Archive for June, 2022

Globalisation: what does it mean and where is it going?

Globalisation is really just the way the world connects – through technology, communications, business, transport and supply systems, as well as culturally, politically and socially. Naturally this interdependence on a global scale has effect on economies, jobs, and lifestyles. In short, it has generally brought about considerable social change. Some argue for the better, others may believe harm has been done to cultures through easy access to foreign resources and exploitation of labour markets.

It’s through globalisation that ideas, information, and goods and services, are spread around the world. This convergence of cultural and economic systems increases interaction, and as countries become more politically and economically tied, the world seems to become smaller – creating the term ‘global village’.

An old hat in fresh design

Globalisation is not new, it can be traced back to the spread of the Roman Empire, in fact as far back as 600BC. Trade routes established from 200BC through to 1450AD brought merchants and goods from China through Central Asia and the Middle East to Europe. The period from 1870 to 1914 is called the golden age of globalisation.

After World War II multinational institutions were established such as the United Nations, the International Monetary Fund, the World Bank, and the World Trade Organisation to promote international co-operation and free trade. The G20, or Group of Twenty, is an international forum that aims to foster international co-operation by addressing global economic issues, such as financial stability and climate change.

The benefits and effects of globalisation

Today, countries see great value in exporting specialised goods and services at competitive prices. Policies that promote free trade and international co-operation seek to increase production, lower prices, and drive economic growth with the view that all countries should benefit.

  • Globalisation removes the barriers set by geographic constraints and political issues, and expands trade, opening global supply chains while providing worldwide access to natural resources and labour markets.
  • Business is able to: access raw materials and parts at lower prices; take advantage of lower cost labour markets; and gain entry into larger markets around the world in which to sell their goods and services. There is no doubt that international competition spurs innovation – the mix and influence of diverse cultures spreads ideas and knowledge.
  • Along with the somewhat indiscriminate flow of money, products, materials, information and people across national boundaries, means that technology has been accelerated and has thus enabled globalisation to expand even further.
  • Globalisation facilitates people’s ability to travel. In this way, it affects whole communities – where they work, who they work for, their ability to move out of their community and into others, or into other countries. This in turn, changes the way people and communities develop. The increased ability to travel and experience new cultures is positive way to contribute to international co-operation and peace.
  • Free trade agreements, as well as multi-national corporations which operate in two or more countries, play a large role in economic globalisation.
  • Globalisation moves capital to poorer countries through the offers of jobs, funds for development, and access to technology they might not have otherwise had. Foreign investment can result in an improved standard of living for the citizens of those nations.
  • Globalisation encourages attention to be paid to human rights issues on a global scale, and shared understanding of the impact of people and production on the environment.

Negative consequences to consider

Critics of globalisation blame the elimination of trade barriers and the freer movement of people for undermining national policies and local cultures. When people move across borders in search of higher paying jobs, local workers can be adversely impacted. When companies move operations overseas to minimise costs, such moves can eliminate jobs and increase unemployment in the home country.

There are damages to the environment. The transport of goods and people among nations generates greenhouse gas, and all the negative effects this may have on the environment, including aspects such as overfishing and deforestation in some parts of the world.

Despite constant balancing and rebalancing of positions and some negative outcomes, business and governments must continually rethink the implementation and improvement of global supply chains to avoid disruption and build on the path of the many benefits of globalisation.

Foster Wealth: steering business, driving wealth

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