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 Effects of Economic Globalization

Globalization is how different parts of the world are connected. People, ideas, and goods move more easily around the world than they did in the past.

Globalization also changes the way companies and countries trade with each other. This shows how globalization affects economies. Globalization has improved people's lives in poor countries. However, globalization sometimes doesn't bring new jobs or money to other countries.

Globalization in the Past

Globalization is not new. People have always traded goods with their neighbors. At one point, people began traveling to distant places. People traded their own goods for other products.

The Silk Road is an example of early globalization. The Silk Road was an old system of trade routes. The routes connected the continents of Europe, Africa, and Asia. China is a country in Asia. The Silk Road was helpful because there were no trains then. Europeans traded products made of glass and other goods for Chinese silk and spices.

Later on, trade developed between Europe, Africa, and America. Sadly, most of it involved slavery. This showed how globalization can truly hurt people. European ships carried products from Europe to Africa. In Africa, the products were traded for enslaved Africans. These enslaved Africans were then forced to go to the Americas. From the Americas, the ships carried raw materials like sugar, tobacco, and cotton back to Europe. In Europe, the raw materials were used to make products. Then those products were brought back to Africa again. The cycle started over. This cycle was called the Triangular Trade.

Globalization has grown in recent years. It is easier to send money and products to other countries. It is simpler for companies to contact other countries. Countries signed agreements that make it all easier for them.

Benefits of Globalization

Globalization gives large companies an advantage. Companies can get materials for less money in poorer countries. They can pay less money to workers in those countries.

Also, different parts of a product may be made in different countries. T-shirts made of cotton are one example. Cotton is a plant. It might be grown in one country. Then, in another country the T-shirt is woven from those pieces of cotton.

The result is more jobs in countries where jobs are needed. More jobs make people's lives more comfortable. People who buy the products are doing better, too. In general, globalization makes prices of goods lower. For example, globalization makes t-shirts cheaper. Also, there are more goods for people to choose from.


Not everything about globalization is good. Many jobs were moved to different countries. The people who had those jobs before were left without jobs.

In poorer countries, the working conditions of people are often very difficult. People there are paid very little for a whole month of work. A worker in the United States may get more money in one day than they do in a whole month. Also, children of poorer families may quit school so they can work.

Into the Future

Globalization is not perfect. However, globalization will continue. The result is a more connected world.

Globalization is the connection of different parts of the world. The term is most often used in relation to economy, the level of business activity, and availability of jobs.

Globalization is also related to economics, the study of how money and wealth are produced and used. Globalization is the process in which businesses, organizations, and countries begin operating on an international scale.

In general, globalization has improved people's lives in developing countries, countries that are still growing. Globalization has been shown to improve people's standard of living, the level of wealth and comfort they enjoy. However, some experts warn that globalization can sometimes have a painful effect on developing countries.

A Historical View

Globalization is not new. People have always traded goods with their neighbors. As cultures advanced, people were able to travel farther away to trade their goods for desirable products found elsewhere.

The Silk Road is an example of early globalization. It was an ancient network of trade routes used between Europe, North Africa, East Africa, Central Asia, South Asia, and East Asia. For more than 1,500 years, Europeans traded glass products and manufactured goods for Chinese silk and spices.

Another example of globalization is the Triangular Trade network. The Triangular Trade network was part of the transatlantic slave trade. Ships carried manufactured goods from Europe to Africa, and then forcibly brought enslaved Africans to the Americas. Raw materials, like sugar, tobacco, and cotton, were taken from the Americas back to Europe where they were made into products. These products were then brought back to Africa and the cycle continued. The resulting spread of slavery shows how globalization can also truly hurt people.

The rate of globalization has increased in recent years as a result of advancements in communication, transportation, and information technology. Companies can more easily expand to other countries. Money can be transferred quickly across national borders. Improved rules within countries and international trade agreements between countries also ease globalization.

Benefits of Globalization

Globalization provides companies with a competitive advantage. They can obtain inexpensive raw materials and pay lower wages to workers in developing countries. At the same time, they use the technical expertise and experience of more developed countries.

With globalization, different parts of a product may be made in different regions of the world. The making of a car is a good example. Even the making of products that seem simple, like cotton T-shirts, often involves businesses in several countries.

Globalization affects services, too. Many businesses located in the United States have outsourced their customer support call centers to companies in India. Some U.S. car companies relocated their operations to Mexico, where labor costs are lower. This move was possible as part of the North American Free Trade Agreement (NAFTA). NAFTA is a trade agreement between the United States, Canada, and Mexico.

The result is more jobs in countries where jobs are needed. Increasing jobs in these countries can have a positive effect on businesses and result in a higher standard of living.

China is a great example of a country that has benefited immensely from globalization. Another example is Vietnam, where globalization has contributed to an increase in the prices for rice. As a result, many poor rice farmers in Vietnam were lifted out of poverty. More children of poor families left work and returned to school.

Consumers benefit, too. In general, globalization decreases the cost of making the products. As a result, companies can offer goods at a lower price to consumers. Consumers also have access to a wider variety of goods.


Not everything about globalization is positive. Any change has winners and losers. Practically, workers in the developed world must compete with workers in other countries where salaries are lower.

The situation is more complex in the developing world, where working conditions may be very difficult. In Bangladesh, the average factory worker earns less in a month than a U.S. worker earns in a day. Work opportunities may cause children of poor families to leave school. According to critics, globalization creates an environment that takes advantage of workers in these countries.

Studies also suggest that globalization may increase the gap in income of educated and less-educated members of a society. This is also known as income inequality.

Into the Future

Regardless of the downsides, globalization is here to stay. The result is a smaller, more connected world. Socially, globalization has enabled the exchange of ideas and cultures, in some ways contributing to a world view in which people are more open and tolerant of one another.


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