7.3.2. Effects of Globalisation

Globalisation has several advantages on economic, technological and other fronts:

a) Globalisation has led to increase in free flow of goods between countries. As a result, world trade has increased in recent years.

b) Globalisation has increased international flow of capital. Investment opportunities for the developed countries have increased. MNCs from the developed countries have started undertaking investment in the developing countries. This has led to the emergence of worldwide financial market.

c) The interdependence between different nation states has increased. Globalisation has increased interdependence between different countries of the world. This is reflected in the interdependence with regard to trading in goods and services and in the movement of capital.

d) Globalisation has brought in new opportunities for the developing countries. They have now got greater access to the advanced technologies. The technology transfer from the developed countries has led to increased productivity and higher living standard in the developing countries.

e) There has emerged worldwide product market. This has increased the range of goods available to producers and consumers.

f) The communication between people of different countries has increased as a result of revolution in the global mass media. This has made the world appear smaller. Information flow between different countries has increased.

g) Globalisation has increased economic prosperity and opportunity in the developing world.

h) Globalisation has brought people of different cultures together. It has reduced the cultural barriers. Increase in the crosscultural contacts has made the dream of global village more realistic.

However, the developments due to globalisation have by no means been an unmixed blessing:

a) One of the consequences of globalisation has been that all countries of the world have become vulnerable to the developments outside their own borders. Thus, the decade of 1990s was marked by a large number of currency crises, and large fluctuations in exchange rates and stock prices. Likewise, the recessionary conditions due to the 2008 financial crisis in USA were transmitted to the rest of the World. The same threat was faced in 2012 because of the Euro crisis.

b) Globalisation has also thrown up new challenges like growing inequality across the nations, volatility in financial market, and environmental degradation.