Economic globalization
• Introduction:-
• The process of integration and interlinking of the various economies
of the world because of the cross border movement of foreign
capital, the rapid spread of technologies, commodities, products and
services is defined as the economic globalization.
• The two critical forces for economic globalization are the
marketization and the rapid growing information importance in all
types of productive activities.
• The key agents of economic globalization have been Multinational
Companies.(MNC).

FEATURES OF ECONOMIC GLOBALISATION
• 1. Emergence of Global Commodity Chains:-
• As there are more multinational networks ranging from the raw materials
to end users, production is gradually globalised.
• 2. Role of Transnational Corporations is Particularly Important:-
• Transnational companies are those that have production facilities in more
than one country.
• The orientations of these companies are international products and
markets.
• Some of these organizations are global brands like Mc Donald’s, Coco-
Cola, Pepsi, Reebok ,etc.
• The annual revenue of giant TNC’s is higher than the middle income
country’s economic output.

• 3. Global Economy is Post Industrial:-
• Rather than tangible, physical products like cars, food or clothing, they are
more likely to be based on information or electronics like information
services or music and films and as a result it is increasingly weightless.
• 4. Electronic Economy Underpins Globalization:-
• The world of finance has also gained through technology.
• Banks and financial corporations can now do large financial transactions
across national boundaries in a matter of seconds.
• The economic crises can be triggered by the transfer of a large sum of
capital.

Consequences of economic globalization
• 1. Increase North South Divide:-
• In 1999, UN published a report which states that less than 20 developing
countries have been benefited from economic globalization.
• From 1960 to current the difference of per capita income between the
poorest and richest country has been increased to 70 times from 30 times.
• 2. Weakened Macroeconomic Control:-
• The economic safety and financial stability of developing nations has
been enormously impacted by a large global floating capital volume with
a quick financial assets expansion, continuous financial instruments
innovation and the trend of global capital privatization.

• 3. Increased Financial Vulnerability:-
• Perhaps the international finance field and especially the issue of short term
capital flows, financial crises and the cross national dissemination of those crises
most vividly demonstrates this combination of rapid globalization of economies.
• 4. Shift in Production Facilities:-
• The nature of global product cycle is also changed and also the global location of
manufacturing becomes more fluid because of the economic globalization.
• Now because of fewer restrictions on foreign direct investments and global trade,
the location of new product manufacturing tends to be changing more to less
developed nations from the developing nations.
• 5. Increased External Demand Vulnerability:-
• Global specialization in manufacturing is nurtured by economic globalization.
• With increasing globalization, a high extent of specialization occurs in nations
producing few resources with few differences.

• 6. Environmental Degradation:-
• Especially, in the developing world, one of the consequences of economic
globalization is environmental degradation.
• This is because it generates demand for economic reform, industrialization
and urbanization in countries with limited ability to ensure adequate
conservation of the environment.
• 7. Diminishing Employment:-
• In various sectors employment opportunities, particularly for the skilled
employees has been increased by the arrival of international companies in
developing nations.
• The requirements for unskilled workers are lessened and unemployment is
increased in those sectors.

• 8. Widening disparity in Incomes:-
• The gap in wages between the educated and uneducated workers has been
increased along with reduction in entire poverty and unemployment
because of the entry of foreign firms and foreign capital.
• As the developing country’s financial health improves, the level of
education increase over the longer term but some poorer will become more
poor in short term.

PREVENTION OF NEGATIVE CONSEQUENCES OF ECONOMIC
GLOBALIZATION
• 1. Bigger Role of International Organization:-
• In the economic globalization process the most critical role should be
played by the global economic organization.
• The vacancy of an agency for global economic supervision and control
as well as the lagging behind the implementation of a regulatory
framework is in contrast with accelerated economic globalization rate.

• 2. Safeguarding the interests of Developing Countries:-
• In the context of creating a new global economic system, the developing
nation’s interests should be secured and their voices broadened.
• The economic globalization trend that came into being and has evolved
under circumstances that have not yet radically altered the old global
economic order.
• 3. Economic Reforms:-
• The process of re-adjusting structure of economy and economic system
reform needs to be intensified.
• In the economic globalization era, the global competition is the
competition on enterprise processes and economic systems.