How has globalisation affected the world economy? Discuss the impacts.

Essay by mohit007University, Bachelor's April 2004

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Globalisation - is the movement of goods, services and money capital or investment across international boundaries and in this way becomes a predominately economic phenomenon sweeping the world. Throughout which, what were formerly national companies become international conglomerates. Hence, countries are no longer seen as independent and closed sovereign states, but as part of one big economy.

While still seen as a relatively new event, globalisation is in fact an extension of a trend which dates back well over two hundred years, when it was simply called colonisation. During this period a well known economic theorists (David Ricardo) published a book in which he developed a theory called comparative cost advantage. In this he notes that countries should specialize in areas of production where their comparative cost advantage was greatest or their disadvantage least. International free trade and specialization, he argued would lower prices, better incomes and raise living standards, thus in turn with better transport and communication contributed to the development of globalisation.

Primarily this shift in thinking is driven by corporate America's insatiable appetite to open new frontiers in emerging countries, and claim a monopoly on the source and distribution of products. All of which in short is because they are searching for more profit and a lower cost. Globalisation is also heavily backed by international consumerism, which is seen as the dominant 'religion' of the era, this means that the fruits of this global production are rapidly sought after and indeed hungrily consumed.

Initially this flood of products into the local markets of major economies causes prices to decrease. Whilst this lower cost to consumers contributes to a higher standard of living it is short lived, globalisation also brings the world closer to a central economy. This is similar to the one currency euro program being instituted...