In this post, you will learn about the concept of globalisation. People across the globe are more linked with each other than ever before. Information and money flow more quickly than ever. Goods and services generated in one part of the world are progressively available in all portions of the world. International travel is more recurrent. International communication is ordinary. This phenomenon has been termed as “globalisation.”
It depicts the increasing integration of economies around the world, especially through trade and financial flows. The term at times also depicts the movement of people (labour) and knowledge (technology) across international borders.
It is essential to understand that globalisation is a contemporary term utilised to describe the changes in societies and the world economy that arise from dramatically enhanced international trade and cultural exchange. It explains the increase of trade and investment because of the opening of barriers across borders and the interdependence of countries. In economic contexts, it is frequently understood to refer nearly exclusively to the effects of trade, especially trade liberalisation or “free trade”.
Notes: In his budget speech of 2007-08, the Finance Minister Chidambaram put forth a proposal to promote Mumbai as a world class financial centre and to make financial services the next growth engine of India.
The International Monetary Fund describes globalisation as, the growing economic interdependence of countries globally through rising volume and variety of cross-border transactions in goods and services, freer international capital flows, and more quick and extensive diffusion of technology. The World Bank describes globalisation as the “Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries”.
You must keep in mind that globalisation can also depict the following things:
· It shares numerous characteristics with internationalisation and is often utilised interchangeably. Few prefer the word globalisation to focus on the erosion of the nation-state or national boundaries.
· The creation of a global village—closer contact between different parts of the world with enhancing possibilities of personal exchange, mutual understanding as well as friendship between “world citizens”, and development of a global civilisation.
· Economic globalisation—there are four features to economic globalisation, referring to four varied flows across boundaries, viz., flows of goods/services, that is, free trade (or at least freer trade), flow of people (migration), of capital and of technology. A result of economic globalisation is enhancing relations among members of an industry in various portions of the world (easily termed as globalisation of an industry), with a matching erosion of national sovereignty in the economic sphere.
· In the area of management, globalisation is a marketing or Strategic term that depicts the emergence of international markets for consumer goods typified by identical customer needs and tastes enabling, for instance, selling the same cars or soaps or foods with identical ad campaigns to people in various cultures. This usage is compared with internationalisation, which explains the activities of multinational companies tackling across borders in either financial instruments, commodities, or products that are widely tailored to local markets.
Globalisation provides extensive opportunities for truly global development but it is not progressing evenly. Few countries are becoming integrated into the global economy more rapidly than others.
It is important for you to keep in mind that countries that have been able to integrate are observing faster growth and decreased poverty. For example, outward-oriented policies brought dynamism and higher prosperity to much of East Asia, transforming it from one of the poorest regions of the world forty years ago, to one of the most developed. And as living standards rose, it turned possible to make progress on democracy and on economic problems like the environment and working standards.
The elimination of barriers to the movement of goods and services, in some instances even to the movement of personnel resulted in increasing specialisation of nations. They started involving more and more in export of those goods where they have comparative benefit over other. The remaining can be imported at much economical prices internationally, rather than manufacturing it locally.
