19 Advantages and Disadvantages of Globalization

The good news is that businesses and professionals willing to prepare for globalization’s challenges by developing strong social impact skills have the potential to benefit immensely. Globalization is the increased flow of goods, services, capital, people, and ideas across international boundaries according to the online course Global Business, taught by Harvard Business School Professor Forest Reinhardt. Two prominent examples of the rise of nationalism as a pushback to globalism include the 2016 election of Donald Trump in the U.S. and the British vote to leave the European Union (known as Brexit). These events contributed to the anti-globalization movement and stoked anti-immigration sentiments.

Increased risk of financial contagion

1. In this study, Frankel and Romer used geography as a proxy for trade to estimate the impact of trade on growth.
2. The obvious advantage of economic globalization centers on its positive contributions to economic progress across the world.
3. A general increase in awareness, opportunity, and transportation technology has allowed people to move about the world in search of a new home, a new job, or to flee a place of danger.
4. This mobility benefits migrants through better opportunities, the companies by linking them up with the best possible employees, and also contributes to the cultural and economic dynamism of the host countries (Dumont, Rayp & Willemé, 2012).
5. These consumers are characterized by their material and economic self-interest – rather than cultural, civic or other forms of identity.
6. In the visualization here, we compare the data published by several of the sources listed above, country by country, from 1955 to today.
7. Transnational marriage is a by-product of the movement and migration of people.

Foreign direct investment (FDI) tends to grow at a much greater rate than world trade does. This can help to boost technology transfer, industrial restructuring, and the growth of global companies. Globalization refers to the increasingly integrated nature of economies around the world. Cross-cultural communication is a field of study that looks at how people from differing cultural backgrounds communicate, in similar and different ways among themselves, and how they endeavor to communicate across cultures. Under these two approaches, it is common to distinguish between ‘traded merchandise’ and ‘traded goods’. As this chart clearly shows, different data sources often tell very different stories.

There is a heated debate about the true effects of globalization and if it really is such a good thing. Good or bad, though, there isn’t much argument as to whether or not it is happening. Let’s look at the positives and negatives of globalization, and you can decide for yourself whether or not it is the best thing for our world. Companies in the West outsourced manufacturing and operational capabilities in other regions of the world.

Trade and Globalization

The first transatlantic cable reduced communication time considerably, allowing a message and a response in the same day. Lasting transatlantic telegraph connections were achieved in the 1865–1866. The first wireless telegraphy transmitters were developed in 1895.

Such interactions often lead to the fusion of cuisines, music, art, and fashion, creating new, hybrid forms of cultural expression. HBS Online’s CORe and CLIMB programs require the completion of a brief application. The applications vary slightly, but all ask for some personal background information. If you are new to HBS Online, you will be required to set up an account before starting an application for the program of your choice. All programs require the completion of a brief online enrollment form before payment.

Economies of Scale (Efficiency)Larger (multi-national) corporations can produce products in bulk. This can create economies of scale, which means the cost of goods goes down as the number of goods you produce goes up. For example, Wal-Mart can often get goods to market a lot cheaper than your local corner store. Economic globalization is the element of globalization concerned with how our economies have become increasingly interconnected.

List of the Disadvantages of Globalization

Businesses must reorganize at the international, national, and sub-national levels in production, international trade, and the integration of financial markets. The transformation of production systems affects the class structure, the labor process, the application of technology, and the structure and organization of capital. As countries are connected to the rest of the world (through increased communication and transportation) they immediately form what a business would call a market.

Before the first wave of globalization, trade was driven mostly by colonialism

A transnational marriage is a marriage between two people from different countries. A variety of special issues arise in marriages between people from different countries, including those related to citizenship and culture, which add complexity and challenges to these kinds of relationships. In an age of increasing globalization, where a growing number of people have ties to networks of people and places across the globe, rather than to a current geographic location, people are increasingly marrying across national boundaries. Transnational marriage is a by-product of the movement and migration of people. The corrections applied in the OECD’s ‘balanced’ series make this the best source for cross-country comparisons. However, this dataset has low coverage across countries, and it only goes back to 2011.

So if we observe that a country’s distance from other countries is a powerful predictor of economic growth (after accounting for other characteristics), then the conclusion is drawn that it must be because trade has an effect on economic growth. Following this logic, Frankel and Romer find evidence of a strong impact of trade on economic growth. This figure shows the increasingly important role of trade between developing countries (South-South trade), vis-a-vis trade between developed and developing countries (North-South trade). In the late 1970s, North-South agreements accounted for more than half of all agreements – in 2010, they accounted for about one-quarter. Today, the majority of preferential trade agreements are between developing economies.

1. Afghanistan and Somalia were among the lowest-scoring countries on that index.
2. As we can see, intercontinental trade was very dynamic, with volumes varying considerably across time and from empire to empire.
3. This means every country now has access to the most productive machineries, making the whole world more productive.
4. Beginning in the 1930s, opposition arose to the idea of a world government, as advocated by organizations such as the World Federalist Movement (WFM).

Globalization and disease

Greater transparency here would lead to better funding of social programs, which could reduce poverty and food insecurity over time. Globalization would remove tax havens for wealthy individuals and businesses. Tax havens are defined as either a country or independent area where taxation levies are at low rates. They offer foreign businesses and individuals an opportunity to keep their profits in local institutions with little or no liability. These havens share little, if any, information about these finances with other tax authorities. As the world moved slowly toward globalization in the 20th century, the nations realized that having a concentrated power with one administration reduced the likelihood of tyranny in pockets around the globe.

Critics disagree – and that’s discussed in the ‘disadvantages’ section below. Erixon also discussed the positive microeconomic positive and negative impacts of globalisation impacts of globalization. Unless borders are completely removed, the advantages of globalization are challenging to achieve. The people who have the power to dictate policy would reap the most significant rewards. Those with money to invest would see their bank accounts continue to rise. At the same time, households living paycheck-to-paycheck would struggle to access what they require, suppressing their ability to pursue a better job.