Globalization And Business Economics Essay


Discuss about the Globalization and Business Economics.



In the recent world of increasing integration, globalization is one of the core concept lying at the heart of the international connectedness of economies. The concept of globalization refers to growing interaction between nations through the link of share and exchange of money, goods, services, ideas, culture internationally (Baylis, Owen & Smith, 2017). The basic intention behind globalization was to make nations more open for trade and allowing them to avail the goods and service of the world and gain economic benefits. However, the impact of globalization has shown to deviate from the expectations. The report sheds light on that deviation prominent based on type of economies in recent world summarizing in brief.

Why Globalisation:

Even though globalization can take form of political, cultural and economic aspects, the economic globalization has been important in a sense that it increased economic independence of the nations through extensive movement of goods and services, capital resources and technology cross-border. The implication of encouraging globalization lies in boosting the economic integration of the nations creating an expanded market place globally. The idea of globalization encouraged one nation to derive benefits from goods and services accessed from any nation around the globe. The difference in cost structure in productions allowed such transfers coming from the concept of comparative advantage. Greater the comparative advantage lesser is the opportunity cost of production and lower is the price. This enhances the demand worldwide. The reduction of trade barriers and ease of entering the market of developing countries by the developed nations through the channel of foreign direct investment are tow of major incentive behind global expansion.

Deviation Of Its Impact:

Globalization in its progression exerted both positive and negative impact on the nations capturing different outcome depending upon type of economy. Economies are three type developed, developing and transitional. Quite evidently the impact of globalization was felt differently in different regions that was prominent in unequal distribution of advantages obtained from globalization among nations (Kaplinsky, 2013).

Industrial revolution, industrialization and subsequent increase in economies of scale boosted the need of cross border market expansion. Developed nation having more access to technology can produce goods without making detrimental effects on the environment and also at lower cost. This makes their product cost efficient and attractive to world (Glatzer, 2012). Developing nations on the other hand pertain to produce more on the face of growing population, national and international demand for consumption. This leads to lower their environmental standard. Moreover the goods produced here are less efficient and more expensive to enter the developed market as they create high trade barriers in form of greater tariff rates, import taxes. These pose serious problem for the developing nations products to enter the international market and expand its market size. Moreover the developing nation receives lower wage rates and burdened with huge production exhausting both natural resources and oil consumption.

Developed nations too face some challenges besides the positive impact of the international expansion. The less wealthy nations among industrialized type are to receive lesser gain from globalization compared to more wealthy nations. The ease of free trade actually increases risk of failure for small organizations apart from providing lots of opportunities. Another biggest challenge that developed nation face is the transfer or outsourcing of jobs to less developed nations. The reason behind this is that free flow of trade leads to increase in production as well as labor cost stemming from that. For highly skilled workforce higher labor cost means higher wage rates that forces the firm to outsource and capital outflow to developing nations that has availability of cheap labor.

Reason Behind Difference In Impact:

The impact of globalization is not positive throughout meeting the expectations and it showed remarkable deviation from those making detrimental effects on economic as well as environmental standards of nations. There has been broadly two sets of separate impact for developing and developed nations (Ezcurra & Rodr?guez-Pose, 2013) The reason behind developing nations failing to gain from this process was its fragility of economy along with less to no existence of industrial production which lies at the heart of it. Moreover, cost pays another important role. Less access to technology or less innovation and more exhaustion of resources have led to higher cost of production. They have faced loss in terms of international trade facing protectionism from the high-income nations.


The comparative advantage and lower cost of transportation and production are the factors to drive nations interact and share with each other. The process was supposed to yield greater benefits for the nations both economically, politically and culturally. However quite remarkably trend and patterns shows skewed impact of the process based upon the condition of economies. Both developed and developing nations receive positive impacts as well as negative impacts but the extent and intensity differs making the impacts to spread unequally among nations. This leads to greater concern for the policymakers in order to let the process bring out more effective outcome.

Does Economic Globalization affect Regional Inequality? A Cross-country Analysis

The process of globalization is not always positive and beneficial for the economies as it adds to the economic disparities across regions thus consolidating relationship between globalization and inequality. The central idea of the paper is to find out the relationship that economic globalization and regional inequalities. The study covers the time period 1990-2007 and have its basis in measures of globalization referring different dimensions economic integration (Ezcurra & Rodr?guez-Pose, 2013). The result consolidates the fact showing positive relation that spatial impact of economic globalization has strong impact in less developed, lower income and middle-income countries. These regions captures higher regional disparity on an average compared to other high-income countries.

The overselling of globalization

Stiglitz, J. E. (2017). The overselling of globalization. Business Economics, 52(3), 129-137.

Politicians and policy makers throughout the world made an argument in favor of globalization and free trade to be beneficial for nations economically. The expectation in terms of job creation gains to growth of GDP have been overestimated (Stiglitz, 2017). The underlying cost of the process including adverse effect of distribution was undermined leading to overselling of the globalization that further created political challenges. There has been loss of confidence in the advocator of the process mostly the elite groups. This led to catastrophe in political and social situations that required comprehensive social protection. Set of policies have been outlined in the paper to put the economy back in track making it better.


Ezcurra, R., & Rodr?guez-Pose, A. (2013). Does economic globalization affect regional inequality? A cross-country analysis. World Development, 52, 92-103.

Barca, F., McCann, P., & Rodr?guez?Pose, A. (2012). The case for regional development intervention: place?based versus place?neutral approaches. Journal of regional science, 52(1), 134-152.

Baylis, J., Owens, P., & Smith, S. (Eds.). (2017). The globalization of world politics: An introduction to international relations. Oxford University Press.

Ezcurra, R., & Rodr?guez-Pose, A. (2013). Does economic globalization affect regional inequality? A cross-country analysis. World Development, 52, 92-103.

Glatzer, W. (2012). Cross-national comparisons of quality of life in developed nations, including the impact of globalization. In Handbook of social indicators and quality of life research (pp. 381-398). Springer Netherlands.

Hirst, P., Thompson, G., & Bromley, S. (2015). Globalization in question. John Wiley & Sons.

Kaplinsky, R. (2013). Globalization, poverty and inequality: Between a rock and a hard place. John Wiley & Sons.

McMichael, A. J. (2013). Globalization, climate change, and human health. New England Journal of Medicine, 368(14), 1335-1343.

Stiglitz, J. E. (2017). The overselling of globalization. Business Economics, 52(3), 129-137.

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