Have you ever wondered about why society is more developed over time, what makes internet, communication and languages to be so important nowadays, why countries have tendency to join together, why inflation rate is also increased in every economies, and how we can take the advantages of most available resources to produce goods and services efficiently…? We will try to answer somehow these questions by understanding “Globalization and its effects” on both social and economic aspects.
Globalization is the process of growing integration of economies and societies around the world. Globalization is not only a tendency any more but also a fact. We can understand it as a process by which people around the world are gathering into a single society and function together. In this process, there is combination of economic, technological, socio-cultural and political forces. In most cases, however, Globalization refers to economic globalization through trade, foreign direct investment, capital flows, migration, and the spread of technology. For this field, the principle of globalization bases on the combination of economic theory about free markets, reducing barriers in exchanging and trading goods that makes the specialization in export-import.
In Vietnam, we have opened “our door” since we carried out the economy reform DOI MOI in the mid-1980s, and we actually joined in this playground when becoming a member of WTO on January, 2007
Nguyen Trong Tuyen Minister
Globalization is a phenomenon on over the world, so it affects all countries, all aspects of our daily life, such as society, culture and economics .After joining WTO, VN has changed dramatically and have attracted many foreign investors. The growth in infrastructure of VN is a real demand.
We should focus these effects on both positive and negative sides. Positive effect firstly, globalization is developing our society. It improves quality of our life, and brings high standard of living. We can feel that our life become more modern, more comfortable than it was in the past when each of us get higher salary, shorter work hours and better public services. Globalization makes countries become closer. We can make friends, get information easily, and observe many cultures from over the world through the development of internet. The Internet in essence makes the world a smaller place.
The second positive effect of globalization is on economics. Like society, economics is also developing days by days. Advances in communication and transportation technology, combined with free-market ideology, have given goods, services, and capital unprecedented mobility, take advantage of abundant, cheap labor that are what we can get by reducing tariffs, privatizing state enterprises, and relaxing environmental and labor standards.
Furthermore, market-based economic policies have contributed to open up the trade barriers have been removed and FDI (Foreign direct investment) is now a fundamental part of most developing countries. In this market, trade has been increased and got more benefit. The nation’s reintegration into the world economy has proceeded at a rapid pace. In Vietnam, The US is now Vietnam’s largest export market, much more than EU and ASIAN market, with textiles, seafood, and footwear and wood products ranked among the top earners. In addition, when every country opens their markets, the import tax reduces. Now, we can consume more with cheaper price, various products, high quality… Another advantage is that now every enterprise, with high scale and good strategies, can sell abroad to increase their brand name and sales. Globalization also increases competition between companies not only in domestic market but also in global market about workers’ knowledge, management; technologies…
Rapid growth and poverty reduction in China, India…. and other countries that were poor 20 years ago, has been a positive aspect of globalization.
In the other hand, globalization has also generated serious international opposition over concerns that it creates increased inequality and environmental degradation. We know that internet is a good tool for us to connect with outside world, but its development can be harm for society in the aspects of ethics if we use for wrong purposes. For economic aspect, while it is true that globalization encourages free trade among countries, there are also negative consequences. Many poor countries have to accept globalization to let the foreign businesses investors from larger countries come to take advantage of the lower wage rate and their natural resources. The main export of poorer countries is usually agricultural goods, but larger countries often subsidize their farmers. It causes the inequality in trade. In addition, reducing tax sometime just bring the benefit for rich countries than for developing countries like Vietnam.
Another bad consequence is the increasing inflation rate. An example to make it clearer is the inflation in Zimbabwe in 2008. Going with super inflation rate, world financial crisis is a serious problem of all countries. Up to 80% of global wealth had been destroyed by the global financial crisis in little less than a year and a half , that need to be solved as soon as possible. You can imagine 20 billion dollar Zimbabwe only exchange 1 USA, but in black market 90 billion exchange 1 USA.
And Inflation in 1923
As for VN, in 2009, GDP growth of VN is 5.2%, this is lowest rate during the last 10 years. However, in situation regressing economic world, this growth is a very big success. The economy of VN still develops stably. CPI (Consumer price index) of VN this year is 6.5%, government can control.
Globalization is very important for any country that does not want to be lost in such everyday changing world. Globalization look like a horse, we must learn how to ride it, or accept to run on bare feet in the race. It can be a good chance for development and prosperity of your country, but also can be harmful when you do not take advantages of positive effects, and have good policies to avoid and solve problems arising out from negative effects of globalization. We also need to improve our knowledge, experiment, languages, ethics… to join in general tendency of society, government and global economics efficiently.
NAME: NGUYEN MANH TUAN
ID: BA 050199