Role of Globalization in Modern Economy Essay

5315 Words May 9th, 2014 22 Pages
THE ROLE OF GLOBALIZATION IN THE MODERN ECONOMY
GLOBALIZATION DEFINED
Over the past several decades, the economies of the world have become increasingly linked, through expanded international trade in services as well as primary and manufactured goods, through portfolio investments such as international loans and purchases of stock, and through direct foreign investment, especially on the part of large multinational corporations. At the same time, foreign aid has increased much less in real terms and has become dwarfed by the now much larger flows of both private capital, and remittances. These linkages have had a marked effect on the developing world. But developing countries are importing and exporting more from each other, as well as
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But globalization can in many ways have a greater impact in developing countries.
For some people, the term globalization suggests exciting business opportunities, efficiency gains from trade, more rapid growth of knowledge and innovation, and the transfer of such knowledge to developing countries facilitating faster growth, or the prospect of a world too interdependent to engage in war. In part, globalization may well turn out to be all of these things.
For other people, however, globalization raises troubling concerns: that inequalities may be accentuated both across and within countries, that environmental degradation may be accelerated, that the international dominance of the richest countries may be expanded and locked in, and that some peoples and regions may be left further behind. Nobel laureate Muhammad Yunus captured some of these sentiments when he wrote in 2008, “Global trade is like a hundred-lane highway crisscrossing the world. If it is a free-for-all highway, with no stop lights, speed limits, size restrictions, or even lane markers; its surface will be taken over by the giant trucks from the world’s most powerful economies.” Appropriate policies and agreements are needed to forestall such potential problems.
Thus globalization carries benefits and opportunities as well as costs and risks. This is true for all peoples in all countries but especially for poor families in low-income countries, for whom

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