smu solved assignments of mb0053 Q1. “The world economy is globalizing at an accelerating pace”. Discuss this statement and list the benefits of globalization.

Answer: Globalization is a process where businesses are dealt in markets around the world, apart from the local and national markets. According to business terminologies, globalization is defined as ‘the worldwide trend of businesses expanding beyond their domestic boundaries’. It is advantageous for the economy of countries because it promotes prosperity in the countries that embrace globalization.

Benefits of globalization

The merits and demerits of globalization are highly debatable. While globalization creates employment

opportunities in the host countries, it also exploits labour at a very low cost compared to the home country. Let us consider the benefits and ill-effects of globalization. Some of the benefits of globalization are as follows:

·         Promotes foreign trade and liberalization of economies.

·         Increases the living standards of people in several developing countries through capital investments in developing countries by developed countries.

·         Benefits customers as companies outsource to low wage countries. Outsourcing helps the companies to be competitive by keeping the cost low, with increased productivity.

·         Promotes better education and jobs.

·         Leads to free flow of information and wide acceptance of foreign products, ideas, ethics, best practices, and culture.

·         Provides better quality of products, customer services, and standardised delivery models across countries.

·         Gives better access to finance for corporate and sovereign borrowers.

·         Increases business travel, which in turn leads to a flourishing travel and hospitality industry across the world.

·         Increases sales as the availability of cutting edge technologies and production techniques decrease the cost of production.

·         Provides several platforms for international dispute resolutions in business, which facilitates international trade.

Some of the ill-effects of globalization are as follows:

·         Leads to exploitation of labour in several cases.

·         Causes unemployment in the developed countries due to outsourcing.

·         Leads to the misuse of IPR, copyrights and so on due to the easy availability of technology, digital communication, travel and so on.

·         Influences political decisions in foreign countries. The MNCs increasingly use their economical powers to influence political decisions.

·         Causes ecological damage as the companies set up polluting production plants in countries with limited or no regulations on pollution.

·         Harms the local businesses of a country due to dumping of cheaper foreign goods.

·         Leads to adverse health issues due to rapid expansion of fast food chains and increased consumption of junk food.

Causes destruction of ethnicity and culture of several regions worldwide in favour of more accepted western culture.