Globalization and Capitalism



Globalization and Capitalism

Introduction

Globalization and Capitalism have brought significant changes in the world. It has affected the way, people eat, live and consume money. In this paper, we will discuss the impact of Globalization and Capitalism on the lives of the people. We will also take reference of an article on “A Failed System: The World Crisis of Capitalist Globalization and its Impact on China', written by John Bellamy Foster.

Globalization

Globalization is the creation and expansion of economic and social connections among people and organizations around the world. The movement of people, goods, ideas, technology, and money fuels the process across national boundaries.

The populations of different cultures have interacted and established economic and cultural links for centuries. In the middle Ages, merchants and explorers exchanged goods and ideas throughout Europe, across North Africa, and between the Middle East and Asia. However, in recent decades, globalization has advanced at an increasingly rapid pace. Two major forces in this development have been the Internet, which has sped up communications, and businesses, which have expanded to reach markets on distant continents.

Although people still identify with their local communities and national governments, many increasingly see themselves as part of a global society. However, globalization does not affect all regions in the same way. Individuals and corporations in industrialized countries tend to benefit more than those in developing countries.

Positive Effects of Globalization

Increase in Foreign Trade

While discussing the positive effects of globalization on cannot ignore the effects which globalization has left on international trade. Comparative advantage has always been an influencing factor even in the past, and through diversification of the products and exports and international division of labor, globalization has provided companies with such comparative advantages which cannot be imitated easily by other market players. Moreover, without globalization it was not possible to institutionalized, international trade. Previously, people used to invade countries in order to get what they want, but now, things are more civilized and are performed in a more humane way. This became possible because of the establishment of the World Trade Organization (WTO), as it has set certain restrictions for international trade, which enables countries to practice free trade around the globe, without any demarcation of boundaries. Thus, the WTO has brought all the countries together in doing trade with each other which has its own benefits. Despite of its risks, a number of countries are moving towards globalization and expanding their economies, through international trade. Consequently this move, results in the increase of the Gross National Product (GNP), due to increase in exports. The annual growth rate of GNP and export rates, across the globe, can be seen in Figure 1. In a nutshell, all of this happened as a result of globalization. This international trade eventually leads to inward flow of Foreign Direct Investment (FDI) in developing countries.

Globalization of Technology

Just like any other transfer of information, globalization of technology has left positive impact around the globe. By making use of media, technical and scientific ...