Free «Global Trade, Globalization and its Impact on the World» Essay Sample


World Bank (23) defines globalization as a phenomenon that advocates for a shift in the economy around the world to the point where various industries offering services become interdependent to the world economy. This leads to a change in the operating of the industry, in order to suit the new business climate in the global market. Globalization can be termed as the development process that is a result of the global economy. Globalization is integration, which results in free trade and flow of capital from one country to another, especially as trading partners. This creates access to foreign markets, where provision of labor is much cheaper. It also leads to the lowering of the operational and production costs for most companies resulting in the rise of profit making.

Globalization, especially on the economic and financial sector, has resulted in tremendous benefits for many countries around the globe. For instance, in the U.S, globalization has led to the increase of the country’s annual income by about one trillion, which equates to an increase of about $10,000 per household in the county, if all factors were to remain constant. The globalization factor has become an integral part, as it plays a significant role in the world’s economy. The focus of this paper is to describe the benefits and disadvantages of this new system. It also answers the questions of whether it has helped or hurt the economy, and what influences globalization has had on other factors like disease, poverty, democratization and the environment.

Beneficiaries of Globalization

The benefits of globalization are so obvious and immense that in every five jobs that a multinational corporation offers, one of them is supported solely by the results. This has led to the adapting the skills of most workers in America, which they offer to meet the demands that are needed on the global scale. This has resulted in the increase in the buying of shares on these companies, as the stock market popularity has spread across various nations. This has led to the increase of the revenues generated in every family to increase, thus, allow them the luxury to afford gadgets, like cable television and Ipods, which assist in keeping in touch with the happenings on the global arena (James 67).

For example, the manufacturing output of the American companies has been among the key beneficiaries with the output believed to have risen. The number of jobs, if dated back to 1979, has dropped from $19 million to $14 million, but generation of revenues by the same companies has risen to $4 trillion from the previous $1.5 trillion. This increase in the revenue generated is attributed to the shifting of some of the plants of manufacturing to foreign destinations. In such areas, the goods, which are produced using materials acquired locally, are also cheaper. On top of this, the same countries are exporting their products to the same countries, hence, are benefitting in various ways. This has eventually changed their portfolios to multinationals, as portrayed by the traditional American companies like McDonalds and Coca Cola that have since become international brands, but still have considerable effects on the American economy.

Besides the creation of new markets, due to international agreements like the North American Trade Agreement (NAFTA), it has assisted in the elimination of the tariffs, which have always acted as trade barriers (Kendall 329). This has made the process of exporting and importing of products on the global scale more profitable.

Drawbacks of Globalization

There are numerous implications of globalization in the national economy. Because of globalization, interdependence and competition have intensified the economies in the world. The issue of it is linked to trading of goods and services and to movement of capital in the global market. Because of interdependence, determination of domestic economic developments does not rely solely on domestic policies and market conditions. It is, therefore, evident that globalizing economy, when evaluating and formulating its domestic policy, is not likely to ignore the prospective actions and reactions of developments, and guiding principles in the rest of the world. Eventually, globalization causes loss of policy autonomy by constraining the policy options available to the government. It also influences the decision-making processes at a national level.

In addition, as much as free trade increases opportunities for international trade, it also risks of failure to develop industries that are incapable of competing in the global market. A great amount of domestic industries in some countries are likely to be endangered because of absolute or comparative advantage of other countries dealing with a particular industry. Overuse and abuse of natural resources is another harmful effect of globalization. The financial crisis that hit the global economy led to the massive losses, which occurred in various companies participating in global trade. This is a clear example on the drawbacks of depending on the global scale. In addition to this, this negatively affects the uniqueness of the different cultures declining.

Generally, as most of these international organizations venture into the global scale, there is the demand for more resources to cater for the increased expenditure. These resources will be used in the expansion mechanisms and marketing, which are achievable on an international scale to ensure that clients are attracted and interested. Hence, the best approach of numerous organizations is to focus on the investment capital that is usually done by attracting investors on the global scale, especially in areas where the expansion process is aimed. This is also achievable through the creation of a portfolio, which is attractive and meets the international standards (James 87). At the same time, the company has to demonstrate that it has potential to make descent returns to the capital that is invested, especially in the opinion of the financial markets, which play key roles in the direction to be taken by investors. All of these moves are likely to reduce the cases of poverty.

Globalization is a remarkable phenomenon that is pragmatic not only of economic cooperation and exchange, but of human relations in the present world in general. From this outlook, globalization cannot be regarded as a process of leveling cultural differences and diversities, but a process of developing the ability to address cultural problems. In terms of democratization, it is clear that freedom of movement is not free to all. This is because most developed countries in the world take painstaking measures aimed at preventing immigration, thus, neutralizing the potentially beneficial influence of autocratic rulers (Berger & Huntington 27). This is not favorable for the process of democratization.  


Very few nations remain not affected by globalization. When other nations have gained wealth in the global open trading, others have become poorer because of globalization. Globalization has led to the rise of many companies globally, thus, increasing competition. Some of the profits include access to cheaper markets and labor. In addition, the opening of foreign markets has led them to change the portfolios to multinationals. This has led to the rise in the revenues generated, and this boosts the economy of the state. In fact, the impact of globalization on the international market can have many beneficial attributes, such as the lowering cost of operation, due to the increased market base. Moreover, the companies will have access to a larger base for customers, which will be easily translated to better returns for the company.


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