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Globalization and Its Effects on World Economies

Introduction

In today’s world, one cannot be able to separate history, economics, and the science of politics. Politics in today’s world controls the economy. Thus, when recorded in a correct and accurate way, the control of the economy is what can be termed as history. This, therefore, shows a core relation between these three fields of study and the interconnection that they share (Smith, 2010). Economics is the study of markets and market trends that affect the day-to-day exchange of goods and services in the various markets that are interconnected. This is due to the globalization of the market places. The internet has enabled the world to become “one market”. Thus, due to this interconnectivity, what affects one part of the globe inevitably affects the rest of the world. This can be in the form of socio-political unrest, wars, and environmental impacts among other things.

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Globalization: Its Impacts and Effects on the World’s economies

The interconnectivity of the global community has had its fair share of both positive and negative impacts with either of them producing different outcomes. This is due to the fact that outcomes in other places have both direct and indirect impacts on other parts of the world. These outcomes vary in nature and their effect on the world. Economic issues that affect the whole world due to this interconnectivity are of various makes. They include:-

Climate Change and Global Warming

Climatic change is significantly on the increase and this can be seen in the way the planet earth is warming up. There is overwhelming scientific evidence that the earth’s temperatures are rising up at a much faster rate and that this is caused mainly by Man in his quest for scientific and technological advancement. With the earth’s temperatures on the rise, there is a significant decrease in the number of natural habitats and the ability of these ecosystems to naturally adapt to the ever-changing environment is diminishing. Global warming has drastically changed the eco-diversity of various parts of the globe and this, in turn, has had a lot of negative impacts not only on the environment but also on the supply of necessary resources that drive the economies of various places. It has led to a decline in the productive sustainability of various industries that rely on agriculture and agricultural products to supply their much-needed raw materials. This significantly affects the pricing of their end products due to the high cost of the raw materials that are becoming much scarcer. Then there is also the concern over the diminishing arable land that can sustain not only large-scale production of cash crops but also of small and medium scale production of food crops.

Industries such as the textile, leather, and fishing industries among others are facing much more hurdles in their ability to cope with demand that is on the rise while supply is on the decline. This has been a direct consequence of the diminishing eco-systems and biological diversity that support such industries. Fish and other aquatic marine life are facing greater difficulty in their survival due to the increase in salinity in the oceans as freshwater becomes scarce. Their survival is becoming threatened since their offspring are not able to survive. Thus there is a significant decrease in the amounts of fish being caught. This in turn leads to food scarcity that in itself spurs an increase in demand. This increase in demand leads to food prices rising and in turn, this leads to people spending more of their monies on buying food. Industries on their part have to spend more on production due to the scarcity of raw materials and this, in turn, leads to increased production costs that are directly or indirectly finally passed on to the consumers in the form of higher pricing of goods and or services.

Human Population Increase

Humanity, throughout the ages, has continuously increased in population and consumption and or use of resources. This has had a major impact on the environment from which man draws almost all of his basic needs. This includes his food, water, and clothing among other things. While there has been an increase in population, this increase has not gone hand in hand with an increase in resources. The truth of the matter is that resources have been on the decline. This in turn has led to, what many believe, to be resource-based conflicts and even wars. These power conflicts and also selfish self-interests will in the future lead to greater violation of basic human rights, misery, and deaths of millions of people than is now evident. Throughout history, most if not all wars have primarily had resources and economic survival as the main cause of their starting.

Millions of lives have been lost and many more have been affected in the most inhumane ways due to differences over equitable sharing of resources. This continues to happen even today (Shah, 2010). The population explosion notwithstanding, it is the way man chooses to live, how he chooses to produce, use or consume and utilize the resources that determine his survival. Ecological limits to the sustainability of man are primarily based on the way these limited and unlimited resources are utilized. There is much impact on market survival, pricing, supply, and demand that is directly and indirectly affected by the way resources are utilized. Food scarcity is a major problem for many countries as there is evidence that links this to not only socio-political instability but also inflation and more government spending on food aid. This is usually triggered by a rise in food prices beyond many a peoples’ buying abilities. This extra spending of public resources means a direct decrease in the provision of other services by the same governments. The is also less input of resources into other revenue-generating projects that initially provided additional funds to the governments (Peterson, 2010).

Natural Disasters

Natural disasters such as earthquakes, floods, tsunamis, droughts among others have both direct and indirect impacts on resource utilization and this, in turn, affects factors such as the supply and demand of goods and services. The poor nations are the worst hit in such scenarios since there are usually little or no resources to be used to cope and also for reconstruction. An example is the case of hurricane Katrina which destroyed much of the south coast of the United States of America, especially the state of New Orleans. Other parts of the world also have had their share of disasters that destroyed livelihoods and much property. These include the Asian earthquake and tsunami disaster that struck Indonesia where almost a quarter of a million people lost their lives and damages ran into the billions of dollars. Much was lost and this, in turn, affected the economies of nearly all surrounding countries. Many funds were diverted from productive ventures so as to aid the colossal damage that had been left behind. This had a great impact on the economies of Southern Asia leading to price hikes on basic commodities as their supply was low while the demand was at its peak. There was widespread loss of resources in the form of food and cash crops, livestock among other things. This had a direct impact on the economies of the country (Davidson, 2010).

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Consumption and Consumerism

There is global inequality in the way that the world’s resources are consumed, with the latest figures available indicating that the wealthiest 20% of the world’s population consume about 70% of the world’s resources while the other 80% who account for the majority of the world poor consume the remaining 30% of the resources. This trend in the final run undermines the fragile environmental base that provides much of the resources. This if not checked will only worsen the situation (Smith, 2008). There is a considerable difference in pricing between the rich and poor nations since there is quite a big difference in the purchasing power between them. Therefore while those in the wealthy nations have more purchasing power, those in the poorer countries have limited power that is concentrated on providing the basics such as food, shelter, and clothing. Here supply is not always equal to demand and there are frequent fluctuations in prices. The wealthy nations on their part are able to afford indulgences in luxury items thus pricing in such states is different from those in the poorer countries.

Conclusion

As can be seen in the above, various economic issues in one way or another affect the economies of the world in either positive or negative ways (Wadley, 2010). This, in turn, affects the way pricing is gauged due to the supply and demand factors, thus any arising trends tend to be heavily influenced by the above and usually have a great impact on society and the different ways of life.

References

Davidson, A. (2010). Climate Change and Global Warming. The New York Times, 135, 28-31.

Peterson, A. (2010). Trade, Economy, & Related Issues. International Journal of Economics, 207, 67-70.

Shah, A. (2010). Human Population. Journal of Environmental Health, 78, 4-9.

Smith, J. K. (2010). Consumption and Consumerism. Financial Post, 34, 87-89.

Wadley, J. (2010). Economic Aspects in the Twenty First Century. The Economist, 90, 23-25.

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StudyCorgi. (2022, January 10). Globalization and Its Effects on World Economies. Retrieved from https://studycorgi.com/globalization-and-its-effects-on-world-economies/

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1. StudyCorgi. "Globalization and Its Effects on World Economies." January 10, 2022. https://studycorgi.com/globalization-and-its-effects-on-world-economies/.


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StudyCorgi. 2022. "Globalization and Its Effects on World Economies." January 10, 2022. https://studycorgi.com/globalization-and-its-effects-on-world-economies/.

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StudyCorgi. (2022) 'Globalization and Its Effects on World Economies'. 10 January.

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