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Economic Globalization: The Role of Geography

Introduction

Globalization is by no means a modern phenomenon closely connected with the geographical structure of the world and location of a particular country. From ancient times countries have never lived in isolation. In the West, Ancient Rome was responsible for control and economic integration of the adjacent countries. And China was in charge of integration in the Far East. Within their borders goods, people and even ideas flew in a free way without any interceptions.

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Discussion Section

Economic development as well as strive for profit are key factors of modern international integration. Historical examples suggest that what was the most important in trade of those days were two types of goods even considered milestones, and these goods are sugar and spice. West India and East India appeared due to this, and great vast lands were traded equivalently for small islands rich for spice and sugar (De La Madrid, 1997; Dicken, 2003). Globalization effects the global environment through location of production means and use of international human resources. In general, globalization is not a new phenomenon in the world’s economic history, neither is it that persistent to problems, crises and change. It is understandable that many people in the nations which experience globalization in the local scale within their countries may question the propriety of advantages in general. Thus, there is even the possibility to question the propriety of globalization in the first place. Certainly, globalization happens nowadays, (though in a slower pace than it could but still it seems to a certain degree beneficial and even inevitable in the present-day life of the world. So, now the main and central goal for national leaders as well as for economists is to define strategies which “would allow the process of globalization to implement harmlessly for any nation which participates in it” (Dicken, 2007, p. 87).

Globalization affects the global environment through building and new architectural changes. The state and a nation exist in close cooperation and interaction with the environment and other countries of the geographical region (Hocking and McGuire, 2004; Zajda et al, 2009). The profits and jobs were being created at the cost of the health of the workers and other people living locally as well as the natural environment. Quite possibly they are correct in this assessment of the motivations of politicians with rural constituencies, but it needs to be considered why it would be that work-hungry people would be willing to be won over by such strategies if they had not, all too often, seen the results of mismanaged industrial development (Dicken, 2007).

During the period of globalization, outsourcing joins capital, technology and labor resources from all over the world. No attribute of science or of engineering says that any given artifact can be improved, in function-to-cost ratio, indefinitely at exponential rates. Progress has been surprisingly steady, costs declining by about a factor of two every three years. This steady exponential improvement of product function per unit cost over four or five generations of quite different technologies seems at variance with the well-documented notion of the product life cycle (Wynne and Kersting, 2009; Stiglitz, 2002; Dolmas, 2004). Outsourcing helps business to join labor and intellectual resources from all over the world and supply them with innovative technological solutions. Outsourcing exhibits improvement in early stages, followed by rapid exploitation as investment follows the early ‘supernormal’ profits, followed by ultimate stagnation in progress as nature proves less tractable and profit margins fall from competitive pressure. Yet stagnation would have been the fate of any of the constituent technologies had innovations not come along to allow the development to jump from one S-curve to the next, just in the nick of time, so to speak. If radical innovation can keep the pace of technological progress at near the maximum for any one technology, the innovating firm may sustain a degree of competitive advantage sufficient to justify the risks. American engineers with the same problem would spend much more time and money pushing the technology to a design point where it is clearly superior to proven alternatives before introducing it. In all likelihood their costs would be higher (Dicken et al 2001).

Present day globalization, or economic integration, is defined by even more factors than in the past. The reason for this lies in adding new types of trade and markets. And it is not surprising because the use of new technologies is one of the factors which are believed to be enablers of globalization (together with deregulation and mobility of capital). Furthermore, economic globalists believe that globalization has developed further in the recent years, due to the development of technologies and communication, advancements in transporting, as well as other aspects of economics employed to help further development of globalization. And globalization continually develops and spreads as a result of trade between different countries, their active export and import. Goods may be produced with the participation of different countries (in cases when parts of goods are created in different countries and the goods are assembled in one of these countries). Different countries appear to be responsible for various stages of goods production and thus goods come out created in a globalized manner. Technical understanding that the older technology’s limitations are about to jeopardize the rewards that have driven the investment strategy to that point is the motivating factor. In other words, it is the refusal of the innovators to accept reality as inevitable. Even in the smallest, most focused firms, the specialist consultant has been expected to complement his or her specific skills with a broad understanding of the business environment as a whole. Indeed, it is often this combination that has been used to distinguish ‘consultants’ from that lower breed of outsider, the ‘contractor’. Somewhere along the line, the ideal of the ‘T-shaped’ consultant was born: someone who was capable of generalist knowledge across a wide range of areas, complemented by an in-depth understanding of one specific area. Flexibility provides a degree of cohesion. There is relatively little ‘glue’ holding consultancy organizations together: few firms are held together by strong brands, established products or – even – long-standing client relationships. Staff turnover among consultants may be as high as 30 per cent, but, even over the course of the average 3-4 year stint with a particular firm, much of a consultant’s time will be spent out on clients’ sites. Specialization leads to organizational fragmentation, and generalization is one of the few offsetting factors that consulting firms have at their disposal. Giving up their generalist characteristics could also endanger their ability to get people to work together (Wolf, 2004; Edwards & Waicman, 2005). This is the essential role for computer-aided design/computer-aided manufacturing. In the course of a person’s interaction and exchange with others, technological tools and systems (which are becoming more readily available all the time) allow the person to expand his set of transactional alternatives by providing him with information on options and opportunities that have been gleaned from environments in every corner of the globe. The global business network becomes directly available to businesses from all over the world, and the whole world suddenly seems user-friendly. In parallel with the exciting prospects for globalization are negative trends such as global trade friction, third world debt problems, a stratification of differing resources and capabilities, and antiquated systems that restrict the activity of corporations capable of doing more.

It is also important to state that not only trade has expanded in the recent years, but also international investment, namely, foreign direct investment. This type of investment of big companies into their production facilities in other countries allows deep level of cross-border economic integration. It is understandable that in most cases such investors are companies from developed industrial countries. But even such developing countries as Brazil, South Korea and Taiwan do their best to participate in the investment business. And it is fair to admit that such type of investment allows technology transfer across the borders for developed countries bring their technologies into production facilities in developing countries. (Douglass, 2003) In general, economic globalization consists in such forms as international trade, direct investments (already mentioned above), portfolio investments, as well as networks of business alliances (Held, 2004; Von Stamm, 2008). Global integration of economies appeared to help a more productive division of labor between integrating countries, developing economies of scale, possibilities to shift capital to the places where it can be used in a much more productive way. On the other hand, “globalization still has its negative consequences which become evident in many of the countries” (Ferendinos, 2009, p. 54). One of the negative outcomes of globalization lies in inequality. It lies in the fact that unskilled labor is not in great request when compared to skilled labor of educated professionals and those possessing capital. Furthermore, economic inequality which lies in poverty of lower classes has appeared to be more striking and difficult in recent ears. As well, developing countries have seized being preferably egalitarian, which implies more inequality and financial gap between richer and poorer people within one and the same country (Bhagwati, 2004; O’Neill, 2009).

The overarching concept of political union remains undefined, sufficiently vague to be acceptable to all the member states without presenting a threat to any. The challenge is that the EU persists with the notion of political unity. On the international stage the EU steadily grows in stature as an important actor both in terms of its formal relationships with other states and through EPC, both activities benefiting greatly from the involvement in this aspect of EU affairs of the national government leaders through the European Council. The ASEAN, NAFTA and EU are the winners in globalization as they were able to join political and economic resources. All other countries outside these unions are losers unable to enter global business world and compete on the international scale (Held, 2004; Gouglass, 2003).

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As it has already been mentioned above, often local governments tend to lose their power because of the economic laws and rules dictated by more powerful so-called partners in global economy. These problems often prove that nowadays societies serve economies while the state of things is supposed to be exactly the contrary. It is understandable that any occasion and any phenomenon in the world history, whether it be tied to economics, politics or culture and society, has both positive and negative impacts, and it is the governmental role to regulate the problems and solve them for the benefit of their society. But the question of treating the difficulties globalization causes is to be considered hereinafter (Ferkiss, 2000; Hirst and Thompson, 1999).

The final question under discussion lies in the steps governments are to make if globalization appears not very beneficial for their countries, for it is possible that globalization is good but not good enough as Bhagwati (2004) states. First, governments are supposed to be able to handle possible downsides of globalization through helping people adapt to new conditions. While globalization does not necessarily imply lack of unemployment, local governments have to consider certain adjustment assistance for unemployed or laid-off. Second, social changes have to be accelerated together with economic growth. If economic well-being and development of a nation implies decrease in child labor, this should be not only declined but also preferably removed at all. Finally, “third, the speed of globalization has to be optimal but not maximal otherwise the national economies risk to suffer from failure unable to cope with new conditions and unable to adjust to new rules” (O’Neill, 2009, p. 65).

Conclusion

Globalization institutions appear to have a visible and sometimes independent impact in periods of critical transition. At the domestic level such transitions may occur through electoral change and democratization as well as through changing policy. Globalization expertise appears indispensable to journalists in times of international crisis, in providing expert commentary for the media. In regional and global domains, the re-emergence of old ethnic hostilities generated new intellectual spaces for policy thinking. In more stable circumstances, policy innovation and impact remain available through processes such as policy transfer and developing routes of bureaucratic and political access. Thus, as it is known, globalization, while it lies in the economic field, should be treated and governed not only economically but also politically in order to assure that it develops in an adequate pace and way. It is evident that relations between the countries, while being economic, are still regulated by politicians who develop, approve and control the implementation of the necessary legislation. So, to make globalization a positive reality it is necessary to control and govern it in a proper way.

References

Bhagwati, J. 2004. In defense of globalization. New York: Oxford University Press.

De La Madrid H, M 1997. Foreword: National Sovereignty and Globalization’,

Houston Journal of International Law, 19. 2010. Web.

Dicken P 2003. Global shift: reshaping the global economic map in the 21st century, 4th edn, SAGE.

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Dicken, P. 2007. Global shift: mapping the changing contours of the world Economy. London: Sage Publications Ltd.

Dicken P, Kelly F P, Olds, K & Wai-Chung Yeung, H. 2001, ‘Chains and networks, territories and scales: towards a relational framework for analysing the global economy’, Global Networks 1(2), pp. 89-112.

Dolmas, J. 2004. ‘Globalization: myths and realities’, Southwest Economy, 5, pp. 3-14.

Edelman S. J & Hart J A 2009, The Politics of International Economic Relations, 7th edn, Cengage Learning.

Edwards, P. & Waicman, J. 2005. The politics of working life. New York: Oxford niversity Press.

Ferendinos,M A M 2009, An Evaluation of the Varied Meanings and Interpretations Attached to the Concept of Globalisation, GRIN Verlag.

Ferkiss, V. (2000) Globalization: myth, reality, problemsAmerica Magazine. Web.

Gouglass, G.K. 2003. The globalization of economic life [Online]. World liance of Reformed Churches. Web.

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Held, D. 2004. A globalizing world? Culture, economics, politics. New York: outledge.

Hirst P Q & Thompson G 1999. Globalization in question: the international economy and the possibilities of governance, 2nd edn, Wiley-Blackwell.

Hocking B & McGuire S 2004. Trade politics, 2nd edn, Routledge.

O’Neill, K. 2009. The Environment and International Relationns. Cambridge University Press.

Stamm, B. 2008. Managing innovation, design and creativity. Chichester: Johniley & Sons Ltd.

Stiglitz, J. 2002 Globalization and its discontents. London: Penguin.

Wolf, M 2004. Why globalization works, Yale University Press.

Wynne, M.A. & Kersting, E.K. 2009. Trade, globalization and the financial crisis’, conomic Letter, 4(8).

Zajda J, Daun H & Saha J L (eds) 2009. Nation-Building, Identity and Citizenship ducation, ol.3, Globalisation, Comparative Education and Policy Research, pringer, Netherlands.

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