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Thus the globalisation of the economy simply indicates interaction of the country relating to production, trading and financial transactions with the developed industrialized countries of the world. By the term globalisation we mean opening up of the economy for world market by attaining international competitiveness.
In view of the current global recession and financial crisis, there is a paramount importance of global integration.
(i) Globalisation helps to boost the long run average growth rate of the economy of the country through: (a) Improvement in the allocative efficiency of resources; (b) Increase in labour productivity; and (c) Reduction in capital-output ratio.
Globalisation originates from developed countries and MNCs based in those countries.
Technologies, capital, products and services are allowed to enter from developed countries to developing countries.
It is the developing countries which needs to be adapted with the changing situations and to accept those new ideas for attaining higher level of socio-economic development.
The above characteristics of globalisation simply suggests that there is a great need for global integration under the present global economic scenario.
Another characteristic of globalisation is the control of economic activities by domestic market and international market.
It also established coordination among the national economy and world economy.
According to Stieglitz, Nobel Prize Winner for Economics (2001) and former Chief Economists of the World Bank, “Globalisation is the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communications, and the breaking down of artificial barriers to the flow of goods and services, capital, knowledge, and (to a lesser extent) people across borders.” Stieglitz is a powerful critique of globalisation and thus clearly pointed out the non-inclusion of fourth parameter of globalisation, i.e., free flow of labour in the present format of globalisation advocated by developed countries. Now it is to be seen how far the developing countries would gain by adopting the path of globalisation in future.
The World Commission on the Social Dimension of Globalisation (WCSDG) set up by ILO has also made some important observations on globalisation. In the mean time, various countries of the world have adopted the policy of globalisation.