Globalization aims to foster the development of specific economies around the world by increasing the efficiency of markets, limiting military conflicts, increasing competition, and distributing wealth more evenly. The world economy we know today is a result of globalization, along with internationalization and localization, but they’re often cited interchangeably so it helps to know their differences to help you have a clear understanding of globalization.
The Milken Institute Globalization Report 2003 revealed many benefits of globalization and outlined some of the related risks that investors and governments should consider. The report’s principles are still relevant.
Globalization has advantages and disadvantages, but the benefits were large enough for great observations. Below are some of the benefits:
1. After globalization, many of the world’s poorest countries have achieved stable economic status. Per capita income has increased, and significant processes in all sectors and technologies have given these regions better commerce strategies, especially in India, China, Africa, and other countries. The annual real GDP growth has exceeded 10% compared to previous statistics in sub-Saharan Africa.
2. An international presence has allowed many companies to leave the closet and take advantage of global opportunities. It was a time when several small industries became big companies that could compete on equal terms with large or key players in the marketplace.
3. Competitive markets have helped to reduce monopoly profits and allowed companies to embrace cost-cutting plans and more inventions to improve their sales, resulting in dynamic efficiency and higher growth.
4. The expansion of the industry rejected labor exploitation and ensured its proper distribution. In particular, in the foreign market, more employment opportunities were observed in addition to the regional market, and the income level of an individual grew to an unimaginable level.
5. The increase in foreign direct investment (FDI), the primary method of securing the cross-border property, has allowed companies to merge globally. Smaller foreign direct investment in 1980 has provided financial stability in recent years.
Foreign direct investment has proved to be a source of knowledge and technology transfer among the nations involved in the manufacturing process, organized and fragmented around the world.
This benefited the emerging economies, which were mainly involved in the last stage of the global supply chain assembly. Their export effectiveness increased as their export quality improved, and they achieved higher export earnings.
6. In emerging markets, global production is growing rapidly. In 1990, 70% of world production was in high-income countries. According to estimates by the IMF, this value will fall to 46% by 2019. For the same period, China’s share is expected to increase from 4% to 18%, while that of India will increase from 3% to 7%.
7. In 1990, merchandise trade in high-income countries was 60%. In the same year, 34% were in middle-income countries and 6% in emerging markets. By 2012, the share of emerging economies had risen to 24%, while the share of middle-income countries had also increased to 45%, while in high-income countries, it had fallen to 31%.
8. Globalization has created great opportunities to involve low-paid workers in emerging economies in the global manufacturing process. This has resulted in billions of isolated individuals coming together as consumers, workers, and rescue workers.
9. The share of the poor has decreased significantly from 1981 to 2008. The proportion of individuals living on fewer than $ 1.25 a day reduced from 77% to 14% over this period.
It is important to note that in South Asia, the proportion of people living in extreme poverty decreased from 61% in 1981 to 36% in 2008. In sub-Saharan Africa, however, no significant progress has been made in reducing poverty.
Industries Benefiting from Globalization
Discussed below are five industries that have benefited from globalization.
1. Telecommunication Industry
Global communication is the fastest-growing segment in the telecommunication industry; this is a result of globalization as there is a high flow of information between different parts of the world. This growth of the international business has resulted in a high flow of data from one location to another.
The telecommunication providers have gained the advantage of expanding internationally, exploiting the large market demand due to global networks and the demands for global customers that are integrated across the world.
Globalization has also provided an opportunity for risk diversifying by creating a harmony between political and economic risks across countries, therefore increasing the telephony penetration rate worldwide.
2. Transportation Industry
Globalization has led to an increase in worldwide shipping activity. Trade and shipping are closely linked, even though incongruity remains on the degree of which energy use in shipping is connected with the association of marine business.
Globalization has played a significant role in shaping air transport. As it created a demand for high-quality, reliable, fast international transportation. The mobility and access are increasingly for diverse types of travelers and cargoes, to a different destination than it was previously. Air transport has been opened-up with many companies venturing into this sector. You can find more information on parcel delivery comparison via different modes of transport by clicking on this link.
3. Manufacturing Industry
There is a range of benefits in the manufacturing industry due to globalization. The following aspects have impacted all global manufacturer, suppliers, and end-user
There have been several trade agreements between different countries across the globe, such as CHAFTA between Australia and China. This creates open access to the market for the consumers within the agreed nations, creating more significant economic opportunities for manufacturers and suppliers.
Through trade agreements, there is a drive to the nations to jointly address issues with pollution, climatic changes, and depletion of natural resources.
There is ample access to raw material across the world for the manufacturers. Globalization has helped in structuring international standards for suppliers of raw materials that are quality.
4. Agriculture Industry
Agriculture is known to be the backbone of many countries in Asia, Africa, and even Europe continent. Agricultural sector such horticulture has raised in most countries due to globalization. As there is a lot of multilateral agreements resulting in market expansion and lowering of tariffs on agricultural imports and exports.
Global agricultural research has improved the quality farmers produce. This is through improved machinery, improved farming methods such as the use of greenhouses, enhanced fertilizers, and affordable pesticides. This has raised farmers’ yield and income.
Globalization has also enabled the integration of technology in the agriculture industry, such as the use of automated irrigation systems and Smart farms.
Globalization has also lead to improving on the agricultural sectors such as aquaculture, apiculture, where the farmers have a global forum that they used for benchmarking and research.
5. Education Industry
The globalization aspect has radically transformed the education sector. Globalization encourages experimentations, explorations to push the limits of innovation.
Formation of global educational forums and mutual support, this have created a standard on the educational system. Giving learns an equal opportunity to access knowledge and already researched doctrines across the world.
In conclusion, globalization is a very important factor when it comes to the economy of a country.