History Of Economics And Globalisation

The paper majorly focused on history of economics and globalization. It also delved in how globalization affects countries as well as companies in their pursuit of market expansion and profitability. Countries or industries that benefit most from globalization and the one’s lag behind were also evaluated.  In the first instance, globalization was defined as a process that requires high level of response as well as participation of every nation globally alongside their population.  It was clear that globalization has resulted from the cultural belies as well as practices that have to be accepted by every participant. A general acceptance of the policies established as well as formulas of implementation alongside challenges which a nation experience are key drivers of globalization. Globalization has also resulted from the strategic plan which transforms people with a range of social backgrounds as well as cultural beliefs. The degree of change, the impact of such a change on cultural practices as well as the cost and benefit drawn from these changes explains the history of globalization. However, it was also noted that the period between the creation of policies and the response of people to these policies are barriers to globalization.  Accordingly, global economics has resulted from the interaction of nations through commercial activities such as trade of services and goods where the exchange is embedded majorly through investments and flows of money. In the second instance, globalization was found to have great impacts on the countries as well as companies in their pursuit of market expansion and profitability. It was noted that a globalization affects both entities through trade which has to adapt to the international market dynamics for competitiveness and relevance within a business environment. With globalization, the changing market dynamics are faster and hence business organization have to undertake more research and development to remain relevance. Globalization also affects these firms and countries by bringing together diverse cultures in the international business market which has a greater impact on the erosion of culture. Increased levels of competitions by firms, advantaged information transfer and exchange of technology are some of the key trends through which globalization affects these firms and companies. In the last instance, it was concluded that globalization benefits developed countries over developing countries making the LDCs to lag behind. It was clear that developed countries have adequate funds to invest in the LDCs and get the ready market in these countries to remit back the profits at the expense of developing countries that lack the large amount of capital needed for such huge or capital intensive investment. Through the globalization, the developed countries have become richer and richer at the expense of the developing countries and hence LDCs have lagged behind.

A capital market is a market where the government, local authorities and the industries act as the source of long term capital through banks, insurance companies, pension funds and private investors. A developed country is distinguished from, and industrial country using the presence and sophistication of their capital markets in which capital markets is either missing or dormant in developing countries. The rapid growth of the global capital market is mainly linked to the increase in privatizations from below 5 percent in the 1975s to around 20 percent at present.

Globalization is a process that requires high level of response and participation of every nation across the world and her population. For the process to succeed there must be general acceptance of the policies created, formulas of implementation and challenges that countries may experience. In other word, the strategic plan to transform people with diverse social backgrounds and different cultural beliefs and practices must be accepted by every participant. The areas to focus on when determining how diversity in cultural practices affect the process of globalization entail the degree of change, the impact of such a change on cultural practices, the cost to the community as well as the benefit derived from the imposed change. Is essence, it becomes very hard for a particular community to detach from her regular cultural practices and respond instantly to certain regulations imposed by a foreign authority. The time overlap from the period of policy creation to the time people respond to such policies derails the process of globalization.

How is Globalization affecting countries and companies in their pursuit of market expansion or profitability?

Global trade increasingly adapts to the international market dynamics to ensure its competitiveness and relevance within the business environment (Twarowska and KÄ…kol 2013, p. 65). Business organizations and other firms should therefore put more cash in research work to change with the changing market dynamics. This is to ensure that the firms have competitive advantage in the market. To ensure effective research is done, all stakeholders including the producers, suppliers, retailers and the consumers must be involved for rational decisions. (Hendee 2010, p. 34)). Globalization brings together diverse cultures together in the international business markets. This has greater impact on the erosion of culture due to the interacting diverse culture. (Northrup, D., 2015, p. 52). Relatively, some firms benefit more from globalization than others do, the same explains why some nations are more competitive over other nations in certain industries (Hendee 2010, p. 63). To understand how globalization impacts the pursuit for marketing, it is crucial to identify the dynamics of global competition and nature of global industries. The key areas to be identified under the limelight of globalization include, efficiency, this can be achieved by firms through exploitation of another countries resource (Twarowska and KÄ…kol 2013, p. 69). In addition, companies can try out extending the productive life cycle of products. Some of the areas that growing trends of globalization have impacted in terms of profitability include:

• Increased levels of competitions by firms

In this situation, if a company is capable of production at a low cost, it is possible to increase its market share in return (Bardhan 2006, p. 45).

• Advantaged Information transfer

Consequently, the rapid changes in our markets require additional levels of information transfer. However, it is important for the shared knowledge to be implemented or rather to be put in an active rather than a passive situation (Serrano, 2007).

• Exchange of technology

The developments that have been associated with technology are countless hence it is one of the most credit areas of advancements. Internationally oriented firms employ the use of technology to exploit new business opportunities (Muhammad 2011, p. 39).

Technology is also a very significant tools for firms in their pursuit for quality goods and services.

Arvydas Guogis, from Romeris University, has attempted to tackle the dilemma behind the big range of countries which benefit from globalization at the expense of others.  The objectives behind this phenomena cuts across several crucial areas that this section will examine (Cavusgil 1993, p. 54). A common question that is usually pegged in most arguments surrounding globalization include, who exactly should take accountability for the positive and negative effects of globalization (Bertucci and Alberti 2003, p. 76). While some argue in terms of the specific roles played by countries, some counter argument base this effects on particular groups of interests i.e. making it the centre of political decision making. It is true to say that globalization is playing an increasing significant role in the development of developing countries (Nayyar 2006, p. 75). Consequently, globalization can be credited for several achievements in the economic processes, political influences, health systems and technological developments. Subsequently, it is also true to argue out that all the effects of this phenomenon are positive. As a result, this section of the paper will comprehensively cover which countries in particular benefit more from it and in what ways they do. (Makhlouf 2014, p. 59).

Although it may seem that they are the least beneficiaries of globalization, developing countries are now capable of coping with the rest of the world, increasing their economic growth and in solving poverty related cases in their country (Cavusgil 1993, p. 65). The World Bank and International Management have also impacted the effectiveness of globalization through encouraging developing countries to apply market reforms and changes through large loans (Mussa 2003, p. 53). It is also through globalization that developed countries are able to invest in the developing nations and as a result creating tremendous job opportunities for many people. True to say, the relationship between developed countries and developing countries has been enhanced because of the interdependency of the two (Zhang and London 2011, p. 58). It is important however to identify that as much as many developing countries share in the benefits of globalization, several other countries lag behind and also share in the negative impacts of the same (Bertucci and Alberti 2003, p. 54). Conversely, globalization has through the years ensured that the rich get richer and the poor either maintain their position or get poorer (O’Rourke and Williamson 2002, p. 67). This explains why, developed countries benefits most from the growing trend in globalization. In the same perspective, developed countries in most cases set up industries in developing countries so as to take advantage of the availability of low wages. As a result, this causes pollution in most countries with poor pollution regulation (Mussa 2003, p. 87). Another controversial issue surrounding globalization is the concept of ‘’brain drain’’. Consequently, priorities in developed countries lowers the productivity of other poor and developing countries (Bardhan 2006, p. 65). To sum all this up, many poor nations suffer at the expense of globalization due to the fact that it is as a result of foreign businesses utilizing the availability of lower wages rates as compared to their own (Nayyar 2003, p. 54).

In conclusion, the history of economics and globalization, how countries and companies are effected by globalization as well as and the most beneficiaries and victims of globalization have been discussed. The discussion has shown that globalization resulted from the cultural beliefs as well as practices that have to be accepted by every participant. Movements of people in and out of countries alongside their goods has fuelled globalization. The globalisation was noted to effect the countries and industries in pursuit of profitability and market expansion through increased technological exchange, advanced transfer of information as well as increased competition among firms. With globalization, it was clear that the word had become a global village and hence traders had to understand diverse cultural beliefs and values to expand their market and increase profits. It was also concluded that developed countries are the major beneficiaries of globalization leaving behind the LDCs to lag behind. The major reason for this linked to the availability of huge capital in the developed countries to invest in the LDCs.

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Cavusgil, S.T., 1993. Globalization of markets and its impact on domestic institutions. Indiana Journal of Global Legal Studies, pp.83-99.

Hendee, J.G., 2010. Profitable Globalization and the Ethical Dilemma of US Job Loss. McNair Scholars Research Journal, 1(1), p.7.

Makhlouf, H.H., 2014. Facets of Globalization. International Journal of Business and Social Science, 5(1).

Muhammad, A.C., Faheem, M.A., Dost, M.K.B. and Abdullah, I., 2011. Globalization and its impacts on the world economic development. International Journal of Business and Social Science, 2(23).

Mussa, M., 2003. Meeting the challenges of globalisation. Journal of African Economies, 12(suppl 1), pp.14-34.

Nayyar, D., 2003. Globalization and development. Rethinking development economics, 1, p.61.

Nayyar, D., 2006. Globalisation, history and development: a tale of two centuries. Cambridge journal of economics, 30(1), pp.137-159.

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Serrano, M.Á., 2007. Phase transition in the globalization of trade. Journal of Statistical Mechanics: Theory and Experiment, 2007(01), p.L01002. 

Twarowska, K. and Kąkol, M., 2013. International Business Strategy-reasons and forms of expansion into foreign markets. Poland: Maria Curie-Skłodowska University, p.55.

Zhang, P. and London, K., 2011, August. Does Globalization Benefit Developed or Developing Country?–Case Studies on Chinese and Australian Construction Industry. In International Conference on Advances in Education and Management (pp. 83-90). Springer Berlin Heidelberg.