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Understanding Globalization: Impacts, Theories, and Challenges in a Connected World

Globalization is the process of economic and political interconnectedness across the globe. It is influenced by Neoclassical Liberal Economic Theory which promotes the reduction of trade barriers and the free movement of goods and capital, leading to increased wealth and employment, especially in less developed countries (LDCs). However, it also presents challenges such as unequal development, exploitation of labor by multinational corporations (MNCs), and erosion of state sovereignty. This complex phenomenon has both benefits and costs, such as rapid urbanization and gender inequality.

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Understanding Globalization: Impacts, Theories, and Challenges in a Connected World

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  1. Globalization • Process that results in the economic and political interconnectedness of the world. • Neoclassical Liberal Economic Theory • Reduce tariffs and trade barriers • Easier for free movement of goods and capital • Lifts wealth of all countries • Increased employment and income for LDCs.

  2. FDI • Foreign Direct Investment • Invest in developing countries • MNC • Multinational Corporations • Most important source of FDI

  3. Unequal Development in LDCs • “Haves” and “Have-Nots” among LDCs. • “Race to the Bottom” • MNCs seek out cheapest place to do business. • Few workers’ rights • Little anti-pollution regulation • Rapid urbanization • Regional inequality within a country • Gender inequalities

  4. Globalization • Market Failure • Those who produce and consume don’t bear full cost of their actions (i.e., pollution).

  5. Sacrificing Sovereignty • Sovereignty • Independent legal authority over a population. • State controlling its own territory.

  6. Globalization • Human Capital • Attributes gained by a worker through education and experience. • International Non-Governmental Organization • Usually referred to as an NGO.

  7. Costs of Globalization Costs Benefits Reduction of barriers makes economic transactions easier. Rapid economic growth. Global array of products at cheaper prices. Better access to information, technology , and capital. Spread democracy and human rights. Empower non-state actors. • Erosion of state sovereignty. • Problems spread more easily over borders. • Crime, drugs, economic crises, disease. • Labor is exploited by MNCs. • Race to the Bottom • Costs of rapid urbanization • Gender inequality • Backlash against “Americanization.” • Brain Drain • Market Failure

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