Is Globalization Beneficial to Economies, Businesses and Populations?

Abstract：Globalization has made both positive and negative impact on world’s economies， business and populations. It can bring mankind benefits such as common progress and prosperity， meanwhile it may also cause possible problems like robbery， power politics and polarization between the rich and the poor.

Key words：globalization； benefits； problems

中图分类号：H319 文献标识码： A 文章编号：1672-1578（2014）4-0004-04

1 Introduction

Globalization，popularly described as the absence of

borders and barriers to trade between nations （Ohmae， 1995）， has been viewed as shifts in traditional patterns of international production， investment， and trade （Dicken， 1998； Renesch， 1992）. It is a powerful real aspect of the new world system， and it represents one of the most influential forces in determining the future course of the globe （Michie， 2003） and involves the integration of economies and societies around the world and affects different regions， countries and areas and their populations （Parker， 1998）.

Integrating business activities across geographical and organizational boundaries， political， economic and cultural forces and competition between inter-dependent regional and local world markets with competitive advantages， globalization pertains to be the freedom to conceive， design， buy， produce， distribute and sell products and services in a manner which offers maximum benefit to the firm without regard to the consequences for individual geographic locations or organizational units. （Kirkbride， et al.， 2001）. It is a process which starts on the domestic level with the formulation of world economic policy and implementation strategy being required to form and adjust the national economic structure as well as infrastructure to the needs and for the functioning of the world economy （Chase-Dunn， 1999）. As a revolutionary phenomenon， globalization has been influenced by developments in systems of telecommunication and modern technology. The level of world trade is much higher than it ever was before， and it involves a much wider range of goods and services （Igbaria，1999）.It brings about both benefits and risks simultaneously.

Much of the world， especially the poorest countries， has been largely excluded from its benefits （Stiglitz， 2002）. The gap between rich and poor has tended to widen， inequalities have risen （Amoroso， 1998）. It is believed that globalization doesn’t work for the benefit of everybody and is beneficial to Western countries （Stiglitz， 2002： 214）. For example， developed Western countries not only benefit most commercially from globalization， but also attempt to globally promote their political systems， values and ideology so as to set up a so-called new world economic and political order， they will demand the lifting of barriers to the movement of services across boundaries， but， at the same time， will impose strict barriers on the movement of people across the same boundaries （Ibid.）. So globalization acts as the agent of exploiting the developing countries and damaging natural environment. The process of globalization produces both “winners” and “losers” （Kirkbride， 2001）.

Is globalization a good thing or a bad thing？ Is it beneficial to economies， businesses and populations？ This paper will explore the impact of globalization on such aspects as economies， businesses and populations. First of all， definition of globalization will be addressed.

2 Effects on economies， businesses and populations

2.1 Effects on economies

Globalization has posed significant impacts on the world economy. It has not only created tremendous benefits to world economy but also produced a lot of problems.

2.1.1 Benefits

One of the contributing factors for the emergence of globalisation is the diffusion and adoption of the flexible model of corporate and industrial organisation， particularly in the post-1970s world economy （Oman， 1994）. Flexible production systems increasingly underpin the growing prominence of functionally integrated transnational production patterns （Dunning， 1993； Oman， 1994； Dick， 1998）. Take East and Southern Asia for example， the penetration of industrialised country markets has brought about a great increase in the share of world manufactured exports for the leading Asian economies （outside Japan）， among which are Hong Kong， Korea， Singapore， Taiwan， China， Malaysia， Indonesia and Thailand. Their share of world manufactured exports has been increased from “1.5 per cent in 1963 to 20 per cent in 1995” （Dicken， Cited in Dicken & Yeung， 1999： 109）. With respect to Japan， the most powerful economic force from Asia in the post-Second World War period， TNCs from it have made tremendous FDI in many areas around the world.

The emergence of the MNC brings about a significant amount of international trade and comprehensive international financial transactions. It is argued that MNCs are using least-educated， thus， low-paid workers to create surplus value and to gain more profit. Thus， the problem of rising wages in the domestic economy is overcome through internalisation of production （Milward， 2003）. Undoubtedly， information technology has contributed tremendously to the globalisation of economy. It is true that globalisation is partly driven by technological innovations （Nesadural， 2003）. As a result of improved transport and communications facilities， globalisation helps facilitate the movement of created assets， and with it the specialization of economic activity. It upgrades the capability of micro-regional spatial units to provide complementary or support services for the mobile assets to be properly exploited （Dunning， 1997）. With the help of internet， details of products reach potential customers instantly， which brings much convenience to consumers and profits to producers.

It is stated that globalisation generates increasingly intense interactions between nation-states through flow of goods， money， people， ideas and information， in the process of reducing boundary barriers （Hurrell， cited in Nesadurai， 2003）. Through policies of liberalisation， privatisation and new ideas of market competition， globalisation advocates and emphasizes free market economy with limited government involvement in and control of economic activity. Hence， global economic ideas are changing from ideas about free trade and free markets to more radical notion that emphasizes withdrawal from the exploitative processes of the world economy， which stimulates the worldwide spread of economic activity， providing corporations the flexibility to organize production to maximise their goals （Nesadurai， 2003）.

With the advancement of technology and development of the world economic events， economic relationship and structural interdependence between nations， especially between advanced industrial nations， are increasingly deepening. Many large MNCs find it advantageous to disperse some of their home bases from their country of ownership to other countries， considering the availability of particular natural resources and the lowering of distance-related transaction costs （Dunning， 1997）. Globalisation boosts FDI， which has posed great impact on the economy of the targeted countries. To some countries， foreign capital remains a crucial source of growth and exports， particularly in the high value-added and advanced sectors of the economy （Nesadurai， 2003）.

Globalisation has led to growing competition on a global basis. Specialization and the division of labor， with their implications for increases in production， now exist not just in a nation but on a worldwide basis. Besides， globalisation creates benefits including the gains from trade in which both parties gain in a mutually beneficial exchange. It can also result in increased productivity as a result of the rationalization of production on a global scale and the spread of technology and competitive pressures for continual innovation on a worldwide basis. It has also contributed to improvements in production efficiency with domestic firms forced to go head-to-head with their foreign rivals. There have also been improvements in the provision of financing which has helped developing countries acquire the capital necessary for their own development （Parker， 1998）.

2.1.2 Problems

It is reported globalisation is fundamentally flawed. The benefits of globalisation have not reached everyone equally. While some people， particularly in the developed world， have enjoyed economic， educational and cultural gains from globalisation， many others who are poor or live in developing world have been left behind in the world economy and are becoming increasingly underprivileged.

Globalisation has brought about problems in the distribution of income， which benefits the well off competitors. While stimulating world economic growth， globalisation lays economic burdens on many people （Amoroso， 1998）. Or rather， globalisation develops and expands at the expense of the underdeveloped countries， because for those who have weaker competitiveness or little opportunity to participate in the economic growth across the world， globalisation does no good but harm in their perspective.

Besides， the free-market economic model promoted by the IMF to the Third World results in severe exploitation and consumption of their natural resources， which poses great threat to the sustainable development of their economic in the years to come （Kirkbride， et al， 2001）.

It is also stated that globalisation has resulted in unemployment in the high wage industrial countries. It is also threatening the social welfare provisions of some states by affecting the domestic fiscal policy and demographic trends.

2.2 Effects on businesses

2.2.1 Benefits

Globalisation has imposed great influences on businesses across the world. It has increased fluctuations in stock markets around the world and influenced opinions toward global issues in real time （Nesadurai， 2003）. It has created more opportunities for businesses to operate on a worldwide basis， which makes much sense in terms of production and consumption.

Globalisation increases mobility of capital， which creates businesses the flexibility of financial allocation and management. Globalisation also increases the transmission of knowledge and information， which brings about more benefits for businesses in terms of innovation of their production and sales （Strange， 1997）. Spread of knowledge （and technology） brings profits to businesses. Foreign investment might bring with it advanced technology and ideas that enhance its direct effect on investment and growth （Epstein， 2003： 154）. More generally， knowledge about production methods， management techniques， export markets and economic policies is available at very low cost， and it represents a highly valuable resource for the developing countries.

Globalisation brings tremendous profits to businesses because of the cheaper raw materials and cheap labour force. For example， Nike， Coco Cola， P & G， etc. all these MNCs have gained great benefits as well as stimulates the local economy by providing employment， raising wages and improving working conditions.

Besides， the experience of operating globally has caused many business managers to rethink the basic assumptions of how their firms are organized and operate. Global management involves mixing and matching among tools and techniques derived from a variety of cultures， perhaps to meld western-style financial techniques with Eastern-style team-oriented work techniques， which effects business performance as well as improves understanding among human resources from different cultures （Parker， 1998）.

2.2.2 Problems

However， globalisation poses great risks and challenges to businesses. Such risks entail political risks， for example， if international sanction is conducted against the host country， the businesses concerned will suffer a lot financially.

Another risk stems from the fake products. With the progress of globalisation， namely， with the entrance of multinational corporations （MNCs） to the developing countries， famous brand name products are popular and profitable. As a means of unfair competition， some local businesses begin to make fake products imitating the famous brand name ones， thereby gaining illegal profits for themselves at the cost of reputations and images of the victim businesses.

Moreover， globalisation may bring about cross-cultural misunderstanding or even conflict. People from different cultures attach different value to their beliefs and business practice， which poses great challenge to the management of human resources and the operation of marketing. In this sense， businesses should be sensitive to the local cultures and beliefs if they want to safely and successfully launch their advertising campaigns or marketing strategies.

2.3 Effects on population

2.3.1 Benefits

With more free flow of trade and capital and investment across borders， globalisation increases competition and enhances productivity and cuts down the production costs. As a result， MNCs not only provides a large amount of employment to the locals， helping them out of the poverty， but raises the living standards and wages of the countries that open themselves to the global marketplace.（Singh & Zammit， 2003； Epstein， 2003）. Because of business competition and reduced production cost， the products， especially those famous brand name products become affordable to ordinary people. Series of products by Nike， Adidas， Puma can serve as good examples. For less developed countries， globalisation offers access to foreign capital， global export markets， and advanced technology while breaking the monopoly of inefficient and protected domestic producers. Faster growth， in turn， promotes poverty reduction， democratization， and higher labour and environmental standards （Epstein， 2003）. Globalisation， through combined business activities to achieve profit， social， political， or other goals， spreads not only consumer goods but notions and beliefs concerning the way to work and live， therefore enhancing the standards of life and work. Moreover， globalisation helps to improve human rights. Because of pressures from transnational nongovernmental groups， from government demands， and from business activities， abuse of human rights and child labour are condemned and eliminated with efforts （Parker， 1998）.

2.3.2 Problems

While bringing blessings to populations， globalisation has caused a lot of problems. Firstly， because of MNCs， the natural resources of the host countries concerned begin to shrink， the environment is damaged， which poses threat to the populations and their next generations （Kiely & Marfleet， 1998）. Secondly， for one reason or another， some of the developing countries haven’t been well prepared for the coming of globalisation， they are put at a disadvantageous position for business competition， thereby， economic crisis burst out， causing great disaster to national economy and the life of the populations involved. Next， the benefits of globalisation are not reaching enough people. It causes imbalance of income distribution. Research from the Institute of Development Studies （Tang and Wood， cited in Burns， et al， 2001： 290） indicates that globalisation increases the earnings of highly skilled workers in developed countries by widening the market for their services， but lowers the wages of other workers in developed countries by eroding their privileged access to jobs in production.

3 Conclusion

To conclude， globalisation is an economical， social and political phenomenon which affects deeply the entire globe. Whether it is negative or positive， it must be understood that it has clearly changed the world system and that it poses both opportunities and challenges. It offers great opportunities and challenges to nations， economies， businesses and populations. Despite the weaknesses of the process of globalisation， we can safely say the benefits of globalisation for economies， businesses and populations overweight its weaknesses.

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作者简介：侯香勤，女， 广东外语外贸大学商务英语学院讲师，硕士；研究方向：语言学与应用语言学，商务英语教学。