Globalization is generally regarded as a good thing because it creates open market opportunities and fosters efficiency between suppliers, partners and customers through a network of distribution; for example, a company can sell electronics in the United States or Japan with equal ease. This type of efficiency allows for the ease of integration between markets for optimal management of inventory and distribution while boosting aggregate demand and helping to grow the employment potential and income of the world economy.Continue Reading
The easy credit and elevated leverage provided by globalization can fuel a sense of confidence in the economy that feeds financial bubbles. This allows money to flow with ease between nations.
The drawbacks of globalization include the uncertainty and risk that accompanies the integration of local and domestic markets. With globalization, there is a high degree of imitation, intense competition, swings in profits and prices and destruction of businesses and products. Some corporations that once enjoyed the benefits that globalization bring are now in an unstable environment because their products were turned into commodities, which took away their pricing power.
Globalization can also lead to currency devaluations when nations try to stave off employment and income declines. It can also raise trade barriers, and in the past, led to trade wars between nations.Learn more about Economics