The Role of Globalization in Shifting the Economic Patterns

Timmons Roberts and Amy Bellone’s collection of articles related to the Globalization and Economy talked about a variety of current changes in society caused by Globalization. One of the changes they elaborate on was on the economic shift that has been occurring since the 1990s due to globalization. Folker Frobel, Jurgen Heinrichs, and Otto Kreye’s article titled “The New International Division of Labour in the World Economy” mentioned how “world’s citizens” are expecting economic growth and improvement.

The most significant change is a shift away from the consumer-oriented growth, which can be achieved through the reduction of real wages and limits on the growth of living standards. The economy has to focus on reducing the amount of unemployment. With the rise of skilled workers around the world due to globalization, exchange of labor is now a popular way companies take to innovate their products. The easier access to transportation and other efficient services abroad, foreign investment are also becoming more common.

Because of Globalization also, “the state has been compelled to provide grants, loans and tax concessions to private business on an increasing scale, hoping to increase domestic investment., reduce the rate of unemployment, and thus avert the danger of potentially explosive social tensions” (162).

Globalization has encouraged export and imports of states, because of the relation building between them. Many countries become interdependent for imported goods. Another change globalization has brought is our economic transition from industrialism to informationalism.  Globalization has presented to the world the importance of information changing. Invention and industry that use to be the most important aspect of companies is now not as fundamental. The new informational mode has taken over the industrialism mode, as most essential technologies has been founded. Under the influence of globalization, the numbers of information flows need efficient articulation of our production and management system.

Nowadays, companies cannot just invent but they need to invent goods that society actually needs. To know this, information becomes the essential subject.  Besides that, “the increasing distance between buyers and sellers, have created the need for specific marketing and effective distribution by firms, thus triggering a flurry of information-gathering systems to establish connection between the two ends of the market” (180).

Philip McMichael also talked about the role of globalization in economic shift in his article “Globalization: Myths and Realities”. He also agrees with the need for reducing unemployment and managing the “debt regime”.  As globalization increases the bonds of states, debts need to be dealt with in order to promote economic growth and minimize future risks of financial crises. This also means eliminating any possibility of a future debt crisis, as we have seen from passed experience in the Asian Financial Crises and the current financial crises, that crises of a state can pull other states to a crisis.

To summarize, globalization has an important role in our economic system and will continue to have it. Globalization has made states more inter-connected with each other, which means we need to keep the economy neat, and avoid falling into a crises or economic downturn as he fall of one state nowadays, may pull other states to fall with too.

Rossa D.