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What Is Globalization?

Globalisation is defined as the process of enabling businesses, organisations, workers, technologies, products, ideas and information to transcend national boundaries and cultures. Brought about by cross-border trade in goods and services, technology and the movement of investment, people and information. The wider implications of globalisation are complex and politically charged. As with major technological advances, globalisation benefits society as a whole, while harming certain groups. Supporters will say that it has made countries more dependent on free trade. But critics argue that it has also concentrated wealth in the corporate elite, disrupting industries and making local economies more vulnerable.

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Some praise globalization for opening borders and connecting cultures and politics. Others blame it for disrupting local economies and eliminating jobs. The fact is that globalization has been around since ancient times, and it is fully integrated into different aspects of modern life. As a consumer, your clothing, foods and electronic gadgets are often produced by multinational companies located around the world. And as an investor, a financial advisor could help you diversify your portfolio with emerging market funds and other foreign investments.

Globalization is defined as a process that moves businesses, organizations, workers, technology, products, ideas and information beyond national borders and cultures. Supporters say that this is making countries more interdependent on free trade. But critics maintain that it is also concentrating wealth in the corporate elite, disrupting industries and making local economies more vulnerable.

This process has roots in ancient civilizations that traded for valuable commodities that were unavailable in their homelands. But today, you can also see how large corporations similarly thrive as multinational businesses with offices and supply chains stretching around the globe.

In the recent economy, trade agreements have become the cornerstones of globalization, creating and expanding networks for trade and infrastructure. This is the case with NAFTA, which was renegotiated by the Trump administration in 2020 as the United States-Mexico-Canada Agreement (USMCA). Initially, NAFTA incentivized U.S. businesses to relocate partially to take advantage of low-cost labor in Mexico. However, the USMCA has added protections for U.S. workers against this type of competition.

Globalization has also come under scrutiny with President Joe Biden's recent $2.3 trillion infrastructure and jobs plan. Many large multinational companies like Amazon were singled out by Biden for taking advantage of tax loopholes to avoid paying federal income taxes. The President said that he would raise corporate taxes and eliminate these loopholes and foreign tax credits to fund his plan.

While governments focus on removing national barriers to promote global trade, they are also working on protecting local economies that could easily get disrupted. Let's break down the advantages and disadvantages of globalization.

Advantages of Globalization

Globalization can provide greater access to goods to countries all around the world. It also provides some economic benefits that financially benefit people that otherwise wouldn't have enough opportunity where they live. Here are the four largest advantages to globalization:

1. Globalization Broadens Access to Goods and Services

It's hard to argue with the point that globalization makes more goods and services available to more people, often at lower prices. If you have disposable income and you're buying a product that comes from abroad, you're benefiting from globalization to some extent. Business owners also benefit by having access to a bigger market for their goods and services.

2. Globalization Can Lift People Out of Poverty

The argument that globalization has lifted people in developing countries out of poverty is somewhat controversial because opinions differ as to the quantity - and quality - of the jobs created by globalization. But the general wisdom is that globalization has increased job opportunities in capital-scarce, labor-rich countries, i.e. developing countries.

3. Globalization Increases Cultural Awareness

Globalization's defenders say it has increased cross-cultural understanding and sharing. A globalized society boosts the rate at which people are exposed to the culture, attitudes and values of people in other countries. That exposure can inspire artists, strengthen ties between nations and dampen xenophobia.

4. Information and Technology Spread More Easily With Globalization

Art and culture aren't the only things that spread more easily in a globalized society. The same goes for information and technology. For example, see the rise of mobile banking in Kenya or the practice of micro-lending. Civil society groups can look to other countries for inspiration and good ideas can spread more easily.

Drawbacks of Globalization

Globalization may benefit many but it also has some large drawbacks to consider. From negatively impacting some economies to benefiting only the largest corporations, it isn't a perfect solution. Here are the four largest drawbacks of globalization:

1. Workers Can Lose Jobs to Countries With Low-Cost Labor

This first argument against globalization is the one that surfaces most frequently in U.S. political discussions about NAFTA and other trade deals. When the U.S. competes with less-developed countries, its big advantage is its access to capital, whereas less-developed countries' big advantage is their cheap labor.

Generally speaking, globalization increases the returns to capital in rich countries like the U.S. and decreases the returns to labor in those same countries. That's a fancy way of saying that low-skill jobs in the U.S. can disappear as a result of globalization (though technology plays a big role in this change, too). The result may be a decrease in the inequality between countries but an increase in the inequality within countries.

2. Globalization Hasn't Protected Labor, Environmental or Human Rights

In theory, globalization can be an opportunity to spread values and practices like environmentalism and labor rights throughout the world. In practice, that spread has been slow and imperfect. For example, rather than exporting the labor protections that a company might have to abide by in the U.S., it might follow lower standards in another country where labor is not protected.

Some argue that globalization has caused a "race to the bottom" in which companies actively seek the countries with the weakest labor and environmental protections and the lowest wages. And while globalization has increased the flow of goods, services and capital, there are still plenty of tax havens, meaning that much of the value added by globalization is not captured and redistributed by governments.

3. Globalization Can Contribute to Cultural Homogeneity

Globalization might lead to more cultural homogeneity as people's preferences converge and products cannot compete with cheaper multinational ones. If everyone wears jeans, learns English and watches Hollywood movies we may lose precious cultural practices and languages. Some critics of globalization worry that it's creating a mainstream monoculture while driving other diverse cultures underground.

4. Globalization Empowers Multinational Corporations

Another criticism leveled at globalization is that it has empowered multinational corporations at the expense of governments and citizens. This reduces state sovereignty and citizens' ability to hold their leaders accountable for conditions in their countries. It's another reason that labor and environmental protections are harder to enforce than many critics of globalization would like. Multinational corporations may also lobby for favorable provisions in trade agreements (this was an argument invoked against the TPP).

Supporters and opponents of globalization generally agree that the phenomenon has come with great benefits and several negative impacts. Supporters argue that the benefits outweigh the drawbacks, while critics want to either improve the conditions of global trade or, in some cases, roll back globalization. Regardless, globalization is here to stay in many industries and countries so it's important to understand how it could impact you and your company.

Tips to Grow Your Business

Whether you're looking to raise money for a future business or create a financial plan to reach your current business goals, a financial advisor can help you make smart money decisions. SmartAsset's free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.

If you're starting up a business, you might want to consider the benefits of setting up an S Corp or an LLC. Make sure you compare the key differences to pick the best option for your needs.

Whether you are self-employed or have an employer, you should consider opening an IRA to save money for your retirement needs. Read more about IRA contribution deadlines and income limits.

Photo credit: ©iStock.com/Rawpixel Ltd, ©iStock.com/_marqs, ©iStock.com/Rawpixel Ltd

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Some praise globalization for opening borders and connecting cultures and politics. Others blame it for disrupting local economies and eliminating jobs. The fact is that globalization has been around since ancient times, and it is fully integrated into different aspects of modern life.

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For developing countries, globalization can bring them many benefits, they can skip the long process of technological development in industrialized countries, through globalization can bring rapid progress. For example, the rapid introduction of mobile phones into Africa has brought technological life and convenient communication services to many backward countries. For example, in case of an emergency, you only need a phone call to contact a doctor for help.
Developing countries tend to attract investors because of their huge growth potential. The resulting advances have led to results such as the spread of motorized agricultural machinery in poor countries, for example, where there was previously only manual Labour.

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Buy better products at affordable prices

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Buy better products at affordable prices

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Globalization can open up larger and more diverse markets, and can provide better products at lower prices. Opening up a globalized market means that consumers can choose goods from all over the world, and they will choose to buy the best and most Cheap goods, through competition, some companies may improve quality and provide more affordable prices.

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People prefer to migrate to areas with the finest possibilities when borders become less restrictive across the world. Impoverished nations with a lower level of living give wages that the industrialized world would consider appalling within the existing global framework. Someone working 10 hours a day in Bangladesh producing clothing makes less in a month than some Americans earn before lunch. We might lessen child labour difficulties by concentrating on globalization. More border freedom would reduce the threat of human trafficking. People would be free to live, work, and travel anywhere they pleased, making it simpler to pursue their goals.

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The cost of manufacturing goods or providing services would decrease with fewer obstacles to the import/export market, without hurting company profit margins. Consumers would profit from cheaper pricing by purchasing more and creating more jobs throughout the world. More invention, creativity, and involvement would occur at all levels of society if we created an atmosphere that encouraged free commerce.

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Businesses
1. Globalisation has widened access to goods and services
It is indisputable that globalisation has made more goods and services more accessible to more people and at lower prices. Business owners can benefit by gaining access to larger markets for goods and services.
2. Information and technology spread more easily with globalisation
Art and culture are not the only things that spread more easily in a globalised society. The same is true of information and technology. Businesses can learn or gain access to useful information or technology more easily as a result of globalisation. And they can also spread information and technology better.
3. Free trade
Free trade is a way for countries to exchange goods and resources. It means that goods can be produced at a lower opportunity cost and when countries specialise, there are benefits to trade such as a greater choice of goods, a larger export market for domestic manufacturers or economies of scale by specialising in certain goods.
4. Free movement of labour
An increase in labour migration brings benefits to workers and recipient countries. If unemployment is high in one country, the opportunities to find work elsewhere increase. This labour migration process also helps to reduce geographical inequalities. In addition, it helps to fill important positions in countries with labour shortages.
5. Increased investment
Globalisation has led to higher levels of investment. It makes it easier for countries to attract both short and long-term investment, and investment by multinational enterprises can play an important role in improving the economies of developing countries.
Consumers
Due to globalization whole world has become a small village. Its opened new market for consumer’s .It’s easy for consumer to buy which product that are not available in their country. One biggest benefit of this globalization has been an increase in product variety for consumers. The internet has opened new options for consumer for browsing from home, office, bus or train, with products available worldwide. Consumers can quickly get product and services by anywhere. Globalization has brought multiple producers and corporations competing for their own stake in the economy. This is a benefit to the consumer as the quality of goods and services should increase and price of product are decrease as a result.

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Consumer

Globalization has promoted to an increase in the consumption of products that has impacted the ecological cycle. Increased consumption promote to an increase in the production of goods which in turn puts stress on the environment. Globalization has also promoted to an increase in the transportation of raw materials and food from one place to another place in the world. Before globalization, people used to consume locally-grown food, but with globalization, people use products that have been developed in foreign countries. The amount of fuel that is consumed in transporting all these products has promoted to an increase in the pollution levels in the environment. It has also promoted to several other environmental concerns such as noise pollution, water pollution and landscape intrusion.  Another negative impacts globalization has had on cultural diversity, including the influence multinational companies have on promoting a consumer culture, exploitation of consumer and influencing societal values. This increased availability of media, products and service can "drown out" local cultural influences. Loss of individual and group identity occur when globalization encourages a Western ideal of individualism.Due to globalization people who belonging to different cultures and countries get a chance to interact with each other that promote a homogeneous set of values and beliefs but it causes a loss in traditions and values. The most common drawback of globalization is that it is mainly useful for rich and educated consumer who aware about global trend. Poor consumers who have small income, they cannot think about buy branding product. Consumer awareness is low due to the lack of education among the masses that increased the chances of the consumers being cheated because of information usually exist with buyers being at the mercy of much better informed sellers. Most of the consumer decisions are affected by advertisements. All right or wrong information is being passed on to the consumers through advertising. Consumer is in state of difficulty. It’s not easy for consumer to solve this problem. No one has told consumers about their rights - to be informed about product quality, price, protection against unsafe products, access to variety of goods at competitive prices, consumer education and any other rights that are provide consumer by the legislation.

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Businesses

1. More competition
International companies do not only have to adapt their internal operations. Going global opens up new sources of revenue and increases the availability of talent. Thanks to these attractive benefits and the convenience of services such as international PEOs, global markets are competitive. As globalisation becomes the norm, many companies often seek the same foreign markets, which increases competition for businesses. In the past, domestic monopolies were protected by a lack of competition. However, globalisation means that companies face greater competition from foreign companies.
2. Labour turnover
Globalisation allows workers to move more freely, workers may lose their jobs to countries with lower labour costs, and some firms struggle to capture the best skilled workers who are better paid elsewhere.
3. Environmental costs
One of the problems with globalisation is that it increases the use of non-renewable resources. It also leads to increased pollution and global warming. Companies can also outsource production to places where environmental standards are less stringent.
4. Reducing cultural diversity
Globalisation has led to increased economic and cultural hegemony. With globalisation, there is arguably less cultural diversity; however, it also brings more choice for some people.

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Globalization increases the use of nonrenewable resources: oil, natural gas, coal, and nuclear energy. It also leads to increasing pollution and global warming. Companies can also outsource production to places with less stringent environmental standards. However, the problem is not globalization but the failure to develop satisfactory environmental standards. The movement of goods around the world also creates a serious waste problem, especially when it comes to plastic pollution.

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The balance of trade refers to the value of products and services exported and imported by a country. Any country may trade with any other country as a result of globalization.
As a result, emerging nations are sometimes too reliant on wealthy countries in terms of imports while their export possibilities are limited. The trade deficit has been present for some time.

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Consumption data (particularly food) already demonstrate that individuals in power divert the majority of resources away from the average public. Americans consume about 200 billion more calories per day than they necessary as a nation, resulting in 80 million people being hungry unnecessarily. In the United States, almost 200,000 tonnes of edible food are discarded every day. The average person in the United States produces 52 tonnes of waste by the age of 75. Globalization would most likely concentrate resource distribution. When only a few people control access to a big number of people, the probability of having a wide-scale detrimental influence on populations increases.

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Globalization does not protect labor, the environment or human rights

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Globalization does not protect labor, the environment or human rights

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In theory, globalization can be an opportunity to spread values ​​and practices such as environmentalism and labor rights around the world. In practice, this propagation is slow and imperfect. For example, rather than exporting labor protections that a company might have to comply with in the U.S., it is better to follow lower standards in another country where labor is not protected.

Some argue that globalization has sparked a "race to the bottom", with companies actively seeking out countries with the weakest labor and environmental protections and the lowest wages. While globalization has increased the flow of goods, services, and capital, there are still plenty of tax havens, meaning that much of the value added from globalization is not captured and redistributed by governments.

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GLOBALIZATION AND THE CONSUMER: AN OVERVIEW/Dr. Krishna Gupta,Miss Kavita Bharti/Oct.-Dec.,2017https://inspirajournals.com/uploads/Issues/1242329937.pdf

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