What are the Positive and Negative Effects of Globalization?

Globalization means that countries can engage in free trade with one another. Globalization is a fairly recent development, so the effects of globalization are still somewhat undetermined. People who are in favor of globalization are often called globalists, and people who are against globalization are often called anti-globalists. Globalists believe globalization has positive effects on economic growth and the quality of life of citizenry in the countries that engage in free global trade. Anti-globalists believe globalization can cause economic and environmental damage to a country and may have the more benefits for those who are already wealthy than anyone else.

Anti-globalists believe multinational corporations largely benefit from globalization, while small businesses may suffer from the increased competition from the global market. A corner liquor store may have a difficult time competing with a chain market location opened by a corporation that hails from overseas. The local computer hardware seller may have a difficult time selling his computer parts to the office in town when they can order cheaper parts distributed directly from a manufacturer in another country. These overseas companies can compete within higher price markets without bearing the cost overhead of having a storefront or business within that higher price market. This allows them to offer products at a lower price, but impacts small local businesses that survive on the sales.

Globalists believe the economic growth that occurs as one of the effects of globalization outweighs its disadvantages. They expect that enough money and economic progress will be made to pay for any damage to environment or small-scale economy that might happen. It can also help improve the economies of nations with high levels of poverty, giving their citizens access to the technology, clean water and city infrastructure that comes with economic business development.

One theory of the effects of globalization suggests that global trade can increase worldwide financial instability. Because the globalization system means one country's economy can directly affect another country's economy through their mutual trade, financial crises that start in one country can become a worldwide problem for all countries connected to it. The economic effects of globalization are generally positive for countries engaging in global trade, raising the per capita income of the citizens of those countries. In some countries, the rich gain more money, while the poor lose access to financial and natural resources taken by global companies.

Globalization can help mega-corporations that may create environmental disturbances and pollution. Many believe the economic growth that occurs as one of the effects of globalization will create enough revenue to clean up any environmental disasters that occur as a casualty of business. Still others believe corporations do not take responsibility for cleanup. In the past, legal limits on corporate liability for environmental damage caused by disasters like oil spills have kept large corporations from bearing the full financial responsibility for cleanup of the environmental problems caused by their company operations.