Impact of Globalization on Economy

Impact of Globalization on Economy

Introduction

Globalization refers to the changing nature of the world economy. The changes are associated with the growth in economic interactions across state borders. The main changes are generally thought to be increasing trade flows, greater mobility of finance capital, and the internationalization of production chains. Many observers associate these changes with the rapid development of information technology (Keohane, 2002).

Although globalization carries an aura of energy and excitement, critics argue that it has negative consequences. From a sociological standpoint, globalization might imply greater cultural conformity, perhaps even a type of cultural imperialism by the major western economies. From a political standpoint, globalization is often seen as part of a neoliberal program that forces governments to adopt a severely restricted and arguably unjust set of public policies. Such criticisms illustrate how debates about globalization often relate economic and technological issues to changing patterns of international and national governance (Held & McGrew, 2000).

The new governance is, indeed, often portrayed as a response to globalization. In this view, globalization has eroded the importance of national barriers and even the state itself; it has increased the economic interdependence of states, thereby undermining the ability of each state to govern its own economy. However, despite the ubiquity of talk of globalization, notably in the rhetoric of policy-makers, there remains a lack of general consensus on its extent and its implications for governance. Globalization can refer, in narrow terms, to increased volumes of transnational trade. Or it can refer to a broader pattern of global economic integration. Or it can refer to the activities of those firms that have scattered their production activities across a number of states, and those states that have promoted a liberal world order (Keohane, 2002).

Context

The transnational flows associated with globalization appear to have risen in the 1970s. It was, after all, in the 1970s, notably in the wake of the oil crisis, that some states, including the UK and the USA, sought to liberalize their economies. A few social scientists even began to discuss globalization at that time. Nonetheless, we can date the massive explosion of talk of globalization, among both social scientists and policy actors, to the 1990s. This explosion appears to have owed much to the end of the Cold War (Gould, 2004). Talk of globalization represented a way of characterizing a new global order. It reflected the perception of a shift from superpowers and their political conflicts to a broader range of actors concerned with economic exchanges (Gould, 2004).

Once we locate globalization in the wake of the Cold War, we are likely to become more sensitive to the intellectual currents and political forces that have made it possible. Neoliberal ideas became extremely prominent in the late 1970s, and they emphasized the supposed benefits of rolling back the state and spreading free markets and free trade. The USA, unchecked by a rival superpower, occupied an increasingly hegemonic role, which it used to promote and guarantee globalizing ...