GLOBALIZATION

How has globalization changed our world?

How has globalization changed our world?

Introduction

Who could have imagined that a person in Lebanon would be able to watch a soccer game played in Europe, live, with perfect image and sound? Our world, as we know it today, has become like a small village where physical, cultural, and economical barriers have become more or less inexistent. This is due to a phenomenon called Globalization. Globalization is defined as “the result of advances in communication, transportation, and information technologies. It describes the growing economic, political, technological, and cultural linkages that connect individuals, communities, businesses, and governments around the world” (MSN Encarta). This phenomenon is not a new one; however, since its existence Globalization has had influence on many major aspects of our life, especially the business world. This impact that globalization has on our business world is displayed through the increase of world trade, ease of new communication methods, and setting high standards on goods and services all around the world.

World Trade

To begin with, one must mention the fact that Globalization has lead to an obvious increase of world trade. The world has seen a tremendous increase in the global transactions and foreign trade in recent years. “Growth in exports worldwide outpaced growth in output every year between 1965 and 2000 by an average ratio of 1.5 to 1” (Temple, 2001). The main reason behind this is that now more and more countries are getting engaged in trading with each other in order to increase their profit or sales or protecting them from being eroded by competition. The main objectives which are influencing the companies to engage in international business are expansion of sales, acquiring resources, minimizing competitive risk and diversification of sources of sales and supplies (Johnson & Turner, 2003).. According to Byers “In more recent years, those countries which have been able to reduce levels of poverty by increasing economic growth - like China, Vietnam, India and Mozambique - have all had high levels of intervention as part of an overall policy of strengthening domestic sectors”(Byers,2003). Many countries are trying to open up to the global economy, developing and developed ones. Developing countries are seeking better standards of living via ensuring jobs and exporting imports all over the world. In his article “This Global Show Must Go On”, Cowen mentions the fact that “More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the World Bank. India has become a rapidly growing economy, the middle class in Brazil and Mexico is flourishing, and recent successes of Ghana and Tanzania show that parts of Africa may be turning the corner as well”(Cowen,2008). On the other hand, developed countries benefit of the cheap labor and the low-priced goods imported from these developing countries. Cowen asserted this aspect by stating that “A new research paper by Christian Broda and John Romalis, both professors at the Graduate School of Business at the University of Chicago, has shown that cheap imports from China have benefited ...