Henry Grade 10A3 Subject: I&S Teacher: Guy Wallbank Discuss the impacts of globalization on the global economy Globalization has been one of the defining economic trends of the past few decades, shaping the global economy in different ways. Many scholars said that Columbus’s Voyage to the new world in 1942 is the first-time people exchange their culture and goods (National Geographic). Or further, the Silk Road, an ancient network of trade routes across China, Central Asia, and the Mediterranean used between 50 B.C.E and 250 C.E(National Geographic). Until now, globalization has played an important role in the global economy. E-commerce and online shopping are two examples of how globalization changed the ways we buy things. Globalization created positive impacts on the global economy. Technology developments, job creation, increased trades, and economic growth are the benefits of globalization. But globalization is also the cause of Income inequality, lack of local businesses, and negative impacts on the environment. Globalization has led to an increase in demand for workers in many sectors, especially in emerging markets. The global unemployment rate as a share of the total labor force in 2002 compared to 2019 decreased by 0.71 percent (Global Unemployment Rate). The unemployment rate decreased because due to globalization, businesses expand into new markets and take advantage of different regions. They may create job opportunities in sectors such as manufacturing, services, and agriculture. So, if the rate of job creation is higher than the rate of job displacement, then the unemployment rate decreases. Globalization is also a factor that promotes technological development. The amount of money companies was spending on research and development in 1996 is 555.05 billion dollars. Until 2022, this number has increased to 2.47 trillion dollars (Total Research and Development Spending). Globalization increased competition among countries and companies, and the amount of money they invested in research and development has become the key factor in this race. Companies and countries that invest more are often able to develop new technologies and products that give them a competitive advantage in global markets. Economic growth is one of the positive effects of globalization. This happened because globalization is reducing the barriers to trades and investments. The difference between the amount of money invested by foreign companies in 1995 and in 2021 is 1.8 trillion dollars (Foreign Direct Investment). The changes in policies encourage more trade and investment from foreign countries and these changes create new opportunities and challenges for foreign investors. Trades play an important role in the development of the global economy. They also get some benefits from the process of globalization. Globalization has encouraged more trade by improving transportation and communication, increasing competitiveness, and it also providing new access to new markets. Export value is one of the key factors that can decide the value of world trade. When a country exports goods or services, it generates revenue and creates demand for its products in other countries. The global export value in 1995 is 5,176 billion dollars and this number has reached 22 trillion dollars (World Trade Organization.). The changes in policies due to globalization is one of the reasons that caused the export value to increase significantly. But, globalization has created some negative impacts on the global economy. Increased economic activities, including trade, transportation, and manufacturing, has resulted in higher levels of greenhouse gas emissions, air and water pollution, and waste generation. Global carbon dioxide emissions increased from 22.4 billion metric tons in 1991 to 34.1 billion metric tons in 2016, driven in part by increased economic activity and international trade (CO2 Emissions Per Capita.). Economic activities can have a significant impact on the environment due to their use of natural resources, such as energy and water, and their generation of waste and pollution. For example, the production of goods and services often requires the use of fossil fuels, which contribute to greenhouse gas emissions and climate change. Additionally, industries may generate waste products that can contaminate soil, water, and air. Also, income inequality is one of the results of globalization. The increase in competitiveness from workers in developing countries who are willing to work for lower wages can put downward pressure on wages for workers in developed countries, leading to income inequality. The bottom 50% of the world's population owns only €2,900 per adult when adjusted for purchasing power, while the top 10% owns about 190 times more than that. Income inequality is also a significant issue, with the wealthiest 10% currently controlling 52% of all income and the poorest half receiving only 8.5% (Andrew Stanley). Globalization has increased competition and made it easier for large multinational corporations to enter and dominate the markets in developing countries. This has made it difficult for local businesses to compete and has led to the closure of many small local businesses which can have a negative impact on local economy and community. Moreover, the rise of globalization has resulted in the expansion of e-commerce, causing a significant disruption to conventional physical retail businesses. In conclusion, globalization has had both positive and negative impacts on the global economy. It has brought about job creation, technological advancements, increased trade, and economic growth, which are beneficial to many nations. However, globalization has also led to income inequality, negative impacts on the environment, and the displacement of local businesses. The increased economic activities resulting from globalization have contributed to higher levels of greenhouse gas emissions, air and water pollution, and waste generation. Income inequality has also worsened due to increased competition from workers in developing countries willing to work for lower wages. Moreover, globalization has made it easier for large multinational corporations to enter and dominate markets in developing countries, leading to the closure of many small local businesses. Therefore, while globalization has brought about significant benefits, policymakers should strive to mitigate its negative impacts to create a more equitable and sustainable global economy. Works cited: 1. National Geographic Society. “Globalization.” National Geographic Society, National Geographic Society, 2011, education.nationalgeographic.org/resource/globalization/. Accessed 27 Feb. 2023. 2. International Monetary Fund. “Globalization: A Brief Overview.” IMF, 30 May 2008, www.imf.org/external/np/exr/ib/2008/053008.htm. Accessed 27 Feb. 2023. 3. Statista. “Global Unemployment Rate from 2011 to 2021.” Statista, 2022, www.statista.com/statistics/279777/global-unemploymentrate/#:~:text=In%202021%2C%20the%20unemployment%20rate,has%20been%20su bject%20to%20fluctuation. Accessed 27 Feb. 2023. 4. Statista. “Total Research and Development Spending Worldwide from 2002 to 2021 (in Trillion U.S. Dollars, Purchasing Power Parity).” Statista, 2022, www.statista.com/statistics/1105959/total-research-and-development-spendingworldwide-ppp-usd/. Accessed 27 Feb. 2023. 5. World Bank. “Foreign Direct Investment, Net Inflows (BoP, Current US$).” World Bank, 2022, data.worldbank.org/indicator/BX.KLT.DINV.CD.WD. Accessed 27 Feb. 2023. 6. World Trade Organization. “World Trade Statistical Review 2022.” World Trade Organization, 2022, www.wto.org/english/res_e/statis_e/trade_evolution_e/evolution_trade_wto_e.ht m. Accessed 27 Feb. 2023. 7. World Bank. “CO2 Emissions Per Capita.” World Bank, 2022, data.worldbank.org/indicator/EN.ATM.CO2E.PC. Accessed 27 Feb. 2023. 8. Stanley, Andrew. “Global Inequalities.” IMF, http://www.imf.org/en/Publications/fandd/issues/2022/03/Global-inequalities-Stanley. Accessed 27 Feb. 2023.
