Globalization impacts all facets of the economy..
Globalization describes the process whereby the world's economies and markets are opened up to all others on an international scale. Trade barriers and tariffs are removed and capital, trade and investment can flow freely from country to country. It is the opposite of protectionism whereby individual sovereign states seek to manage their economies by imposing artificial controls such as subsidies, quotas, tariffs and limits on overseas investments. Globalization largely refers to the economic mode although it also means the decreasing cultural and political barriers between individual nations.
Domestic Industry
As barriers to investment come down, developed nations can see their local industries suffer as large multinational corporations move their operations offshore to less developed nations where conditions may be more favorable. The access to cheap labor and less government regulation make moving overseas very attractive to companies that do not have any inherent reason to base their manufacturing in their own nation. As competitors make the move, those remaining face increased pressure to do the same. This has seen the closing of many factories and the demise of many industries in developed countries, with resulting social dislocation and unemployment.
Employment Conditions
Many less developed nations have a less established regulatory framework in which companies may operate, and this is often exploited by companies to increase their profits at the expense of local workers. Safety regulations may be very lax or unenforced, employment conditions and working hours may be dangerous and unhealthy, and workers in these countries often have no representation and few rights. The wealthy companies exploit the poverty of the less developed nations by offering work few can pass up but at great cost to individuals and communities.
Imbalances
The liberalization of world trade tends to favor the wealthy nations at the expense of the poor. Large economies benefit while smaller ones are reduced to supplying the larger ones with cheap labor and raw materials. The poorer countries have far less bargaining power and political influence and are often forced to watch as their economies suffer. For example, on the global markets, farmers in less developed nations will find it hard to compete with their European counterparts, who benefit from massive governmental support, subsidies and technological investment.
Environment
In less developed countries, the pressure to generate income in this globalized economy puts great pressure on the environment. Multinational corporations, often aided by weak or corrupt local governments, can exploit the lack of environmental protections in the host country and the lack of a significant or powerful environmental lobby and take advantage of natural resources in ways that are environmentally damaging and unsustainable. Weak laws may also result in companies polluting the environment instead of adopting expensive pollution reduction programs.
