The Impact of Globalization on Local Economies: A Closer Look

The Effects of Globalisation on Local Economies

Statistics show a noticeable spike in the globalization phenomenon in recent years. Much of it was due to quick augmentations in transport and communication technologies.

Furthermore, Statistics reveal –

There has been an astonishing growth in trade among nations over the last century. International trade has significantly spiked 40 times more than in the last couple of centuries (from 1913).

Due to this, local and world economies have benefitted immensely and shown positive growth trends. The global export resulted in a little close to 10% of worldwide output. Now, exported goods value is near 25% and shows potential to increase in the future.

These data reveal a positive picture. Over the last couple of centuries, economies have grown and prospered. And currently, worldwide trade has more comparative growth than in 1870.

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Globalization's Impact on Local and Global Economies

Per the above data, International trade has been the catalyst for increased economic growth. Moreover, with fewer trading barriers and the emergence of new-gen tech allowing speedy transfer of goods, capital, and services across different borders, globalization is proving to be a blessing for most governments and businesses.

Many other driving factors also play a role in bringing out Globalization's positive outcomes on economies.

Those other variables include as follows –

The emergence of more multinational business establishments
Rise in worldwide financial markets
Rapid spreading and exchanging of social and cultural norms

Let's look at the positive outcomes of globalization on economic growth and development

Sharp Rise in Trading and Investment Prospects

The first significant impact of Globalization is increased opportunities to engage in trading and invest in foreign nations. Naturally, this led to a spike in economic activities (demand and supply) and positive economic growth and development.

Accessibility to Newer Markets and Their Customer Base

The impact of globalization has permitted various businesses to access new markets and customers and expand. These businesses strive to boost their overall sales output and profit yields and even amp up their customer base.

Increased Productivity and Innovation

Globalization has also triggered augmented productivity through innovation and increased competition between world businesses and governments. And in doing so, it is paving the way toward a better and more lucrative future economy.

Spreading of Fresh Know-Hows and Technologies

Globalization has also enabled the spread of knowledge on fresh technologies beyond borders, thus allowing other nations to learn from one another and implement optimal practices for the greater good.

Rise in Market Demand and Healthy Competition

Globalization's impact on various economies and consumer markets has increased market demand and healthy competition among competitors. Such competition has resulted in high-quality consumable products and value-added services at affordable prices.

Scope for Exponential Economic Growth

Globalization has unlocked the latent potential for exponential economic growth, expansion, versatility, and lucrativeness.

Through increasing connectedness and interdependence between countries, businesses, and individuals globally, economies can garner the attention of several foreign investors, thus reaping the benefits of substantial trading opportunities.

More Noteworthy Positive Outcomes

Globalization's impact on local economies has led to a rise in employment, lower prices for buyers, and the absence of any economic disruption.
It has improved capital mobility, thus enabling multinational corporations to relocate their business operations to nations having low worker costs and advantageous tax policies.
Globalization has also resulted in worldwide supply chain development, thus allowing businesses of all scales to trade and procure raw materials and other necessary prerequisites from various parts of the globe.
Globalization also resulted in rising competition among the labour class. Since several companies are looking to hire workers with a particular set of skills, it leads to increased employment rates.

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The Negative Impacts of Globalisation on Economies

Besides the various positives, Globalization has also had some degree of negative impact on economies.

Globalization has caused many industries to relocate to other nations offering lower labour costs. This caused a sharp decline in some regions and a loss of jobs for several regional workers.
Globalization has also widened inequality among some nations. Despite bringing substantial economic growth to some nations, those nations unable to compete with major players in the worldwide market are left behind. The rising inequalities between some nations as richer counties benefit more than poorer nations.
Globalization has led to worldwide supply chain development, allowing businesses to procure raw materials from other nations. Although this resulted in better efficiency and savings, it also posed risks of disrupting supply chains. A case in point was the recent COVID-19 pandemic that caused factories and transportation to shut down, thus resulting in world supply chain disruption.
Globalization has also contributed to the spread of more Western cultures and the loss of conventional cultures. Moreover, it has also caused degradation of the national environment from increased pollution, climatic change, and deforestation.
Above all, Globalization has led to more dependency on foreign markets and their investment prospects, thus leaving nations at the mercy of economic downturns and market shocks.

Strategies That Governments Can Adopt to Remove Existing Negative Impacts

Governments can adopt the following strategies to seize the prospects of Economic Globalization.

They are as follows –

Proper investment in workforce training and education to augment their skills and competence.
Governments can aim to diversify economies and several industries to lessen dependence on a specific market or industry and safeguard against unforeseen downturns and shocks.
Governments can also invest in infrastructure to smoothen trading and attract foreign investment opportunities. Doing so will improve the competitiveness and efficacy of regional businesses, improve trade flow and lead to more employment prospects.
Moreover, governments can support SMEs (Small to Medium Enterprises) to compete with larger businesses in the world's lucrative markets.
Finally, governments can join forces and sync up with other nations and their industries to share expertise and know-how and improve competitiveness and accessibility to unexplored markets and result in fresh business prospects.

To Surmise

Globalization's impact on economies has proven to be a double-edged sword. However, the government is taking meaningful measures to balance opportunities and hurdles for all-around positive economic development and expansion.

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