Globilization

Globalisation is a term used to describe the process of integration on a world wide scale of markets and production [Worthington & Britton; 2003]. It attempts to promote higher levels of equality and greater access to world markets by opening up more economies, thereby creating a trading environment with an increased number of nations actively engaged in higher levels of exporting and importing. In today’s world Physical location is becoming less relevant as new technology and increasingly complex international supply links are developed. Brands such as Coca – Cola, McDonald’s BP and Shell are internationally recognised and have become drivers for growth and market dominance [Price; 2006].

For many, Globalisation provides wealth and prosperity to countries which have been economically isolated and provides unity and opportunity to people all over the world to benefit from global trading. In opposition, globalisation spells out loss of sovereignty and individuality, decline in domestic cultures and traditions and the invasion of the natural environment. Critics of the globalisation phenomenon believe exploitation, pollution and greed are all covert yet fundamental elements of globalisation that are devastating as readily as they are beneficial to a country. According to Price other problems associated with globalisation are

1. Reduction in job security as work can be easily moved from one country to another.

2. Undercutting of one country’s wages by another, leading to erosion of wages rates.

3. Exceeding generally accepted working hours and exposure to health and safety risks in order to cut costs.

There are four main factors that have contributed to globalisation over recent years recent and they are as follows:

Firstly, there is the freer movement of goods and services between countries. Free trade is promoted internationally and regionally by a number of trading blocs and organisations. The most important and relevant one is probably the World Trade Organisation (WTO). The WTO has pushed along globalisation because it discusses trade issues, establishes agreed rules and takes appropriate measures when these rules have been broken. It has 130 plus members and membership is conditional on the grounds that countries must follow trade policies of a broadly free trading nature.

The other main trading bloc is the EU. It has helped globalisation because it enjoys a single currency that further unites and integrates the current 27 members. The EU allows the liberty of inter-member movement with goods, services and labour alike.

Free trade has lead to globalisation in recent years because countries can enjoy exports and imports of great quality and lower prices. Globalisation is also about improving current economic situations, and if consumers are satisfied then they tend of spend more, hence generating a larger amount of money in the economy which in turn inspires even more globalisation.

Another factor which has led to the process of increased globalisation is the freer movement of the factors of production, i.e.: land, labour, capital, enterprise. If we first consider the physical capital like tools, infrastructure and raw materials; in the past it was more convenient for a country to just make use of it’s own resources. It was either extremely expensive or not allowed for these to move about. But since deregulation, freer movement of factors of production exists.

In terms of money capital, in the past there was the issue of exchange control, whereby there was a maximum on the amount of currency you could carry. This has been deregulated, and this along with the decrease in bureaucracy and removal of �red tape’ has enabled foreign investment to occur, spurring on globalisation.

This freer movement of factors of production, which includes capital and labour mobility, has led to globalisation as different countries’ resources has become open to the world market. The United Arab Emirates, for example, exports a large amount of aluminium and generates a massive sum of money from this. However, to do this is has to obtain bauxite (the raw material) and this is possible because of the freer movement of factors of production.

The 3rd factor is the freer movement of firms; more specifically globalisation has been led by the growth of Multi-national Corporations (MNCs). They are an integral part of globalisation that the sales of MNCs such as General Motors and Ford exceed the entire gross domestic product of many countries.

MNCs help globalisation because without them there would be far less trade and innovation. MNCs have increased the amount of world output significantly and this has improved living standards throughout. MNCs create new