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