Negative Influence of Globalization
Globalization has had a negative influence on the world economy recently because of the worldwide inflation. Due to inflation of the western economies the rest of the world is also suffering because all the economies are tied together due to globalization and they depend on each other, if one has a negative impact then it will also affect the others. The fight against terror in Iraq and Afghanistan has also increased the price of oil throughout the world and this had a bad impact especially because recently the demand for oil from India and China has grown tenfold. An ideal example is the increase in the price of vegetables in India because of the increase in the price of oil which in turn increased the cost of transportation which added to the increased prices of all commodities and not only vegetables. Another negative impact of globalization was the recession felt by majority of the countries in the world because of the Subprime Mortgage Crisis which caused the banks to suffer huge losses and some even got bankrupt like Merrill Lynch and Lehman Brothers. It all happened because these banks were giving loans to people who had a low credit rating, as these people were not getting any loans from state run banks they approached these private investment banks for loans. These private banks gave them loans but at a high interest rate as they were taking a risk in giving loans to these people as they had low credit rating. The actual crisis occurred when the demand in the real estate industry began to quickly decrease which also resulted in the prices to decline whilst the interest rates were high for people who had taken loans with low credit and ultimately they were unable to pay the interest to the private banks which started going into losses as they had no way of recovering the loans that they had given. As all the economies of the world are interrelated to each other because of globalization this subprime crisis has affected the whole world in a negative way. Example Citibank in India reported a loss of Rs 60.3 crores and shares of various companies in south-east Asia took a negative turn and are still recovering from the losses but Europe and North America suffered the most. The most common negative impact of globalization is that the poor people and resources of the host country are exploited by big multinational companies as the wages they receive are miniscule compared to their counterparts in the developed countries and the resources are extracted without any concern for the countries eco-system. Moreover because of globalization farmers of developing countries can’t make the same amount of money as the farmers in developed countries as developed countries give a subsidy to its farmers.
Local businesses suffer because they cannot compete with MNC because they don’t have the capital to compete and these MNC come into a country and reduce the price of their product so much that the local business simply cannot do and thus the local business either gets shut down or bought over and merged with the multinational company. Example In India Campa Cola was bought over by Coca Cola even though campa cola was doing well before the MNC entered the industry.
Positive Influence of Globalization
There have been many advantages of globalization like free trade between various countries has helped the economies of those countries as well as remove the boundaries which restrict trade. Example In Europe the countries in the European Union (EU) participate in free trade and now the borders between them is only a formality and these countries enjoy peace. Another positive influence of globalization is that the consumers from the entire world have access to Good Quality Cheap & Standardised Products. Example Adidas has opened hi-tech factories in Asia which has the luxury of cheap labour and because of this it is able to produce good quality shoes, racquets, clothes etc at low prices. The host country also has the benefit of Transfer of Technology through large multinational companies that have a partnership with a company from the host nation. Example India received Japanese car manufacturing technology when Suzuki and Maruti entered into a joint partnership. The major advantage of globalization is that jobs have been created and as a result of which poverty has been reduced significantly in third world and developing countries. Example In India nearly one lakh jobs were created in the IT field because of IBM entering the country.
Conclusion
Globalization has made trade grow by 1500% in the last 50 years and has helped connect the entire world. Because of it products are cheap and available everywhere. Multinational companies which often are the carriers of globalization have invested and created millions of jobs in the developing and third world countries but many people in those countries still view them as a means to control them. It also has negative qualities like exploiting the poor and resources because of non-existent laws but all in all globalization has more positive qualities than negative ones.
REFERENCES
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