Globalization and Greece essay
Introduction
Speaking about the globalization people usually means the increase of interdependence and connectivity of global trade because of growing independence. This paradox was described by Carbaugh (2005) as the increase of integration between resource and product markets via foreign investment, trade and immigration, environmental and cultural integration. Moving through natural and man-made barriers led international economical, cultural and technological exchange. The obvious result of this process is the interrelation between different countries: economic change in one part of the world influences on what happens in other parts of the world.
Really, the newest technologies, the development on transportation infrastructure all over the world, and the knowledge exchange stimulated the activation of global trade and the development of global market. However, this process has the serious negative consequence including the negative impact on exporters and importers. The objectives of this paper are the following: to define the term “globalization”, to provide the brief review of its development, to analyze the positive and negative impact on exporters and importers, and to review the impact of globalization on the economy of Greece.
Globalization: brief review
Among the various existing definitions of globalization the definition from glossary on Investorworld.com was chosen to be the starting point of discussion. The glossary defined it as the “the process of increasing the connectivity and interdependence of the world’s markets and businesses.”(Investoworld.com, 2010). A brief history of globalization by MacGillivray cites the Paul Krugman’s definition of globalization: that is “a catchall phrase for growing world trade, the growing linkages between financial markets in different countries, and the many other ways in which the world is becoming a smaller place” (MacGillivray, 2006, p. 5)
People, companies and governments are involved in the ongoing process influencing the political systems, economics, cultures, environment and other aspect of human activity.
This research is focused on the global trade problems. The main components of every trade deal are the negotiations and the delivery. The development of transportation infrastructure made possible the easy delivery of the merchandised goods to almost every place on the Earth. The development of modern communication technologies, headed by Internet communication, made easy the negotiations. It led to the dramatic reduction of trade barriers. The governments of many countries developed a set of international agreements regarding the investments, trade in goods in service. The powerful companies developed to multinational corporations, which expanded their influence in the foreign markets, built foreign factories, and reached the marketing and production agreements with foreign partner.
Four aspects of globalization are related to the movement: the movement on people, capital, goods, and information. However, two factors seem to be more important than other: capital movement and foreign trade. All the mentioned factors existed from the ancient times, and some researchers claim the globalization started in the 16th century. However, only at the end of 20th century the technological and social development allowed the huge growth of net private capital flows and the direct investments. The growth of direct foreign investments is the most important category of capital growth. At the same time the volume of foreign trade grew more than twice, though the data for various countries differs significantly. The migration of working force is mostly the consequence of economic development caused with two previous factors, as well as spread of knowledge and technologies. Nevertheless, no one of the four factors can be excluded or undervalued
The development of technology as the driver of globalization was mentioned above. New technologies, including information technology, have dramatically transformed economic life. New information technologies created the unique, powerful and valuable new tool for all economic actors. Corporations, businesses, investors and consumers obtained a number of the advanced economic opportunities, such as the search of new partners, fast and easy analysis of global economic trends, and easy assets transfer. To increase the production and trade potential of the country many governments after the World War II adopted free-market economic systems. The free-market system means the absence of governmental market regulation and allows the trade and investment across find and use new opportunities in the country. As the result, within the recent twenty years the network of multinational corporations linked the countries of the world in the entire global market. However, it would be mistake to think that globalization started after the World War II and finished nowadays. First, globalization is the ongoing process, it is still not finished. Second, the history of globalization goes back to the middle ages.
History of Globalization
Despite the term “globalization” became popular not so long ago, the concept of globalization isn’t recent. For centuries governments, corporations and individuals invested in enterprises in other countries and travelled great distances to buy and sell goods to each other.
The first remarkable event in history of globalization is the return of Marco Polo from long sojourn in China. He exploited the interest to the trade between Europe and the East.The names of great travellers of Middle Ages – Portuguese Vasko da Gama, Italian Amerigo Vespucci – are the landmarks in history of globalization as well. At last, everybody knows that Christopher Columbus started his journey to the West seeking the new trade ways to India and China.
The World War I became the dividing line between the progressive an exponential period of globalization development. The unparalleled amount of immigration and trade became slightly slower in the time of the Great Depression, when the ties between nations were severed. On the other hand, the economic crisis known as the Great depression gave the start to the new round of globalization. The writer Alex MacGillivray distinguishes two dividing lines the development of globalization in the 20th century on two periods:
- The Sputnik World (1955-65). After two Great Wars the world was divided on two main parts, and there two parts started the space race. The space race had two main consequences. First, the competition on the bipolar world fastened the technological development in both opposing parts. The development of radio and television, which can be considered as the tools of globalization also, happened in this period. Second, the interaction of different states and cultures within every camp led to many global exchanges. The active migration and rapid trade growth are the main characteristics of this period.
- Global supply chain (1995-2005). It is also known as “thermo-globalization” period. It is the hottest decade since record began, because industrial activity of humankind leads to the temperature growth. Due to technologic development the world is interconnected like never before. Modern transportation and communication services, including mobile phones and the Internet, turned the world to the one great market. Despite the close tight between different countries, “half of all international trade tales place within the same region or continent” (MacGillivray, 2006, p. 123). The chains of global supply are spread all over the world but the central points of these chains are still located in the industrialized or rich countries. As the world starts to globalize the issue of corporations as the central actors becomes the subject of public debates. On the one hand, many researches consider sovereign states as the main players in the world of “post-Westphalian transition” (Kobrin, 2008). Among other arguments they provide thesis of the property rights regulations as the necessity for international market. On the other hand, their opponents tell that even nowadays, when the process of globalization is just on the halfway, “51 of the 100 largest economies in the world are corporations, and only 49 are countries” (ISP report, 2001). Multi-national corporations integrate markets, production and distribution over the world and the globalization is overly corporate-led trend.
During the second stage of globalization, new inventions and improvements in the production process greatly increased efficiency. Currently, improved political strategies, along with advances in technology, have prompted such a swell in international investment and trade that many experts claims the world is on the threshold of a new stage of economic development. Thus, within the last three decades the volume of trade on a global scale has increased itself twenty times, and the flow of foreign dollars has almost doubled and still counting. The trend doesn’t reach its peak yet, though the economic crisis of 2008 was partly caused with the exponential development of global trade.
Positive and Negative Effects on import and export trade
It is obvious that globalization provides many benefits to the importers and exporters of goods and services. Among the main benefits are the access to a worldwide market, the free exchange of goods and capital, and the increase in information flow between geographically remote locations, which was made possible by the modern technology. The new method of work known as outsourcing is worth more detailed description. The idea is simple: using internet technologies many companies have the possibility to hide the remote worker without including him or her to the company staff. Especially outsourcing is popular in software development, customer support, marketing, and accounting jobs. In such way the developing countries get access to the newest technologies; the workers get employment, the general level of employment in the country increases and influences on country’s economy in positive manner. On the other hand, the employee company enjoys the lower costs due to the lower wages in developing countries.
There are also some negative effects for importers and exporters, such as cross-cultural conflicts, especially between the countries with different social systems. Conflicts between representatives of different cultures can lead to growth of tension and the failure of the idea of global village. Among other negative consequences is the risk of overtaken of local industries by foreign multinational conglomerates, employment instability, air and water pollution in countries with insufficient environmental regulation, exploitation of child and prisoner labor to produce cheap goods, job insecurity, lower standards of living comparatively to developed countries, obesity due to fast food spread, and so on. However, it can be conclude that globalization involves every country of the world to the global trade, and the country should accelerate its competitive productions to stay competitive on global market.
