Effects of Globalization

The word ‘globalisation’ is almost interchangeable with the term ‘economic liberalization’. Standing almost at the end of the 21st century, a question may arise in our mind –whether this open economy, a direct product of globalisation, has actually been a boon to the world’s economy including the social and economic scenario. Careful thought brings out the consequences like recession, global financial crisis and other related impacts. However just like every problem has a solution this issue is also addressable. We have come too far to look back at the time of conquests and colonization. Hence globalisation cannot be abandoned for sure, but a multidimensional approach might help in dealing with the economic problems associated with globalisation. Due to the enhancement of the technology and globalisation the countries are able to increase the production basket in their economy. In addition to these the benefits that have been reaped from it are improved consumption choices, employment opportunities, and enhanced lifestyle patterns. (Thorsby, 2001, pp 155-156) However a more analytical view may be provided regarding the effect of globalisation on the economy. To support this analysis the paper has focused on extensive secondary research and two primary sources.

The basic advantages that globalisation brings in are the improvement in the labour forces, the efficient structuring of organizations and the exchanges that takes place between workers from various cultures. Since labour forces are the human resources and sometimes the intellectual capital of the organization we need to assess its impact on the organization as a whole. Globalisation has caused workers to associate with other workers across vast geographical distances. In addition to these the constantly changing needs of consumers across the globe is a big issue. Organizations have to utilize their human resources in a meaningful way to get the optimum productivity and efficiency. Only this will enhance the competitive advantage of an organization in the dynamic global market. In relation to this the socio demography plays a very important role. People who belong from different communities do have certain mannerisms. Language and culture also play a very vital role in it. All the three elements (labor force, organization and social demography) are correlated to one other. Absence of any one of them can prove to be fatal for each. Sometimes lack of linguistic proficiency among workers from various geographies acts as a barrier to the smooth functioning of an organization. Hence organizations depend on knowledge acquired firsthand with regards to understanding the mutual likes and dislikes of an employee from a certain socio-cultural background. The advantage that firsthand experience brings is that it cultivates both direct and reflected knowledge. (Mortensen, 2009; Beyene, 2009)

With globalisation the demand for various products have increased excepting for financial services. Now the crucial question is whether financial services across the world are of high standards? The answer is no, as is suggested by the fact that demand for financial services continues to be low in emerging markets. The reason that has been projected is the lack of financial literacy and imagination towards the field of financial services. This has restrained the growth in demand for financial services. There has been another justification which states that demand for financial services are low due to two factors. First is the expensive nature of the services and secondly it does not add much value to an extremely poor society. However if we analyze rigorously we will find that financial services can be improved if the financial literacy programs are developed in these societies. An instance can be viewed in this light where the development of financial literacy programs has helped the uneducated and illiterate to open savings bank account. But on the contrary the cost associated with the financial training program is very high. (Cole, 2009; Sampson, 2009; Zia, 2009)

Globalisation has become ubiquitous in the new neo-liberal world order of the last few decades. However, all too often, the flaws inherent in this system have caused distress to populations negatively affected by it. Moreover, the loopholes of international business law allow Multinational Enterprises (MNEs) to go Scot-free and evade accountability toward the citizens of the countries in which they operate on. While the activities of Multinational Enterprises in developing countries can either be beneficial or disadvantageous to a country, recent evidence suggests that there are more cases of the latter than the former. The primary criticism leveled against economic globalisation is that it perpetuates lack of accountability and irresponsibility on part if its practitioners. While global financiers and speculators can accurately evaluate the values of tangible assets, more often than not the measure of intangible consequences of an MNE’s operations are not accounted. In other words, certain ‘externalities’ such as pollution of water sources, global warming, internal displacement of people are not accounted for. (Smith & Debrah, 2002)

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