Globalization

CAUSES AND EFFECTS OF GLOBALIZATION-

Major factors for the spread of globalization:

The Democratization of Technology

Innovations in miniaturization have made computers, pagers and cell phones easy to carry and affordable. The costs of travel, transport, and the costs of conversing information have dropped dramatically in the postwar period because of the growth of technology. A 3-minute phone call from the United States to Britain cost $12 in 1946, and today it can cost 48 cents. Telegrams presented the only rapid means of written communication.

The Democratization of Finance

After the cold war most global lending was done by insurance companies and commercial banks. Now companies present bonds directly to the consumer which could be me and you advancing through our 401(k) plans. Now companies and countries are trading with people whom they don't know positioned in diverse countries. If a company or country did not carry out, the bond holders would sell or trade off their shares and invest money in companies and countries that performed. Standard theory would guide one to suppose that all countries will profit, as the allocation of income between countries is concerned. Economists have long addressed that trade is commonly advantageous, and many of us trust that the experience of extensive growth alongside rapidly developing trade in the postwar period achieves to validate that. Likewise, most FDI goes where a worldwide has academic assets that can supply something to the local economy, and is as a result likely to be mutually favorable to shareholder and receiver.

The Democratization of Information

In the post cold war era, mainly Governments had control of the information that was dispersed to the community. With the unveiling of many communication satellites, the amount of information means available amplified radically and is obtainable to anyone with a cable subscription or a dish antenna. With the arrival of Internet, information is open anytime on-demand. The increase of customer awareness about what is accessible that comes from advertising and travel, is encouraged by the communications transformation.

Consequences of Globalization

Globalization most certainly allows a rise in the level of global production. Global money flows can transport savings from countries where the marginal product of assets is minimal to those where it is optimal, which again rises global productivity.

The outcomes on domestic income sharing