Not long ago, nearly everyone supported globalization. However, the political situation in America and Europe has shown that there are different viewpoints on the results.
It has become clear that globalization can produce a variety of results. Companies and individuals can implement globalization best practices to increase the benefits while mitigating the risks to improve our collective futures. In this post, we’ll talk about some of the main globalization benefits and challenges.
What are the Benefits of Globalization?
Improved Living Standards
One of the main benefits of globalization is the massive rise in living standards in developing nations. According to the World Bank, extreme poverty has been reduced by 35% since 1990. Nearly 1.1 billion people have moved out of extreme poverty since then.
These same countries also have access to huge technological improvements without going through the difficulties that developed nations have experienced. For example, developing countries in Africa did not have an extensive land-line phone network before mobile phones permeated the market. Many African markets skipped landlines, avoiding the huge setup costs. In developed nations, phone companies still maintain aging, outdated systems.
Increased Creativity and Innovation
Global competition encourages creativity and innovation in order for companies to stay one step ahead. This drive toward quality and price improves products and keeps costs low. The free movement of labor and capital means that ideas from developing nations can drive innovation around the world.
Before globalization, getting funding for an idea in an underdeveloped country would be extremely difficult. Since communications have evolved, individuals without access to funding can still make a difference in both their home market and around the world.
Lowered Costs for Goods and Services
Lowered costs help people in both developing and developed countries live better on less money. Huge cost reductions from inexpensive manufacturing and logistics have lowered the cost of living for everyone around the world. The world trade system has also created an unprecedented variety of food at low cost.
Easy Access to Foreign Culture
Globalization has also made it easier to access foreign culture, including food, movies, music, and art. The free flow of people, goods, and information has made it possible to have Thai food delivered to your apartment as you listen to your favorite Norwegian Viking metal band and stream the latest Brazilian movie.
What are the Challenges of Globalization?
One of the most common critiques of the global trade system is how it ships jobs, especially manufacturing jobs, from less developed countries to developing countries. Lower-skilled workers who lose manufacturing jobs in developed countries often have a difficult time finding new, comparably compensated work. Job loss in developed countries creates a double-strain on those countries’ social welfare systems. More people are in need of help, and job losses lead to lower tax revenues to provide it.
Despite huge growth in emerging markets, the Western developed world still holds the reigns on international order and on how capital flows from country to country. For example, organizations like the International Monetary Fund and the World Bank make it simple to acquire a loan. Western values, however, are not universal. Applying them to non-western countries can bring disastrous financial results. Even worse, some ways that the developed world tries to help the developing world deepens poverty rather than alleviating it.
Loss of Cultural Identity
While globalization has made foreign cultures easier to access, it has also begun to meld cultures together. The success of certain cultures throughout the world have caused other countries to emulate these lifestyles and culture. When cultures begin to lose their distinctive features, we lose our global diversity.
Partner with a Globalization Expert
Many experts disagree on how globalization can affect the world. No matter your opinion, globalization isn’t going away. Working with an experienced partner like Velocity Global can help your business take advantage of the many opportunities of going global. Contact us to learn more.