What do economists mean by globalisation? Critically examine the possible effects of globalisation on the global economic inequality.

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What do economists mean by globalisation? Critically examine the possible effects of globalisation on the global economic inequality.

Most writers and economist would define globalisation as the increasing interdependence of nations, by the integration of national economies into the international economy through trade, foreign direct investments, short – term capital flow, international flow of workers and increases in advanced technology.

This term could define globalisation however; the definition only looks at one part of globalisation and undermines the deprivation and global economic inequality it includes. “If a definition of a core concept such as globalisation is slippery, then the knowledge built upon it is likely to be similarly shaky and, in turn, the actions pursued on the basis of that knowledge can very well be misguided” This quote makes me believe, we only understand what globalisation involves “Trade etc” however, we are yet to understand the true meaning of globalisation and therefore the true definition of globalisation, where all concepts “Inequality” are included in the definition.

After the Second World War, lots of different factors influenced the move towards a global world. The abandonment of exchange controls, the fall of communism, advances in technology and the freeing up of the global market.

The abandonment of exchange controls has made it much easier for people to convert money from one currency to another and therefore this has helped increase trade and investment between nations. This would also mean government’s could lose control over what goes in and out of the economy, in terms of individual imports and exports (International sales transactions through the internet). The abandonment of exchange controls has also brought rise to an unequal demand of currencies. Everywhere you go, more people demand for Dollars, Pounds, Euro and Yen than any other currency. In some countries, house prices are only valued in Dollars instead of the true currency of the country. This further leads to a decrease in national pride of that country. An example of this is in Ghana, where most house prices are now valued in dollars rather than the Ghanaian currency, Cedis. It would in turn cost the locals more, to purchase a house, as one would have to convert from a weaker currency “Cedis” to a stronger currency “Dollars”.

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The fall of communism and the motive of capitalism to maximise returns through cheap labour has increased the movement of foreign direct investments to developing countries such as India, Philippines etc. This form of investment could benefit either sides or either one side of the party. A firm such as Reebok, having their factories and selling their products in the Philippines would benefit the employees and the organisation Reebok, however; when the benefits are weighed the gain to the organisation out weighs that of the locals.

The employed workers of Reebok would have an income to spend or ...

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