Globalization and its Impact

Introduction

We live in a world which is shrinking day by day with the extensive use of technological advancements. These technological advancements are mainly in the fields of finance, IT, international trade, culture, environment and in fact all the other aspects of life are humongous are related to each not only physically or geographically but also strategically. Globalization has become one of the most unavoidable substances of today’s era which has resulted in the dramatic changes in economic setup of the world. The devotees of globalization are in the view that it has affected the social, political, environmental, technological and economical in a worthy way which has resulted in extended markets and increasing reach ‘to stakeholders’ and ‘of stakeholders’. However the critics of globalization has always been in the view that it has deteriorated the cost of local labor, land and other resources so the debate is still not concluded.

Globalization is giving rise to industry and is making collaboration among different industries to create a new mix which is giving birth to technological and industrial traffic ultimately resulting in environmental concerns.  Still the positives being fetched from globalization are said to be of more value and it is affirmed that the economy, environment, technology and society gaining a lot from increased globalization.

The following paper will shed light on the major outcomes of globalization effect and will further try to draw a line between the positives and negatives of globalization with respect to Australian environment.

What is Globalization?

The researchers haven’t yet reached to a conclusion to clearly define globalization. In fact it is a combination of a lot of simultaneous changes in the environment. Globalization can be described as an extensive idea casually used to portray a number of different phenomena that reflect expanded monetary reliance of geographically different countries. Such phenomena incorporate supply of merchandise (goods and services), cope with transportation obstacles, worldwide capital flow, multinational movement, FDI, outsourcing and expanded interaction with exchange rate volatility (Goldberg & Pavcnik, 2007). Still the subject matter experts are not on the same ground when it comes to defining globalization. They have examined the subject from multi-perspective approaches but a single universal perspective of globalization is yet not identified (Ch, et. al., 2011). A simplified common definition can be compiled after merging some existing definitions i.e. it is the process which integrate the scattered economies of the world as one unit or it is collection of policies used to manage policies, people and corporates of economies (Rothenberg, 2003).

The combination of the resulted integration on hands adds value to the existing market and on the other hand it helps in realizing the potentials as well. The definition given to globalization for the sake of understanding covers the aspects of culture, social, individual and at most the economical. The economic expansion due to globalization is humongous as the approximate value of daily transactions is $1.5 billion with an upward trend along with $8.9 trillion worth of goods transaction and $2.1 trillion of services provided in the same period. (Hill, 2009).

 

Merits of Globalization

Globalization is much more than the universal expansion of merchandise and venture. The reach of thoughts starting with one end of the world to the other has expanded tremendously in the recent decades. The world’s needy entities have profited massively which has resulted in life expectancy specially among developing nations, the child mortality is decreased by 60% especially in the last 4 decades and most of all the grain yields have increased by 200% in mid-60s within developing countries and also a huge increment in per capita caloric food supply (Johnson, 2002). Apart from these, there can be numerous positives when it comes to globalization. The globalization brings along HR information, free mobilization of capital and an increased currency exchanges throughout the globe which results in distribution of wealth across the globe. The global economy compels the organizational setups to strategically integrate with the economy and result in positive changes in the organization to meet the growing economy.

With globalization prevailing in the market the domestic organizations do not only depend upon the local customer as they are able to tap into the international markets with growing reach to customers globally (Ch et al., 2011; Mejfa-vergnaud, 2004). The past barriers of international trade are now broken with the help of hugely spread globalization which has helped global firms to attain growth and sustainability in the competition. The spread was made to keep the sustainability of the domestic firms but with the increased liberalization the barriers were nullified with the help of economic reforms and market reforms and an added ease to attain loan for their businesses. The availability of these added benefits helped the firms to expand their business reach and increase their revenues. Firms in developed countries, in order to decrease cost of labor, started outsourcing their labor requirements in developing and under developed countries which comes up with a two-fold benefit. The developing and under-developed labor get a chance to get earning opportunity and the developed countries get cheap labor as compared to their domestic labor (Hamdi, 2013).

 

Demerits of Globalization

Apart from all the good thing that mass globalization has given to this world, it also comes with some negative impacts on the society as well as economy. The drawbacks of globalizations are mainly highlighted by the critics of this discipline.

The economies having a lower labor cost (developing and under-developed) are often misused in the developed economies with the same wage rate, which results in the benefit of developed economies as they get lower labor cost as compared to their domestic labor cost but the developing and under-developed labor still gets the same or a little bit increasing cost. This also gives birth to the problem of unemployment in the parent countries as their domestic labor is not being used and services are outsourced instead. The government on the other hand face additional problems of handling the situation and trying to create a balance between the import and export of resources and to avoid the situation of brain drain in their country.

Globalization comes with the threat of increased disease spread as the humans from all around the world travels globally which is always having a hazard of carrying infection from one place to another place which was supposed to be contained in a specific geographical boundary before (Hamdi, 2103). The increased disease spread increases the medical expenses with time.

The critical researchers are in the view globalization has no doubt given boost to the economy but as a result the poor is becoming poorer and the rich is becoming richer and as the result, the gap between the rich and the poor is increasing with an increasing rate as compared to before. The living example from the last era is Indian economy which has grown at an increasing rate while the African states are still living below poverty line, which means that the globalizations is being partial to the economy (Hamdi, 2013).

Australian Scenario

Like the rest of the world, Australia too has got positives and negatives from globalization in recent eras:

Major Positives from Globalization

• With increased production in recent decades the balance of trade is gaining strength and with the emergence of globalization in Australia, the aid given to the manufacturing sector has reduced by 9% by 1997 (ABS, 2000).
• Globalization have given raise to the exports of Australia to new markets and the portion of exports in GDP of Australia has grown by 16% between 1975 and 2000 (ABS, 2000).

Major Negatives from Globalization

• Unemployment is increasing in Australia with the increased outsourcing of labor from developing economies and a situation of brain drain due to excessive opportunities in US markets is a big threat and drawback due to globalization (Stokes, 2000).
• The American and Australian markets now go in competition to each other. With increased certainty in American markets and fluctuation in dollar exchange rate, comes the threat of uncertainty in Australian market (MacFarlane, 2000).
• With increased globalization the difference between the rich and the poor has been increased and is increasing day by day which is alarming for the society (Barrett, et. al., 2000).

Impact on individual, organization and community

Individual

• An individual consumer has an increased number of choices to fulfil his single need.
• An individual can pursue more options regarding his career choice with the opening of market after globalization.
• An Individual can jump to a higher utility curve with increased options and pursue a better lifestyle than before.
• An individual can look for new and up-to-date knowledge, skills and abilities for himself and his organization.

Organization

• An organization can look for better brains which will give them added benefit of cultural diversity.
• A domestic organization can look into international markets to sell their products.
• An organization can look for cheaper cost of production to minimize their cost to increase their profitability.
• An organization can look into latest IT developments to adopt for better and efficient productivity.

Community

• The community will have a better and diverse culture which can give them a chance to adopt positives from other cultures.
• Many community members can opt to get into other cultures with increased satisfaction and adaptability.
• Exposure to new and increased languages is possible with expanding globalization which gives a chance to community member to learn new languages and look for career opportunities in their cultures.

 

Conclusion

Globalization has both its positives and negatives in other parts of the world as well as in Australia, yet it is the responsibility of the individual, organization, society and government to try and get the most out it and avoid the negatives by making policies that support globalization as well as help them avoid the negatives of globalization.

 

References

ABS. (2000). Use of the Internet by Householders. Australian Bureau of Statistics Report.

Barrett, G. F., Crossley, T. F, & Worswick, C. (2000). Consumption and Income Inequality in Australia. Economic Record. 76 (233), pp. 116-138.

Ch, M. A., Faheem, M. A., Dost, M. K. Bin, & Abdullah, I. (2011). Globalization and its Impacts on the World Economic Development. International Journal of Business and Social Science, 2(23), 291–297.

Goldberg, P. K., & Pavcnik, N. (2007). Distributional Effects of Globalization in Developing Countries. Journal of Economic Literature, American Economic Association, 45(1), 39–82.

Hamdi, F. M. (2013). The Impact of Globalization in the Developing Countries. Developing Country Studies. 3 (11), pp. 1-4.

Hill, C. W. (2009). Global business today. McGraw-Hill Irwin.

Johnson, D. G. (2002). Globalization: What it is and who benefits. Journal of Asian Economics, 13(4), 427–439. doi:10.1016/S1049-0078(02)00162-8

Mejfa-vergnaud, A. (2004). Effects of Globalization. Society, 41(3), 66–70.

Rothenberg, L. E. (2003). Globalization 101: The Three Tensions of Globalization. Occasional Papers. Issues in Global Education, 176, 1–6.