Kavan Choksi Business Consultant Briefly Discusses The Impact of Globalization on World Economy
In simple terms, globalization implies to the connection of varied parts of the world. When it comes to economics, globalization can be considered to be the process by which organizations, businesses, and countries start to operate on an international scale. As per Kavan Choksi Business Consultant, even though globalization is most commonly used in the economic context, it also affects and is impacted by culture and politics.
Kavan Choksi Business Consultant provides a general insight into the impact of globalization on the world economy
Globalization is not a new phenomenon. In fact, to a certain extent, it has existed ever since people started to move from one place in the world to another. However, having said that, globalization has certainly become lot more rapid in the recent years. Technological advancements have especially facilitated the increase of globalization. It has had an impact on almost all parts of modern life, most notably in regards to the global economy. Expanding the operations of a company on a global scale is an important aspect of globalization. This goal is facilitated by certain technological, political, and environmental factors.
Globalization has led to a huge surge in international trade. Trade barriers have been reduced through agreements such as the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), allowing nations to specialize in their comparative advantages and fostering a more efficient allocation of resources. Moreover, when there are several businesses competing for a stake in the economy, it is always a positive sign for consumers. After all, competition tends to bring about the production and delivery of quality goods and services. As a result, consumers are able to enjoy high quality products at a competitive price.
Globalization leads to more foreign direct investment. As trade among different economies takes place at a more favorable rate, FDI tends to increase. This influx of foreign capital can stimulate economic development. Financial globalization has accelerated the flow of capital across borders. Capital markets are more interconnected, which allows for the efficient allocation of funds and the diversification of investment portfolios. Globalization has contributed to economic growth and development in many regions. Access to larger markets and foreign investment contributes to greater economic activity, and even helps in poverty reduction and improved living standards in several developing countries.
As per Kavan Choksi Business Consultant, the rise of global supply chains is also a major benefit of globalization. Companies today are able to source components and services from various countries to optimize costs and efficiency. However, it is important to understand that while this has led to increased productivity; it also exposes economies to supply chain disruptions, as witnessed during events like the COVID-19 pandemic.
Competition does not only bring out the best in people, but also the best in countries on the whole. Improved competition as a result of globalization paves the way for technological innovation, most especially when there is an increase in foreign direct investment. This ultimately helps enhance economic output via efficient processes and methods of production.
