Globalization. Globalization In Economic Research Paper

Globalization. Globalization In Economic - Research Paper Example Although globalization is largely viewed as an economic process, it is has been known to have numerous political and social effects as well (Pew Research Center). With regards to the political and economic aspects, globalization is described as the process of decentralization of markets and legal systems (Lynch 6). In relation to businesses, it can be explained as a process in which companies venture into the emerging global markets. Furthermore, entities are taking advantage of the internet to launch their virtual presence in the worldwide marketplace. In most cases globalization is linked to modernization whereby there is transformation of developing nations into developed ones. Internationally, globalization is analyzed in terms of the challenges to the global economy and economic issues in general. There have heated discussions of globalization and its advantages and disadvantages. There have been numerous benefits accruing from the process such as increased trade among nations a nd dissemination of information world over (Knickerbocker 45). On the flip side there have been drawbacks associated with the process including exploitation of the poor nations, erosion of traditional cultures through modernization and the rising levels of global terrorism. In a nutshell, the process has positive and negative implications on countries world over. This essay addresses the complex concept of globalization and focuses on its economic aspect. It can be noted that global economic activities have become more integrated and economically oriented over the recent past. It takes the form of increased trade among nations, an increase in imports and exports, an overall growth of foreign investments and foreign loans. This is due to the existence of better policies and a friendlier economic environment (Knickerbocker 76). In fact, most modern economies argue that it is meaningless to form one’s thinking on national economies as international trade has become the backbone of most domestic economies in most countries. This has been the trend in most countries that have adopted uniform business environments and legal systems that govern the operations of global markets. This has had both negative and positive implications on the global economy. The first advantage linked to globalization development of the industrial economies that are under the Organization of Cooperation and Development (OECD). It is clear that international trading activities contribute to a significant proportion of the economic production or GDP in most countries (Knickerbocker 77). This is because economies tend to specialize in the areas where they have the highest comparative advantage. For example, if a country is best suited to produce steel, it concentrates on its production and outsources other products that may be expensive to produce in the country. Through specialization, countries are able to make optimum profits from their production activities. Globalization has resul ted to intensified trade in the national economies. This is due to the increased flow of goods, services and capital in the global market. This is due to the abolition of trade barriers among nations and uniform regulations on importation and exportation. This simplifies trading among nations and there increasing trading activities in the global economy (Lynch 10). This is facilitated by international trading organizations such as the International Monetary Fund (IMF) and the World Trade Organization (WTO) that make laws and regulations concerning the operations in the global economy. Regionally, bodies such as the European Union (EU), North America Free Trade Association (NAFTA), Common Markets for East and Central Africa (COMESA) and association of South East