Pros and Cons of Globalization

Globalization: The decrease in the perceptual distance between countries due to improvements in technology, industry, transportation, etc.

Pros
Globalization has been able to spread the wealth from richer, more economically developed countries to less economically developed countries. Since labour is cheaper in less economically developed countries (LEDC), more economically developed countries (MEDC) hire the labour of LEDCs to decrease the costs of production. Doing this, transfers wealth from the MEDCs to the LEDCs as the labour of the LEDC is paid by the wealth of the MEDCs. There are numerous examples to this process. China is one example of a country that benefited from globalization. Between 1990 to 2005, poverty rates decreased from 60% to 16%; a decrease of 475 million people. India is another example of a country that has benefited from globalization. India has decreased its poverty rate by 50% over the past 2 decades.

Aside from decreasing poverty, the decrease in the perceptual distance between different countries has allowed transnational companies to sell their goods and services at a cheaper price (hopefully!) considering the cost of labour is cheaper.

A global benefit of globalization is the potential increase in efficiency. As countries can have absolute advantage and comparative advantage compared to other countries. Since certain countries can produce certain goods and services using less resources, there is greater efficiency, concordantly a decrease in the amount of scarce resources being used.

Cons
Globalization has its cons. There are numerous cases where instead of both MEDCs and LEDCs benefit from globalization, the MEDCs mostly benefit from the trade and the LEDCs gain or in fact lose out due to globalization. Many countries in Africa are examples of such cases. Ghana is one example. Ghana produces one third of all the chocolate produced in the United States. Because of the massive demand for chocolate, Ghana grows chocolate to be manufactured in other countries but Ghana remains in the primary sector of goods and services and thus is more unstable due to the volatility of agricultural products.