Economic Globalization Explanation
What do you think about when you hear the term economic globalization? Massive changes to the economic sector? Or the country’s economic sector that goes international? It turns out that the meaning is not that simple. For more details, let’s look at the following explanation.
The term globalization is often heard as a mention of something related to the progress of the times. According to the Big Indian Dictionary, globalization is the process of entering individuals, groups, or countries into the world.
This means that globalization shapes relationships between people or nations around the world through trade, investment, travel, and culture. This relationship continues to run well so that it can cross the borders of a country. The term globalization is often confused with the term internationalization, this is because they have similar characteristics.
The globalization that occurs in the economic sector certainly affects trade between several countries which is free. The success of economic globalization cannot be separated from the role of technology. Technology can integrate traditional trading traditions into a more perfect, universal form, and can eliminate the boundaries of time and space.
Economic globalization is closely related to freedom in the world of trade which seeks to remove barriers to international trade. The reason is that globalization only sees the world as a unit.
These constraints are usually in the form of export or import tariffs that are too high so that the prices of goods are not competitive. Also, it includes obstacles in the form of trade politics imposed by a country to protect domestic production.
So in general, the meaning of economic globalization is the process of entering economics into the world without any boundaries between countries or regions. Economics in question includes the processes of production, distribution, and consumption.
History and Development of Economic Globalization
Economic globalization is one form of unlimited innovation that occurs in the international trade sector. Although initially, international trade has been going on for thousands of years. However, its impact on economic, social, and political interests has only been felt in recent centuries.
At present, innovation is not only limited to the advanced technology sector, furthermore, but innovation has also become a global phenomenon that affects almost all sectors of life.
In the last 25 years, globalization in the economic sector has experienced very rapid growth. Globalization has made the traffic of trade in goods and services across countries more open.
This occurs because the costs of transportation and communication are lower. The cause is reduced barriers in various aspects, such as the movement of goods, services, labor, capital, and science.
Theoretically, trade globalization will increase the amount of trade between countries with increased specialization and efficiency. This is because a country that has the advantage of product competitiveness will continue to increase its production and competitiveness.
On the other hand, globalization has also played a role in influencing the level of welfare and socio-economic life in many countries in the world. In various literature, there are two different views regarding the positive and negative impacts of trade globalization on the level of welfare of a country.
Increasing the use of data speeds on the internet is at the core of globalization and the digital economy in connecting all modes of the world. Currently, its use has grown 45 times greater since 2005.
Some experts predict that this phenomenon will increase nine times in the next five years. This condition is of course accompanied by an increase in the number of users of information flow, searching, communication, video, transactions, and intracompany traffic.
Although economic globalization has expanded since the emergence of trade between countries, its growth has increased dramatically in the last 20-30 years. One of the reasons is thanks to the framework of the General Agreement on Tariffs and Trade and the World Trade Organization. All countries are slowly removing trade barriers and opening current accounts and capital accounts.
India’s Strategy in Facing Economic Globalization
Some companies consider competition in the era of globalization a challenge that can be used as an opportunity to support economic growth in India.
India has a high potential to compete in this era, especially in a large population with several skills. Evidenced by the increasing number of internet users, including abundant resources, has the potential to win the competition.
However, there are still some potential obstacles to compete in this era. One of them is the lack of adequate digital infrastructure. And there are still differences in the use and mastery of technology in various regions, including cities and villages. As well as the existence of regulations that specifically regulate the digital economy.
Based on Faisal Basri’s analysis entitled Map of the Indian Economy Entering the Digital Age which is quoted from the writing of a lecturer at the Faculty of Engineering. There are at least the top 7 skills that must be prepared by human resources in India to meet the competition for economic globalization:
1. Complex Problem Solving
When a country can product innovation through the use of technology, it can be said that it has supported economic globalization. Technology is also used to make predictions in complex environments by conducting research and studying certain knowledge.
Although it cannot be denied that with the entry of globalization, there will be more and more problems to be faced. However, with innovation and a complex operating system for goods and services, there will always be a solution to every problem.
2. Critical Thinking
The level of global income can have a real impact on the quality of life of the world’s population. This is because technology produces low prices with long-term gains in efficiency and productivity.
With technology, transportation and communication costs will decrease, global logistics and supply chains will be more effective, and trade costs will be reduced. All of this will open up new markets and encourage economic growth.
It is an example of critical thinking of an active and skilled intellectual process as a guide for belief in action. In general, it is based on universal intellectual value.
Technology causes the demand for skilled workers to increase while the demand for workers with low education decreases. In this case, technology is one of the main reasons why incomes have not increased, even decreased for a large proportion of the population in high-income countries.
4. People Management
HR management emphasizes the context of someone who can lead to strong and sustainable results. The trick is to increase the involvement of human resources who work for them. So that this has a direct impact on lower-class workers.
5. Coordinating with Other
Technology in the era of globalization in the economic sector is so crucial, that it requires effective assistance to increase the scale of economic benefits. Because it requires good coordination skills. Its scope is the capacity to organize and relate to, the entire workflow including dealing with crises, obstacles, or unexpected interruptions.
6. Emotional Intelligence
Digitalization has the ability to spur any information received by society. So that everyone can get a variety of information both local and international.
On the one hand, this can provide humans with the necessary information. But on the other hand, it will be an excessive burden on the entire information process that is received by every human being or society. Therefore emotional intelligence is needed that identifies and manages the emotional level of others.
7. Judgment and Decision Making
Good decisions require clear, measurable, specific, realistic goals that are agreed upon by several supporters.
Not many companies are ready to face this condition. Only companies that are supported by adequate infrastructure, effective systems, and good management allow them to compete in this era.
Therefore, companies need to evaluate designs and systems that have been running so far. Never stop to adapt to various global economic developments and digital competition.
One of the simplest ways is to have a good business financial record as a solid business foundation.