Louielyn P.

Palustre

BSA 1-01

Economic Globalization: Trends, Risks and Risk Prevention

“We should keep on going along the path of globalization. Globalization is good... when trade stops, war
comes.”- Jack Ma, co-founder and executive chairman of Alibaba Group, a multinational technology
conglomerate. Advances in technology, such as mobile phones, airplanes, telephones and the internet have made
the growth of transportation and communication networks possible. Amongst other things, this means that people
and other countries can exchange information and goods more quickly and in a less complicated way. This process
is called globalization. Foreign products that were rarely seen in countries around the world prior to globalization
became a common sight. Globalization is much more than international trade, global chains and cheap goods.
Globalization is a process where countries around the world are becoming closer in a number of areas. What was
many before become one. It influences people, immigration employment, ideas and knowledge.

Economic globalization is an increasing interdependence of world economies by which business or other

organizations develop international influence worldwide. It is an intermarriage between two or more economies.
Due to continuing expansion and mutual integration of companies and government around the world, economic
globalization becomes irreversible. This is largely based on the rapid development of science and technology and
international policies. The advancement of science and technology has greatly reduced the cost of transportation
and communication. In addition, according to GATT and WTO, many countries have gradually cut down their
tariff and non-tariff barriers. As a result, it greatly reduced the cost of international trade and investment making
it possible to organize and coordinate global production. It also encourages investors and business owners. Due
to businesses booming with the help of globalization, it eliminates monopolistic behaviors and strengthens market
competition. Local firms have to react to withstand competition and so the world grows closer together. More
affordable products are more available for more people. International finance flourish as well to serve the needs
of international trade and investment activities. The true sense of globalization is only realized by the financial
market. The main reason why globalization is continuously happening right now is for multinational corporations
expand their businesses, lower the cost of production and maximize their profit. They are dominant in the
developed countries resulting the fact that it is they that determine the rules for international economic changes.
United States and other western countries control international economic and financial organizations. At the same
time, they are the largest beneficiaries of economic globalization. Furthermore, in order to improve companies'
competitiveness at the international market, domestic companies and those from other countries have been
merging one after another, gaining influence on the world's industrial competition pattern. But where there is
light, there is also shadow. Globalization not only brings opportunities but it also brings risks. Firstly, it has
expanded rather than reduced the gap between the North and South. Developing countries could not attract any
capital except for donations and bilateral financial aids. Secondly, economic globalization has developing
countries' risks of being bombarded by unfavorable external factors such as fluctuation of foreign exchange rates
and weaken and dysfunction the monetary sovereignty and policy of a country. In order to prevent and dissolve
the risks brought by economic globalization to developing countries, there are a number of measures that should
be taken. First, international economic organizations, having many limitations in managing the world economy,
should play a bigger role in the process of economic globalization. Second, interest of developing countries should
be guaranteed and should be given an enlarged part in the process of developing a new international economic
order. Growth sharing must be guaranteed. Globalization should benefit not only the developed countries but also
the developing countries as well. Each and every country should be given equal benefits in globalization. Third,
the step of reforming economic system and readjusting economic structures should be quickened. The problems
of the government should be solved and strengthen its function.

The writer simply wants to argue that despite the positive effects brought about by globalization such as
rapid development of science and technologies resulting to lower cost of production and prices of goods and
services, international agreements regarding cutting down their tariffs to promote trade and investment and
importing of goods, eliminating monopolistic behaviors and strengthening market competition, economic
globalization, still, is a major concern. It poses risks more so in the developing countries. Multinational
corporations are for-profit enterprises that conduct businesses in more than one country. They account for about
one third of the world's exports. Positive impact of multinational corporations is that it can do a lot of good things
in the global economy. They provide investment around the world. They create jobs in other countries. They
encourage the development of infrastructure, roads, bridges and energy. They can bring technology to other
countries. And they create access to world markets for companies operating another country. On the other hand,
multinational corporations serve to decapitalize other countries. They take profit. They take money and resources
out of other countries and bring it to the home country, the headquarters country. Multinational corporations can
also create inequality around the world because some companies will pay very well and that will lead to income
inequality in other countries around the world. Due to economic globalization, international finance, which is
supposedly serving the needs of international trade and investment activities, has become more and more
independent. The financial market aimed to obtain profit without taking into account the aspects related to it.
They are guilty for having imposed certain economic regulations that were too strict and which advantaged only
those who had imposed them on the market (Claudiu, 2012). Moreover, according to the article, from the year
1980 up to 1995, financial market is dominated by major developed countries as per figures. Developed countries
have been playing a dominant role in the process of economic globalization. Most countries don't practice what
they preach when it comes to being fair. For example, western countries which encourage poorer countries to sell
them resources but discourage them from selling actual high-value added products (One Minute Economics,
2016). Developed countries become the largest beneficiaries of economic globalization.

The statistics presented in the article is very helpful. It helps us analyze and visualize the effects of
globalization be it positive or negative. It presents information regarding economic globalization. The writer
persuades the readers that globalization is bad and that we should do something about it in order to prevent and
dissolve the risk brought along by economic globalization to developing countries. On a different note, there are
few loopholes in the article. The writer mentioned according to "some report" published by UN in 1999 and
according to "some data" provided by IMF. This questions the credibility of his research. Instead of stating some
report or some data, the writer should have further researched this claim. Accuracy should be above all else. These
make the readers have a second thought whether his claims about the report published by UN in 1999 and the
data provided by IMF are reliable or not. The writer is making a point regarding his stand about economic
globalization. I agree with the writer's thoughts for the most part but there are two things that I do not agree with
him. First is there is still a lack of information. There are still arguments left unsaid. Because of globalization,
people often suffer. If a company decides to move production to an economically disadvantaged country, people
in industrialized countries lose their jobs. They can pay cheaper workers. At the same time, job opportunities
open up to many locals in the economically disadvantaged countries. Many people in these countries work for
very little money in comparison to those in industrialized countries. Therefore, the job's salary help them survive
but not “entirely” eradicate poverty. These companies that citizens from the developing countries work for are all
from developed countries. This is still an advantage on the western side. They help these countries become richer.
A further disadvantage of globalization is ecological problems such as climate change. The use of airplanes, ships
and trucks to transport goods over international borders is constantly on the increase. This causes more carbon
dioxide to be released into the atmosphere which, in turn, is the main cause of global warming. Another is when
a company may want to build factories in other countries because environmental laws are not as strict as they are
in their home country. Poor countries in the third world may have to cut down more trees so that they can build
these factories or sell it to richer countries. Second, According to a study conducted by GEDProject, all countries
benefited from globalization and that interconnectedness is “generally” a good thing in terms of economy. But
globalization opportunities are not evenly dispersed and that the gains to developed nations far outweighed those
emerging markets. Due to globalization, some countries benefit more than others. Developed nations are the big
winners. In the long run, this trend could exacerbate global inequalities suggesting emerging markets could lose
out. The developed world must ensure that emerging markets have every opportunity to join.

There are, therefore, many sides to globalization which affect almost all aspects of life causing me to think
that the chain of positive and negative effects will continue to grow further. What's important is to realize that
globalization itself is neither good nor bad. It just depends how the people deal with all the new possibilities in
the future.