it just evolves too quickly. Bacteria can reproduce a new generation in less than 30 minutes, while it takes us decades to come up with a new generation of antibiotics. Solutions are only possible when and where we get the upper hand. Poor countries where humans live in close proximity to farm animals are the best place to breed extremely dangerous zoonotic disease. These are often the same countries, perhaps not entirely coincidentally, that feel threatened by American power. Establishing an early warning system for these diseases - exactly what we lacked in the case of SARS a few years ago and exactly what we lack for avian flu today - will require a significant level of intervention into the very places that don't want it. That will be true as long as international intervention means American interference.

The most likely sources of the next ebola or HIV-like pandemic are the countries that simply won't let U.S. or other Western agencies in, including the World Health Organization. Yet the threat is too arcane and not immediate enough for the West to force the issue. What's needed is another great power to take over a piece of the work, a power that has more immediate interests in the countries where diseases incubate and one that is seen as less of a threat. As long as the United States remains the world's lone superpower, we're not likely to get any help. Even after HIV, SARS, and several years of mounting hysteria about avian flu, the world is still not ready for a viral pandemic in Southeast Asia or sub-Saharan Africa. America can't change that alone.

If there were rival great powers with different cultural and ideological leanings, globalization's darkest problem of all - terrorism - would also likely look quite different. The pundits are partly right: Today's international terrorism owes something to globalization. Al Qaeda uses the Internet to transmit messages, it uses credit cards and modern banking to move money, and it uses cell phones and laptops to plot attacks. But it's not globalization that turned Osama bin Laden from a small-time Saudi dissident into the symbolic head of a radical global movement. What created Osama bin Laden was the predominance of American power.

A terrorist organization needs a story to attract resources and recruits. Oftentimes, mere frustration over political, economic, or religious conditions is not enough. Al Qaeda understands that, and, for that reason, it weaves a narrative of global jihad against a "modernization," "Westernization," and a "Judeo-Christian" threat. There is really just one country that both spearheads and represents that threat: the United States. And so the most efficient way for a terrorist to gain a reputation is to attack the United States. The logic is the same for all monopolies. A few years ago, every computer hacker in the world wanted to bring down Microsoft, just as every aspiring terrorist wants to create a spectacle of destruction akin to the September 11 attacks inside the United States.

Al Qaeda cells have gone after alternate targets such as Britain, Egypt, and Spain. But these are not the acts that increase recruitment and fundraising, or mobilize the energy of otherwise disparate groups around the world. Nothing enhances the profile of a terrorist like killing an American, something Abu Musab al-Zarqawi understood well in Iraq. Even if al Qaeda's deepest aspirations lie with the demise of the Saudi regime, the predominance of U.S. power and its role supporting the house of Saud makes America the only enemy really worth fighting. A multipolar world would surely confuse this kind of clear framing that pits Islamism against the West. What would be al Qaeda's message if the Chinese were equally involved in propping up authoritarian regimes in the Islamic, oil-rich Gulf states? Does the al Qaeda story work if half its enemy is neither Western nor Christian?

RESTORING THE BALANCE

The consensus today in the U.S. foreign-policy community is that more American power is always better. Across the board. For both the United States and the rest of the globe. The National Security Strategy documents of 2002 and 2006 enshrine this consensus in phrases such as "a balance of power that favors freedom." The strategy explicitly defines the "balance" as a continued imbalance, as the United States continues "dissuading potential competitors... from challenging the United States, its allies, and its partners."

In no way is U.S. power inherently a bad thing. Nor is it true that no good comes from unipolarity. But there are significant downsides to the imbalance of power. That view is hardly revolutionary. It has a long pedigree in U.S. foreign-policy thought. It was the perspective, for instance, that George Kennan brought to the table in the late 1940s when he talked about the desirability of a European superpower to restrain the United States. Although the issues today are different than they were in Kennan's time, it's still the case that too much power may, as Kennan believed, lead to overreach. It may lead to arrogance. It may lead to insensitivity to the concerns of others. Though Kennan may have been prescient to voice these concerns, he couldn't have predicted the degree to which American unipolarity would lead to such an unstable overlap with modern-day globalization.

America has experienced this dangerous burden for 15 years, but it still refuses to see it for what it really is. Antiglobalization sentiment is coming today from both the right and the left. But by blaming globalization for what ails the world, the U.S. foreign-policy community is missing a very big part of what is undermining one of the most hopeful trends in modern history - the reconnection of societies, economies, and minds that political borders have kept apart for far too long.

America cannot indefinitely stave off the rise of another superpower. But, in today's networked and interdependent world, such an event is not entirely a cause for mourning. A shift in the global balance of power would, in fact, help the United States manage some of the most costly and dangerous consequences of globalization. As the international playing field levels, the scope of these problems and the threat they pose to America will only decrease. When that happens, the United States will find globalization is a far easier burden to bear.

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The world today is more dangerous and less orderly than it was supposed to be. Ten or 15 years ago, the naive expectations were that the "end of history" was near. The reality has been the opposite. The world has more international terrorism and more nuclear proliferation today than it did in 1990.

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Globalization can use up the limited amount of resources this world holds. In economics, scarcity is a very strong topic. Globalization has the potential to make the world even more scarce as it is. Resources remain finite; yet countries have no strong concern to this due to globalizing. For instance, China’s use of coal has increased rapidly, as well as India. Not only has the world used up more resources, but within this, pollution has been getting worse. There has been an increase in the world’s carbon dioxide emissions. Sometimes, actions are done to try and prevent this, but ironically encouraged more manufacturing and thus more emissions released. Because of the substantial amount of resources being used up, demand must increase, and so prices have to rise. Raised pricing can lead to an economic recession, meaning things such as job loss, increasing deficit, or business failure.

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Globalization seems to be looked on as an unmitigated "good" by economists. Unfortunately, economists seem to be guided by their badly flawed models; they miss real-world problems. In particular, they miss the point that the world is finite. We don't have infinite resources, or unlimited ability to handle excess pollution. So we are setting up a "solution" that is at best temporary.

Economists also tend to look at results too narrowly-from the point of view of a business that can expand, or a worker who has plenty of money, even though these users are not typical. In real life, the business are facing increased competition, and the worker may be laid off because of greater competition.

The following is a list of reasons why globalization is not living up to what was promised, and is, in fact, a very major problem.

1. Globalization uses up finite resources more quickly. As an example, China joined the world trade organization in December 2001. In 2002, its coal use began rising rapidly (Figure 1, below).

In fact, there is also a huge increase in world coal consumption (Figure 2, below). India's consumption is increasing as well, but from a smaller base.

2. Globalization increases world carbon dioxide emissions. If the world burns its coal more quickly, and does not cut back on other fossil fuel use, carbon dioxide emissions increase. Figure 3 shows how carbon dioxide emissions have increased, relative to what might have been expected, based on the trend line for the years prior to when the Kyoto protocol was adopted in 1997.

3. Globalization makes it virtually impossible for regulators in one country to foresee the worldwide implications of their actions. Actions which would seem to reduce emissions for an individual country may indirectly encourage world trade, ramp up manufacturing in coal-producing areas, and increase emissions over all. See my post Climate Change: Why Standard Fixes Don't Work.
4. Globalization acts to increase world oil prices.
The world has undergone two sets of oil price spikes. The first one, in the 1973 to 1983 period, occurred after US oil supply began to decline in 1970 (Figure 4, above and Figure 5 below).

After 1983, it was possible to bring oil prices back to the $30 to $40 barrel range (in 2012$), compared to the $20 barrel price (in 2012$) available prior to 1970. This was done partly by ramping up oil production in the North Sea, Alaska and Mexico (sources which were already known), and partly by reducing consumption. The reduction in consumption was accomplished by cutting back oil use for electricity, and by encouraging the use of more fuel-efficient cars.

Now, since 2005, we have high oil prices back, but we have a much worse problem. The reason the problem is worse now is partly because oil supply is not growing very much, due to limits we are reaching, and partly because demand is exploding due to globalization.

If we look at world oil supply, it is virtually flat. The United States and Canada together provide the slight increase in world oil supply that has occurred since 2005. Otherwise, supply has been flat since 2005 (Figure 6, below). What looks like a huge increase in US oil production in 2012 in Figure 5 looks much less impressive, when viewed in the context of world oil production in Figure 6.

Part of our problem now is that with globalization, world oil demand is rising very rapidly. Chinese buyers purchased more cars in 2012 than did European buyers. Rapidly rising world demand, together with oil supply which is barely rising, pushes world prices upward. This time, there also is no possibility of a dip in world oil demand of the type that occurred in the early 1980s. Even if the West drops its oil consumption greatly, the East has sufficient pent-up demand that it will make use of any oil that is made available to the market.

Adding to our problem is the fact that we have already extracted most of the inexpensive to extract oil because the "easy" (and cheap) to extract oil was extracted first. Because of this, oil prices cannot decrease very much, without world supply dropping off. Instead, because of diminishing returns, needed price keeps ratcheting upward. The new "tight" oil that is acting to increase US supply is an example of expensive to produce oil-it can't bring needed price relief.

5. Globalization transfers consumption of limited oil supply from developed countries to developing countries. If world oil supply isn't growing by very much, and demand is growing rapidly in developing countries, oil to meet this rising demand must come from somewhere. The way this transfer takes place is through the mechanism of high oil prices. High oil prices are particularly a problem for major oil importing countries, such as the United States, many European countries, and Japan. Because oil is used in growing food and for commuting, a rise in oil price tends to lead to a cutback in discretionary spending, recession, and lower oil use in these countries. See my academic article, "Oil Supply Limits and the Continuing Financial Crisis," available here or here.

Developing countries are better able to use higher-priced oil than developed countries. In some cases (particularly in oil-producing countries) subsidies play a role. In addition, the shift of manufacturing to less developed countries increases the number of workers who can afford a motorcycle or car. Job loss plays a role in the loss of oil consumption from developed countries-see my post, Why is US Oil Consumption Lower? Better Gasoline Mileage? The real issue isn't better mileage; one major issue is loss of jobs.

6. Globalization transfers jobs from developed countries to less developed countries. Globalization levels the playing field, in a way that makes it hard for developed countries to compete. A country with a lower cost structure (lower wages and benefits for workers, more inexpensive coal in its energy mix, and more lenient rules on pollution) is able to out-compete a typical OECD country. In the United States, the percentage of US citizens with jobs started dropping about the time China joined the World Trade Organization in 2001.

7. Globalization transfers investment spending from developed countries to less developed countries. If an investor has a chance to choose between a country with a competitive advantage and a country with a competitive disadvantage, which will the investor choose? A shift in investment shouldn't be too surprising.

In the US, domestic investment was fairly steady as a percentage of National Income until the mid-1980s (Figure 9). In recent years, it has dropped off and is now close to consumption of assets (similar to depreciation, but includes other removals from service, such as removals because manufacturing has moved overseas). The assets in question include all types of capital assets, including government-owned assets (schools, roads), business owned assets (factories, stores), and individual homes. A similar pattern applies to business investment viewed separately.

Part of the shift in the balance between investment and consumption of assets is rising consumption of assets. This would include early retirement of factories, among other things.

Even very low interest rates in recent years have not brought US investment back to earlier levels.
8. With the dollar as the world's reserve currency, globalization leads to huge US balance of trade deficits and other imbalances.
With increased globalization and the rising price of oil since 2002, the US trade deficit has soared (Figure 10). Adding together amounts from Figure 10, the cumulative US deficit for the period 1980 through 2011 is $8.6 trillion. By the end of 2012, the cumulative deficit since 1980 is probably a little over 9 trillion.

A major reason for the large US trade deficit is the fact that the US dollar is the world's " reserve currency." While the mechanism is too complicated to explain here, the result is that the US can run deficits year after year, and the rest of the world will take their surpluses, and use it to buy US debt. With this arrangement, the rest of the world funds the United States' continued overspending. It is fairly clear the system was not put together with the thought that it would work in a fully globalized world-it simply leads to too great an advantage for the United States relative to other countries. Erik Townsend recently wrote an article called Why Peak Oil Threatens the International Monetary System, in which he talks about the possibility of high oil prices bringing an end to the current arrangement.

At this point, high oil prices together with globalization have led to huge US deficit spending since 2008. This has occurred partly because a smaller portion of the population is working (and thus paying taxes), and partly because US spending for unemployment benefits and stimulus has risen. The result is a mismatch between government income and spending (Figure 11, below).

Thanks to the mismatch described in the last paragraph, the federal deficit in recent years has been far greater than the balance of payment deficit. As a result, some other source of funding for the additional US debt has been needed, in addition to what is provided by the reserve currency arrangement. The Federal Reserve has been using Quantitative Easing to buy up federal debt since late 2008. This has provided a buyer for additional debt and also keeps US interest rates low (hoping to attract some investment back to the US, and keeping US debt payments affordable). The current situation is unsustainable, however. Continued overspending and printing money to pay debt is not a long-term solution to huge imbalances among countries and lack of cheap oil-situations that do not "go away" by themselves.

9. Globalization tends to move taxation away from corporations, and onto individual citizens. Corporations have the ability to move to locations where the tax rate is lowest. Individual citizens have much less ability to make such a change. Also, with today's lack of jobs, each community competes with other communities with respect to how many tax breaks it can give to prospective employers. When we look at the breakdown of US tax receipts (federal, state, and local combined) this is what we find:

The only portion that is entirely from corporations is corporate income taxes, shown in red. This has clearly shrunk by more than half. Part of the green layer (excise, sales, and property tax) is also from corporations, since truckers also pay excise tax on fuel they purchase, and businesses usually pay property taxes. It is clear, though, that the portion of revenue coming from personal income taxes and Social Security and Medicare funding (blue) has been rising.

I showed that high oil prices seem to lead to depressed US wages in my post, The Connection of Depressed Wages to High Oil Prices and Limits to Growth. If wages are low at the same time that wage-earners are being asked to shoulder an increasing share of rising government costs, this creates a mismatch that wage-earners are not really able to handle.
10. Globalization sets up a currency "race to the bottom," with each country trying to get an export advantage by dropping the value of its currency.
Because of the competitive nature of the world economy, each country needs to sell its goods and services at as low a price as possible. This can be done in various ways-pay its workers lower wages; allow more pollution; use cheaper more polluting fuels; or debase the currency by Quantitative Easing (also known as "printing money,") in the hope that this will produce inflation and lower the value of the currency relative to other currencies.

There is no way this race to the bottom can end well. Prices of imports become very high in a debased currency-this becomes a problem. In addition, the supply of money is increasingly out of balance with real goods and services. This produces asset bubbles, such as artificially high stock market prices, and artificially high bond prices (because the interest rates on bonds are so low). These assets bubbles lead to investment crashes. Also, if the printing ever stops (and perhaps even if it doesn't), interest rates will rise, greatly raising cost to governments, corporations, and individual citizens.

11. Globalization encourages dependence on other countries for essential goods and services. With globalization, goods can often be obtained cheaply from elsewhere. A country may come to believe that there is no point in producing its own food or clothing. It becomes easy to depend on imports and specialize in something like financial services or high-priced medical care-services that are not as oil-dependent.

As long as the system stays together, this arrangement works, more or less. However, if the built-in instabilities in the system become too great, and the system stops working, there is suddenly a very large problem. Even if the dependence is not on food, but is instead on computers and replacement parts for machinery, there can still be a big problem if imports are interrupted.
12. Globalization ties countries together, so that if one country collapses, the collapse is likely to ripple through the system, pulling many other countries with it.
History includes many examples of civilizations that started from a small base, gradually grew to over-utilize their resource base, and then collapsed. We are now dealing with a world situation which is not too different. The big difference this time is that a large number of countries is involved, and these countries are increasingly interdependent. In my post 2013: Beginning of Long-Term Recession, I showed that there are significant parallels between financial dislocations now happening in the United States and the types of changes which happened in other societies, prior to collapse. My analysis was based on the model of collapse developed in the book Secular Cycles by Peter Turchin and Sergey Nefedov.

It is not just the United States that is in perilous financial condition. Many European countries and Japan are in similarly poor condition. The failure of one country has the potential to pull many others down, and with it much of the system. The only countries that remain safe are the ones that have not grown to depend on globalization, of which there are probably not many today-perhaps landlocked countries of Africa.

In the past, when one area collapsed, there was less interdependence, so it was possible to let cropland "rest" and deforested areas regrow. With regeneration, and perhaps new technology, it was possible for a new civilization to grow in the same area later. If we are dealing with a world-wide collapse, it will be much more difficult to follow this model.

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Twelve Reasons Why Globalization is a Huge Problem

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Globalization seems to be looked on as an unmitigated "good" by economists. Unfortunately, economists seem to be guided by their badly flawed models; they miss real-world problems. In particular, they miss the point that the world is finite. We don't have infinite resources, or unlimited ability to handle excess pollution.

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In this article, the author explains how globalization can easily unbalance companies not only in one country, but globally. With the spread of free trade, firms will have to face unsteady and unpredictable demand for their products. This also means taking business opportunities and making choices will be difficult. A domestic business will have less of a harder time figuring out their next move. The increase of foreign competition may be good for consumers, but not as beneficial towards companies. More competition means more substitutes. Prices and profit collected may sway inappropriately. Companies will hardly have power, or perhaps have no power over their pricing. These factors could lead to the potential destruction of a business, possibly several.

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Globalization, the increasing integration and interdependence of domestic and overseas markets, has three sides: the good side, the bad side, and the ugly side.

The good side of globalization is all about the efficiencies and opportunities open markets create. Business can communicate efficiently and effectively with their partners, suppliers, and customers and manage better their supplies, inventories, and distribution network. Local producers can sell their products in distant markets with the same ease and speed as in their home country. Sony Corporation (NYSE:SNE), for instance, can sell its TV and game consoles with the same ease in New York as in Tokyo. Likewise, Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL), and Cisco (NASDAQ:CSCO) can sell their high tech gear with the same ease in Tokyo as in New York.

The good side of globalization is also about easy credit and rising leverage, as money flows easily across local and national boundaries, and creditors fail to distinguish between good and bad borrowers, boosting aggregate demand; setting the world economy into a virtuous cycle of income and employment growth; and easy credit and leverage fuel financial bubbles that feed into a euphoria that perpetuates the virtuous cycle.

The bad side of globalization is all about the new risks and uncertainties brought about by the high degree of integration of domestic and local markets, intensification of competition, high degree of imitation, price and profit swings, and business and product destruction. Corporations that previously have been enjoying the benefits of globalization, now face unstable and unpredictable demand and business opportunities and their products quickly become commodities, leaving them little or no pricing power and under constant pressure by new competitors that undermine profitability.

The bad side of globalization is also about tight credit, deleverage, and declining money flows across local and national boundaries, as creditors tighten credit to both good and bad borrowers, depressing aggregate demand; setting the world economy into a vicious cycle of income and employment declines; and euphoria is succeeded by pessimism and a burst of asset bubbles, perpetuating the downward spiral of the world economy.

The ugly side of globalization is when nations and local communities try to escape the vicious cycle of income and employment declines through simultaneous currency devaluations; and by raising trade barriers that in essence put an end to globalization and a beginning to trade wars, as was the case in the 1930s.

In the last quarter of the century and for the most part of the first decade of this century, the world has seen the good side of globalization. In the last four years, the world has seen the bad side of globalization. We do hope and pray that the world won't see the ugly side of it.

Also read:
Why A Labor Shortage Is Good News For The Chinese Economy An Open Letter To The Capitalist Enterprise Why the Next Financial Crisis Will Be Nastier

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The Good, The Bad, And The Ugly Side Of Globalization

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Image via Wikipedia Globalization, the increasing integration and interdependence of domestic and overseas markets, has three sides: the good side, the bad side, and the ugly side. The good side of globalization is all about the efficiencies and opportunities open markets create. Business can communicate efficiently and effectively with their partners, suppliers, [...]

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This article explains that globalization has helped production flourish in countries. Products such as food, electrical equipment, and vehicles increase due to growing consumer demand. An increase in demand results in an increase in business growth, which means even more production. This is a very healthy cycle to be in. Production also leads to higher revenue and more profits; eventually, an increase in employment occurs as well. Because of this economic growth, countries grow a larger middle class. This is good, because that typically means that a decent amount of the population has gotten out of poverty. Some significant countries that have exemplified this include Brazil and China. Because of this larger middle class, a country’s GDP could increase remarkably.

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The world has experienced rapid globalization in the last few decades. Both developed and developing countries are increasingly participating in globalization and becoming part of the global village. The world economy has increased significantly and countries all over the world, whether developed or developing, have seen the size of their national economies grow. Even though globalization has been beneficial for the world economy, it has led to the emergence of certain problems in different parts of the world and in both developed and developing countries.

Globalization has had a tremendous positive impact on poverty reduction. The increasing integration of developing countries to the world economy has led to a reduction in extreme poverty. According to the World Bank, 52 per cent of people living in developing countries lived in extreme poverty in 1981. By 2011, this has decreased to only 17 percent. Large developing countries like India and China experienced rapid decreases in extreme poverty. While China experienced rapid economic growth due to globalization, it lifted 680 million people out of extreme poverty between 1981 and 2001. The significant reduction in poverty in the developing world shows the beneficial effect of globalization on poverty reduction. Globalization opened up developing countries to the world economy. Developing countries experienced substantial inflow of foreign direct investment, technological inflow and the opportunity to serve a substantial customer base in the developed countries. This led to the setting up of factories and companies that employed increasing number of workers and helped them to move out of poverty.

The last few decades have been characterized by the emergence of a growing middle class in the developing countries. This has especially happened in the fast growing developing countries like Brazil and China. Over the last few decades, hundreds of millions of people have joined the middle class and have been a significant driver of consumption of goods and services. Even though the definition of the middle class varies between countries, especially between developed and developing countries, the sizable middle class in the large developing countries like Brazil, Indonesia, India and China have become substantial drivers of national, regional and the global economy. Globalization that fosters international trade and helped increase GDP of the developing countries, have helped sizable portion of the population in developing countries to join the ranks of the middle class.

The citizens of developed countries have benefited from globalization through the purchase of goods and services produced in developing countries. From apparels manufactured in countries like Vietnam and Bangladesh to smartphones and televisions manufactured in China have become increasingly available to the population of the developed countries. The manufacture of these goods and services in low-wage developing countries reduce the manufacturing costs and, ultimately, the prices of these goods and services to their consumers in developed countries. As the consumers pay relatively low prices for these goods and services, their real income may have increased. The developed country consumers enjoy a wide variety of goods and services at relatively low prices that may have improved their standard of living. Therefore, globalization has benefited the consumers of the developed countries.

The companies of the developed countries have gained from increased trade and globalization. These companies, often multinationals with headquarters in developed countries, have made significant inroads to the developing countries' markets and cater to the needs and demands of their growing middle class. Food products, electrical equipments, automobiles, etc. are being increasingly consumed by the population of the developing countries, leading to substantial demand for the goods and services produced by developed countries' companies. This has led to increases in the sizes of these companies; the companies have more production, higher revenues and profits, benefiting their shareholders. In certain cases, this may have actually increased employment in certain sectors in the developed countries. At the same time, some companies from developed countries produce in developing countries that offer relatively low-wage workers. This has helped the companies to reduce their manufacturing costs and boost their revenues as well as profits. Therefore, globalization has been beneficial for the companies of the developed countries in two ways; it has allowed them to access new markets and manufacture products in low-wage developing countries. Also, increasing demand from the middle class in developing countries may have led to increases in production and, consequently, employment in certain sectors in the developed countries.

Globalization has benefited both developed and developing countries in many ways. The economies of developed and developing countries have significantly grown in the last few decades. Large, developing countries like the BRICS have enormously benefited from globalization while the economies of developed countries have grown substantially. However, globalization has led to the emergence of some problems in both developed and developing countries. The rapid industrialization in developing countries has led to increased environmental pollution and unplanned urbanization in some of the developing countries. Many of these developing countries are faced with polluted rivers and air. This has led to increased sickness among their citizens which raise their healthcare spending. Again, globalization may sometimes lead to increased exploitation of workers in developing countries. As businesses seek lower production and labor costs, the workers in developing countries become increasingly vulnerable to exploitation in terms of long work hours, low wages and, sometimes, risky work environments.

Developed countries are also encountering certain problems due to globalization. International trade and globalization has allowed manufacturing companies to move their production from developed countries to developing countries to take advantage of lower labor costs. The shift of manufacturing out of developed countries has led to loss of manufacturing base in the developed countries. This deindustrialization has adversely affected certain regions that were more reliant on manufacturing like Detroit. Again, Ontario has also experienced a decline in its manufacturing base. Most developed countries have experienced steady decline in their manufacturing bases. This has led to decrease in manufacturing output and employment in the developed countries. The loss of manufacturing base, especially that support vital industries, may have deleterious impact on a country.

It is not only manufacturing that has been moved overseas but also certain services have been relocated to developing countries. Back office work and call centers have been outsourced to developing countries that offer lower labor costs. The outsourcing of certain types of services and manufacturing have led to decrease in employment in these sectors. The people who were previously employed in manufacturing become unemployed. Even though many make a successful transition to other occupations, some may get stuck in unemployment. Also, the loss of relatively low-wage call center positions and back office jobs may have increased unemployment. Therefore, globalization has played a negative role on the employment scenario in developed countries. It led to loss of employment among the lower income group and the middle class in developed countries. As many people in the lower income group have less education and fewer opportunities for retraining, it may lead to their long-term unemployment.

Again, globalization may have played a role in the emergence of poverty in developed countries. When people in the lower income group experience long-term unemployment, they may slip into poverty. While the poverty rate has remained between 12 to 15 percent in the last few decades in the U.S., the number of people living in poverty actually increased. The same trend is observed in the U.K.. Therefore, globalization may have played a role in increased unemployment and higher number of people living in poverty in the developed countries.

Another adverse impact of globalization may be wage stagnation in the developed countries. The wages of people belonging to the lower-income group and the middle class did not significantly increase in the last few decades as some of their occupations have been increasingly under threat of being outsourced to developing countries. The availability of low-wage workers in developing countries may have acted as a hindrance for the rise in wages of lower-income and middle class workers in developed countries. Any potential rise in their wages may encourage a business to relocate its production or service unit to a developing country and take advantage of competitive wages. Therefore, globalization may have contributed to wage stagnation in the developed countries, especially for the lower-income and the middle class. The wage stagnation may have adversely affected poverty in the developed countries. A study by Joseph Rowntree Foundation revealed that there are more working families living in poverty than non-working ones in the UK. This indicates that globalization may play a role in the emergence of low-wage employment and stagnant wages in the developed countries that again lead to increase in poverty.

Globalization has had a mixed impact on both developed and developing countries. Even though it has been beneficial in certain ways, there are significant shortcomings of unharnessed and unfettered globalization. The issue of environmental degradation caused by rampant industrialization in developing countries need to be addressed. Globalization has to become more inclusive so that it protects the workers of developing countries from exploitation while encouraging employment opportunities and wage increases among the workers in the middle class and lower-income groups in the developed countries. The loss of jobs due to offshoring and outsourcing that has characterized developed countries in the last few decades need to be stemmed or reversed for globalization and international trade to be politically popular among the people in the developed countries. Only when the fruits of globalization are enjoyed by the wide spectrum of citizens in both developed and developing countries will globalization remain popular and be sustainable in the long run.

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Globalization Is Only a Good Thing If It Benefits All Groups of Society

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The world has experienced rapid globalization in the last few decades. Both developed and developing countries are increasingly participating in globalization and becoming part of the global village. The world economy has increased significantly and countries all over the world, whether developed or developing, have seen the size of their national economies grow.

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This article discusses how globalization can affect first-world, developed economies, as well as encourage interdependence. In richer countries, globalization can result in lower imports. These low prices can bring stronger spending power in firms and consumers. This can result in a higher standard of living. Globalization can also open an economy to more investment opportunities. Globalization offers more jobs, especially in the service sector. Globalization also promotes foreign competition, forcing businesses to increase efficiency. Firms may even manufacture more expensive products in order to escape more competition. One of the greatest benefits from globalization is interdependence. Freer trade will lead to more peace. Peace between nations means that they are able to negotiate problems and agree to terms with each other rather than engage in war or armed conflict.

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There is talk of food miles, of buying locally, and of self-sufficiency, as if these were virtues. The good thing (my number nine) is globalization which gives us all access to each other's special skills and products.
9. Globalization
Over the course of decades globalization is turning the world into an integrated economy instead of what it has been for most of its history, a series of relatively isolated economies. The more trading that takes place, the more wealth is created, and global trade across international frontiers has created more wealth than ever before in human history, and had helped lift more people out of mere subsistence than ever before.

To poorer countries globalization brings the chance to sell their relatively low cost labour onto world markets. It brings the investment that creates jobs, and although those jobs pay less than their counterparts in rich economies, they represent a step up for people in recipient countries because they usually pay more than do the more traditional jobs available there.

To people in richer countries globalization brings lower cost goods from abroad, which leaves them with spending power to spare and a higher standard of living. It also brings opportunities for productive investment in high growth industries in developing countries.

Those adversely affected by the global exchanges are the people in rich countries whose output is now undercut by the cheaper alternatives from abroad. They often need to find new jobs or to be retrained to do work that adds higher value. The extra wealth generated by globalization has brought an increase in service sector employment, which provides many of the new jobs needed.

Competition from abroad forces firms to become more efficient and to use resources more efficiently. Often they choose to go upmarket, seeking higher added value products that face less competition from relatively unskilled labour. Thus firms which once sold cheap textiles move into fashion and design, and find customers among the rising middle classes in developing countries.

The integration of the world economy has brought with it an interdependence. As countries co-operate in trade with each other, they get to know each other and grow into the habit of resolving disputes by negotiation and agreement instead of by armed conflict. The 19th Century French economist Frederic Bastiat expressed this pithily: "Where goods do not cross frontiers, armies will."

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There is talk of food miles, of buying locally, and of self-sufficiency, as if these were virtues. The good thing (my number nine) is globalization which gives us all access to each other's special skills and products. 9. Globalization Over the course of decades globalization is turning the

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Globalization Helps People Out of Poverty

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Globalization Helps People Out of Poverty

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This article briefly mentions how Quebec protesters are against proposing free trade, and how the Summit of the Americas organization believes otherwise. The article then goes on to say why globalization can help people out of poverty. Globalization and free trade offers a poor economy the chance to grow and be a part of the global economy. For example, in the 1990s, globalization has caused poor countries to grow annually at a 3.6% rate. Globalization strongly correlates with economic growth, which is why it has helped several countries out of poverty. To be more specific, globalizing has influenced improvement in markets, which led to an increase in national wealth. The article also mentioned that globalization has encouraged investment and trade, resulting in a more peaceful partnership between countries.

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Globalization Serves the World's Poor

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Globalization Can Leave Developing Countries Behind in Foreign Competition

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Globalization Can Leave Developing Countries Behind in Foreign Competition

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This article discusses how globalization can be harmful to both developed and developing countries. Often in globalizing, countries that are still developing are left behind due to free trade and foreign competition. They do not have the goods and services to compete with stronger economies. However, not only could globalization negatively affect developing countries, but it could also affect countries that have already developed as well. Globalization influences skilled workers to move to other countries, where they can earn more income and live a better standard of living. This is known as a “labor drain,” which non-first-world countries may experience often.  Additionally, globalizing means large firms utilizing tax havens in order to avoid tax payment in the countries in which they collect profit. Because of this avoidance, the government has to increase taxes, harming consumers and the goods and services that they buy.

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Globalization is one of the 21 st century's most important political topics. You might have heard the term globalization used before, whether in an economics lecture or in a political debate.

As the world grows more connected through the Internet and greater international trade, globalization is becoming more important - and more controversial - than at any other point in history.

In this blog post, we look at the benefits, the downsides, and the interesting realities of globalization. Whether you're an economics expert or someone with an interest in the future of the world, you'll gain a well-rounded understanding of the pros and cons of globalization.

If you'd like to gain a deeper understanding of economics and globalization, enroll in our course, Economics Without Boundaries with David McWilliams.

What is globalization?

What exactly is globalization? Simply put, globalization is the process of changing to an integrated world from an isolated one. Globalization can be summed up as a long-term change towards greater international cooperation in economics, politics, idea, cultural values, and the exchange of knowledge.

Globalization has largely been made possible by advances in technology, particularly the Internet. As the world grows more connected, people in all nations achieve a far greater level of interdependence in activities such as trade, communications, travel, and political policy.

It's easy to assume that globalization is an entirely modern phenomenon driven by inventions like the telegraph or the Internet. In many ways, globalization has been taking place for centuries.

From the Silk Road, which spanned from Europe all the way to East Asia, to the invention of steamships and railroads, humans have engaged in cultural exchange and international trade for centuries.

In the 20 th century, this international exchange and trade was made far easier by the invention of airlines and road vehicles. What was once a slow process became a far simpler one. In the late 20 th century, the invention of digital communications tools like the Internet made modern globalization a reality.

While globalization covers a wide range of topics, ranging from cultural values and information to economics and international trade, most modern discussion of the pros and cons of globalization is focused on economics and culture.

What are the core features of globalization?

From an economic perspective, globalization has truly changed the world. The core features of globalization are increased free trade between nations, easier movement of capital between borders, and a massive increase in foreign investment.

This has resulted in growth for both small businesses and multinational companies, which can now access new markets across the world. It's also resulted in increased transport and communication between countries and continents.

What are the key benefits of globalization?

There are many pros and cons of globalization, ranging from economic benefits to a freer, more equal labor market. Let's start by looking at the most discussed benefit of globalization: free trade.

Free trade reduces the barriers that once stood between nations trading freely with one another. When companies in different nations don't face any barriers to trade in the form of import or export restrictions, they can engage in free trade.

An example of a free trade agreement is the North American Free Trade Agreement (NAFTA), which allows Mexico, Canada, and the United States to exchange products and services without significant import and export restrictions.

Free trade has numerous benefits for economies and consumers. Consumer enjoy a greater choice of goods and services, since foreign companies can easily offer their products for sale. They also benefit from lower overall prices for goods, as a greater variety of goods for sale increases competition and drives prices down.

Manufacturers in countries with free trade agreements also benefit from free trade in the from of a larger export market. Rather than being able to export to just a few countries, exporters can now sell their goods to wholesalers and consumers in a large variety of counties.

Free trade also allows nations and economies to specialize, producing higher quality goods at better prices. If a country, for example, has large oil reserves but little land that's suitable for farming, it can focus on oil production while importing fresh food from abroad.

Another key benefit of globalization is the free movement of labor. In a globalized world, workers can more easily move from one country to another to market their skills to employers and contribute to the economy.

In many cases, free movement of labor allows economies to fix 'gaps' that exist in their labor markets. For example, the United Kingdom has hired nurses from India to fill positions in its public hospitals that were previously empty due to local labor shortages.

Companies can also hire workers in foreign countries to work for them using online tools and telecommunications. Learn more about the theory and decisions behind this in our Business Process Outsourcing course.

The benefits of free movement of labor also work in the other direction. If a country has too few jobs and too many workers, people can easily move to markets in which the job market is better. An excellent example of free movement between countries can be seen in the European Union, particularly the Schengen Area.

What are the downsides of globalization?

While many features of globalization have been beneficial, others have resulted in problems for certain economies and countries. Each of the benefits of globalization, from free trade to the free movement of labor, can also be a downside for specific countries and economies.

One of the biggest downsides of globalization is the harm it can cause to economies at an early stage of development. Free trade forces all countries to compete using an even playing field, which critics claim puts smaller, less developed countries behind their more developed counterparts.

Some economists believe that free trade is only possible if industries in developing countries are allowed to grow under a certain level of economic protection. This is known as the Paradox of Free Trade, and it is a core argument among economists.

Another downside of globalization is the phenomenon known as ' labor drain.' Since globalization allows workers to easily move from one country to another, countries with limited job opportunities often find it difficult to encourage skilled workers to stay in their countries.

You can learn more about how labor drain relates to the current economic climate in our course, Capitalism in Crisis: The Global Economic Crisis Explained.

This is particularly problematic in countries with extensive publicly-funded higher education systems. After receiving training in their home countries, many people emigrate and spend their professional career in a more lucrative economy at the expense of their home country.

Globalization can also have a significant negative impact on taxation. Since many companies are able to trade with one country while being based in another, large corporations often exploit tax havens such as Luxembourg, Switzerland, and Hong Kong to avoid paying taxes in the countries where they generate their profits.

This can often hurt consumers in the form of higher taxes on consumer products and property. Since countries often have little control over where big companies register to avoid tax, they are often forced to raise other taxes in order to make up for lost revenues due to corporate tax avoidance.

Many economists and environmentalists have criticized globalization due to its environmental impact. Learn about the environmental effects of globalization in Energy Economics and the Environment.

Finally, globalization has had a cultural impact on many countries that have been subject to large-scale immigration. Many critics of globalization feel that the free movement of labor has resulted in the weakening of specific cultures in favor of greater economic and cultural hegemony.

Understanding economics as a whole

Globalization is an interesting issue that's drawn many people to the study of trade and economics. Like many other economic processes, globalization has both major advantages and disadvantages for the world as a whole.

At the core of the globalization argument is the concept of the invisible hand of the market, as conceived by Adam Smith. As nations become more connected, markets will self-regulate to maximize their benefits and minimize their downsides.

Learn more about the basic principles of economics in our course, Micro & Macro Economics.

An example of this can be seen in the United States. Because of globalization, most consumers can purchase products ranging from cars to televisions at lower prices than at any point in history. This is because these products are no longer produced in the United States, but in other countries with lower labor costs.

The benefit of this change is lower prices for consumer goods. However, a downside of this development is a reduction in the number of manufacturing jobs available in the United States, as production is outsourced to countries with greater economies of scale and more affordable labor.

This is one of the many pros and cons of globalization, and it illustrates a key value of economics: any decision which has positive effects can also have negative effects.

Learn more about economics and globalization

Would you like to learn more about how the world's economy functions? Economic developments can have a huge effect on global politics and culture, and learning the theory behind modern economics is a great way to stay informed.

Enroll in our course, The Geography of Globalization, to learn more about how the shift towards a more global economy is changing the world. You may also want to learn about how globalization affects teamwork in international organizations.

Globalization is at the center of modern economics and politics. Stay informed of its positive and negative effects and you'll be a more informed, capable, and politically astute citizen of the world.

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Pros and Cons of Globalization: Controversy and Discussion

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Globalization is one of the 21 st century's most important political topics. You might have heard the term globalization used before, whether in an economics lecture or in a political debate. As the world grows more connected through the Internet and greater international trade, globalization is becoming more important - and more controversial - than at any other point in history.

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This article, though it lists numerous pros and cons of globalization, focuses mainly on how businesses can improve from it. Globalization means more consumers, an obvious advantage for an industry. An increase in consumers will lead to cheaper production costs. Firms from developed countries can have a lower production cost because of trading with countries such as China, India, Brazil, or otherwise. Even smaller businesses in first-world countries can have cheaper production costs due to globalization. Also, because of more consumers, markets are more efficient. Market efficiency will lead to business expansion, which will then lead to more jobs being offered. This could result in an improved standard of living. Overall, globalization can influence several businesses to grow, thus making the economy grow in turn.

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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 of globalization and how it simultaneously shapes our cultures and economic relationships.

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 Purpose

There 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.

If you need help expanding your own business, this course on international expansion will help you formulate an action plan to expand business through international sales and partnerships.

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."

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

The Benefits Of Globalization

For 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 of globalization in the modern era.

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.

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.).

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 the research of legendary economist Paul Krugman and how international trade creates and affects a new geographic economy.

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 Globalization

Because 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 cons of globalization.

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.

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

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 roughly half 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"?

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've logged 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, Inevitable

Unfortunately, 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 on energy, economics and the environment can help you make your choice.

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

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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.).

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Globalization Benefits the Service Economy and Promotes Individualism

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Globalization Benefits the Service Economy and Promotes Individualism

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This video has touched on both sides of the argument; however, it has proven that globalization has been good for the world. Globalization has caused people to live better lives, and also played a role in population growth through time. Globalization has also played an important role in a service economy, offering jobs in sectors such as healthcare, entertainment, and education. Globalization proves that people do not need to center their occupation around agriculture or manufacturing. Globalization has also brought about a psychological change; specifically, the psychology concerning upper classes in the industrialized world. Globalization also brought the celebration of individualism into society. This individualism has grown more powerful over the years. The video also mentions that globalization has promoted democracy. Democracy has helped countries like Brazil and India out of poverty. Indirectly, globalization has affected the world significantly over time, specifically in a way that is beneficial to most.

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Globalization II - Good or Bad?: Crash Course World History #42

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These sources argue that globalization has made the world worse.

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These sources argue that globalization has made the world better.