Forces Of Globalization

Prepare a short analysis of the impact of globalization on a country?

The interaction between different sectors of the world and establishing a relation of interdependence in respect of economies, cultures, societies is termed as Globalization. Globalization can be defined in a more sophisticated way as the extermination of the sate enforced constraint on cross border exchanges and developing integrated and complex system of production and exchanges across nations. With the advent of globalization trade barriers will reduce and this will increase economic transaction and business across borders. (Craig, 2004)  World Trade Organization (WTO), European Union, Asian Free Trade Area plays an important role in boosting global activities. (Boudreaux, 2008)

According to Ernst & Young’s Globalization Index 2012, Singapore is second, behind Hong Kong. (Parag Khanna, 2014)Analysis reveals that the different economic developmental strategies implemented by the government of Singapore have been impacted by globalization. The government of Singapore integrates the country by managing the large companies, by buying and selling dollars of Singapore on a worldwide basis to influence the exchange rate and by accomplishing the government’s objectives. The expenditure of the country by using its surplus funds is concentrated in the service castor and in the innovation of technology with a view to improve the stages of the nation’s economic development. (Preston, 2007)The concept and significance of globalization has been recognized across the world. (Haase, 2012)

Globalization is multifaceted. It impacts the every aspect of the country which includes economical, social and technological. (Economics Tuition Singapore, 2014) There are many forces of globalization that impact the country. Some of which are discussed below:

Globalization not only opened up areas of exchanging goods and services across countries, it also led to the transfer of technology for the betterment of the nation. This transfer of technology enhanced the productivity of the countries and brought about economic growth. (Schularick and Solomou, 2011) It is necessary for a government to select a demand driven technique. Singapore was able to achieve the actual economic growth by increasing the level of international trade. The government of Singapore has liberalized the finance sector and the telecommunication.

Economic integration through trade will increase the flow and operation of business. Globalization has also improved the financial scenario by integrating the financial markets. Singapore had attained an increase in the real Gross Domestic Product (GDP) by increasing the net-exports. The largest component of Singapore’s GDP is net exports. With globalization the rate of Foreign Direct Investment (FDI) has increased in the nations. Multi National Corporations enabled and increased the transfer of capital in physical and human form and technology which ultimately enhanced Singapore’s productive capacity. (Nederveen, Konings and Stoop, 2003)

Data Source: (Data.worldbank.org, 2015)

We see that FDI net inflows as percentage of GDP has increased over the years (except for the fall in 2011) which has resulted from economic integration.

Offshoring is another type of outsourcing where the business processes are relocated to some other country. The relocation of the business is done in terms of contracts with other parties. In this way, globalization increased the scope of business worldwide and enhanced the transfer of knowledge, information and expertise which established and improved global relations with other countries. Singapore is believed to acquire a favorable business environment, improved infrastructure, prevalence of resource pool and other important aspects of business startup which made the country an ideal location across the world to outsource. (Rjglobemanagement.com, 2015) Singapore is regarded as the offshore dwelling of many corporations like Citibank, Microsoft, Hewlett-Packard etc. Globalization that created openness among nations made this possible. (Mok, 2000)

Technology

The diversification of organization worldwide augmented the global migration during the last two decades. Lack of job opportunities and weak economic conditions forced citizens to migrate to other countries for a better life. (Clayton, 2004) In Singapore the rate of migration is large because of the offshoring of corporations to Singapore enabled workers to relocate. Thus, the size of the non residents in Singapore had increased overtime. As recorded in June 2014, the total population of Singapore was around 5.47 million out of which 0.53 million were permanent residents and 1.6 million were non residents possessing work passes and education visa. The statistics from 2010 to 2012 of the constitution of the population of Singapore is depicted in the chart below.

Data Source: (Data.worldbank.org, 2015)

For the efficient movement of trade, resources and supporting passenger movement and freight among nation is possible only when transportation is implemented properly. The connectivity between nations can be improved by introducing and improving infrastructures such as road, railways, air road for effective transportation. Singapore is able to increase its competitiveness and improve its economy because they have a big port of loading terminal for shipment.

Globalization has led to industrialization which in turn increased the emission of pollutants within the atmosphere. This is detrimental to the ecosystem. Singapore has a high population density which poses a hindrance on water resource management, waste disposal and other environmental issue. Water in Singapore is polluted which contributes to oil spill and other hazards which are harmful. Globalization helped Singapore to develop a water treatment plant NEWater (Senthilingam, 2014)which treats unwanted water into a drinkable water. (Li and Ruiyao, 2008)

The forces of globalization impact every aspect in an economy and one such aspect is its impact on the different stakeholders like domestic companies, employment, indigenous cultures and different demographic group within Singapore (in our case).

It is quite evident that globalization has led to the integration of countries by smooth operation of goods exchange. Now the exchange which in other word is known as net exports, affect the interests of the domestic producers. With opening up of trade, domestic country engages in importing goods. This discourages the domestic companies because consumers change their taste and preferences towards foreign goods. On one hand the domestic companies are affected, on the other hand the consumers are benefited from this purchase as they are able to increase the standard of living. Domestic companies of Singapore are taking initiatives to promote infrastructure of communication and make the country a superior island by this year 2015. Singapore is also planning to introduce coming generation network of broad band which would help to innovate areas like education and health. The government of Singapore had implemented technology in their services.

The impact of globalization on the workforce has two impacts: negative as well as positive impacts. The positive impact is considered to be the physical investment on the domestic companies that generate enough employment within the economy. (Upchurch, 2004)The negative effect can be felt due to migration. The people who migrate are considered to be highly skilled and experienced and thus they draw the opportunities of employment. Since Singapore is considered to be the offshore home and over the years FDI has increased in this nation, all these augment employment generation. Thus globalization has led to low unemployment rates in Singapore. (Stats.mom.gov.sg, 2015)

Trade and Integration

Globalization generates work opportunities to indigenous cultures by transferring local and domestic employees and migration. This will enable the societies appreciate each other’s culture. Globalization, on the other hand had led to culture loss as well. This can be explained by the loss of farmers land due to industrialization which made him unemployed. There are other aspects of indigenous culture which are business negotiations, multilateral trade and trade off that is supposed benefit the nation.

The impact of globalization on the demographic groups is diverse. on one hand the urban growing population grow a threat on the natural resources by increasing demand of natural resources and on the other hand the rural population are engaging themselves in migration because of better work opportunities, high standard of living etc. In Singapore globalization had impacted the demographic group also. (Hayes, 2006)Singapore has a high population density which resulted in increasing demand of natural resources which posed a threat. As far as the rural population is concerned globalization has negative and positive impact. This is because on one hand when technological upgradation has caused labor cut from production (Hellier and Chusseau, 2010)and on the other hand new industries and FDI has created sufficient employment within the country. (Chans-net.org, 2015)

Marketing is a universally accepted activity that operates within the country irrespective of political, social and economic system. (Kedia, 2006) The focus on international marketing practice was extracted when globalization crept in the countries. It helped in the smooth exchange of goods and services but it does not guarantee that all consumers are obtaining the same level of satisfaction when they were not purchasing from a foreign company. For proper operation of MNC in other countries strategies of international marketing must be formulated. A consumer may not get the same level of satisfaction on purchasing a good from a particular MNC, other business can attract these consumers by applying appropriate marketing strategies. (Ivythesis.typepad.com, 2015)

Conclusion

Globalization introduced a sense of competitiveness among nations. The survival of the countries depends on how they tackle risks in global business. (Suh, 2014) The interdependency among countries no doubt benefited some of the less developed and developing countries but the negative impact of globalization like inflation, global business shifts, supply shocks, employment woes, competition and other external shocks must not be ignored. Singapore ranks second in the Globalization Index, yet it has witnessed a lot of problems due to globalization. (Koh, 2007)

References

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