Essay on Economics and Globalisation

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Globalisation is a phenomenon that poses great opportunities and should be pursued while recognising and addressing the costs. Globalisation takes various forms, yet defined here within the economic scope due to its strong contemporary prominence and impact. Economic globalisation entails the interactions and interdependence of global markets, due to increased mobility of goods, services, capital and communications. Globalisation is driven by many factors, including technological advancements and deliberate neo-liberalist policy. It is not a new phenomenon, yet contemporary globalisation differs dramatically in scale, penetrating more people and remote areas than ever before. Globalisation has many benefits such as economic growth and poverty reduction, yet on a domestic scale economies must be allowed to adapt, and the global economy must be managed on an international scale. Economic interdependence and advances leads to a safer, more democratic world. The forces of globalisation have been set in motion and are not able to be reversed, hence the world must recognise globalisation as inevitable, and work to reap the benefits.

Globalisation is an encompassing term, taking various forms that describing the vast social, economic, cultural and political changes that arise due to interaction and integration of people, institutions and governments of different states. Due to contemporary impact, globalisation here is defined within the scope of economic globalisation, it is a process driven by an international financial system of trade and investment. Globalisation includes the transnational movement of capital, goods and services, the spread of ideas, information and people through the increased mobility of communications, all enhanced by information technologies. This gives rise to interdependent global markets.

Yet, globalisation is hardly a ‘natural’ process due to scientific advancement, and rather the result of strong neo-liberalist policy and structural measures. The post World War Two era saw neo-liberal economic reforms becoming commonplace international economic policy, adapted to facilitate growth and coordinate economies, emblematic in the first General Agreement on Tariffs and Trade (GATT) in 1947. Following the fall of the Soviet block in 1989, coupled with the global economic leadership of neo-liberalists Reagan and Thatcher in the USA and UK respectively, free-market capitalism was perceived as the most viable system to produce economic wealth, enabling greater levels of investment and international trade.

Globalisation is not new, yet contemporary globalisation has many unprecedented characteristics. The current globalisation wave, gaining rapid force in the 1990s, can be seen as an extension of primitive, specialised divisions of labour such as “shepherds” and “hunters”. The stark difference is scale, with modern technology penetrating more lives, cheaper and faster. Globalisation today is also more individual, with the Internet acting as an instant, almost costless enabler for personal consumption and production. Today, corporations, especially Multinational Corporations (MNCs) are a driving force behind globalisation. The number of MNCs has increased dramatically, with almost 7000 existing in 1970 to over 53,000 in 1997. The quantitative scale of globalisation is enormous, opening qualitative opportunities that should be pursued with various cautions.

Globalisation enables large-scale economic opportunities. The increased mobility of capital, goods and services engenders a broad and diverse international economic environment that enables dramatic growth. By reducing barriers to trade, the wealth of all participants lifts as economies engage in efficient, specialised production and trade in foreign or international markets. Trade also enables economies to obtain raw resources needed in production. International investment has also dramatically increased due to advancement in information
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