After the Second World War a period of political decolonization tookplace, this did not advance the less developed countries (LDC) compared tothose that expand. In accordance to structural theorist, this took place becauseof the absence of institutions and structure that was required for the developmentof the LDC, in order for the integration to take place. In difference to neoclassical views, there are many other people thathave socialist views on globalization and view that globalization is an immoralentity. World economic and pollical system is highly unequal, this leads tohigh and growing divisions between the rich and poor.
Some critics such as NoamChomsky views globalization as legacy of colonialism and inefficiency. Trade isa not free, yet the world trade system functions as to favor of richer nations.Theorist who is related to this view is Karl HeinrichMarx (2014) who wrote a book on globalization. Karl Marx stated thatcapitalism is unethical and dishonest; capitalism accomplishes their workersand boosts their own wealth by degenerating the fully working conditions oftheir employees. Reasons for this are political authorities who result in therich getting richer and poor getting poorer. Based on theory ofcomparative advantage and absolute advantage. Comparative advantage takes placewhen a company can produce a service/product at the lowest costs compared toits competitors.
Absolute advantage is the ability of a company producingservices/goods using high efficiency and quality, by that specialising in theservice/product and trading it abroad (Dlabay and Scott, 2006). Example ofabsolute advantage ”Japan is more efficient in the production of cars and theUnited States has an absolute advantage in the production of food” (Reinert etal., 2009).
David Ricardo argues that tree trade could advance two countrieseven though one country produces all the traded commodities more successfullythan the other. Trade between national has always benefited specialisation and divisionof labour and bought an increase in word output. Neoclassical criticsview that globalisation overall is an advantage to the society and the main aspectsthat neoclassical theorists focus on, trade, growth and improvement. Adam Smith(2014) was a Scottish economist, optimist and philosopher who focused on the benefitswhich trade brings. Adam Smith highlighted the advantages to an economy ofmarket liberalization and trade, and the devoted relationship between growth,trade and process. Smith believed that trade provides better specialisation; increasedmarket and improved goods.
Two main arguments summarised by Adam Smith (2014) includedinternational trade is a source of external funding that boosts the totalamount of money available to fuel trade. The second argument authorises thegrowth of markets on an international scale. Both arguments are strong, legitimisingwhy international trade supports globalisation. Neoclassical/NeoliberalviewsGlobalisation and its results stimulate intense disagreement.Arguments about globalisation have been taking place since scholars began examiningthe worldwide growth of markets. The different perspectives on growth ofinternational economic activity came up with different conclusions. Neoclassicaland neoliberal critics globalisation is efficient, as it delivers beneficialfree market capitalism to everyone across the world. For Marxist and socialist writers,given the social, economic and political dissimilarities between countries andgroups within the world.
It is not probable that globalisation will advance allyet, the only rich elites and businesses. Marxist writers view globalisation asbad. Structuralist and institutionalist analysists focus on the requirement tomake sure that the correct institutional frameworks are positioned so that the promisingof globalisation is accomplished and its dangers are low. Structuralist reportersview globalisation as good, yet it all depends on the national and globalstructures.
All three perspectives believe that globalisation has occurred throughthe growth of capitalism. However, all three perspectives have different viewsas the nature of this spatial change and its effects. (Wetherly and Otter,2014).The concept of globalisation is a recent term, only originatingits current definition in the 1970’s. Concept of globalisation is divided intotwo events: collapse of communism, one which conveys no ideological ‘orthodoxy’,both negative and positive views which are shared across liberalism, socialism andconservatism.
The order concept technological revolution uses encompasses conceptsof ‘interconnectedness’ and ‘enmeshed societies’ (Milward, B., 2003). This processchanges the structure of the economy and society; mature sectors (includingtextiles and machine tools) could be rejuvenated by grafting new technologiesonto their products and processes. (Ohmae, K. 1985). There are three main perspectives on globalisation, which includesneoclassical, socialist and structuralist views.
The Neoclassical critics believethat globalisation is beneficial to everyone. The main key elements thatneoclassical theorists focus on include development, trade and growth. AdamSmith (2014) a Scottish economist, philosopher and optimist who was the firstperson to discuss globalisation. Smith concentrated on the advantages whichtrade influences, Adam believed that trade provided great specialisation; increasingthe market and providing people with the greater chance of goods. The main twoarguments that Adam Smith (2014) expressed was international trade, Smith mentionedthat international trade is a source of external funding which supports tradinginternally and that internal trade allows the growth of markets. Both argumentsare strongly expressed that legitimise why international trade supportsglobalisation.
Joseph E. Stiglitz is Americaneconomist who was rewarded the Novel Price for Economics in 2001. Stiglitz hasdemonstrated that without equal access to information between employee andemployer, consumer and company or even the debtor and lender. Also, there is nochance of ‘free’ markets contributing effectively. Stiglitz view onglobalisation is that ”the closer integration of the countries and people ofthe world ..
.brought about by the enormous reduction of costs of transportationand communication, and the breaking down of artificial barriers to the flows ofgoods, services, capital, knowledge, and people across borders”. (Stiglitz, 2002:9).
Stiglitz defines globalisation as either failure or success, as it alldepends on its management. Stiglitz explains that globalisation permitsbusiness to explore their services and goods around the globe, however, the waythrough which globalisation is organised, need to be changed. Demanding of therole of the IMF and the World Bank in benefiting ‘free markets’ without puttingin place the rules that ensure fairness. Regardless of the term globalisation usedwithin the last decades (Lechner, F.
J. and Boli, J. eds.
, 2014) states that ”globalizationhas much to offer…globalization is often seen as global Westernization…inequalitiesinclude disparities in affluence and also gross asymmetries in political,social and economic opportunities and power”. (Lechner,F.J. and Boli, J.
eds., 2014). Essential components that are responsible forthe evolution of this phenomenon are the use of increase of capital mobility,internet and containerisation. The internet is viewed as socio-economiccommentator as an important diving force in developing a unified global community.Without technology, globalisation would not be as essential to discuss. Particularly,communications technology; internet plays an important role, has revolutionisedhow individuals work, develop global understanding base and supply differentways of bringing cultures and people closer together. Containerisation enableshigh quality of goods being successfully shipped across the world at unusuallylow costs.
An increase in capital mobility permitted businesses to invest andlocate abroad. Additionally, growth in technology, effectiveness in communicationsand transport increased the ability globalisation over past 30 years. (EconomicsOnline, 2016)While the global business progresses,the definition of globalisation extends. It is defined that ”Globalizationlinks together all the spatial levels of business activity. It has grown becauseof the expansion of capitalism…globalisation at its simplest can be seen as theincrease over time of international trade (mechanised trade) and services. Withtrade comes an increase in the amount of market across national borders…without trade, business world not be able to benefit from the ability tospecialize”. (Wetherly & Otter, 2014). Wetherly and Otter describesglobalisation as a formal process characterising international trade and theimportance of capitalism in business activity.
Capitalism is the economicstructure which allows people to work free at jobs of their choosing. It isviewed that both globalisation and capitalism have made the world a betterplace, the growth of capitalism and freer international trade as described byWetherly & Otter, has corresponded with an increase in economic expansion,high employment and a decrease in child labour. This definition is an in-depth explanationof how the world has developed its communication through trade and capitalism,creating a mixture of various nationalities that have increased themulticulturalism in businesses around the world.
Globalisationrefers to global relationships of cultures, individuals and economical activities.The term is mainly used to refer the economical globalisation: the globaldistribution of the production of services and goods; through reduction ofbarriers to international trade such as export fees, tariffs and importantquotas. According to researches, t us the modern age which has guided to the originof globalisation. Globalisation came into presence after the Second World War. Globalisationis arguable the most essential factor forming world economy today. Even thoughit is not a new phenomenon, (globalisation can be traced back to the 1800’s).
The world economy has become progressively interdependent for a long time. Inrecent decades the changes globalisation brings occur far more rapidly.Globalisation is expanding widely and greatly, supplying businesses with growthand success. Increase in the exchange of knowledge, capital and trade aroundthe world, driven by innovation, social and economic impact than ever before. Usingthree main competing views on globalisation, as summarised by Wetherly andOtter (2014), this essay aims to discuss the definition of globalisation and topresent the implications that the concept has on business practices.
Particularly, the essay starts by examining various perspectives, the historyof globalisation, the aspects and features of globalisation and uses variousexample from different businesses, countries and sectors in order to analyse howthey were affected by globalisation. Lastly, the essay then finished withconclusive findings and thoughts.