Internationization Of Economies Essay Example | Topics and Well Written Essays - 1750 words

Internationization Of Economies - Essay Example Explain what a Monetary Union is and indicate possible benefits of the regime. Globalisation is a broad term used to denote the merger of the world’s various economic systems. The primary agents of change are reductions in barriers to trade such as import quotas, export fees and tariffs. The base contention related to justify globalisation is that it aids in increasing material wealth as well as goods and services through an efficient process of international division of labour. Globalisation is also used to describe how regional economies, cultures and societies are becoming increasingly integrated through trade, transportation and communication. Economic globalisation can be specified better if seen as the integration of national and regional economies into the global economy. The salient features of this integration are FDI (foreign direct investment), migration, trade, capital flows, technology and military presence. (Bhagwati, 2004) Globalisation like most other internati onal phenomenon has had positive and negative consequences. This text will attempt to analyse the positive and negative aspects of globalisation in terms of economics by utilising relevant economic theories. This will be followed by a discussion on floating and fixed exchange rates and the text will end with an appraisal of the monetary union concept. Economic Globalisation Economic globalisation is dependent on achieving a common global market that is based entirely on the freedom to exchange all nature of services and goods. (Lorenz & Wagner, 2007) Another major consequence of globalisation is that employees have to compete in an international job market. Previously wage regulations were more in sync with national economies while the advent of globalisation has changed this altogether. As economies are more and more intertwined, the failure of an individual economy does not necessarily jeopardise worker’s wages. This has affected the distribution of wages and income on a la rge scale. (Reich, 1992) The new global market is highly competitive and productivity must be upgraded in order to face the competition. The removal of trade barriers and tariffs ensures that competition is head on and multi faceted simultaneously. Quality and cost need to be monitored at the same time and there are large chances that industry may fail if faced with too stiff competition. Industries must upgrade their technology as well as the product range in order to compete. (Croucher, 2004) However, the failure of individual economies does present the chance for a domino effect. One failing economy may spur failure elsewhere and the entire global market may collapse. The recent economic recession is a glaring example of such a phenomenon. Some schools of thought contend that globalisation does present obvious problems through rapid development but globalisation is a positive force which has the power to lift a nation out of poverty. Rapid development spurs a virtual economic cyc le which produces faster economic advancement. (Bhagwati, 2004) Globalisation presents blue collar workers in developing nations with far greater occupational choices than before. Educated workers from developing nations are given chances to compete internationally for better paying jobs. Workers from developing nations are able to compete with workers from industrialised nations at an advantage. This aids in creating greater opportunities for workers. Workers are provided with opportunities to emigrate and getting jobs in industrialised countries or to stay in their native countries to work in outsourced industrial ventures. The global economy also provides abundant opportunities for products of cottage industries too. (Bhagwati, 2004) On the other hand, globalisation has