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Economic Globalization: Strengths and Weaknesses

Introduction

Globalization is not a new phenomenon, but rather a concept that has started to follow the human population due to colonialism, international trade, and economic liberalism. The global economy is characterized by the increase in the exchange of goods and services, which ultimately leads to the diffusion of economic growth. The theoretical framework of this concept is based on economic liberalism favored by capitalists. In short, the more buyers and sellers are on the market, the more competitive it becomes, which helps to keep the prices as low as possible, ensuring consumer welfare. The proponents of globalization believe that by maximizing economic welfare, foreign investments increase the poorer states’ economic efficiency. Despite all the positive aspects, workers from developing countries argue that globalization leads to job loss and exploitation of resources by big corporations. For example, in 2016, Peruvians protested against the country being a part of the Trans-Pacific Partnership, while Argentinians did the same in response to the loss of more than 150,000 jobs1. In order to understand whether the changes initiated by economic globalization are positive or not, it is important to determine its strengths and weaknesses.

The Opposite Perceptions of Globalization

Globalization is an umbrella term since it incorporates a variety of highly elastic explanations, often involving “expansion” and “international cooperation.” It is crucial to have a single definition of the construct to gain a deeper understanding of its pros and cons. Economic globalization is the worldwide integration of markets as well as financial, trade, and commerce systems2. On the one hand, it benefits consumers by lowering the cost of manufacturing, which results in decreased prices. Globalization allows companies to source inexpensive materials from abroad and take advantage of cheaper labor in developing countries by outsourcing. The global economy also leads to greater specialization due to the concept known as comparative advantage. It refers to the states’ ability to focus on what they can produce most efficiently while importing other goods from countries that specialize in them. This way, each country can minimize its opportunity cost and increase the efficiency of production, including productivity and performance levels.

On the other hand, opponents of global economic integration believe that it is harmful to national sovereignty and labor rights. Firstly, some argue that foreign investments are a threat to the state’s self-sufficiency. An example of this would be the Asian financial crisis of the 1990s. As soon as Thailand experienced a rapid withdrawal of foreign capital, other economies in Asia started to struggle as well due to the fact that “exchange rates plummeted to 50 percent of pre-crisis values, stock markets fell 80 percent, and real GDP dropped 4 to 8 percent.”3 Secondly, workers from developed countries have no way of competing with the lower-cost workforce from the developing world. Studies show “reforms in labor markets and trade (main elements of the package of reforms instituted in Latin America through the Washington Consensus) have contributed to inequality in income distribution.”4 Employees and unions are fully dependent on the conditions set by corporations that offer either lower pay or losing a job.

International Economic Development as a Component of Globalization

International economic development refers to a variety of strategies and initiatives implemented by states and non-governmental bodies in an effort to improve international economies, particularly those in developing countries. Humanitarian development is represented by USAID, UN Human Development Project, and other prominent international non-governmental organizations (INGOs). It is evident that such organizations can lead to economic growth and improve the quality of life of people coming from developing countries. Economic improvements are related to improvements in the public services sector and infrastructure. In addition, economic development results in a higher average income, which is associated with a better quality of life.

However, rapid economic growth can, in fact, result in the opposite. The fast development of the economy leads to the inadequate distribution of wealth, which facilitates greater inequality in terms of income and social status. The Gini coefficient helps to evaluate the inequalities in wealth and income distribution5. Even though India’s GDP enjoyed consistent growth6 over the past decade, the country’s Gini coefficient has risen, demonstrating that economic growth experienced by India resulted in greater inequality. Moreover, economic development directly affects the environment resulting in negative externalities, including environmental degradation.

Christianity and Globalization

There is a pivotal moment in the Bible, which reflects Christians’ most probable attitude towards globalization. In Genesis 11, humans attempt to construct a city and a tower known as the Tower of Babel7. The main point of the story is that the collective work of all humans can help each individual to reach their full potential and “become God” or at least get very close to God. Ever since people scattered around the world divided by their different languages, they have been trying to reunify. This is apparent in the relatively new phenomenon known as globalization. Thus, the world is seeking to come back to its pre-Babylonian origins. Christian worldview does not require people to be radical and choose to be either supporters or adversaries of globalization. On the one hand, globalization is a threat to an array of unique cultures since “it serves to minimize and nullify cultural values and beliefs.”8 On the other hand, it helps to replace those distinct values with a set of universal moral principles. It is every Christian’s mission to search for harmony between God and man. Christians would support any model of human development, which could help humankind achieve sameness while minimizing and mitigating conflict between one another.

Conclusion

Globalization is a concept that has become tightly integrated into the description of modern reality. Diversity is an inescapable buzzword; international cooperation is the focus of many states’ agenda; the economic market is undergoing major transformations due to new players entering the field. It is hard to produce a conclusive statement regarding the impact of globalization. After all, economic liberalism has led to lower prices and more efficient productions. However, globalization also contributed to making economies of less developed countries vulnerable to external capital, which can be easily withdrawn, as in the case with Thailand. In order to achieve a balance between foreign influences and national self-sufficiency, governments of developing countries need to facilitate economic growth at a slower pace and ensure its citizens enjoy fair pay and comfortable working conditions. INGOs have a responsibility to optimize economic development initiatives in order to avoid the increase in wealth inequality.

Bibliography

Bishop, William H. “The Necessity of Unification in Globalization: A Christian Perspective.” Leadership Advance Online 25 (2014): 1-11. Web.

Fernández, Lascurain M. “Challenges of Economic Globalization.” Revista de Relaciones Internacionales, Estrategia y Seguridad 12, no. 1 (2016): 23-50. Web.

Mingst, Karen, Heather Elko McKibben, and Ivan Arreguín-Toft. Essentials of International Relations. 8th ed. New York, NY: W. W. Norton & Company, 2018.

Naguib, Costanza. “The Relationship between Inequality and Growth: Evidence from New Data.” Swiss Journal of Economics and Statistics 153, no. 3 (2017): 183-225. Web.

National Geographic Society. “Effects of Economic Globalization.” 2019. Web.

Footnotes

  1. Mingst, Karen, Heather Elko McKibben, and Ivan Arreguín-Toft, Essentials of International Relations. 8th ed. (New York, NY: W. W. Norton & Company, 2018).
  2. National Geographic Society, “Effects of Economic Globalization,” Web.
  3. Mingst et al., Essentials of International Relations, 8th ed, p. 281.
  4. Fernández, Lascurain M., “Challenges of Economic Globalization,” Revista de Relaciones Internacionales, Estrategia y Seguridad 12, no. 1 (2016): 34. Web.
  5. Naguib, Costanza, “The Relationship between Inequality and Growth: Evidence from New Data,” Swiss Journal of Economics and Statistics 153, no. 3 (2017). Web.
  6. Ibid.
  7. Bishop, William H. “The Necessity of Unification in Globalization: A Christian Perspective,” Leadership Advance Online 25 (2014). Web.
  8. Ibid. 4.

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1. Essay4Business. "Economic Globalization: Strengths and Weaknesses." January 19, 2023. https://essay4business.com/economic-globalization-strengths-and-weaknesses/.


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Essay4Business. "Economic Globalization: Strengths and Weaknesses." January 19, 2023. https://essay4business.com/economic-globalization-strengths-and-weaknesses/.

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Essay4Business. 2023. "Economic Globalization: Strengths and Weaknesses." January 19, 2023. https://essay4business.com/economic-globalization-strengths-and-weaknesses/.

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Essay4Business. (2023) 'Economic Globalization: Strengths and Weaknesses'. 19 January.

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