1.0 Introduction
Globalization is the connection between different countries that results in expansion of
economics, international culture and political activities (National Geographic, 2014).
Globalization was an ancient Greek culture that was spread across the world and today it is an
important factor that helps in economy growth. The Silk Road between China and the
Mediterranean Sea promoted the idea for exchange of knowledge along with trading of
goods.
In 1990s, Globalization accelerated with industrial revolution as machines and factories is
more common. Many companies purchase raw material from rural areas of the country, they
manufacture them and sell it to other countries so as to earn higher profit and increase their
market share (National Geographic, 2014).
In the twentieth century, Globalization became more common with the rapid growth of air
travel, internet usage and expansion of free trade. Internet helps to connect people from
different countries easily and flight helps to transport goods faster, trading between countries
becomes easier (National Geographic, 2014).
Globalization is important to developed countries such as America, as a country economy
could not survive on its own. With the increase of foreign direct investments and
international trades, it helps in the growth of their economy as they could sell their new
technology such as machines to developing countries and profit more when they import
cheap raw materials and low cost manufactured products from developing country (Goldberg,
2012).
This report consists of, rationale for economic policies, impacts of globalizations and
influences of globalization.
2.0 Rationale of Globalization
2.1 International Trade
International trade is the volume and value of exports and imports flowing between countries
throughout the world. Exports are goods and services produced domestically but sold to other
countries, imports are vice versa (Hubbard et al., 2013).
International trade helps in growth of economy for developing countries as it provides job
opportunities. Over the past 20 years China’s economy had grown rapidly because of
international trade. According to (Yao, 2014), China’s foreign trade have reached a year-on-
year 8.1 trillion Yuan in the first four month of 2014.
Many companies in United States (US) have relocated their operations to China because of its
cheap raw materials, labour and rental cost. Thus this helps to creates more job and increase
their Gross Domestic Production (GDP). US also benefits from international trades as they
export their technology such as machines and devices like (iPhones) to developing countries
for manufacturing, to lower production cost. They then import the product back to US and
export to other countries to sell so that they can earn a higher profit.
Apple (iPhones) is a good example of international trade, as they outsource their production
to Foxconn a Taiwanese company that did the production in China and import the finished
product back to US (Duhigg and Barboza, 2012).
In this case, both countries will benefit from globalization as US companies will profit more
from the cheaper production cost and China benefitted from the jobs that are created in their
country that will help to increase their GDP and tax revenues.
2.2 Foreign Direct Investments
Foreign direct investment (FDI) helps significantly in the growth of a country’s economy as it
helps to bring money into the country and thus, more jobs are created and GDP will increase
(Singapore Statistic, 2014).
FDI such as Universal Studio, Casinos, and integrated resorts helps to attract tourist to
Singapore and thus, increase the demand for tours to Singapore. As tourist spends money it
helps to boost the economy and hence government will need to expand airports and build
more shopping malls to cater to the demand. This helps to create more jobs and increase the
economy growth of the country. According to (Singapore Statistic, 2014), Singapore had a
total of 462.7 billion of FDI in 2012. This helps in the growth of Singapore’s economy by
4.1% in 2013.
Universal studio is a good example of foreign direct investments and globalizations as this
idea was originated from US and the company is based in US (Universal Studio, 2014). In
this case, Singapore as a developed country will benefit more as Singapore will profit from
