Saturday, 1 November 2014

Globalisation: The global marketplace

Globalisation:
'The process that facilitates unrestricted global trade and investment flows.'
Globalisation gets a hard time in the press, but globalisation has done some of the most amazing things to our world.
Globalisation has facilitated the eradication of more poverty than any other process in the history of man kind. That's right, globalisation saves lives and lots at that.
The beauty of globalisation is that it allows poor countries to compete on a level playing field with the rest of the world. Here they can take advantage of their lower valued currency and price of living. Allowing them to create a product for less than the competition. This has been true for Africa, who have seen 6%+ growth for the five years before the financial crisis.
The poverty that foreign direct investment and world trade has eradicated is multiples of what charities have ever, and will ever be able to do.
Some of the other things that globalisation facilitates is choice. If we are able to trade with other countries, we able to have such a vast array of products and services available at out fingertips.
But not only that - globalisation allows our products to be of much higher quality, by allowing the pooling or research andspecialisation of different conpenents of the supply chain. For example Apple had 200 different countries in its supply chain from across the globe that helps with the manufacturing and design of one Apple iPhone.
The main aspects of globalisations high impact the on the world derives from the economics involved.
Comparative advantage/specialisation:
Before globalisation, countries had to produce and design all of its own products. This is virtually impossible in today's world. There is no way an independent country could produce all the products we have today, this is because of skill sets, experiance, climate, population etc... For example the UK could never consume half as many bannanas as it can today if we had to produce them ourselves.
For example say we have two countries that both produce two different products. One country could be much more efficient in the production of one product and the other country more efficient in the other product.
The only reasonable thing to do would be to specialise in what you are good at and then trade with each other. This drastically increases the output, consumption and the standard of living of each country.
We do this today in our jobs in business', when do you ever see an employee that can do every process of the firm. This firm would be inefficient, be able to produce less and thus charge a higher price and will fail because of the lack of competition.
This is globalisation, and the end outcome is higher world output consumption and standard of living

No comments:

Post a Comment