Impacts of Globalization on Economic Activities
Globalization is the process of international integration. This process is associated with the exchange of products, worldviews, and ideas among other aspects. Globalization has impacted economic activities to a great extent. This paper discusses some ways and aspects through which globalization has affected economic activities.
International trade has been affected over the years. Through globalization, trade has developed among nations, and the processes of trade have continued to be effective. For example, nations come together to form trade blocs, where trade barriers and tariffs are reduced or completely eliminated. Through technology, transport has been improved enabling the transfer of goods and services between countries. This has promoted the formation of many trade unions as goods and services can reach their destined markets in time.
There has been an increase in global economic activities. The increased economic activities have been greatly supported by the availability of global markets. Globalization has enabled the development of good and reliable transport networks, leading to the creation of global markets. Producers and entrepreneurs have increased their economic activities by producing more goods and services since there is an available global market.
Reduction of general prices of goods and services has also been experienced. There has been great technological advancement, resulting from the exchange of ideas between nations, leading to better and improved production methods. The improvements and ease in production has led to a reduction in prices of goods and services, leading to affordability of goods and services to many consumers. This has in turn improved the living standards of many people.
Increased international investment has also been a consequence of globalization. Through improved communication networks, investors can acquire relevant information concerning investment opportunities. Investors transfer their capital to nations with good investment opportunities, where they intensively invest on different economic activities. Increased foreign investment has had great impacts on the local investors in the host nations. Foreign investors have improved production methods and technologies, and they, therefore, produce their products at low costs. This is reflected in their low prices for their goods and services leading to high competition with the local firms. Some local firms are not able to cope with the competition from foreign investors, and in some cases leave the market.
Globalization has enabled the migration and mobility of people and laborers from one nation to the other. About 30% of the total numbers of people who migrate in a given year have their migration reasons linked to labor. Trade agreements between nations have liberalized the movement of laborers. This has been promoted by the existence of multinational corporations and changes in specialization patterns, leading to the movement of the corporations’ key personnel to different countries. Developed countries may experience shortages in supply of both skilled and unskilled labor. They may also suffer from aging population, hence developing the need to acquire laborers from other nations. On the other hand, developing nations may experience unemployment in their home countries, and, as a result, their citizens may seek employment at foreign countries. Migration by citizens from developing countries to developed countries may also be as a result of brain drain. Transport is of the essence when considering the migration of people, and through globalization, quick and reliable transport methods have been adopted.
Globalization has impacted economic activities to a great extent. Through it, there have been improvements in many aspects that foster economic activities. For this reason, the impacts of globalization on economic activities cannot be taken lightly.