Globalization and World Trade

Impacts of Globalization and World Trade

Globalization can be termed as the process of integrating global economy allowing capital to flow freely and tapping into foreign labor markets (Staiger, 2015). Globalization emanates from removing barriers that encourage services, goods, labor, and capital to flow between economies. This can include removing quotas and tariffs and or lowering the same. World trade, on the other hand, refers to the exchange of services and goods between world economies. Globalization and world trade have had many effects on world economies both negative and positive.

Globalization has increasingly opened up trade opportunities between economies. Business organizations and multinational companies have taken to opening up especially in developing countries. Industries in developing economies have also benefited since they can sell their products outside local boundaries and this has been made possible by falling of trade barriers. Growth and profits generated from these trading deals have hugely helped local industries to expand and develop a new line of products.

Employment opportunities, especially for skilled labor in developing economies, have been evidenced by world trade. Multinational companies in these economies provide jobs and training program for their personnel. Increasing training has made personnel better placed to rise the ranks in workplaces and especially through labor specialization.

Economic globalization creates a forum for national governments to gain access to foreign borrowing. Monies got from such deals help governments to make infrastructural improvements including building better and equipped health facilities (Parmy, 2017). Governments are also able to improve urban housing and other vital facilities that have improved living standards of the citizens.

World trade brings about easy sharing of information. Such information can range from security intelligence between nations which has taken world security a notch higher. Security teams can train together further sharing enemy tackling tactics. Apart from security information, globalization has enhanced selling and sharing of business ideas. New products have been introduced in world markets satisfying crucial customer needs, proceeds of information sharing. Internet, mobile phones, and other technological developments have significantly eased sharing of information providing a competitive advantage to the economies and companies that adopt them for business.

It goes without saying that world trade has removed cultural barriers making the globe virtually a village. Making the world a global village has brought interaction of cultures where countries can adapt to the beneficial cultural trends.  There has been a trend where wealthy class and the elites in developing countries have embraced western culture including languages and behavioral patterns. Other results of cultural interaction involve cooking, arts and musical styles whose infiltration to foreign societies have greatly influenced dressing and general way of life of their consumers. Globalization plays a great role in tolerating attitudes and ideas from different religions and societies.

The leadership of the world has taken a new twist with globalization. Having a media that is drawing attention to world issues like violations of human rights has led to world superpowers intervening to bring calm and normalcy to the affected countries. This has brought a relief especially from human suffering and promoted prosperity and democracy. Unlimited jurisdiction has removed the long-standing hindrances to prosecuting criminals who can no longer seek shelter in foreign countries. Perpetrators of crimes of whatever nature can be brought to justice irrespective of nations of origin.

In today’s world, one can access higher education from institutions far away from their native countries. Opening up learning opportunities goes way long in bridging knowledge gaps between developed and developing countries (Mohr, 2015). Students benefiting from such opportunities return to mother countries with professional expertise vital in building local economies to match other world economies.

Globalization and world trade, however, does not only have positive effects. Negatives impacts of these trends are felt and mostly in developing nations. To start with the opening of multination companies and corporations usually repress the development of local industries (Olds, 2012). This is so because internationals enjoy benefits from large-scale production, better management practices, and technological advances. These competitive advantages make it difficult for local companies to compete favorably ending with their collapse and withdrawal from the market.

Despite cultural exchange bringing huge benefits to the world, it leads to erosion of culture and moral decadence in the recipient societies. Important traditional practices have gone down the drain with the adoption of foreign cultures as native ignore their culture. Dressing modes, cooking styles, and behavioral practices have greatly changed for the worst.

Integration of technology and ignorance to safety standards in industries has resulted in the production of substandard commodities. In most cases, it is expected that mechanization and use of technology in production automatically results to superior quality products. This is however not the case as in some instances mechanization has resulted in the production of faulty products. Some companies venture into new markets to dump their products that have been rejected in mother economies since they are substandard.

When mechanization and technology are incorporated in production labor especially the unskilled and semi-skilled are rendered unemployed since automation takes over. With job losses, poverty knocks in with the population unable to afford basic commodities. Governments experience losses in tax revenues that would have otherwise been remitted from the lost employment. There is also a tendency of multinational companies to have a preference for cheap labor and general disregard for employee welfare.

The negative impacts of globalization cannot easily downplay the positives it brings. Globalization has made businesses realize that their success is so much dependent on efficiency and ability to adapt to emerging world trends. Economies and business that would ignore the place of world trade and globalization are likely to be overtaken and thrown into oblivion. However, it is vital that while adapting to globalization trends only the best business and cultural practices are put into consideration.

Developing economies should take it upon themselves to make policies that shield them from exploitation by first world countries. Laws regarding dumping of substandard goods to local markets should top the list with close attention given to the provision of employment opportunities to the indigenous population. Governments should be keen to ensure that there is a balance of trade and balance of payment to guarantee the protection of local industries. Multinational companies should not be left to take over local economies as this will greatly compromise local development.

Continued government borrowing can render an economy growth less as most of the revenues collected from taxes goes into servicing foreign debt. Money collected from taxes and foreign trade should instead be invested in research, innovations, and development to give an economy a competitive advantage over other world economies. Governments should find there would be most successful market niche invest in export-inclined industries, encourage entrepreneurship, innovations, and creativity to provide products and services for export.


Staiger, R. W. (2015). International rules and institutions for trade policy. Handbook of international economics, 3, 1495-1551.

Olds, K. (2012). Globalization and urban change: Capital, culture, and Pacific Rim mega-projects. OUP Catalogue.

Parmy Olson., (2017). How to Handle Globalization. Retrieved from

Mohr, A. (2015). The Effects of Economic Globalization on Developing Countries. Retrieved from Small Business: http://smallbusiness. Chron. com/effects-economic-globalization developing-countries-3906. HTML.








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