1.0 Introduction
Globalization is one phenomenon that is evident in all parts of the world. It is usually defined as disintegration of national boundaries an act which leads to integration of countries and economies (Bertho, Crawford, & Fogarty, 2008). It leads to formation of a world economy and a single world market. Although no one can negate the fact that globalization is a real phenomena, the impact of the same both positive and negative remains debatable. The effects of globalization affect the developed and the developing countries differently. Developing nations benefit greatly from the global economy because they stand a chance to develop their economy which results to not only economic development but also to other forms development in social and political arena. On the same note, developed nations also benefit greatly because with fewer or no trade restrictions, they get a chance to invest in various places more so in the developing nations and the same results to economic growth and development. On the same note, it is important to point out that scholars have concluded that every positive impact is always coupled with a negative impact. However, there is much about globalization and this paper shall narrow down to its impacts specifically in China and the United States.
2.0 Globalization and the drivers of globalization
Although globalization has got a long history, its progression in the 21st century is not only remarkable but failure to know its outcome creates more trouble and tension to economists and other people in the world. Although some people have argued that there is no significant difference between the current global economy and the one which existed in the 19th century, it is difficult to negate the fact that the pace of the process of globalization is accelerating at a very high rate (Bertho, Crawford, & Fogarty, 2008). For instance, there is a lot of technological development in the sector of information technology which results to further integration of markets. In addition, due to reduced trade barriers between different countries, people are moving from one country to another at a very high rate. The new forces that have emanated from globalization are beyond the ability of any country to prevent or even oppose. Factors that lead to globalization are referred to as drivers of globalization as discussed below.
2.1 Market Globalization Drivers
There are various market globalization drivers which are inclusive but not limited to common customer needs and tastes, global customers, lead countries and transferable marketing. Common customer needs and tastes refers to a phenomena which results when customers in different countries prefer similar goods and that shapes an industry since every international company is forced to use global strategy levers to be in a position to fit in the global market. Some customers are referred to as global customers because instead of buying from global markets, they prefer international markets helping to further increase the force of globalization. Transferable marketing helps to expand and increase global companies as it becomes easy for companies to market in different countries (Jäger, 2009).
2.2 Cost Globalization Drivers
Cost globalization drivers refer to all the factors that affect economics of industries like global economies of scale, favorable logistics, fast changing technology, sourcing efficiencies, difference in exchange rates and steep experience curve to mention just a few. As highlighted earlier, these factors affect an industry making it to go global in order to continue functioning and making profits. For instance, high products development costs forces a company to go global especially when the costs cannot be paid by domestic markets. Currently, the fast changing technology also increases the costs of production. As a result, industries which use the current technology are forced to focus more on global markets since such markets help in recovering cost of production easily while compared to domestic markets. In such situations, globalization continues to extend and flourish.
2.3 Government and Competitive Drivers of Globalization
Globalization is heavily affected by rules given by government inform of various policies which include favorable trade policies, common marketing regulation, government owned competitors as well as customers, host government concerns and compatible technical standards. For instance, globalization is influenced by various governments polices like non tariff barriers, export subsidies and capital flow restrictions as indicated in the studies of Jäger (2009). In case such polices create a favorable environment, international trade is highly practiced and globalization becomes inevitable. Competitive globalization drivers are inclusive of high levels of imports and exports. Following increase of trade between different countries, interaction between people increases leading to globalization. There are still other drivers like revolution of the sector of communication and information technology as well as improvement of business transactions. Such and other factors beyond the scope of this paper enhance globalization hence the term drivers of globalization.
3.0 The Changing Nature of the Global Economy
According to the studies of Howe, Propst & McMahon (1997), the global economy is currently characterized by various changes that result from globalization and the ever advancing technology. Further studies illustrate that there are various trends that are observed and the same result to the changing economy. Currently, manufacturers are using fewer raw materials to manufacture their products. The current economy is also marked by less demand for physical labor and as a result, the cost of production largely depends on the applications used during manufacturing other than on human resources. Lastly, financial markets have become global because globalization has led to integration.
Economy has been characterized by international trade composed more of human resources, financial capital and ideas. It is therefore clear that though initially the success of a country was based on the availability of natural resources, currently, that is not the case since the most important factor is adding value to the products. As a result, countries like Japan which are able to use the most advanced technology in production have ended up being the economic giants (Howe, Propst, & McMahon, 1997).
4.0 Economic and Political Effects of Globalization in China and United States
Both United States and China have benefited greatly from the economic effects of globalization. Studies of Jilberto & Hogenboom (2002), indicate that in the 21st century China economic development cannot go unnoticed especially after the country has managed to become the fourth country with the largest economy. Similarly, United Stats as also greatly benefited from the same as its economy is closely followed by the economy of China. However, figures indicate that China is the country that has experienced the highest growth rate in the world market as it recorded a growth rate of 4.5% which is quite high compared to 1.8 of United States. Whichever the case, there are a lot of economic benefits that the two countries have derived from globalization.
In most instances, economic development results to political stability. However, this does not mean that there are only positive effects of globalization. In China, globalization has led to political stability as it is now possible for the country to form new relations with countries in other continents reducing the major conflicts. On the contrary, that has not been the case in a country like United States. Although there are still some political benefits of globalization, its economic development seems to increase its conflicts especially with the oil producing countries. In addition, due to unrestricted flow of people leading to immigration, security threats due to terrorism have increased. Most of the security threats in United States can be largely be blamed to the effects of globalization.
5.0 Steps that can be taken by Managers to Meet the Challenges and the Opportunities of Globalization
As highlighted earlier in this paper, it is important to note that there are not only challenges but also opportunities that have resulted from globalization. There are a number of steps that managers need to take in order to remain successful. To begin with, it is important to identify the available opportunities in the global market. Secondly there is needed to upgrade the products and services in order to be competitive enough in the global market. Since it is possible to invest in other countries, it is important for the managers to study the economic trends of such countries in order to invest where they can get maximum returns. There are various challenges which managers must meet in order to remain in business especially in this era. Their biggest challenge is to manage all factors of production effectively in order to make profit. This is quite complex since it involves human resource, capital, raw materials and other factors of production. Studying the global trend is quite effective because by so doing, they can be in a position to know how to balance all the factors to keep the business going and to reap benefits of globalization (Howe, Propst, & McMahon, 1997).
6.0 Conclusions and Recommendations
Globalization is a real phenomenon especially in the 21st century and cannot be stopped. Its challenges and opportunities are evident in each and every country. It is therefore most important for every person to adapt to the changes of the same. Countries need to make policies that can help them combat any problem that may emanate from globalization as well as policies that can help them prosper as other countries prosper. For employees, it is important to increase knowledge and skills especially due to the fact that studies have indicated that the process of production is currently using the very recent technological development. Although there is a lot of literature on globalization, it is important for scholars to study the effects of globalization in specific countries.
References
Bertho, M., Crawford, B. & Fogarty, E. A. ( 2008). The Impact of Globalization on the United States: Culture and society. Westport: Greenwood Publishing Group.
Howe, J., Propst, L. & McMahon, E. (1997). Balancing nature and commerce in gateway communities. Washington, DC: Island Press.
Jäger, D. S. (2009). Globalization Drivers for Renewable Energies Referring to Electricity Production of E.ON: A Competitive Analysis in Comparison with RWE. Munich: GRIN Verlag .
Jilberto, A. E. & Hogenboom, B. (2002). China’s Growing Economic and Political Power: Effects on the Global South. Retrieved September 1, 2010, from http://www.japanfocus.org/-Gavan_McCormack/2611
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