There is no doubt that the current world is becoming more and more interconnected.
Internal and external business environment is changing rapidly and the relationship that
exists between international trade, communication, politics and cultures becoming more
intense. The term globalisation has been frequently used everywhere around the world
these days and sometimes there is an opportunity to be benefitted by it. On the other hand,
it could develop challenging occurences. But what exactly does globalization mean. And
what are its ramifications? When we mention about globalization, there are numerous
descriptions in conjunction to different thoughts by recognized academic individuals and
Joseph Stiglitz defines ‘Globalization’ as a phenomenon that can get "the closer integration
of the countries and peoples of the world brought about by the enormous reduction of costs
of transportation and communication, and the breaking down of artificial barriers to the
flows of goods, services, capital, knowledge, and people across borders" ( Stiglitz , 2002 ).
In my opinion, I do agree on how Stiglitz defines it as it is certainly clear that in today’s
world economic, environmental social and political issues, the problems are no longer
limited to the national level because the world has become so interdependent with each
other. The world is becoming more and more unified to the extent that an economic
inflation that occurs in one country could hugely affected many others.
The presence of globalization phenomenon could lead to both positive and negative
impacts especially in world economy context. In terms of the positive side, I think
globalization does help to enhance free international trades among countries across the
world. The advances in science and technology have allowed businesses to easily cross
over territorial boundary lines. In reference to the existing trade agreements such as AFTA
and NAFTA, it makes it easier for countries to exchange goods and resources. Countries
can specialise in producing goods where they have a comparative advantage.
Consequently, companies from the relative countries tend to become more productive and
competitive thereby raising the quality of goods, services and the world’s living standard.
Secondly, Globalisation has also enabled increased levels of foreign direct investment.
Free movement of capital due to lower trade barrier made it easier for countries to attract
short term and long-term investment. These investments by multinational companies could
play a huge role in contributing into higher economies of developing countries. For
example, the expanding of foreign direct investment has helped countries like India and