Advantages and Disadvantages of Globalization
The advantages and disadvantages of globalization are those opportunities and risks that the interconnection between the different levels (economic, political, social and technological) of the world entails.
Undoubtedly, globalization has brought with it many benefits for society. It is undeniable how at the level of transport, knowledge or communication the advantages have been enormous. However, this global interconnection also makes competition more and more demanding. Company that stops or stops innovating, company that has to close.
But what can be an advantage on the one hand, can be a disadvantage on the other. In other words, from the point of view of the consumer , it is an advantage since better products are increasingly being produced at a lower cost. But, from the point of view of the entrepreneur, it is a continuous effort.
Advantages of globalization
Among the most important advantages of globalization are
- Larger markets : The markets are becoming larger due to the fact that there are more and more trade agreements and free trade agreements, which hope to make the process of international trade between the different nations of the world more homogeneous and easier.
- Economies of scale: At the same time that markets expand, companies take the opportunity to produce more at a lower cost. The foregoing widens the margins and the profits increase. Which, in turn, produces that employees are in better working conditions. The economy ultimately becomes more efficient.
- Technological access: Interconnection, communication and transportation allow high-tech products to be produced in record time. In addition, the transfer of knowledge is carried out very quickly. Although it sometimes leads to plagiarism and copying, it also leads to faster innovation to generate product differentiation.
Disadvantages of globalization
Among the disadvantages of globalization we find the following:
- Increased Competition : Increased competition is often good for the economy. Companies compete and produce better products at lower cost. However, although competition can positively affect us as consumers, as entrepreneurs it requires being at the forefront of events. This point is an advantage or disadvantage depending on the perspective of whoever looks at it.
- More demanding consumers: With products getting better and communication processes faster, consumers are becoming better informed. Consequently, the requirements demanded of a product at a technical and human level are increasing.
- Lower margins: Related to the competition, its increase can cause an adjustment in costs. Many companies cut costs to survive and remain competitive. Sometimes, this affects the salaries of employees who could be weighed down. At other times, the company moves to other countries and closes the company leaving behind many jobs.
- Constant innovation : Constant innovation is another point that can be positive, since it offers improved products. However, this is a risk for companies. Companies that do not invest in innovation quickly fall behind and must close. The same goes for countries. Those countries that do not invest in innovation could see their growth hampered and with it the living conditions of their population.