Globalization can be defined as the process through which a country opens its economy to foreign market investments, in other words it involves breach all trade barriers and enabling trade of goods and services with other countries. Due to advent of technology and better infrastructure globalization has become easy and fast paced. Globalization has many effects both positive as well as negative let’s see some effects of globalization –
1. As domestic economy opens up it leads to inflow of foreign direct investments which give a great boost to the domestic economy investment cycle and which leads to better growth for the economy and which in turn increases overall living standard of the people.
2. Domestic companies can tap foreign markets for their capital requirements at cheaper rates of interest.
3. Another effect of globalization is that due to increased competition from foreign company’s domestic companies profit get reduced as foreign companies tend to have better infrastructure and therefore they can produce goods at cheap rates than domestic companies, which ultimately result in lower sales for domestic goods.
4. Another effect of globalization is related to culture as economies open up people will share their culture and tradition with other nations of world. Also globalization increases the travel between countries, as people travel to new places to see the beauty of the nature of different countries.
5. Globalization increases the overall productivity of the world as better technology and specialization in producing a particular product leads to countries producing quality goods at cheap rates and hence saving lot of valuable resources of world.