DEFINITION:

Name for the process of increasing the connectivity and interdependence of the world's markets and businesses. This process has speeded up dramatically in the last two decades as technological advances make it easier for people to travel, communicate, and do business internationally. Two major recent driving forces are advances in telecommunications infrastructure and the rise of the internet. In general, as economies become more connected to other economies, they have increased opportunity but also increased competition. Thus, as globalization becomes a more and more common feature of world economics, powerful pro-globalization and anti-globalization lobbies have arisen. The pro-globalization lobby argues that globalization brings about much increased opportunities for almost everyone, and increased competition is a good thing since it makes agents of production more efficient. The two most prominent pro-globalization organizations are the World Trade Organization and the World Economic Forum. The World Trade Organization is a pan-governmental entity (which currently has 144 members) that was set up to formulate a set of rules to govern global trade and capital flows through the process of member consensus, and to supervise their member countries to ensure that the rules are being followed. The World Economic Forum, a private foundation, does not have decision-making power but enjoys a great deal of importance since it has been effective as a powerful networking forum for many of the world's business, government and not-profit leaders. The anti-globalization group argues that certain groups of people who are deprived in terms of resources are not currently capable of functioning within the increased competitive pressure that will be brought about by allowing their economies to be more connected to the rest of the world. Important anti-globalization organizations include environmental groups like Friends of the Earth and Greenpeace; international aid organizations like Oxfam; third world government organizations like the G77; business organizations and trade unions whose competitiveness is threatened by globalization like the U.S. textiles and European farm lobby, as well as the Australian and U.S. trade union movements.

MODERN GLOBALIZATION:

Globalization, since World War II, is largely the result of planning by politicians to break down borders hampering trade to increase prosperity and interdependence thereby decreasing the chance of future war. Their work led to the Bretton Woods conference, an agreement by the world's leading politicians to lay down the framework for international commerce and finance, and the founding of several international institutions intended to oversee the processes of globalization.

These institutions include the International Bank for Reconstruction and Development (the

World Bank), and the International Monetary Fund. Globalization has been facilitated by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of the General Agreement on Tariffs and Trade (GATT), which led to a series of agreements to remove restrictions on free trade.
Since World War II, barriers to international trade have been considerably lowered through international agreements - GATT. Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, have included:

Promotion of free trade:

#elimination of

tariffs;

#creation of free trade zones with small or no tariffs

#Reduced transportation costs, especially resulting from development of containerization for ocean shipping.

#Reduction or elimination of

capital controls

#Reduction, elimination, or harmonization of

subsidies for local businesses

#Creation of subsidies for global corporations

#Harmonization of

intellectual property laws across the majority of states, with more restrictions

#Supranational recognition of intellectual property restrictions (e.g.

patents granted by China would be recognized in the United States)

#Cultural globalization, driven by communication technology and the worldwide marketing of Western cultural industries, was understood at first as a process of homogenization, as the global domination of American culture at the expense of traditional diversity. However, a contrasting trend soon became evident in the emergence of movements protesting against globalization and giving new momentum to the defense of local uniqueness, individuality, and identity, but largely without success.

#The Uruguay Round (1986 to 1994) led to a treaty to create the WTO to mediate trade disputes and set up a uniform platform of trading. Other bilateral and multilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.
World exports rose from 8.5% in 1970, to 16.1% of total gross world product in 2001.

THE EFFECT OF GLOBALIZATION:

The effects of Globalization are manifold, affecting various aspects of the world economy to bring about overall financial betterment. The effects of Globalization exert intense influence on the financial condition as well as the industrial sector of a particular nation. Globalization gives birth to markets based on industrial productions across the world. This in turn, widens the access to a diverse variety of foreign commodities for consumption of the customers, owing to the marketing strategies undertaken by different corporations.

In the world economic arena, Globalization facilitates the formation of a common worldwide market, on the basis of the liberal exchange of both cash and kinds. As far as Political Globalization is concerned, it helps in the formation of a world government to normalize the existing interactions among countries. It also ensures the rights emerging out of Economic and Social Globalizations.

Promotion of liberal trading activities is perhaps the greatest contribution of Globalization, acting as a boon to the world economy. Following are the ages advantages enjoyed by countries engaged in mutual free trades:

#Considerable reduction in the cost of transportation, especially with the development of containerization with respect to overseas ocean shipments

#Decrease or abolition of control over capital and the capital market
Formation of free zones for carrying out commercial activities, against payment of little or no tariffs at all

#Decrease, abolition or synchronization of subsidies in domestic trades

#Decrease or abolition of every kind of tariffs However, the concept of free trade emerging from Globalization suffers from limitations as well:

#Restrictions imposed on the supernatural identification of intellectual properties. This means that the patents granted by a particular nation will by recognized in another country.

#Synchronization of intellectual asset laws across most states are subject to additional restrictions

.

Advantages of Globalization :

#Goods and people are transported with more easiness and speed .
#The possibility of war between the developed countries decreases.
#Free trade between countries increases .
#Global mass media connects all the people in the world.
#As the cultural barriers reduce, the global village dream becomes more realistic .
#There is a propagation of democratic ideals.
#The interdependence of the nation-states increases .
#As the liquidity of capital increases, developed countries can invest in developing ones .
#The flexibility of corporations to operate across borders increases .
#The communication between the individuals and corporations in the world increases
environmental protection in developed countries increases.

Advantages of globalization in the developing world :

It is claimed that globalization increases the economic prosperity and opportunity in the developing world. The civil liberties are enhanced and there is a more efficient use of resources. All the countries involved in the free trade are at a profit. As a result, there are lower prices, more employment and a better standard of life in these developing nations. It is feared that some developing regions progress at the expense of other developed regions. However, such doubts are futile as globalization is a positive-sum chance in which the skills and technologies enable to increase the living standards throughout the world. Liberals look at globalization as an efficient tool to eliminate penury and allow the poor people a firm foothold in the global economy. In two decades from 1981 to 2001, the number of people surviving on $1 or less per day decreased from 1.5 billion to 1.1 billion. Simultaneously, the world population also increased. Thus, the percentage of such people decreased from 40% to 20% in such developing countries.

GLOBALIZATION IS GOOD TO INDIA:

It begins with a very feel-good factor of showing how the developing world, mainly India and China are now playing a huge role in manufacturing, services and research and development of numerous multinational companies that were originally based only from USA. Then it talks about some companies sprouting up in India, Korea and Taiwan that are based in India and do creative work (not BPO) for US companies. Thus the feel-good factor in terms of the rising incomes, increasing middle-class and purchasing power, and mixing of cultures. The entire book is peppered with anecdotes of Friedman’s worldwide travels and encounters with leading businessmen making it a worthwhile read

Globalisation is good because it is lifting millions out of poverty everyday by promising thousands of jobs for the educated in services and R&D, as well as the uneducated in manufacturing. But Friedman doesn’t forget it’s ill-effects of wiping away cultures and thereby creating fiction, as well as the abuses of modern technologies such as the internet by terrorist groups. He is however of the opinion that while globalisation, which is predominantly American, brings with it all the good and bad effects of Western culture, the intermixing is leading to the growth of a new generation rooted in their cultures and still benefiting from the civilizations around the world. Especially for India, he says that Indians have been of the outlook that “the Mughals come, the Mughals go, the British come, the British go” but we still eat our cuisine, wear our kurtas and sarees and speak our tongues and therefore are better poised to imbibe the necessary and important lessons from globalisation whereas still eschew its ill-effects such as total Americanization, high divorce rates and lack of respect for elders.

We can see all around us the blooming job-growth, the lavish spending as well as the general exuberance and self-confidence of the Indian youth today, all ensuing from globalization. But we still entertain its opponents such as the communists and certain other groups that unequivocally oppose MNCs and liberalization with shooting-one’s-own-feet middle-age ideologies. Imaging pre-globalized India, even the early to mid-90s when globalization just begun and graduates were still driving autos and most Indians were living without hope!

Friedman later advocates how countries such as India could equip themselves to lead in innovation and creative design by better education to the deprived classes thereby leading to MNCs headquartered in India. Although this may not be a long way away, India seems to have made an unpardonable mistake of forgetting its rural household which still accounts for the majority. There are still millions of Indians who live without electricity or clean water and who have never seen a television or the WWW.

The BJP got punished for this exactly when the rural populace decided to throw her out of power, although I personally feel this is a big mistake because percolation of the fruits of globalization from urban to rural areas will inevitably consume time in terms of decades.

In the latter chapters Friedman discusses how globalization will lead to a lot fewer wars amongst globalized economies. For India especially this is very true because India can no longer afford a full-scale war with Pakistan without considering the uncontrollable erosion of all MNCs that have now settled in India and the ensuing loss of millions of jobs, regaining which will be a very difficult, uphill task. Therefore, as much as many Indians would like to snub Pakistan and end the ghastly terror and jihad activities emanating from it, it is to our own good that India not wage a major war but show restraint and maintain only minimal trade and diplomatic ties with

Pakistan.