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Globalization Case

Essay by   •  December 5, 2011  •  Essay  •  1,354 Words (6 Pages)  •  1,754 Views

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Globalization is the integration of social, economic, and political systems around the world. Although globalization occurs through various mediums on a continual basis, there are three facets of globalization that stand as potentially most beneficial or malicious: banking, trade, and technology. The three do not function simply as lone factors of a bigger picture, but instead are co-dependent, as other tenets of the globalization trend often are. Where one tenet seemingly exists because of another, in retrospect it may be found that the relationship is two-way and they in fact exist entirely dependent on each other.

When monetary storage and safety is considered there are benefits and drawbacks when dealing with banks. As recent global protests and events continue to take place, this point holds greater significance. The beginnings of organized banking are traced to many different times and places, including the ancient Egyptians and Babylonians. The priests of local temples loaned money to farmers and guild workers for crops and businesses at interest, and central grain housings were used to segment out food payments (A Brief). This historical notion serves a valid purpose: banking has been around for a long time. Throughout the generations banking has pushed into the global front and created an international medium for massive money movements and assistance to nations in need, although it is debated that the global banking systems act only as Western puppets forcing elitist plans on less wealthy or less developed nations.

The Bretton Woods conference during the final stages of WWII saw to the creation of the two largest global monetary institutions in existence today: the International Monetary Fund (IMF) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Center for Settlement of Investment Disputes (ICSID). Representatives from member nations govern both institutions, although the highly developed nations hold more power than others resulting in Westernized tenets. The two institutions function with a grand level similarity in that they both act as lending agents to underdeveloped or struggling nations, and often seek to impose stringent economic reforms on countries with difficulties repaying loans (International).

While aid to the needy has indeed come from the hands of the IMF and the World Bank, the developed Western nations remain the center of criticism for the sanctions and proposed guidelines imposed on other nations. Often these guidelines fall into capitalistic headings and are expected to be put into effect immediately, whether or not the nations on which they are imposed are immediately capable to do as such. On one hand globalization in banking brings aid and monetary guidance to nations lacking advancement, yet on the other it allows elite Westernized nations to dictate how less powerful nations should approach economic structures (International).

The globalization of trade in today's world has created an environment of international commercial relationships that can benefit both the nations and their citizens. Private industries can trade with private industries from other nations, and national governments have the ability to trade with other national governments. Furthermore, currency exchange rates allow entrepreneurs and merchants to accurately price and sell goods anywhere in the world.

Comparative advantage is demonstrated in global trade between nations with the semi-specialization of goods production within nations. For example, the top export of Saudi Arabia may be oil, while the top export of Germany may be cars. Because it is cheaper for Saudi Arabia to produce oil than it is for Germany, and the vice versa stands for Germany and cars, each country will produce more of its respective top earning exports and produce less of the others that it may be able to buy for less than it can produce. Thus, nations can benefit financially and increase prosperity within the borders by being open to trade with other nations. This dynamic also leads to a more competitive environment for consumer markets. If nations are seeking goods that can be produced at a more reasonable price than they can likely produce the goods or themselves, the final price in localized markets can possibly be reduced. However, not all is wonderful in globalization land with respect to economic troubles. The globalization

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