Globalization: Threat or Opportunity

Globalization: Threat or Opportunity

In 2006 the world has become more of a global society then ever does to globalization. In this essay I will define globalization and then describe the factors which lead to this phenomenon. This essay will note some institutions that are related to trade and development on a global scale. This essay will also point out the positives and negatives of globalization for industrialized countries and underdeveloped countries around the globe.

Globalization is the expansion and intensification of linkages and flows, of people, goods, capital, ideas, and cultures across the borders (Rakesh). It is the concept of people working together and helping each other out. Globalization affects every country in the world in one way or another, whether it is positive or negative. Economies around the world have integrated through trade and financial flows. Globalization has been aided the movement of labor, knowledge, and technology across the world (Rakesh).

International trade has been around for a long time. Countries in the 13th century traded spices for example. Since World War II there have been advancements in technology which has reduced the costs of trade (IMF). When advanced technology came about it brought an easier way to trade and communicate through out the world. Technology has experienced rapid growth in the international trade and investment. In the 20th century globalization is now not only a notion it is a phenomenon but the question is, is it a threat or an opportunity?

Companies world wide such as McDonald’s have gone global. McDonald’s started in the United States and is now in countries across the globe. McDonald’s is just one of the many businesses taking their business global. Companies expand internationally for many reasons. Some expand to reach a global market while some do it for cheaper labor.

There are many main factors that lead to the growth of globalization, one of them being trade. For centuries countries have engaged in trade. One country may produce a material that another either can not produce or just can not produce as well as the other, so they trade materials. The export of manufactured goods rose from the year 1971 to 1999 29% and continues to grow (Nicholas). It is easier for countries to trade than it was 20 years ago one reason being because the barrier on international trade have been lowered through the General Agreement on Tariffs and Trade (GATT).

Another factor witch lead to globalization is financial flows. Foreign direct investment has grown. The movement of money or capital from country to country has become normal in this era. World wide financial markets have better access to outside money for corporate, national and sub national borrowers (IMF).

Movement of People is another factor that has lead to globalization. With more companies going global there are more career opportunities overseas. With this being so people are moving more often now to other countries to find employment opportunities. Outsourcing is another reason that people are moving overseas. Companies are having their products produced overseas because they can do so cheaper. This has caused a growth in cross cultural contacts and greater international travel (Cassidy).

Technology and Spread of Knowledge has made it so information is now easier to exchange between countries. Some of this technology includes the internet, satellites, and wireless telephones.

WTO (The World Trade Organization) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

NAFTA (North American Free Trade Agreement) is a trade agreement between the U.S. Canada and Mexico. It became effective on January 1, 1994. The purpose of NAFTA was to encourage trade by eliminating tariffs on most goods originating in and traded between these countries over a fifteen-year period. NAFTA provides preferential tariff treatment for certain products traded between these countries when strict documentation and certification procedures are met. Currently, preferential treatment means either reduced or eliminated tariff rates, depending on the product.

UN (The United Nations) is an international organization whose stated aims are to facilitate co-operation in international law, international security, economic growth, and social equity. It was founded in 1945 at the signing of the carter by 50 countries, replacing the League of Nations founded in 1919.

The IMF is the world's central organization for international monetary cooperation. It is an organization in which almost all