Globilization and the World Economy Essay

1386 Words 6 Pages
Globilization and the World Economy

Globalisation in general means the effort of a company moving into
other territories (outside the national boarders of a country) to sell
its goods and services to increase profits as a result of expansion.
Globalisation incorporates both opportunities and risks which change
the way businesses are managed worldwide. It brings about a
well-diversified portfolio for such a company. This is because the
company is guarding itself from huge losses in case of economic
uncertainty. Significant gain in one company can cover for the losses
made in another company. By this, the globalise company would
experience constant cost pressure which entice them to continuously
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It means that they can have access to
increase efficiency of foreign investment; this was one of the reasons
why General Motors recently spent $750 million to build a Buick
assembly plant in China ( Roston & Fonda, 2002).

Globalisation also helps to increase the national income of the
countries under discussion. This is because; when the foreign
countries enter the territory, they bring in foreign currency which in
a way helps to boom the economy. More so, workers; both local and
foreign gets the opportunity to work for such a company. These workers
pay taxes to the government which intern increases the national income
(Roston & Fonda, 2002). The foreign workers also pay a lot of money to
just to acquire the permit to work in the country. Hence the gross
domestic would increase and the country would be seen in the
international setting as an up-and-coming country (Ghosh, 2001). This
can help attract other companies into the country and the country can
also be able to easily borrow funds from the international monetary
funds (IMF) if needs be.

Foreign direct investment (FDI) is a main advantage of globalization
affecting the world economy. When a company goes global, it will make…