Globalization and its benefits

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Globalization and its benefits

  1. 1. GLOBALIZATION AND BUSINESS SYNCHRONIZATION Globalization is said to be the process of increasing the interaction, unification, andintegration of the world’s economies, people, companies, and governments of different nation byreducing the barriers to international trade like tariffs, export fees, import quotas etc. this processis driven by the international trade and investment through information technology. This processaims to increase the material wealth, goods, and services through creating efficiency in the labordivisions by maintaining international relations, specialization and competition. This term isclosely related to economic globalization where the trade, FDI, capital flow, migration,technology and military of national and international economies are integrated to achievemaximized effects (Bhagwati, 2004). Ahmed et al. (1993) explained that many studies measure these global activities on thebase of country size and by the growth of the company. Recently there is advancement in themeasurement methods that are based on econometrics and advanced computer technology. Thegrowth of international trade over the past decades is said to be the product of globalization. Theworld trade has increased more than twenty seven folds since 1950’s (WTO, 2007). This resultedin increased benefits to the consumers around the globe with respect to the selection of theproducts. The increased financial linkage with the countries around the globe has increased thedegree of diversification in the products and services offered by the companies and the countriesare able to cope with the idiosyncratic shocks. Thus there is profound correlation between the
  2. 2. level of risk sharing between the countries and the production specialization process ( Kalemli-Ozcan et al. 2003) The tremendous pace of globalization has significant impact on the countries around theglobe and the people living there. It has transformed various businesses like Detroit’s BigTHREE or Bangalore to IT hub from boom to bust or vice versa. It has played vital role in theincreased prosperity of the world since 1950’s which has now spread from United states andEurope to the regions like China and India, which were considered formerly as poor countries(BBC, 2007). With the advent of globalization process, the world trade has increased much faster thanthe overall growth of the world economy since 1955. The globalization has helped to reduce thetrade barriers like tariffs on the export of manufactured goods. The countries like Japan, Koreaand China are having dramatic increases in their living standard due to international trade. ManyMNCs are outsourcing their manufacturing units overseas to enjoy cheaper labor cost and stay inthe competition. Recently, Apple, Multinational giant, has become virtual firm by outsourcingmost of its production units to the companies in Asia (Schifferes, 2007). The globalization has not only changed the way of manufacturing to variousorganizations but also it has revamped various service sector businesses. Many services relatedjobs are under the continuous threat and fear of outsourcing as the global companies tends tomaster costs by shifting their functions to the other countries. Bangalore has become one of thelargest and fastest growing IT hubs outside United States (Nadvi, 1995; Parthasarathy, 2004).
  3. 3. India has become the world’s leading IT services provider, with its volume of offshorebusiness doubling every three year. It is not only a hub for software-related industries but alsohouses several high-tech clusters (e.g. defence, aeronautics) and is considered to be thescientific and engineering centre of India in terms of research and training and partlymanufacturing. What China has become to manufacturing, India has become to the new world ofbusiness process outsourcing (BPO) - which includes everything from payroll to billing to ITsupport (Nadvi, 1995; Parthasarathy, 2004). Every process or function has positive and negative impacts associated with it. If theglobalization has so many positive influences on the world economy and trade, it has somenegative impacts on the social, cultural lives, and it has increased disparity within the people.There are many critics that are continuously expressing their views against globalization. But thepoint here is that globalization gathers pace and companies make new acquisitions and enter newmarkets and categories, the complexity of harmonizing information across borders can onlyincrease. Although growth can sometimes be painful, there may never be a better time to thinkabout a global information strategy. To find the right balance between benefits and costsassociated with globalization, citizens of all nations need to understand how globalization worksand the policy choices facing them and their societies.
  4. 4. REFERENCESAhmed, S., B.W. Ickes, P. Wang, and B.S. Yoo (1993). International Business Cycles, AmericanEconomic Review, 83, 335-359.Bhagwati, J., (2004). In Defense of Globalization. Oxford, New York: Oxford University Press.Kalemli-Ozcan, S., B. Sorensen, and O. Yosha (2003). Risk Sharing and IndustrialSpecialization: Regional and International Evidence, American Economic Review, 93, 903-918.Nadvi, K,. (1995). Industrial clusters and networks: case studies of SME growth andinnovation. UNIDO, Vienna.Parthasarathy, B., (2004). India’s Silicon Valley or Silicon Valley’s India?: socially embeddingthe computer software industry in Bangalore. International Journal of Urban and RegionalResearch , 3, 664-685.Schifferes, S. (2007). Globalization Shakes the World, BBC NEWS, Retrieved on June 11, 2011from http://news.bbc.co.uk/2/hi/business/6279679.stmWorld Trade Report. (2007). The GATT/WTO at 60: WTO World Trade Report examines sixdecades of multilateralism in trade, Retrieved on June 11, 2011 fromhttp://www.wto.org/english/news_e/pres07_e/pr502_e.htm

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