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What are the advantages and disadvantages of Globalization?

Robert Parker, CEO at Holborn Assets (1999-present)

Advantages of Globalization:

It opens the borders between the nations and increases the awareness about the
differences between us (racial, religious, traditions) and how they can be managed
in our favor.
According to a Forbes article: It also provides poor countries, through infusions of
foreign capital and technology, with the chance to develop economically and by
spreading prosperity, creates the conditions in which democracy and respect for
human rights may flourish. This is an ethereal goal which hasnt been achieved in
most countries. The Pros And Cons Of Globalization
It can offer a global market in which all the people can consume the same series of
goods based on their preference. For example, any person in the world can buy an
iPhone, drink a Cola and eat a Mac hamburger. (Actually, I dont know if it should
be in the pro list, especially when I think about McDonald's).
Free movement. This is a big advantage - people can travel and the labor force can
move. Yet, we can see immigration, culture clashes, and other negative sides of
Disadvantages of globalization:

Free trade simply kills competition by letting the developed countries surpass the
poor ones. It is namely the globalization which lead to an even wider discrepancy
in wealth distribution.

This is why almost half of millionaires live in the US and not in China (even if its
population exceed the US by 5.5 times) Pakistan (even if it has almost the same
population), Indonesia, Nigeria, Brazilia, or some other country:

Globalization made possible the US to rule the world with the help of the USD as a
world reserve currency. This wouldn't be possible in an isolated world.
Globalization killed traditions of hundreds of nations and tribes. This is why most
of you dont know African movies and music, Chinese movies and music, Russian
movies, etc. but everyone knows Hollywood movies and the trash music promoted
on Youtube. In short, all the crazy and shameful qualities of the Western world are
propagated in the world to make our brains kind of uniform.
Globalization made corporations flourish and killed small companies and middle
class. They make the rules. They decide whats good and whats bad. Monsters like
Google, Pfizer, Monsanto, McDonalds, Exxon, Chevron, etc. will decide whats
good and whats bad for you and no-one will have the power to oppose. Smaller
business can simply follow the trends - they cant create new trends. The monopoly
is huge. A Forbes article notes well that you can find multinational corporations
that are accused of social injustice, unfair working conditions (including slave
labor wages, living and working conditions), as well as lack of concern for
environment, mismanagement of natural resources, and ecological damage.
Globalization can also have a significant negative impact on taxation. Since
many companies are able to trade with one country while being based in
another, large corporations often exploit tax havens such as Luxembourg,
Switzerland, and Hong Kong to avoid paying taxes in the countries where they
generate their profits. Pros and Cons of Globalization: Controversy and
Workers in developed countries like the US face pay-cut demands from
employers who threaten to export jobs. This has created a culture of fear for
many middle class workers who have little leverage in this global game. The Pros
And Cons Of Globalization
However, in my opinion, the biggest threat of globalization is the creation of a world elite
that will eventually rule the world. Gradually there is a world power that is being created
instead of compartmentalized power sectors. Politics is merging and decisions that are
being taken are actually beneficial for people all over the world. This is simply a
romanticized view of what is actually happening. Globalization
Viplav Mehta, Just a Generalist
Globalisation is the process of international integration through acceptance and exchange of
each others goods, services, culture among others. Thus, virtually , it is a process of
vanishing of the borders between various countries.

However, this phenomenon is a twin-faced one, thus having both advantages and
disadvantages. Let us have an insight on them:


With better exchanges of goods and services, each and everything is now available
everywhere in the world.
The North(refers to the developed world) merges with the South(developing and
Least developed), thus leading to an era of overall technological advancement
which in turn has its huge advantages on literally every aspect including health,
education, poverty among others.
Better relations between various nations who provide a jig-saw fit for each other.
For example. India provides a bulk of resources, both natural and human but it
lacks the required technology for a particular task which is possessed by Japan.
The latter is lacking young population. So , it would invest in India for good
returns. This way they provide a jig saw fit for each other.
Cultural exchange is the best way to establish strong people-to-people links. This is
facilitated by globalisation.
Joint efforts on common problems like climate change, terrorism, trade etc.
Economic exchange in the form of trade and investment, which is a major
component of this process, is a good method of calming down the tensions
between any two countries.
Flow of information and ideas from those who have it to those who dont. For
example from the U.S to South Africa. Internet, in general and Social Media in
particular has played a huge role here.

This process is leading to an era of Neo-colonialism, as the developed nations are

trying to assert their dominance in the name of globalisation.
This has led to global lobbying by the developed nations in the developing ones
so that the latter does not overtake the former. For example, a report of IB, India
revealed that Greenpeace International of the U.S is hindering the progress of the
major Indian development projects.
Cultural exchanges though tie people together, are leading to overshadowing of
one culture by another. For example. overshadowing of western culture on
the Indian culture. This way even the pros of ones own culture are subdued.
Particularly, in value-rich countries like India, where family life used to be its
forte, globalisation has caused devastation. Now, the process
ofNUCLEARisation is soaring with families getting divided. This is also leading
to a scenario where the old age dependents are pushed into pitiable conditions by
their children.
Developing countries like India is facing a phenomenon called brain-drain,
where a huge chunk of Indias youth is preferring jobs/education in the developed
countries than their own. This will leave lesser scope of tapping the demographic
potential of the country.
Terrorism has soared in the globalised world. This is due to multiple reasons:
o Developed nations tendency to interfere in the affairs of other nations to fulfil
their greed leads to upraising of some rebellion forces which later on turn to
become a terrorist group.
o Social Media which has facilitated the flow in info and also eased the people-to-
people contacts has become a facilitator of the terrorist activities as it eases the
radicalisation process across the globe.
o Cyber crimes are on a rise which has grave consequences when it comes to security
of a country.
Globalisation helps in an global technological advancement .
o But this advancement has negative consequences for the environment due to
increasing emissions and climate change.
o Also, with technological development decreases the dependency on manual labour,
which cuts down the employment opportunities leading to poverty and crime as
o With dependence of technology for day-to-day things, health problems are
It leads to increasing urbanisation, a phenomenon where migration from rural
to urban areas increases. This is due to the perception of increased opportunities
in urban areas due to globalisation. Urbanisation has a grave impact on standard
of living, ecology, human indicators among others.

Spencer P Morrison, Editor-In-Chief, National Economics Editorial

This answer looks at economic globalization (aka free trade) from Americas

For an answer looking at who benefits, read my answer to this question.

Free trade, which is based on the theory of comparative advantage, is domain-specific. This
means that its only applicable certain situations, when specific preconditions are met.


1. Theoretically, free trade enriches both trading partners. This is because both sides
specialize in making what theyre good at, which allows them to maximize their comparative
advantage. This increases economic efficiency, and therefore decreases prices.

1. This applies within a domestic economy, or in an international setting where

capital is immobile.
2. It allows the free exchange of exotic products, which gives consumers more variety and
diversity of goods.


Free trade doesnt work in a global setting, where capital is mobile, and trade partners are
asymmetrical (ie. when one partner fights dirty). Its caused a ton of problems. Looking
specifically at America:

1. Free trade has led to massive trade deficits. You can see that after NAFTA was
signed, America developed a chronic deficit with Mexico, which led to over 800,000 net
jobs being lost.

The same thing happened with China after its entry into the World Trade Organization
(which lowered trade barriers).

In fact, this has been the case with the world as America has reduced trade barriers.

As you can see, as trade barriers have come down, and the economy globalized, America ran
ever larger trade deficits.

2. Trade deficits are bad because they are the result of offshoring.

Offshoring means that American production is moved abroad, but the consumption is not
(ie. a car factory is moved to Mexico, and we import the cars to America).

The current trade deficit displaces between 1018 million jobs

3. Offshoring leads to job loss, which increases competition in the labor market
(more people chasing fewer jobs). This has caused wage stagnation. In real terms,
wages havent gone up since 1973.

4. Offshoring has also led to more income inequality.

This is because people who lose their manufacturing jobs generally find new work in the
service industry. Service jobs either pay very high (lawyers, designers) or very poorly
(burger-flipper, Wal-Mart greeter). This creates inequality.

5. Goods arent actually cheaper.

In real terms, free trade hasnt brought cheaper goods, because although goods could be
made cheaper, peoples wages stopped rising. In real terms, most people are actually worse
off than they were in 1985.
The below graph shows that the median household actually has less discretionary spending
(as a proportion of its income) than it did in 1985. During the period before free trade,
discretionary spending increased proportionally every year (ie. real economic progress was

Although its true that most people live better now than they did back then, this is because of
technological, not economic gains.

6. The trade deficit has also caused the national debt to balloon.

Nothing comes for free.

Dont forget that when we buy goods from foreign countries we have to pay for it by
either selling assets (property, stocks) or debt (bonds, treasury bills).

$6 trillion of our national debt was sold to foreign lenders, in exchange for their currency.
This allowed us to buy their products.

About half of our national debt was caused by the trade deficit, and therefore free

As it turns out, America became prosperous under protectionist policies, not free trade.

Kartikeya Bahl, Trying to know more about economics.

Globalization refers to the interaction of one economy with all the other economies of the
world. This interaction can be in terms of financial transactions, trade, politics,education,
production etc. Globalization picked up steam with the invention of newer and newer
technologies in the world of transportation and communication. Thus, it can be seen that
though globalization is traced back to ancient times by historians, it truly began at the end
of the 19th and beginning of the 20th century. The term Globalization, in its newest form,
has four major parameters:

1. Free flow of goods and services between countries due to the reduction in trade
2. Creation of an environment for flow of capital and investment among countries.
3. Free flow of technology from one country to another.
4. Free movement of labor among countries.
True globalization is attainable only if all four components are present. However,
globalization has some advantages and some disadvantages. Some of these advantages and
disadvantages are:


Increase in employment opportunities: As globalization increases, more and more

companies are setting up businesses in other countries. This in turn increases the
employment opportunities that people atone place have. People can get better jobs without
having to move to other countries in search of better jobs. Today, many multinational
companies such as Microsoft, Google and Toyota etc. have their offices in India and many
Indians work for these companies in India. Without globalization, Indian people would not
have had the opportunity to work for such companies in India.

Education: With the increase in globalization, it has become easier for people to move
across borders to different parts of the world to acquire better education. This has resulted
in an integration of cultures. People from underdeveloped and developing countries often
move to developed countries to get better education. More and more Indian students are
traveling to countries like the UK or the USA to pursue higher education. This has also
opened their cultures towards the Indian culture to some extent.

Increase in free trade: An increase in free trade has opened doors for investors in
developed countries to invest their money in developing countries. Big companies from
developed countries have the freedom to operate in developing countries. In the 2000s,
Japanese and European companies such as Kawasaki and Siemens started producing high-
speed trains in China. This helped Chinese firms in gaining knowledge about the production
process and now Chinese companies such as China South Locomotive & Rolling Stock Corp.
are producing high-speed trains on their own.
Faster flow of Information: Information flows from one part of the world to the other
immediately, resulting in the world being tied together. Vital information can be shared
between individuals and corporations at a very fast rate. It has also facilitated in increasing
the ease of transporting people and goods.

Increase in quality of goods and services: As a result of globalization, people have

access to the best quality of goods and services throughout the world. Companies have to
strive to provide better quality goods and services to the consumer and the consumer has
the liberty of choosing whichever product he thinks is best suited for his needs. This allows a
person in America to wear clothes made in India and Mexico while watching a football
match taking place in England on a TV made in China.

Decrease in prices of goods and services: As the competition in the market has
increased due to rapid globalization, producers have to price their products competitively in
order to remain in the market. This has become a boon for the consumer as he can get better
quality products at cheaper prices. An example is that of the car Ambassador in India. It was
the only car available in India along with the Fiat before the liberalization of the Indian
Economy. These cars were inefficient and expensive. Once the Indian economy was opened,
other car companies started selling their cars in India at cheaper prices. This was a major
benefit for the Indian consumer.

Reduction in cultural barriers: As people move from one country to another, barriers
between various cultures tend to decrease.This has resulted in tolerance and openness
towards other cultures. This has also facilitated communication between different cultures
and hence, nations. It has also led to a reduction in wars as we are today living in one of the
most peaceful periods in the history of mankind.


Environmental degradation: Developed countries can take advantage of

underdeveloped countries weak regulatory laws in terms of environmental protection.

Unfair working conditions: Many multinationals have been accused of social injustice
by exploiting labor in underdeveloped countries in order to cut costs. Labor are provided
unhealthy working conditions leading to health hazards. Many large companies have also
been accused of using child labor in their factories in underdeveloped countries. Nikes
much publicized use of child labor along with poor working conditions and low wages in its
factories in Indonesia is a well-documented example.

Fall in employment growth rate: Though the promotion of the idea that the advances
in technology and increase in productivity would create more jobs has been a cornerstone of
globalization, it has been seen that in the past few years, such advances have led to a
decrease in the employment growth rate in some developing economies. This can also be
attributed to the fact that companies move their production facilities from one place to
another in search of cheaper labor once the workers in the previous country start
demanding better wages.

Growing disparity among the rich and the poor: 86% of the worlds resources are
said to be consumed by the richest 20% of the world population. This means that the poorer
80% only gets to consume 14% of the worlds resources. This is a direct result of
globalization according to some activists who believe that globalization only serves the rich
whereas the poor have to face its disadvantages.

Small scale industries face extinction: Small scale industries which are indigenous to
a particular place face extinction as they do not have the resources or the power that the
multinational companies have. As a result, these small industries are unable to compete
with bigger companies and go out of business. An example is the bamboo furniture making
industry in India. The manufacturers work out of their homes and work hard to make
furniture out of bamboo. These workers cannot compete with large companies selling cheap
plastic furniture and as a result, their industry faces extinction.

Rapid spread of deadly diseases: Deadly diseases such as AIDS or other

communicable diseases can spread at very fast pace via travelers or due to other means as a
direct consequence of globalization.
Matruprasad Mishra, Joined Ph D course in Economics, Utkal University,
Bhubaneswar (2020)

Globalisation is nothing but free international trade. Free trade is based on comparative
cost advantage. The country having better cost advantage can produce goods at lower prices
than another who is not having that advantage.

It can occur if raw materials are home produced, labour is cheap in the domestic market,
capital goods are produced in the domestic market and entrepreneurs are ready to invest in
the country. Thus a country is having superior factors of production will gain under free

However the importing country from above exporting country should have similar
opportunities in production of different products which is required by others. At least the
latter country can pay back to the former country in foreign exchange.

Thus free trade is good between equally strong economies. Free flow of goods and services
will strengthen each other.

However if countries are unequal in strength, the importing country cannot pay back to
exporting country and it will become dependent on it. If it is to survive economically it has
to protect domestic industries and imposes restrictions on free trade.

Apart from economic goods, under free trade education and culture spreads from one
country to another. Tourism develops and people know each other. With cultural change,
taste and fashion change and traditional values lose its importance. This can have
repercussions on future generations.

As agriculture societies change into advanced industrial society simple life gives way to
complex life. The hazards of industrialisation like migration of rural population to urban
areas occur in search of employment leading to pressure on urban sanitation and living
conditions. Health hazards and violence become part of city life as people become more

So a balanced view should be taken while accepting globalisation as an economic philosophy

for human betterment. The evils of the system mitigated and good points are accepted.

The Pros And Cons Of Globalization

A story in the Washington Post said 20 years ago globalization was pitched as a
strategy that would raise all boats in poor and rich countries alike. In the U.S. and
Europe consumers would have their pick of inexpensive items made by people
thousands of miles away whose pay was much lower than theirs. And in time
trade barriers would drop to support even more multinationals expansion and
economic gains while geo political cooperation would flourish.

There is no question that globalization has been a good thing for many
developing countries who now have access to our markets and can export cheap
goods. Globalization has also been good for Multi-national corporations and Wall
Street. But globalization has not been good for working people (blue or white
collar) and has led to the continuing deindustrialization of America.

Globalization is a complicated issue. It is necessary to evaluate the pros and cons

before drawing any conclusions.


Supporters of globalization argue that it has the potential to make this world a
better place to live in and solve some of the deep-seated problems like
unemployment and poverty.
1. Free trade is supposed to reduce barriers such as tariffs, value added taxes,
subsidies, and other barriers between nations. This is not true. There are still
many barriers to free trade. The Washington Post story says the problem is that
the big G20 countries added more than 1,200 restrictive export and import
measures since 2008

2. The proponents say globalization represents free trade which promotes global
economic growth; creates jobs, makes companies more competitive, and lowers
prices for consumers.

3. Competition between countries is supposed to drive prices down. In many

cases this is not working because countries manipulate their currency to get a
price advantage.

4. It also provides poor countries, through infusions of foreign capital and

technology, with the chance to develop economically and by spreading prosperity,
creates the conditions in which democracy and respect for human rights may
flourish. This is an ethereal goal which hasnt been achieved in most countries

5. According to supporters globalization and democracy should go hand in hand.

It should be pure business with no colonialist designs.

6. There is now a worldwide market for companies and consumers who have
access to products of different countries. True

7. Gradually there is a world power that is being created instead of

compartmentalized power sectors. Politics is merging and decisions that are
being taken are actually beneficial for people all over the world. This is simply a
romanticized view of what is actually happening. True

8. There is more influx of information between two countries, which do not have
anything in common between them. True

9. There is cultural intermingling and each country is learning more about other
cultures. True

10. Since we share financial interests, corporations and governments are trying to
sort out ecological problems for each other. True, they are talking more than

11. Socially we have become more open and tolerant towards each other and
people who live in the other part of the world are not considered aliens. True in
many cases.

12. Most people see speedy travel, mass communications and quick
dissemination of information through the Internet as benefits of globalization.

13. Labor can move from country to country to market their skills. True, but this
can cause problems with the existing labor and downward pressure on wages.

14. Sharing technology with developing nations will help them progress. True for
small countries but stealing our technologies and IP have become a big problem
with our larger competitors like China.

15. Transnational companies investing in installing plants in other countries

provide employment for the people in those countries often getting them out of
poverty. True
16. Globalization has given countries the ability to agree to free trade agreements
like NAFTA, South Korea Korus, and The TPP. True but these agreements have
cost the U.S. many jobs and always increase our trade deficit


The general complaint about globalization is that it has made the rich richer
while making the non-rich poorer. It is wonderful for managers, owners and
investors, but hell on workers and nature.

Globalization is supposed to be about free trade where all barriers are

eliminated but there are still many barriers. For instance161 countries have value
added taxes (VATs) on imports which are as high as 21.6% in Europe. The U.S.
does not have VAT.

The biggest problem for developed countries is that jobs are lost and transferred
to lower cost countries. According to conservative estimates by Robert Scott of
the Economic Policy Institute, granting China most favored nation status drained
away 3.2 million jobs, including 2.4 million manufacturing jobs. He pegs the net
losses due to our trade deficit with Japan ($78.3 billion in 2013) at 896,000 jobs,
as well as an additional 682,900 jobs from the Mexico U.S. trade-deficit run-up
from 1994 through 2010.

Workers in developed countries like the US face pay-cut demands from

employers who threaten to export jobs. This has created a culture of fear for
many middle class workers who have little leverage in this global game

Large multi-national corporations have the ability to exploit tax havens in other
countries to avoid paying taxes.

Multinational corporations are accused of social injustice, unfair working

conditions (including slave labor wages, living and working conditions), as well as
lack of concern for environment, mismanagement of natural resources, and
ecological damage.

Multinational corporations, which were previously restricted to commercial

activities, are increasingly influencing political decisions. Many think there is a
threat of corporations ruling the world because they are gaining power, due to

Building products overseas in countries like China puts our technologies at risk
of being copied or stolen, which is in fact happening rapidly

The anti-globalists also claim that globalization is not working for the majority
of the world. During the most recent period of rapid growth in global trade and
investment, 1960 to 1998, inequality worsened both internationally and within
countries. The UN Development Program reports that the richest 20 percent of
the world's population consume 86 percent of the world's resources while the
poorest 80 percent consume just 14 percent.

Some experts think that globalization is also leading to the incursion of

communicable diseases. Deadly diseases like HIV/AIDS are being spread by
travelers to the remotest corners of the globe.

Globalization has led to exploitation of labor. Prisoners and child workers are
used to work in inhumane conditions. Safety standards are ignored to produce
cheap goods. There is also an increase in human trafficking.
Social welfare schemes or safety nets are under great pressure in developed
countries because of deficits, job losses, and other economic ramifications of

Globalization is an economic tsunami that is sweeping the planet. We cant stop it

but there are many things we can do to slow it down and make it more equitable.

What is missing?

Leadership We need politicians who are willing to confront the cheaters. One of
our biggest problems is that 7 of our trading partners manipulate their currencies
to gain unfair price advantage which increases their exports and decreases their
imports. This is illegal under WTO rules so there is a sound legal basis to put
some kind of tax on their exports until they quit cheating.

Balanced Trade Most of our trading partners can balance their trade budgets
and even run a surplus. We have not made any effort to balance our trade budget
and have run a deficit for more than 30 years resulting in an $11 trillion deficit.
The trade deficit is the single biggest job killer in our economy, particularly
manufacturing jobs. We need the government to develop a plan to begin to
balance our trade deficit even though this is not a political priority in either party.

Trade Agreements Both the NAFTA and the South Korean Korus trade
agreements might have been good for Wall Street and the multi-national
corporations but they eliminated jobs in America and expanded our trade deficit.
The upcoming Trans Pacific Trade Agreement will do the same thing and
Congress should not fast track this bad agreement for a dozen reasons.

Enforcing the rules China ignores trade rules and WTO laws with reckless
abandon. Besides currency manipulation they subsidize their state owned
companies to target our markets, and provide funding to their state owned
companies that dump their products in America. They also steal our technologies,
sell counterfeit versions of our products, and impose tariffs and other barriers
anytime they want - as we do nothing to stop them. China does not deserve to be
on our most favored nation list and we need to tax their exports to us until they
stop these illegal activities.

What is good for third world countries, like Kenya, or countries with tremendous
growth, like China, has not been good for American workers. Globalization is
deindustrializing America as we continue to outsource both manufacturing blue
collar and white collar jobs. Supporters of globalization have made the case that it
is good because it has brought low priced imported goods, but they have not
matched the decline of wages in the middle class and will not offset the loss of
many family wage jobs

Globalization is like being overwhelmed by a snow avalanche. You cant stop it

you can only swim in the snow and hope to stay on top. I would like to make the
argument that the US should try a lot harder to swim in the snow and stay on top.
We cant stop globalization but there are many policies and strategies we can use
to make it more equitable. We can enforce the trade laws, force the competition
to play by the same rules, and stop giving our competitors the tools (technology
and R& D) to ultimately win the global war.
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Globalization: Meaning, Advantages and
By the term globalisation we mean opening up of the economy for world
market by attaining international competitiveness. Thus the globalisation of
the economy simply indicates interaction of the country relating to production,
trading and financial transactions with the developed industrialized countries
of the world.

Accordingly, the term globalisation has four parameters:

(a) Permitting free flow of goods by removing or reducing trade barriers
between the countries,

(b) Creating environment for flow of capital between the countries,

(c) Allowing free flow in technology transfer and

(d) Creating environment for free movement of labour between the countries
of the world. Thus taking the entire world as global village, all the four
components are equally important for attaining a smooth path for

The concept of Globalisation by integrating nation states within the frame work
of World Trade Organisation (WTO) is an alternative version of the Theory of
Comparative Cost Advantage propagated by the classical economists for
assuming unrestricted flow of goods between the countries for mutual benefit,
especially from Great Britain to other less developed countries or to their

In this way, the imperialist nations gained much at the cost of the colonial
countries who had to suffer from the scar of stagnation and poverty. But the
advocates of the policy of globalisation argue that globalisation would help the
underdeveloped and developing countries to improve their competitive
strength and attain higher growth rates. Now it is to be seen how far the
developing countries would gain by adopting the path of globalisation in
In the mean time, various countries of the world have adopted the policy of
globalisation. Following the same path India had also adopted the same policy
since 1991 and started the process of dismantling trade barriers along with
abolishing quantitative restrictions (QRs) phase-wise.

Accordingly, the Government of India has been reducing the peak rate of
customs duty in its subsequent budgets and removed QRs on the remaining
715 items in the EXIM Policy 2001-2002. All these have resulted open access
to new markets and new technology for the country.

Advantages of Globalisation:
The following are some of the important advantages of globalisation for
a developing country like India:

(i) Globalisation helps to boost the long run average growth rate of the
economy of the country through:

(a) Improvement in the allocative efficiency of resources;

(b) Increase in labour productivity; and

(c) Reduction in capital-output ratio.

(ii) Globalisation paves the way for removing inefficiency in production

system. Prolonged protective scenario in the absence of globalisation makes
the production system careless about cost effectiveness which can be
attained by following the policy of globalisation.
(iii) Globalisation attracts entry of foreign capital along with foreign updated
technology which improves the quality of production.
(iv) Globalisation usually restructure production and trade pattern favouring
labour-intensive goods and labour-intensive techniques as well as expansion
of trade in services.

(v) In a globalized scenario, domestic industries of developing country

become conscious about price reduction and quality improvement to their
products so as to face foreign competition.
(vi) Globalisation discourages uneconomic import substitution and favour
cheaper imports of capital goods which reduces capital-output ratio in
manufacturing industries. Cost effectiveness and price reduction of
manufactured commodities will improve the terms of trade in favour of
(vii) Globalisation facilitates consumer goods industries to expand faster to
meet growing demand for these consumer goods which would result faster
expansion of employment opportunities over a period of time. This would
result trickle down effect to reduce the proportion of population living below
the poverty line
(viii) Globalisation enhances the efficiency of the banking insurance and
financial sectors with the opening up to those areas to foreign capital, foreign
banks and insurance companies.

Disadvantages of Globalisation:
Globalisation has its disadvantages also.

The following are some of these disadvantages:

(i) Globalisation paves the way for redistribution of economic power at the
world level leading to domination by economically powerful nations over the
poor nations.
(ii) Globalisation usually results greater increase in imports than increase in
exports leading to growing trade deficit and balance of payments problem.
(iii) Although globalisation promote the idea that technological change and
increase in productivity would lead to more jobs and higher wages but during
the last few years, such technological changes occurring in some developing
countries have resulted more loss of jobs than they have created leading to
fall in employment growth rates.

(iv) Globalisation has alerted the village and small scale industries and
sounded death-knell to it as they cannot withstand the competition arising
from well organized MNCs.

(v) Globalisation has been showing down the process to poverty reduction in
some developing and underdeveloped countries of the world and thereby
enhances the problem of inequality.

(vi) Globalisation is also posing as a threat to agriculture in developing and

underdeveloped countries of the world. As with the WTO trading provisions,
agricultural commodities market of poor and developing countries will be
flooded farm goods from countries at a rate much lower than that indigenous
farm products leading to a death-blow to many farmers.

(vii) Implementation of globalisation principle becoming harder in many

industrially developed democratic countries to ask its people to bear the pains
and uncertainties of structural adjustment with the hope of getting benefits in