The Meaning Of Globalization, And Its Effects On Economy

This essay will explore what it is meant by the term globalisation in a wider point and explore what it is meant by the term with respected relevance to certain aspects such as business globalisation and economic globalisation. The essay will underpin what the aspects are while also discussing the advantages and disadvantages which follows each.

The term globalisation usually refers to the internationalisation of markets, goods and services, the means of production, financial systems, competitions, corporations, technology and industries. Globalisation of businesses appears all over the world today and is widely accepted as a normality of trade. A multitude of business operate at both a national and international level, importing and exporting abroad as well as having branches and stores in multiple countries across multiple continents. Businesses do this to tackle a wider market, reasons for doing this might include competition in their country of origin or difficult market conditions which means they may perhaps struggle to compete or successfully continue to sell their products or services at the same level they are used to. Businesses often expand into wider markets abroad, considered globalisation of businesses, for reasons such as: Taxes. For example, the average corporate income tax rate in the United States is 27. 00% in 2018 compared to the United Kingdom’s corporate income tax rate being 19. 00% in 2018. With this in mind, businesses can often be encouraged to move sales or at least parts of sales to different locations such as the U. S. to the U. K. as they are both similar markets and share a lot of common conditions and share cross-Atlantic businesses already. Moving across sales like this benefits the business as it allows a certain part of their overall revenue to actually pay less taxation via corporation income tax meaning that their overall net profit is higher as less is deducted through taxes.

It is known that for a long time that manufacturing/retail businesses such as Nike, Inc. use globalisation to their economic advantage by setting up and employing workers to manufacturer their clothing and footwear goods in counties that are usually less economically developed. In these countries the minimum wage is usually a lot lower than the country the product is initially sold in, for example a product manufactured in Vietnam and then sold in The United Kingdom; so the company can reduce costs hugely by employing workers in these countries at a significantly lower wage and therefore increasing their overall net profits as costs are reduced. This is an example of a positive advantage of globalisation to corporations as they are maximising profits which means the company’s shareholders get higher dividends. One potential disadvantage of globalisation into countries that can be considered ‘less economically developed’, is that corporations like Nike Inc. may unknowingly via third party factories, that have an either direct or indirect employment of child workers on their workforce , this from an ethical stand point is a bad thing as it can put children under harsh working hours where they may be working more hours than an adult in a country like the U. K. but for significantly less money, and it can stop them perusing an education if they have a chance to.

Using child labour can also be a bad thing for this business as it perceives them as less ethical to consumers which Nike Inc. has struggled a lot with from a PR point of view. This can be a direct result of globalisation and companies going overseas to employ people from other countries but a counter argument would be that if Nike or another large corporation weren’t doing it, then perhaps a local corporation or industry to that nation would be which could perhaps have worse working conditions. One point made that could be seen as a positive for child labour, and thus a positive aspect of globalisation, is that these children being employed by the corporations are providing money for themselves and their families which can be beneficial in a developing nation as more people are in work and therefore contributing to a growing economy. This means globalisation can actually increase a developing countries economy by corporations moving and expanding abroad and thus have advantages.

Businesses can also often expand abroad to fill gaps in markets which could perhaps already be filled in their origin country. For example, Uber breaking into the U. K. market to fill that niche of more organised affordable taxis which now they become a large competitor and threaten the Taxi market with their biggest competitor being London Taxis who used to own an almost monopoly, especially in London U. K. Positives of this example of globalisation and businesses growing into countries is that it offers consumer a more affordable and convenient service which is widely seen as better than the competition. Saving both the consumer money and benefiting with convenience. Disadvantage to Uber’s global spread is that they can be seen to ruin local taxi businesses in both the U. K. and abroad. It defeats the need for perhaps slightly less unorganised but locally run taxi services compared to a service offered like Uber. This can often be unbeneficial to a local economy as Uber is a United States run corporation meaning a lot of profits made abroad and, in the U. K. , will be used in the U. S. economy and benefitting that there rather than the local economies it operates in.

A further example of a benefit of globalisation which is more generalised rather than to a specific market would be perhaps a decreased price of goods and services. When businesses move to other countries they often or not, join markets with already existing competition. With how easy it can be to start a business abroad it can be found that more businesses operate in one market than there would be without globalisation meaning that with competition, prices are lowered to keep a competitive advantage meaning that consumers pay less for their products, benefitting them. A disadvantage to this could perhaps be that If consumers are spending less, they are giving less to the businesses which means the businesses would pay less taxes that year to the government which means less money for the government in that economic region.

Overall globalisation can be seen as a significantly good thing as it greatly benefits the movement of wealth to less economically developed nations, and through businesses allows poorer economies to grow by providing job and job security which allows money being paid to them to be successfully redistributed back into these local economies and thus developing them. Before globalisation less economically developed countries would have struggled to maintain their economies and jobs would be little-to-none as less businesses would operate but still maintaining the same population.