It is evident that the world is becoming more and more global each
and everyday. Rapid developments in communication are making the
world that we live today global. In part, globalization, such as the
use of Internet, makes our life better. On the other hand,
globalization also introduces us to new issues, such as moral
problems arise from misuse of Internet.
Whether globalization poses benefits or problems, countries in the
world are moving themselves toward globalization. In term of policy
making, the Governments of the countries are adjusting themselves
toward functioning effectively in a global environment, where nations
that involves in any trade must agree to a uniform system of working.
Thus in order to attract investors and fund managers, the governments
of the nations would need to revise and implement fair policies that
will work for the better of both - the investors and the nations.
For businesses, globalization makes companies work with the same
goals in mind such as pleasing the consumers as well as doing their
job as a manufacturer of goods and services. In globalization age,
mergers are unavoidable for companies to compete globally for they
make the companies run efficiently and producing better products for
customers. Mergers are also used as tools to be competent and
capable of standing a challenge from other internationally giant
companies. In one aspect, globalization along with the explosion of
technology increases consumer power and customers' choices. In the
other, mergers can result in downsizing, job losses, and lowering in
payments.
As an economic phenomenon, globalization is manifested in a shift
from a world of distinct national economies to a global economy in
which production is internationalized and financial capital flows
freely and instantly between countries. The globalization of
economics is related to the increase in the trade of goods and
services worldwide. Increase in trades lead to increased investment
and competition which causes worldwide competition to increase the
supply and demand for market to thrive. With the increase in trade
and investment, the standard of living is bound to increase. The
increase of globalization allows people from various nations to
experience the best of both worlds. They not only reap the benefits
that they will receive from their country participating in world
trade, but they will also be able to buy goods and services offered
from other countries, worldwide. The globalization of business
allows the business world to share information and gain knowledge,
especially technological knowledge from one another.
While there are individuals who have amassed great wealth from the
globalization of the world economy, the majorities have seen little
benefit. Internationally, while some newly industrialized countries
have increased export earnings as a result of liberalized global
trade, poorer nations have been completely excluded from the feast.
This is quite true with the fact that 85% of the world output is
controlled by 32 countries in the world - 7 nations which are members
of G-7 and 25 others are from emerging markets. Universally,
globalization has placed great pressure on working people, as
national governments force down labor standards in an attempt to
attract foreign investment with the promise of low costs. It is now
universally acknowledged - especially after the East Asian crisis of
1997-98 - that globalization has both winners and losers, and that
the losers will be the poor.
While the world is going toward globalization, there will be problems
that will arise down the roads. One of the problems is that the
globalization has not in fact described "free trade" and "open
competition". Growing international trade has allowed global
monopolies to take root or has been manipulated so that it is really
only "managed trade". Since the efficiency and growing welfare are
tied to the benefits of competition, lack of true competition is a
critical flaw. Such problems can be noticed in Asia where crony
capitalism is commonly practiced. Crony capitalism is where the
business world and the politician have a suspiciously close
relationship. While this situation might help the economy in many
ways because business and politics often have the same goals and
agenda, this very system also often times causes conflict of
interests.
Another problem that will arise from globalization is where investors
become key players in a country rather than the head of the country.
This is quite true with the fact that some companies are more
productive and wealthier than countries. The companies, which are
also huge investors, will put pressure on the countries to regulate
the policies in meeting with their standard. More often than not,
the country, which yields to the pressure, becomes politically
unstable from policies that conflict with the national interests.
Financial instability will also be the problem arises from
globalization. Investors will try to make sure that the project they
invest in is risk free. Any small signs of instabilities along with
speculations will make investors pulling their money out of the
country they have invested in. For the countries that their economy
depend on portfolio money or short-term investments, the lack of
market confident phenomenon, most of the time, lead to economic
fluctuation and instability. The worst of all, for the countries
that have weak economic fundamentals along with corruption, economic
disaster such as excessive devaluation of the currencies and economic
depressions are the results.
To prevent such things, policies that encourage long-term capital (as
with most foreign direct investment) and discourage short-term
capital movement across borders that are more conducive to economic
growth, development, and stability are needed. Financial-sector
supervisors should more closely monitor the financial exposure of
their banks and fund managers in developing countries. They should
also offer more assistance and cooperation with their
developing-country counterparts, as they do already to combat money
laundering. Institutions such as IMF, World Bank, WTO and BIS should
play important role in making sure that globalization benefits all.
In conclusion, globalization brings challenges to the world. The way
the country responds to the challenges will determine whether the
challenges will become threats or opportunities. Good and efficient
management will bring the country prosperity. On the other hand, bad
and lack of transparency in management and policies will do harm and
bring instability to the country.
Reference:
1. Thomas L. Friedman, 1999, The Lexus and the Olive Tree, New York.
2. http://www.worldbank.org/
3. http://www.imf.org/
Johari Alwi,
Marang Trg.
