Globalization is a fundamental trend that has largely shaped the lives of many over the past decades. Cultural sharing, improved international cooperation, and extensive opportunities for trade are all among the benefits of globalization. However, globalisation also presents significant disadvantages. For example, according to Collins (2015), globalization has increased class division and unemployment rates in developed countries. Similarly, the impact of globalization on the world economy is considerably complex. This essay will serve to outline how six basic characteristics of the world economy are connected to the positive and negative effects of globalization.
Dedering et al. (2010) summarise the six key characteristics of the world economy. The authors explain that the first aspect of the world economy is that it consists of a single, unified market that is geographically extensive (Dedering et al. 2010). This structure in terms of the world economy became possible because of improved international cooperation, one of the positive aspects of globalization. Second, Dedering et al. (2010) explain that although it consists of a single market, the world economy still exhibits significant territorial division as it is influenced by the international political system.
The connection between this feature of the world economy and globalization is not obvious; however, globalization does contribute to the preservation of a territorial division between countries. As noted by Collins (2015), globalisation has affected every country and economy differently. While some countries have been able to harvest the benefits of globalization, others have faced increased poverty and unemployment as a result of the process (Hamdi 2013). Thus, globalization has contributed to territorial division, especially between rich and poor countries. The third characteristic of the world economy is that “it has taken the shape of a basic, three-tiered pattern” (Dedering et al. 2010, p. 50) where developed countries form the center, and developing economies form the periphery.
According to Dedering et al. (2010), this shape was formed because developed countries have a significant degree of control over the global economy while developing countries are highly dependent on them for their economic growth. This distribution of power is also supported by globalization since developed countries benefit from transferring their manufacturing to developing countries. The fourth characteristic of the world economy is that it develops in cyclical patterns of growth and stagnation (Dedering et al. 2010). Globalization has contributed to the last cycle, enabling the United States to become the dominant economy.
As the process of globalization reaches its peak, a period of stagnation tends to follow before a new stage of economic growth begins. The fifth characteristic of the world economy is that people in different countries will either resist or adapt to the incorporation of their country into the world economy rather than simply accepting the changes (Dedering et al. 2010). This can be one of the influences of globalisation; as with any major trend or movement, globalization has significant implications for people of all nations. Many individuals are fearful of such a large-scale change, thus preferring to reject it or adapt to ensure that the risk of negative implications is minimal.
The final characteristic of the world economy is that every country has a specific role to play and a different response to the development of the world economy (Dedering et al. 2010). This feature is also linked to globalization as every part of the world has responded to the process in a specific way, adopting a particular controlling or dependent role in globalization. Consequently, countries play the same roles in the development of the world economy.
Overall, it is true that globalization has had a significant influence on the current form that the world economy has assumed. Both the negative and positive aspects of the trend have influenced the way countries have responded or adapted to it. Without globalization and its associated trends, the world economy would probably take a different form as the degree of cooperation between various countries would be much lower.
Collins, M 2015, ‘The pros and cons of globalization’, Forbes. Web.
Dedering, T, Harmse, A, Martin, R & van Wyk, Y 2010, Globalisation, University of South Africa, Pretoria.
Hamdi, FM 2013, ‘The impact of globalization in the developing countries’, Developing Country Studies, vol. 3, no. 11, pp. 142-144.