Advantages disadvantages and impacts of Globalization

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Globalization is a process in which limited societies, economies, and cultures have connected through a global system of trade. The term is sometimes used to refer particularly to economic globalization: the incorporation of national economies into the international economy through trade, foreign direct investment, capital flows, and increase of technology. Globalization is generally known as determined by a combination of economic, technological, socio-cultural, and political factors this term can also refers to the worldwide distribution of ideas, languages, or trendy culture. Competition increases between countries. (Alassane D. Ouattara, 1997)

Globalization is the result of a number of interconnected developments including:

The growth and relative implication of foreign direct investment.

The internationalization of economic markets.

The rapidly and continuing development of communication and transport technology

Liberalization and Deregulation

 Public sector services converted into privatization


Economic globalization is characterized by increasing in trade and investment, liberalization, privatization of public services and deregulation of many government institutions. Economic globalization is also linked with increasing inequality in wealth and influence between nations and within nations as well as between public and private sectors. Economic globalization has been taking place for the last several years it has begun to happen at an increased rate over the last 20-30 years. This recent boom has been largely accounted by developed economies linked with less developed economies, by resources of foreign direct investment, the reduction of trade obstacles, and the modernization of these developing cultures. Environmental globalization recognizes that an environmental incident or impact that happens in one country is not restricted to that area but has the potential to affect the entire world's well being. Thus, communicative globalization refers to the rapid growth of communication technologies such as internet, telephone, satellite and so on, Ability to link people, information and ideas around the world which impact on culture, both positively and negatively.


Privatization is a requirement for globalization and goes side by side with it. Nowadays the phrase of globalization has gained importance in all over of the world. Globalization may have positive or negative impact on developing countries. However, the developing nations can survive by alteration in the development of globalization by public policy readjustment for privatization, deregulation and liberalization.

The wave of financial globalization as the mid-1980s has been marked by increase in capital flows among industrial countries, particularly between industrial and developing countries. Where these capital flows have been linked with the high growth rates in some developing countries. A number of countries have experienced interrupted collapse in growth rates and major financial crises over the same period, that disaster have exacted a serious toll in terms of macroeconomic and social costs. Trade could affect these inequalities only through its effect on economic growth in individual countries. A central issue, so concerns the possible effect of trade on economic growth. ( khair Uz Zaman,; , qaiser Aman;, 2007)

Key Institutions of Globalization

The economic globalization lies with certain influential financial institutions that are entirely in the hands of western countries. They include:

International Monetary Fund (IMF)

World Bank (WB)

World Trade Organization (WTO)

These institutions are also known as the Bretton Woods institutions and mainly influence on the economic and political policy formulation in developing countries.

(Rahman MD Faizur, 2005)

History Globalization:

The start of globalization goes back to the second half of the 19th century. When nationality as the basis for state formation was already widespread. The World Bank classifies the development of globalization since then as follows:

The 1st wave of globalization: 1870 -1914

The retreat into nationalism: 1914 -1945

The 2nd wave of globalization: 1945 - 1980

The new and 3rd wave of globalization: 1980

The first wave of globalization was started in 1870 and constant until the beginning of the First World War in 1914. This period of globalization made easy for the delivery of imported goods as well as the exported goods. The development of telegraph helped to begin contact over long distance.

The period of 1914 to 1945 was tagged a retreat of independence and extensively improved in the technical condition of the transport and communication. The great depression of the late 1920s and early 1930s direct to protectionism, which additionally restricted the international division of labors.

The second wave of globalization (1945-1980) followed the patriotic period. As a response to the war, there was much effort to enhance international hold. This was reflected in the establishment of the United Nations in 1945 and the Bretton woods institutions in 1946. In 1980, trade of manufactures was to large extent freed of barriers. In the case of agricultural products, trade was restricted between developing countries; imports of products of developing countries were liberalized if they did not compete with those of the developed countries.

The third wave of globalization started around 1980 and this phase continues today. According to the World Bank, this period has four characteristics that separate it from the previous period.

Large numbers of developing countries bankrupt into the global markets

Developing countries became increasingly marginalized and suffered from declining incomes and increasingly poverty

Worldwide capital movements and immigration became substantial.

Increasing destruction of production.

(Kotilainen, Markku; Kaitila, Ville;, 2002)

Globalization, as World War II, is basically the result of planning by politicians to break down the borders obstacles in trade to increase the prosperity and interdependence, as a result to reduce the chances of future war between the countries.

Since World War II, barriers to international trade have been significantly decreased through international agreements GATT. Particularly initiative carried out as a result of GATT and WTO, for which GATT is the foundation, has included:

Promotion of free trade:

Eliminating of tariffs; creation of free trade sector with small or no tariffs.

Reduced transportation cost, especially resulting from development of containerization for ocean shipping.

Reduction , elimination or coordination of financial support for local businesses

Creation of financial support for worldwide corporations.

Coordination of intellectual poverty laws across the majority of states, with more restrictions.

Super national identification of intellectual poverty limitations.


The phrase Globalization has been used broadly by media and educational in recent

years. This describes the process of generate networks of connections through a

selection of flows of information, people, capital goods and technology.

In economics, globalization connect in various phase of cross-border dealings, free

international capital flows, foreign direct investment, portfolio investment, and rapid and

widespread distribution of technology. Globalization enhances the economic prosperity and leads to more efficient allocation of resources, which, in turn will result in higher output, more

employment, lower prices and higher standard of living. However, some critics worry

about the resulting outsourcing and off shoring, which have destroyed the American

manufacturing sector.


Advantages of Globalization

Goods and people are transferred with more easiness from one country to another.

Due to globalization war between developed countries has reduced.

Free trading increases the interdependence of the nation-state.

People connected in the world due to global mass media.

Communication between individuals and corporations in the world increases.

Environmental security in developed countries increases.

Encouragement of more researches and development of new machines and equipment for domestic use.

People connected in the globe due to worldwide mass media.

Strong competition thus encourages higher quality products

Global mass media connects all the people in the world

Increase in economic growth of the country.

Reduction of cultural barriers increases the global village effect



Increased in flow of skilled and non-skilled jobs from developed to developing nations as corporations try to find out the cheapest labor

Corporate influence of nation-states far exceeds that of civil society organizations and average individuals

Increased chance of economic disruptions in one country affecting all countries.

Threat that control of world media by a handful of corporations will limit cultural appearance.

Greater chance of reactions for globalization being aggressive in an attempt to defend cultural traditions.

Greater risk of diseases being transported unintentionally between nations

Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity

International bodies like the World Trade Organization violate the national and individual independence.

Increase in the chances of universal war within developing countries and open war between developing countries as they struggle for resources

Decreases in environmental reliability as polluting corporations take advantage of weak regulatory rules in developing countries.


Impacts of Globalization

According to economists, there are a lot of global events connected with globalization and incorporation. It is easy to classify the changes brought by the globalization.

Improvement of International Trade.

Globalization increases the international trade between many countries and makes the sale or purchase easy.

Technological Progress.

Governments have upgraded their level of technology to compete and be competitive globally.

Increasing Influence of Multinational Companies.

An important trend in the globalization is the increasing influence and broadening scope of the multinational companies. A company that has subsidiaries in various countries is called a multinational.

Power of the WTO, IMF, and WB.

Another effect of globalization is the strengthening power and influence of international institutions such as the World Trade Organization, International Monetary Fund, and World Bank.

Greater Mobility of Human Resources across Countries.

 Globalization allows countries to provide their manpower in countries with cheap labor. For instance, the manpower shortages in Taiwan, South Korea, and Malaysia provide opportunities for labor exporting countries such as the Philippines to bring their human resources to those countries for employment.

Greater Outsourcing of Business Processes to Other Countries.

Different countries are tremendously benefiting from this trend of global business outsourcing. Global companies in the US take advantage of the cheaper labor and highly skilled workers that countries can suggest.

Civil Society. 

Broadening scope of the global civil society is an important trend in globalization. Many institutions are established in the country and run by citizens which civil society often refers to NGOs. Global civil society refers to NGOs that advocate certain issue or cause. There are many NGOs that promote good environment to women's and support their rights. Government and NGOs have the same goal of serving the people but these NGOs are working to establish polices that are beneficial to all.


Effects of globalization

More goods and services are available

Expansion of new markets

Income generation and increased in economic growth

Development in the volume and range of cross border transactions in goods and services.

Increase in the use of new technology in small-scale manufacturing to increase the level of production.

The global common market has a freedom to trade of goods and capital

The emergence of a new market where the products were market at an international level for all type of consumers.

Widely access to a large variety of goods for consumers and companies.

Free movement of people of different nation's leads to community benefits.

Global environmental and other trade problems are solved by discussions.

development of containerization of ocean shipping reduce the transportation cost

Reduction in trade barrier

Increases in international travel and tourism

Increase in the ambition to use overseas ideas and products, accept new practices and technologies and become a part of world culture.

Subsidies for local businesses decrease

Local consumer products are exported to other countries

Capital controls reduce or conquer

Enhancement in worldwide modern traditions/cultures.



Developing countries are those which have a lower per capita income, unemployment, lack of goods and services. People have a lower standard of living, high infant mortality rate.

Characteristics of Developing Economy:

The common characteristics of developing countries:

Lower living standards

Insufficient housing

Low education standard

Increase in death rate

Limited life and work expectancy

High and rising levels of unemployment and under employment.

Lack of technology

Low standard of education


Advantages of globalization in the developing world:

Globalization increases the economic prosperity and opportunity in the developing world. The countrywide freedom is enhanced and increases the resources of the developing countries and there is a more efficient use of resources. All the countries involved in the free trade are at a profit. As a result, there are lower prices, more employment and a better standard of life in these developing nations. It is feared that some developing areas progress at the costs of other developed areas. However, such worries are unsuccessful as globalization is a positive-sum chance in which the skills and technologies enable to increase the living standards throughout the world. Liberals look at globalization as an efficient tool to eliminate poverty and allow the poor people to hold a strong grip in the global economy.

The Impact of Globalization on the Pakistan Economy

Globalization is not new. Pakistan has been involved in trade, investment, financial flows, technology transfers and the movement of labor since its foundation. There are a number of factors that have aided this transformation.

The expansion of new markets:

Foreign exchange and capital markets are linked internationally. They control 24 hours a day with contact any where in the world possible in all time. Financial deregulation increases the impact of globalization on the economy.

New technology and the tools of globalization:

The internet, email, mobile phones, media and communication networks have all sped up the process of globalization. They have increased the broaden of communication and and speed knowledge transfer.

New institutional players :

The World Trade Organization (WTO) has emergent right over national governments, as does the IMF with its restrictions and controls it can force on nations requiring support. Multinational corporations have more economic power than many other nations. Include funds and financial dealers are able to control financial flows and consequently exchange rates, leaving nations helpless in their wake.

New rules and restrictions:

Mutual agreements on trade, services and intellectual property rights, supported by strong enforcement instrument, decrease the possibility for national governments to extend their own economic policies.

Pakistan Economy

Pakistan is a South Asian country that was established in 1947.  Pakistan is a developing country; its total population is approximately 180 million. Its neighboring regions include India, Iran, Tajikistan, Afghanistan, and China. Its GDP is $164 billion and contributing in agriculture, industry and services respectively 19.6%, 26.82% and 53.7%. Per capita income and HDI is approximately $1022 and 0.52. Population of Pakistan is in the 6th number and has biggest and strongest army in the world. Pakistan economy is based on agriculture sector. In last two decades Pakistan service industry has grown up rapidly. More than 50% population of Pakistan is linked with the rural sector. So that's why mostly area is neglected and misused. Total acquired area of Pakistan is 803,940 km2, but mostly area is neglected and underdeveloped. External debts are around $50.1 billion. Pakistan has an outstanding potential for growth and its current growth rate is 2%. Pakistan has marvels treasures of natural resources, fruitful lands, some of largest natural resources mines, highest mountain ranges, 1050 mile coastline, vast deserts and the best productive lands. Pakistan is one of the most blessed countries on the earth. But Pakistan political and economic conditions are not good.

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Pakistan economic development

last few years there has been a con rate of Pakistan economic development that has marked itself in its remarkable gross domestic product statistics. In financial year 2007 there was an increase of 52 percent in amount fixed in Pakistani budget for the development of national economy. This has been an important step in development of Pakistan economy is concerned as this move has required to address underdevelopment of national economy that has broaden at all levels especially in social sector. Economic development of Pakistan has always been among its major assets as far as attain identification from global financial circles is concerned. In decade of 60s Pakistan's economy had progressed at a straight rate and it was view as being excellent. Economic policies adopted by national government have helped economic development in Pakistan to a significant extent. In 1990s 2 % of gross domestic product of Pakistan had been assigned for economic progress and its double in 2003.

In 1999 PKR 80 billion had been set away for economic development of Pakistan and by 2007 this amount had gone up to PKR 520 billion. In fiscal year 2008 this amount was PKR 549.7 billion. Poverty in rural areas has been an important area of Pakistani economics. From 2005 to 2008 $16.7 trillion has been spent in order to deal with different issues related to poverty. This money has played a very important role in overall economic development in Pakistan. Poverty has been reduced to 24 % by 2006 from 35 % at 2000-01. As per Human Development Index of 2007 Pakistan has been accorded status of a "Medium Development Country".

Infrastructural development is an important area of Pakistan economic development. However, it has not been paid much attention by Pakistan national government. More years a number of international financial organizations have played a most important role in development of Pakistan's economy such as International Monetary Fund, Asian Development Bank and World Bank. From 2006 to 2009 Asian Development Bank would be providing almost $6 billion for Pakistan economic development. World Bank is supposed to provide a loan for infrastructural development worth $6.5 billion in the same period. Pakistan would also collect a yearly financial help from Japan worth $500 million.



GDP is the sum of market value of all final goods and services produced in a country within a given year, equivalent to total consumer, investment and government spending, plus the value of export, minus the value of imports. GDP includes only goods and services produced within the geographical boundaries of the U.S, in spite of the producer's nationality.


FDI Direct investments in productive assets by a company incorporated in a foreign country, as opposed to investments in shares of local companies by foreign entities. An important feature of an increasingly globalized economic system.



A country's exports minus its imports; it is the largest component of a country's balance of payments.