Linkage of domestic economy to that of the world through free movement of men and material across boundaries – GLOBALIZATION
Globalization is not a new concept that emerged recently but it’s presence as an economic activity can be traced from the period of colonialism & imperialism which started in the early 16th century. During colonialism the core countries like UK had their links with the satellite countries such as India & many African nations where the former had its trade ties with the latter ones.
The modern concept of globalisation started with the attempt by USA to establish its manufacturing units in Mexico in 1940s to generate revenue by increasing market base. Later the global institutions like World bank, IMF has also encouraged the economic globalization through loan conditionalities and Structural Adjustment program.Since then the process of globalisation continued n reached its glory during 1990s with many countries adopting these policies.
Though globalisation is a multi faceted concept, it’s impact can be seen more on economy of every nation – both developed and developing countries in both positive and negative ways as follows…
Positive impacts on economy
1)Globalization has resulted in web of economic interconnectedness at different stages – between intra industry,inter-State and inter – firm.
2) The globe has changed into a single economic entity
4)The major trade is practiced through global financial economies and trans national companies
3)Increased share of technology among countries can be seen. eg. Computer aided financial markets.
Negative impact on economy
1)The WB & the IMF followed one fits all approach which didn’t suit to many African nations worsening their economic status
2)Though globalisation mean free moment of men and material ,the moment of skilled human includes only 15% globally
3)The globalisation has changed the plight of domestic firms which has failed to face competition from global firms . Eg. Amazon in online shopping,uber in private vehicle, chabols in North Korea etc
4)The calculation of global economy does not include the back breaking work done by women who accounts nearly half of the world population
5)Many sceptics says that globalisation has favoured economy of global north rather than global south as nearly 90%of global trade is carried out by developed nations
Critics says that this process involves periodic booms n bursts whose frequency has reduced in the recent years
Though globalisation has its negative impacts on the economies of some underdeveloped countries ,in large it has benefited a lot to the growth of many post colonial countries through increased accessibility of latest technology,trade activities, increased markets globally etc. Taking care of the flaws that prevail in any system through better assessment can help nations to flourish which suits in the globalisation of economy too.