At the outset, one must say that globalisation is a controversial issue because it impinges both gains and pains. We will first put forward the arguments favouring globalisation.
i. Globalisation is expected to promote efficiency, productivity and, hence, higher economic growth rate. In a controlled and regulated economy, there is no inducement to the industries to become efficient and self-reliant as these are protected from foreign competition through import restrictions and from domestic competition through industrial licensing. Globalisation has one pillar of liberalisation. Liberalisation and the market principles improve the allocative efficiency of resources. This will increase export earnings, allow the inflow of foreign capital and technology. Industries and farm sector, banking and financial sectors are then exposed to international competition. Competition enhances efficiency, productivity and ultimately a better economic growth rate is likely to be achieved.
ii. As far as consumers are concerned, quality goods at the right price will be delivered. This helps to bring down prices. Quality improvement and price reduction will then be enjoyed.
iii. Foreign capital is attracted. It augurs the advent of multinational enterprises (MNEs) who bring modern up-to-date technology in less developed countries. Not only MNCs bring with them modern technology but also it brings investment funds, organisational structure, managerial culture, distribution network, etc. All these create income and employment in the country.
Arguments Against Globalisation:
i. It is feared that globalisation will promote fierce and unhealthy competition. Instead of competition and cooperation, one may argue that MNCs will swallow the domestic producers of poor backward countries overtime. Ultimately, this will cause concentration of economic and political power into the hands of the foreign business enterprises.
ii. Merely opening up the domestic economy without reaching out to foreign markets or helping industries to meet the global challenges has limited the benefits of globalisation without reducing its costs.
Yogita Ingle 4 years, 5 months ago
At the outset, one must say that globalisation is a controversial issue because it impinges both gains and pains. We will first put forward the arguments favouring globalisation.
i. Globalisation is expected to promote efficiency, productivity and, hence, higher economic growth rate. In a controlled and regulated economy, there is no inducement to the industries to become efficient and self-reliant as these are protected from foreign competition through import restrictions and from domestic competition through industrial licensing. Globalisation has one pillar of liberalisation. Liberalisation and the market principles improve the allocative efficiency of resources. This will increase export earnings, allow the inflow of foreign capital and technology. Industries and farm sector, banking and financial sectors are then exposed to international competition. Competition enhances efficiency, productivity and ultimately a better economic growth rate is likely to be achieved.
ii. As far as consumers are concerned, quality goods at the right price will be delivered. This helps to bring down prices. Quality improvement and price reduction will then be enjoyed.
iii. Foreign capital is attracted. It augurs the advent of multinational enterprises (MNEs) who bring modern up-to-date technology in less developed countries. Not only MNCs bring with them modern technology but also it brings investment funds, organisational structure, managerial culture, distribution network, etc. All these create income and employment in the country.
Arguments Against Globalisation:
i. It is feared that globalisation will promote fierce and unhealthy competition. Instead of competition and cooperation, one may argue that MNCs will swallow the domestic producers of poor backward countries overtime. Ultimately, this will cause concentration of economic and political power into the hands of the foreign business enterprises.
ii. Merely opening up the domestic economy without reaching out to foreign markets or helping industries to meet the global challenges has limited the benefits of globalisation without reducing its costs.
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