Globalization

Globalization is the rapid integration of production and investment decisions across the world by economic agents desirous of taking advantage of the environment where their competitive edge can manifest in high returns. Under globalisation, capital is moved and employed in countries with higher productive investment opportunities. With rapid integration of national economies through globalization, the economic prospects of nations are becoming increasingly determined by factors beyond the scope of domestic economies. This is because national economic development which entails the application of a consistent set of policy measures to raise the level of economic growth and ensure a fair distribution of the proceeds of growth can be undermined by unfavorable developments not only in the domestic economy but also in the development in the trading partners economies and other major economies in the world.
  Globalization therefore imposes discipline on nations if they must survive the competition arising from it. Globalization also shows in the rising share of international trade in world output and the rise in capital mobility which includes direct investment. National economies are becoming more integrated as cross border flows of trade, investment and financial capital show remarkable increases. Under a global setting, consumers buy more foreign foods, firms operate across national borders, savers invest more abroad, thereby increasing the potential to boost productivity living standards of countries.
   An integrated global economy engenders a more effective division of labour among countries and allows firms to exploit bigger economies of scale. That is, globalization of trade and investment increases specialization and efficiency, better quality products at reduced prices, competitiveness, output and technological improvement and improved entrepreneurial skills. It also guarantees consumers satisfaction since the best standards of quality are maintain through specialization and competition. The increase in foreign direct investment flows facilitates the growth in world trade and output by increasing the international mobility of capital and ensuring efficient development and use of technology and other resources in the production process to achieve unit cost. To that extent, globalization is necessary for national economic development, in particular, and crucial for global economic growth in general.