A Closer Look at Economic Globalization

Globalization is a special term that refers to the interdependence of cultures and economies over the globe. Nowadays, it has become easy for nations to exchange goods, information, services, and technology like IOT (The Internet of Things) and AI (artificial intelligence). They have become more interconnected politically, culturally, and economically than ever. This is because of many facilitations that have been developed to break any geographical, political, or linguistic barriers among countries.

Some researchers have found out that globalization has begun with Columbus’s voyage to the New World in 1492 which was the beginning of the idea of global trade and people since then have started to exchange goods, human labor, customs, and even ideas. The Silk Road which was founded in central Asia as a network of trade routes was a clear example of the beginning of globalization.

Despite its obvious benefits and the fact it has made the world a small village where all populations can connect and exchange all resources, globalization also has negative effects such as increasing inequality among nations.

There are three types of globalization: political globalization, cultural globalization, and economic globalization, and all types affect each other. In this blog, we will walk you through the definition of economic globalization, its benefits and challenges, and we will explain how Torjoman helps you with the best and top-notch translation services to cross all the language barriers and communicate effectively with other nations.

What Is Economic Globalization?

Economic globalization is the connectedness of countries all over the world for trading purposes. It refers to the exchange of goods and services and the flows of technology, labor, assets, and ideas among nations.

In recent years, the world has witnessed a great increase in the rate of economic globalization thanks to the enhancements in long-distance transportation, telecommunications, science, and technology. Moreover, many countries have started to cut down their trade barriers and promote free trade and global cooperation which has opened the gate for a more prosperous era of economic globalization.

What Are the Benefits of Economic Globalization?

Although economic globalization has helped many nations to increase their standards of living through global trade, it has affected others negatively. Let’s have a look at some of the main benefits of economic globalization.

Increasing the Standard of Living

Since international trade has enabled businesses to buy inexpensive materials, they will definitely sell their products at a lower price. Hence, both business owners and customers will enjoy higher standards of living. Customers will be able to buy goods at a lower price and businesses can skyrocket their sales and revenues.

Giving Businesses a Competitive Advantage

Economic globalization helps businesses win competitive advantages over others working in the same field. Businesses can now select the countries which sell their needed materials at a lower price. They can also hire human labor from developing countries where workers can accept lower salaries.

Thus, businesses can save more money to invest more in technology instead of wasting all their finances on buying raw materials and paying labor costs.

Eliminating Unemployment in Some Countries

Many businesses nowadays have started to outsource their services to companies in other countries where the labor cost is lower such as India, Vietnam, and China. This has resulted in creating new job opportunities in such countries and people’s standard of living has increased remarkably.

The Challenges of Economic Globalization

We have seen that economic globalization has affected both developing and developed countries positively. However, it has also its drawbacks. Let’s discuss them briefly:

Inequality among Countries

Economic globalization has extended the gap between the rich and the poor. Although many poor countries have benefited from globalization, others still have high poverty rates as is the case in many African countries. Furthermore, it differentiates between the highly skilled and less skilled workers since educated or highly skilled workers have more job opportunities than others which has led to societal violence.

The Spread of Deadly Diseases

Due to the increase in international trade movements, deadly diseases have spread very fast among travelers such as Swine Flu, Bird Flu, and Covide-19.

Damaging the Environment

According to Harvard Business School, globalization has many negative effects on the environment. Because many countries turn to trade partners for goods they don’t produce themselves, this has resulted in problems in forest health and led to serious environmental issues like habitat loss, deforestation, or natural resource overuse. However, this has promoted more environmental awareness among individuals.

In addition, since many manufacturing companies prefer to relocate to developing countries where labor costs are lower, they are causing a great amount of pollution in such countries owing to the high number of factories that exist there.

Summing up

Economic globalization has affected both the developed and developing countries. Collaboration among countries has risen and the possibility of the occurrences of wars has decreased significantly. In short, economic globalization has helped in spreading peace among world nations.

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