Economic Advantages and Disadvantages of Globalization

Globalization is a commonly used term to represent the dissemination of practices, notions and technologies across the globe. Nations are also looking at a free economy with a free market for goods and services. This has brought forth de-localization and rise in the multinational corporations. There are both pros and cons for globalization.

More Liquidity in Capital and Reduced Financial Risk

• Globalization implies free trade, and free trade involves an increased cash flow. When the financial flow increases, redistribution of capital takes place and thus there is more liquidity in capital. In post-globalization, the financial institutions and markets have a wide reach that creates a capability to disperse the risk more extensively than before. One major advantage of globalization is that the investors have the privilege to take only the financial risk they wish to.

Economical Advantage

• Globalization involves de-localization, which means that most of the activities of a business are now done across distances. The multinationals hire their workforce from overseas so as to obtain inexpensive labor. This leads to higher employment rate in the developing countries, thus improving their economies. The investors can also invest money in the developing countries. Therefore, the flow of communications is increased across the globe, which in turn brings forth economic advantage. In other words, globalization allows an increased flow of communication across the world, which ensures sharing of indispensable information between individuals and the organizations. This use of technology in communication saves time, which in turn saves money for the corporations. Thus, the multinational can become profitable by the use of the new means of communication. Besides, globalization provides speedy transportation of goods as well as people. This in turn brings forth obvious economic advantage for the corporations.

Interdependability etween Nations

• The disadvantages of globalization are closely linked to its advantages. The interdependability between nations can work as an advantage and a disadvantage. The problem is that if one nation suffers from economic disruptions, it is most likely that all other dependent nations are also affected. Thus, the risks become more global.

Unemployment

• The multinationals usually look out for making profits. The developing nations have good workforces that are not only skilled but also cheap. So there would be an increased flow of both skilled and non-skilled jobs from the developing nations to the developed nations. This is not good for the developed nations because there are chances for unemployment in the developed nations where the multinational would have previously held its operation.