With globalization, world economies are increasingly being integrated. The internet and mobile phones are playing a greater role in bringing people closer, making the world smaller. Goods and services which were once confined to western nations are now available globally. The internet has made outsourcing and off-shoring of work a reality. Improved infrastructure has made it possible for one to reach any part of the world within a short period of time. Many countries around the world are now exposed to international trade.
The process of globalization is closely related to convergence and divergence of economic, social, and national policies. In this case, divergence denotes persistent diversity of institutions and national policies, aimed at increasing efficiency. On the other hand, Convergence refers to a process where economic policies and local institutions fade over a period of time to give way to common economic structures aimed at strengthening the market and increasing efficiency.
Globalization theory assumes that men and women, the rich and the poor, will be affected equally by globalization. Another assumption made by this theory is that cartels, young industries, large corporations, and small-scale firms will have equal trade opportunities through globalization. However, the more than twenty years of globalization show different results, taking into considerations that international trade is an issue that is close to the heart of people’s livelihood, their economic rights, and their most basic social needs.
A country’s exposure to the world market and international trade affects the distribution of resources within that country. In most cases, this generates considerable resource distribution conflicts, leading to social, economic, and cultural inequality in many countries. Surprisingly, distributional changes usually move in the opposite direction from the direction promised by globalization. For example, less skilled people, mostly from third world countries were expected to benefit from globalization but evidence shows that the standard of living of these people has not changed during the three-decade of globalization.
Many companies in developed countries like the United States and Britain have relocated manufacturing jobs to foreign countries like China and India, where it is cheaper to produce and do business. Technical jobs and services are now being taken over by foreign laborers through off-shoring and outsourcing. These have led to a loss of jobs and an increase in unemployment rates in the US and UK. In principle, many countries are increasingly and seriously falling behind economically when it comes to competing in the global market. In other cases, established companies and large corporations flood cheaper goods in developing countries than those goods manufactured in those countries, forcing many local industries to close down.
Globalization demands the pursuit of common economic policies regardless of a country’s nature of the economy, global economic position, and country’s level of development. Countries must permit free transnational corporation operations in their country and open their economies to imports.
The role of many governments has been reduced in the determination of labor, prices of goods, currencies, and resource allocations. This has led to a dramatic increase in global trade volume and the rise of many multinational corporations. To level the playing field, regulatory bodies such World Trade Organization (WTO), International Monetary Fund (IMF), and European Union (EU) have been established. Today, many members of the European Unions have embraced the use of the same currency, the Euro, as a way of harmonizing international trades between member countries.
When economics and social rights and patterns of people are affected by globalization, their culture is also affected, either positively or negatively. One aspect of culture that is affected by globalization is Language. The need for communication in one unifying language has influenced linguistic development. As a regional language, English has stood out as the most preferred business language in the global arena. Filmmakers and business people have significantly influenced the growth of English. On other hand, regional language conflicts have been experienced especially in regards to the use of local and national languages. A good example is the use of the Chinese language verse English, especially when conducting international trades.
With the integration of world economies through globalization, convergence and divergence of social, economic, and national policies are very evident, bringing both negative and positive effects. As many countries gain access to international trade, there is an increased inequality level at both the domestic and international levels. Poor nations are continuing to be poorer, low skilled workers have not benefited, against the conventional wisdom of globalization. The gap between the rich and the poor is increasing each day. Trade imbalances continue to be a stumbling block even with the creation of regulatory bodies like the World Trade Organization.