The Positive and Negative Economic Impacts of a Globalized Economy

Complete partial essay

The positive and negative economic impacts of a globalized economy.

Globalization is an inevitable force that many argue provides more good than harm. Some of those goods include the possibility to alleviate poverty (Farrell, 2004) and to stimulate global economic growth (Tung, 2002). However to fully understand and appreciate its true impact, many aspects of globalization should be thoroughly examined. One of the more significant aspect is the economic impacts of globalization both globally and individually for countries. While there are cases for both positive and negative impacts, the interaction of world economies is important for worldwide economic prosperity; increased job opportunities; access to more products and markets; foreign direct investments; and increased efficiencies in the productions of goods through specialization. Arguably the above list of positive impacts have reversing effects and globalization can have further negative impacts for individual nations. But while there are some arguments that point out the negative economic impacts of a globalized economy, the benefits for individual countries, along with the world as a whole, are far more significant.

Foreign Direct Investments (FDI) provides improvements to businesses and industries which raises GDP and improves standard of living. A research conducted by the Mckinsey Global Institute showed that FDI was pivotal for improved productivity and output and for raising GDP, which greatly improved the standard of living for people in China, India, Brazil and Mexico (Farrell, 2004). When countries provide the right business environment and frameworks, FDIs can improve local productivity and output (Farrell, 2004), generally through advanced technologies. These improvements usually lead to reduced costs for products which ultimately means that the consumer saves more money to spend elsewhere.