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Globalization Impacts

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Economic Practice Essay - Globalization "Analyze the impact of globalization on economic growth, quality of life, and external stability of global economies" Globalization is an important characteristic within the contemporary economic environment. The term globalization refers to the integration of local and international economies into a globally unified political economic and cultural order, and is not a singular phenomenon, but a term to describe the forces that transform an economy into one characterized by the embracement of the freer movement of trade, investment, labor and capital. The drive for globalization has resulted in greater economic growth globally, through the opening up of barriers to international trade, yet this increase in world output is often associated with detrimental effects in relation to the stability of a national economy, being susceptible to the ups and downs of the international business cycle and also both positive and negative effects on the standards of living or quality of life with in a nation. The main evidence to suggest the globalization within a nation has been the growth in global markets, changes in global consumption patterns, the establishment of intergovernmental agreements as well as the rise of transnational corporations. Globalization has been essentially driven by the breaking down of economic barriers between nations over recent decades that have resulted in greater worldwide economic growth. ...read more.


However, the standard of living, or quality of life Is not simply a measure of the level of economic growth or change in real GDP, but it is a measure that takes into account the literary levels, education, health care, technological change and mortality rates. An example of a quality of life indicator is the Human Development Index (HDI) which measures changes in those factors as a result of globalization. Over the last few decades, the HDI of the world's richest countries have increased as a result of globalization, where growth and development has been attributed to these economies through willingness to embrace market liberalization. However, the HDI of the poorer nations have grown at a slower rate to the richer nation's which, as some economists put it, shows that globalization is another word for the continual plundering of the poorer and weaker nations by the rich and powerful economies. It has been strongly argued that the benefits of competition go only to those who can compete, and poor countries have to negotiate on unequal terms. In addition, the forces of globalization take no account for social injustices, with Asian sweat shops being a prime example. ...read more.


While globalization has resulted in aggregate increases in trade, output and investment growth over the past few decades, it is clear that the benefits from this growth have been distributed unequally between different economies. While developing nations are now focusing on manufacturing productions, high income economies are establishing new production patterns and many poor nations are not adapting significantly. Consequently, this has resulted in lagging economic growth rates with in less developed countries, while nations such as the fast growing "Tiger" economies have experienced phenomenal growth rates of close to 9%. The income divide globally, as a result would tend to widen, as richer nations become richer at a faster rate than poor nations. However, a limiting factor towards continuing accelerated growth with in high income nations continues to be the maintenance of an economy's external stability, in particular preventing the blow outs of net foreign debt and equity over the business cycle, which might affect the international confidence in the management of the particular economy. There for globalization on the whole has come as a benefit throughout the world, yet these benefits are still heavily weighed towards the already rich nations, while the developing economies struggle to maintain growth on par with the higher income nations, resulting in the evident contrast in quality of life between there "classes" of nations in the global economy. ...read more.

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