258 Reading: Globalization Benefits and Challenges
258 Reading: Globalization Benefits and Challenges
Defining Globalization
Globalization is a term used to describe how countries, people, and businesses around the world are becoming more interconnected, as forces like technology, transportation, media, and global finance make it easier for goods, services, ideas, and people to cross traditional borders and boundaries. Globalization offers both benefits and challenges. It can provide tremendous opportunities for economic growth to improve the quality of life for many people. It can also lead to challenges with the welfare of workers, economies, and the environment as businesses globalize and shift their operations between countries to take advantage of lower costs of doing business in other world regions.
Watch the following short video for an overview of globalization and its impacts.
You can view the transcript for “Globalization explained” here (opens in new window).
Globalization, Economic Growth, and Market Opportunity
Globalization creates opportunities for many countries to experience economic growth. Economic growth is the increase in the number of goods and services produced by an economy over time. It is conventionally measured as a percentage change in the Gross Domestic Product (GDP) or Gross National Product (GNP). These two measures, which are calculated slightly differently, total the amounts paid for the goods and services that a country produced. As an example of measuring economic growth, a country that creates $9,000,000 in goods and services in 2019 and then creates $9,090,000 in 2020 has a nominal economic growth rate of 1 percent for 2020.
A way of classifying the economic growth of countries is to divide them into three groups: (a) industrialized, (b) developing, and (c) less-developed nations.
- Industrialized nations have economies characterized by a healthy climate for private enterprise (business) and a consumer orientation, meaning the business climate focuses on meeting consumers’ long-term wants and needs. These nations have high literacy rates, modem technology, and higher per capita incomes. Historically, industrialized nations include United States, Canada, Japan, South Korea, Australia, New Zealand, and most Western European nations. Newly industrialized countries include Russia and most other eastern European countries, Turkey, South Africa, China, India, and Brazil, among others. The
- Less-developed nations, also known as least-developed countries (LDCs) have extensive poverty, low per capita income and standards of living, low literacy rates, and very limited technology. Often these nations lack strong government, financial, and economic systems to support a healthy business community. Their economies tend to be focused on agriculture and the production of raw materials (such as the mining and timber industries). There are many less-developed nations in the world, with most located in Africa and Asia.
- Developing nations are those that are making the transit