Globalization (or globalisation) refers to the mechanism of merging international economies, communities, and populations into a global network of contact, transportation, and commerce. Economic globalization is a concept that is often used to refer to the introduction of national economies into the world market through commerce, foreign direct investment, capital transfers, migration, and the spread of technology. “Globalization can be described as the intensification of global social ties that connect distant locations in such a way that local happenings are affected by events occurring thousands of miles away and vice versa. “Globalization, in general, refers to the integration of our country’s economy with the global economy. The structural reforms implemented have had a significant impact on the economy’s overall performance.
It also marked the beginning of the Indian economy’s entry into the world economy. When India’s foreign currency reserves fell to $1 billion in 1991, the country’s economy was in deep trouble. Globalization influences many industries, including agriculture, industry, finance, and health care, among others. India’s growth in different sectors began only after the announcement of globalization by then-Finance Minister Man Mohan Singh.
Analysis of globalizations and its effects
“One does not have to go far to see the huge impact of globalization and technology on everyday life. From day-to-day corporate transactions to in-home habits, new technology is becoming increasingly prevalent. While these changes are affecting many facets of society, perhaps the most important factor is how they impact enterprises. Commerce has become increasingly globalized, with any component of the supply chain subject to the whims of a global marketplace. This reality, known as globalization, would not be possible without the tremendous impact that technology has on everyday life”
Globalization is bringing about a transformative and destructive future for both developers and workers. Looking at current-day effects is important to consider what the future holds.
Here are the main consequences of globalization on business right now.
Outsourcing
Outsourcing is arguably one of the most well-known consequences of globalization, and it is impossible to address the subject without mentioning it. Many consider this to be the worst side- effect in an increasingly globalized business climate, when workers can unexpectedly find themselves out of work – whilst others far away profit from this pattern. Businesses commonly adopt outsourcing strategies for a variety of causes, the most popular of which are
- Wages and pensions are lower.
- Fewer job constraints
- Tax environments that are more conducive
The Business Services Association discovered that about one in every ten workers in the national workforce were working in outsourcing, more than 3 million positions in the UK alone”
Outsourcing has advantages for firms – and, in some ways, the economy. The same data as above reveals that GDP is increasing about 0.4 percentage points higher than it would have without the outsourcing policies of the last 30 years.
Outsourcing clearly provides concrete and practical opportunities to firms looking to reduce costs and increase efficiency. However, given the growing market reaction against companies that use international labour instead of domestic alternatives, it may lead to less-than-sterling ratings within target audiences.
Increased competition and knowledge
While it is often presented as such by many when addressing the issue, globalisation does have a range of drawbacks for companies. The most noticeable is the increased degree of rivalry that globalisation presents to businesses: firms that once traded geographically or globally today participate in a global marketplace”
Although some industries (for example, local restaurants and grocery stores) are largely resilient to the overt impact of globalisation-fuelled competition, there are also indirect effects to be felt.
However, with companies battling for consumers and clients online or through sectors such as banking, a rise in interconnectivity means shoppers may be able to find options elsewhere.
Although globalisation may bring more rivals to businesses’ doors, the movement may also operate in the other direction. Breaking into new markets is a viable option for firms who are feeling threatened by competition in their home markets, but the situation must be treated with caution.
“Be mindful of the underlying factors driving the two sides of globalisation: the supply side and the demand side,”1 writes Smart Business Online. Finally, you must consciously put bets on the future you want. This means you’d better consider the quickly evolving world dynamics because your company’s future is at their mercy.
Better Knowledge
Capital, people, and exchange are three critical factors that firms address on a daily basis. They are both significant drivers in globalization, as the dynamic is causing growth in global supply of all three. However, the spread of ideas and learning is accelerating as a result of globalization.
Historical Context
Globalization refers to how “national and regional economies, communities, and civilizations have been intertwined into the global network of commerce, connectivity, immigration, and transportation.” The origins of globalization are still being discussed, with some accounts putting it as far back as the Bronze Age, or nearly 4,000 years ago. Others place the date more fairly in the era of global colonization that began with Christopher Columbus’ discovery of America in 1592 – this marked the birth of the first global trading networks, which European powers pioneered” This is widely regarded as the first wave of globalization, through which industry and commerce crossed oceans and lasted more than a century.
“By the nineteenth century, the globalisation revolution had entered a new phase; the introduction of innovations such as the steam engine encouraged foreign commerce even further, increasing the pace and scale at which business could be done. A lack of major wars (following the end of the Napoleonic Wars in 1815) helped rapid development during this time, which was marked by, among other things, large waves of refugees spreading across the globe – more than 20 million people left Europe for other shores between 1850 and 19138”
“The term “globalisation” first emerged in the late 1920s; a decade and a half later, after and shortly after World War II, globalization entered a new era. At the end of the conflict, the
German forces developed V-2 rockets for use by London; just after war, this invention would shape the backbone of modern communication, as nations pursued the ability of rockets to bring spacecraft, and ultimately men, to the stars”
“Simultaneously, broad trade deals such as the General Agreement on Tariffs and Trade (GATT), the “first worldwide multilateral free trade deal,” were created. This deal was expressly designed to promote commerce by eliminating barriers that were deemed detrimental to free trade. It was gradually replaced by the establishment of the World Trade Organization”
Globalisation with respect to Economic Reforms of 1991
India’s economic reforms in 1991 were a watershed event in the country’s development. After experiencing a serious balance of payments crisis, the government of India made several policy adjustments to liberalize and open the economy. When compared to the previous age of protectionism and state control, these reforms, commonly referred to as the “New Economic Policy,” were a dramatic change.
The Indian market was opened to global competition by lowering import tariffs and tearing down trade barriers as part of the reforms. The Indian economy was able to become more integrated into the global economic system as a result of this change. It opened worldwide markets to domestic producers but also made them more vulnerable to competition from abroad.
Through fewer regulations and a friendlier business climate, the economic reforms hoped to entice foreign direct investment (FDI). As a result, foreign direct investment (FDI) flooded the economy, bringing with it money, technology, and experienced managers. Multinational companies’ (MNCs’) arrival aided India’s participation in global supply chains and facilitated the transfer of technology.
Liberalizing the financial sector paved the way for deeper participation in international capital markets. It stimulated the growth of capital markets and the creation of novel financial products, as well as the admission of international institutions. These changes promoted cross-border capital flows, boosted foreign portfolio investment, and simplified access to international money.
Globalization paved the way for the spread of new technologies and the sharing of information throughout the world. Through licencing agreements, joint ventures, and collaborations with foreign enterprises, the opening of the Indian economy gave indigenous firms access to cutting-edge technology and management techniques. As a result, output and effectiveness increased.
Accelerating developments in information and communication technology (ICT) during the 1990s and beyond were a major force in propelling globalization. It drastically improved communication, lowered the price of information, and quickened the rate at which ideas could travel across national boundaries. The growth of India’s information technology industry has made the country a major Centre for international business outsourcing.
The economic changes that took place in India in 1991 were affected and aided by these features of globalization. Increased commerce, international investment, technical progress, and integration with global financial markets all stem from India’s liberalization and opening up. The long-term repercussions of these shifts have been profound for India’s economy, helping to make it one of the fastest-growing and more influential in the world.
Suggestions
- Globalization has created exceptional opportunities for human growth for all populations, both in developing and industrialized countries. Globalization must be used further to stimulate sustainable development in order to generate wealth, according to commercial marketing powers.
- India should pay immediate attention to ensuring accelerated growth in schooling, hygiene, water and sanitation, labor, and jobs, so that goals are reached on time under time-bound programmes.
- A solid base of human development for all citizens is critical for the country’s social, political, and economic development.
- The government has launched an initiative to provide training to small-scale entrepreneurs.
- To address the increasing deprivation, the government should take urgent action to raise and build additional job opportunities in rural areas.
- There should be a great plan for long-term and profitable growth.
- Simply the GDP and other macroeconomic indicators by billions of dollars does not fix the chronic (unending) hunger and backward living standards of the people at the micro level. Growth should be sustainable, with opportunities for human advancement and good jobs. The health of a nation should be designed from the bottom up, rather than from the top down.
Conclusion
Today, the term “global organization” refers to real commercial dealings and vast distances between a diverse group of individuals with various cultures and perspectives. What binds them together in this dynamic network of relationships is the need for growth, the rapid sharing of resources and tools, and coordinated cooperation, both of which can lead to maintaining cooperation and the movement of capital.
It is possible to assume that today’s decisions to cross domestic boundaries and internationalize a company are essential for significant growth and advancement of a business enterprise. As a result, he is continually looking for and analyzing new fields where the corporation might grow from a small to medium business enterprise to a global corporation seeking to consistently develop and increase its own portfolio. Making the decision to spend outside of one’s own borders is a dynamic and time-consuming operation. This is done by a sequence of stages and methods that require a long-term systematic study and scanning of the newly selected investment site.
“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”
Written by- Anushka Satwani
References
IndianEconomy:–Developments–and–Challenges.html
- https://www.bbc.co.uk/bitesize/guides/znn447h/revision/1
- http://www.eajournals.org/wp–content/uploads/The–Impact–of–Globalization–to–
Businessand–the–World–Economy.pdf
- https://www.getsmarter.com/blog/market–trends/the–historical–impact–of–globalisationoneconomies–and–business/
- https://bookboon.com/blog/2011/10/how–globalization–affects–business/
- https://core.ac.uk/download/pdf/33812244.pdf
- https://www.telemediaonline.co.uk/the–effects–of–globalisation–on–business/
- http://www.sbnonline.com/article/how–to–compete–in–a–global–marketplacepaulprabhaker–northern–illinois–university/
- https://mpra.ub.uni–de/96988/1/MPRA_paper_96947.pdf
- http://oldtm.lbp.world/SeminarPdf/90.pdf
