Today it is difficult to find a more popular and debatable topic than globalization. It was devoted by dozens of conferences and symposia, and hundreds of books, thousands of articles. The scientists, politicians, businessmen, religious leaders, artists, and journalists talk and argue about it.
Globalization is “not an absolute evil and absolute good”. Speaking about the basics of this phenomenon, it’s clearly seen that certain features of contemporary globalization are viewed for a long time. The base of this process goes in an era when the establishment of colonial empires made the first foundations of international economic relations in our millennium. However, modern international economic relations that create globalization today, in principle, are different from those that were formed in the beginning of the Age of Discovery and the formation of colonial empires.
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Foundations of modern systems are built on commodity and economic relations between developed and developing countries. These relationships represent the ultimate exchange of highly complex products and advanced technologies. This is so due to historically different sectorial specialization of certain developed countries and regions. For example, U.S. has interests in products of Japanese electronics industry, while energy equipment manufactured in the USA is interests of Japan. In fact, these chains are more branched and complex.
A pioneer in the studying of economic globalization and the “creator” of the term “globalization” was an American scientist Theodore Levitt after the publication in 1983 of his book “Globalization of Markets.” After that in scientific and journalistic literature the term “globalization” has been massive, chaotic and often ugly modified. That’s why, in my work I want to devote to the problems of globalization in the modern world. One of the primary tasks for me is the discussion of positive and negative effects of globalization on the Russian market and the global business environment in general.
Positive impacts of globalization upon worldwide business environment
No matter how controversial phenomenon is globalization, it doesn’t leave indifferent a lot of people all over the world. In my opinion, it means that it has both positive and negative sides. I’m convinced that positive features outweigh the negative. Positive impact of globalization cannot be overestimated. In total, globalization of the economy poses a serious basis for the solution of universal problems of mankind.
Furthermore, it contributes to international competition. Sometimes argued that globalization will lead to the perfect competition. Nowadays it leads to new competitive areas and tougher competition in traditional markets. Globalization processes in the global economy are beneficial, especially to consumers, because competition gives them more choices and lower prices.
By increasing of competition, globalization stimulates further development of new technologies and their distribution among countries. The benefits of globalization are determined by the economic benefits that can be obtained from the use of advanced scientific, technological and skill level of the leading in their respective areas of foreign countries in other countries. In these cases, the introductions of new solutions occur in the shorter time and at a lower cost.
One of such solutions is deepening of specialization and the international division of labor. In these conditions funds and resources are allocated more effectively. Globalization leads to increase of productivity as a result of rationalization of production at the global level and dissemination of advanced technologies that are owned by individual countries. In theory, these will make the average level of life higher and enhance the life prospects of the population.
Threats that are caused by globalization
As I’ve mentioned above, Globalization is rather contradictory process. On the one hand, its essential features, which were discussed above, in general, improve efficiency of the world economy. On the other hand, as it will be written below, some of its features are often negatively affects the population worldwide and some countries in common.
The first threat in the context of globalization is the thing that its benefits are distributed unevenly. Nowadays, industries that are related with export are experienced with a large influx of capital and skilled labor. At the same time a number of branches significantly lose from globalization processes, losing its competitive advantage because of increased market openness. These industries are forced to make additional efforts to adapt to the changing conditions.
It should be accepted, that that such changes have a serious threat to the settled economic structure, and the government should take the heavy burden of social costs that are related to compensation, retraining, unemployment compensation, providing support to needy families.
The second problem is that the enormous scale and speed of international financial market does pose a serious threat to the world economy. Huge masses move freely through the world of speculative capital. It can easily bring down the financial system of almost every state. Recent history has the examples of that: the collapse of the national currency of Great Britain caused by speculative operations of the George Soros Foundation, and the last Asian crisis.
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The third drawback of globalization is the point, that it has significantly weakened the traditional national system of state regulation of the economy, while at the same time the creation of international and especially supranational mechanisms of regulation didn’t happen. The exception of this rule is the only EU. At the same time as a result of poorly conducted in the 2004-2007 expansion of the EU-15 to EU-27, which was put on a long-term depression phenomenon in the economy of the EU-15, the European Union itself was in a state of severe crisis of adaptation.
The last, but not the least problem is that the current liberal model of globalization, advocated and implemented mainly by the countries of the “golden billion”, which are led by the United States, aimed at extracting of the greatest benefits from the accelerated development of the global economy for highly developed countries without sufficient regard for the interests of other countries. That is why in recent years in many countries, especially in Russia, the movement of “anti-globalization” is widespread.
Globalization in Russia
In my opinion, in the XXI century, the success of economic development and the ability to overcome social problems largely depends on ability of society for adapting to new global realities. It set a difficult task for all states. They either will be able to “fit in globalization” or they intent to be behind the leading countries of the world.
Thus, the main challenge of globalization for Russia is it ability for organic connection to the most important trends in world development. In technological and economical way, Russia, probably, has a chance to overcome or at least mitigate the growing lag behind the developed democracies, which now use beneficial effects of globalization. Despite the structural distortions of the Soviet economy and the acute crisis of transition, Russia has maintained a good level of scientific and technological development, relatively skilled labor force, and most importantly, the intellectual potential. In other words, Russia has the preconditions for inclusion in globalization. There are several main problems. Will Russian elite overcome cultural traditionalism? Will the country be fully open in the near future? Will it absorb new ideas and values? Will it renounce from the ambitions of great power and suspicion of developed democracies? I don’t have optimistic answers to these questionsâ€¦
I would like to draw attention to the problem of formation of Russian transnational corporations. Since the main subject of globalization is leading MNCs, Russia should have several dozen world-class multinationals Russian companies, in order to participate equally in globalization processes. Firstly, it should be companies, in which Russians take control over the capital. Secondly, they should have branches in all major regions of the world, which are conducting a global strategy, manufacturing, marketing and sale of goods. Thirdly, they should be oriented to Russian national interests, which would lead to complete satisfaction of their own mercantile interests.
Nowadays in Russia are not so many companies that meet even the most common criteria for the definition of the MNC. There are not so many truly international Russian MNKs, like “Gazprom”, “Lukoil”, “Rusal”. But even largest Russian multinational companies in the list of 500 biggest corporations are far away from the top 10. Also it’s very important to achieve creation of Russian MNCs in sectors that are not connected with natural resources.
For successful adaptation of the Russian Federation to the processes of globalization, the leading Russian banks must join the club of world-class transnational banks. However, the position of Russia in the global banking sector is even weaker than in industrial MNCs.
Ultimately, Russia’s balance of benefits, difficulties and losses from globalization can be estimated as zero or negative. My country has to take great efforts to make globalization its ally.
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