Globalization can be defined as, "Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the integration of economies and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure".
http://hubpages.com/hub/Definition-of-Globalization
Integration can be positive or negative. Negative integration is the breaking down the protective barriers and the trade barriers e.g quotas and tariffs. This removal of barriers can be beneficial for the country because that removal will allow the products to enter in to the country which is needed there. Like if a country removes the trade barriers then it will reduce the cost of raw materials and will increase the supply. This will make the production of final product cheap and will make it easy to export. Whereas the positive integration is useful for the standardization of international economic laws and policies.
The phenomena of globalization are not new for the world but the perception level of each country is very different. Each country applies this phenomenon in a different way and with a very different speed. According to globalization the social values, politics, cultures and economy of many different countries integrated, which is a characteristic for today's world. Globalization in simple terms can be explained as the cooperation among all the countries of the world , ad the cooperation is specifically needed in economies of the countries. Globalization can take place through several economic ways.
Emerging Markets
Emerging markets can be explained as
"New market structures arising from digitalization, deregulation, globalization, and open-standards, that are shifting the balance of economic power from the sellers to the buyers. In such markets information is freely and widely available, and is almost instantly accessible. To compete in these scenarios, a firm must adopt new processes based information technologies, and must keep a close watch on the price, quality, and convenience trends.
http://www.businessdictionary.com/definition/emerging-markets.html
Emerging markets can be explained as the progress of a country's business and social activity. Recently there are 28 emerging markets in the world but the China and India are on top of the list because of the rapid progress they made.
Effect of Globalization on Emerging Markets
Globalization plays a very important role in the progress of emerging markets. Globalization affects the emerging markets in two ways i-e
Positive Effect of globalization on Emerging markets
Negative effects of globalization on emerging markets
Both of these effects of globalization on emerging markets are explained below in detail:
Positive Effect of Globalization on Emerging Markets
Many emerging markets now days are experiencing globalization which help them to get a rapid growth and progress which makes the influence of emerging markets more strong.
In this paper we will discuss how the globalization will affect the emerging countries of the world and those effects are given below:
Outsourcing and in sourcing of Employees
"The methods of outsourcing and in sourcing of employees contributed much into the development of international collaboration. Outsourcing is the relationship between the client and the supplier that bases on a contract, under which the supplier gets the means of production and the client acquires the services of the supplier during the validity of the contract. This model usually reduces the company costs and makes the use of resources, capital and technologies more effective. In sourcing is the opposite model and is even more efficient. In order to cut costs of labor and taxes companies delegate some operations to subcontractors, a formation that specializes in them. It usually helps to control the production of important goods".
These two methods benefit a lot to the emerging markets because they outsource and in source the required work force, if the required or needed skills are not available in their country. So without globalization the emerging markets must be failed to fulfill their requirements.
Outsourcing of Raw Material and Semi Finished Goods
The emerging markets outsource the raw materials and semi finished goods from those countries where they can purchase them at comparatively cheap rates .This will help them to manufacture the final products by incurring low cost. This will increase the profitability of the companies as they earn more revenues because of purchasing cheap raw material and semi finished goods. Here we can quote the example of Everyday Industries India Ltd, they deal in battery manufacturing. They outsource the raw material and semi finished goods from China in a large quantity. They purchase those raw materials at cheap rates and sell the final products at profitable rates.
Globalization gives the opportunity to the emerging countries to reduce their manufacturing cost and allow them to contact with those countries from where they can get raw material and semi finished goods at comparatively low rates.
http://www.thehindubusinessline.com/bline/2007/07/30/stories/2007073050411500.htm
Technological Advancement
The information systems and telecommunication systems are designed at global level which allows greater transborder data flow. This transborder data flow is done by using the latest technologies of internet, submarine fiber optic cables, communication satellites and wireless phones. So the emerging markets of the world don't need to spend a huge amount of money to develop their own information systems and telecommunication systems, they have easy access to these global telecommunication and information system. But they can use their own technology to make those systems more improved.
Some emerging markets also purchases the soft wares from other countries which designs them best. Like some organizations of United Kingdom purchases software from India because India is so much advanced in IT technology .This shows that globalization helps the emerging markets to use the better technology and also bring a trend of technology sharing among different countries.
Languages
In the globalized business world, people from different countries come together to work for a particular company so every person speaks the language of his own country .Although English is known as the international language but still it is not necessary that each individual knows English language well and feel comfortable to communicate in that language. Especially the labor class most of the time face this problem so to overcome this problem the businesses of emerging markets hires such people who are able to deal with multi languages. So such person solve the problems of communication and languages in the organization and makes the emerging markets enjoy the skills and talents of the people of other countries speaking different languages. Here globalization again gives the chance to the emerging markets to use the talents of people of other countries and without facing any hurdle relating to languages of those people and bring betterment in their businesses.
Cultural Growth
Because of globalization the emerging markets found improvement in their culture because people from many cultures came together and work together so it is simply known as cultural diffusion. In such environment people work feeling the whole world a single place for all of them to work so there is desire with everyone to improve the living standard of each other and people enjoys the foreign ideas and products and adopt new practices and technologies, In simple world they become use to ,to work in a global environment and instead of feeling any problem from the culture of people of other countries ,the people adopt good point of that culture to bring improvement in their working conditions.
So emerging markets will be benefited a lot from this multi culture environment because there will be variety of skills, technologies and ideas available to them which they can utilize in making their businesses more perfect.
Competition
Globalization creates a competition in the companies of all over the world because each organization tries to use the best labor skills, raw material ,technologies and work force because it is not east for the companies of all over the world to survive in the global market because in global market there is a competition of a very high level which creates a need for the improvement in the productivity of the products.
So the competition of this much high intensity force the businesses of emerging markets to make more improvements in their businesses and produce the goods of more better quality because they are not competing in the local market ,their competition is in the global market. As markets are becoming worldwide, so the companies continuously upgrade their technologies and make the efficient and skillful use of technology so that their businesses get improved and they face no problem to compete in international markets.
Legal Issues
The creation of the international criminal court and international justice movements reduces the risk for emerging markets and makes the businesses more secure because the percentage of fraud cases decreases after the creation of this international criminal court and international justice movements. If a person did fraud in a business of one country then he can be easily traced out and get punished in any other country because of this international criminal courts and international justice movements. The awareness of global crime fighting efforts has been increased. So because of this the emerging markets feel safe to operate at national and international level and they are not that much afraid of any type of financial loss or theft.
Increase in Investments
Globalization provides the investment opportunities to the people as well as to the businesses. Investors from all over the world come to those countries to make investment where they feel their investment profitable .If we discuss the investment opportunities in emerging markets than we can say that in emerging markets there are a lot of investment opportunities for the foreign investors. They make investment in such emerging markets and enjoy the profits from their businesses. Such foreign investment also makes the economy of the emerging markets more strong. More and more investors attract towards such economies and operate their businesses in the emerging countries.
Here the best example which we can quote is the example of China. In China investors from all over the world come there and make investments .Majority of the renowned businesses of the world are also operating in China because there they get cheap labor, land and raw material, so they find it so much profitable to operate their business in such countries.
Economies of Emerging Markets
Because of globalization there is freedom of exchange of goods and other products across borders ,because economies realizes very well the global common market in which the businesses are operating. The emerging markets also take advantage of this thing because The interconnectedness of these markets, meant that if any of the economy of the country collapse then many countries will join together to bear the loss caused by that collapse of the economy. So if the loss has been shared by many hands then it is not difficult to bear that loss.
Globalization makes the economies of the emerging markets so much strong .If we see the economy of India which is on the top of the list of the emerging markets then we will see that globalization makes the economy of that country very strong. Although India is considered as a poor country but still its economy is so much benefited because of globalization.
Negative Effect of Globalization on Emerging Markets
Although globalization brings many advantages for the emerging markets but still there are some negative effect of globalization on the same markets. Some of those points are explained below:
Increase in Unemployment
As I have discussed above that the businesses of emerging markets outsource the skillful employees and labor from other countries because that they have to pay comparatively low salaries to that people May be they feel that labor more talented than that of available in their own country. Whatever the reason is but because of outsourcing of employees from other countries, the chance to get appointed by any good organization may become less and the people of the country remain unemployed and the people from other countries get the chance to do the jobs in their country.
Loss of Country's Own Culture
People from many different cultures came to invest ,work or run their businesses in the emerging markets so it means that many different cultures got diffuse in a single country. So because of that there are chances that the country may lose its own culture or the picture of country's own culture will become blurring because of the entry of many other cultures in the country which is not good for any country. So globalization sometimes effects the cultures of the countries very badly.
Increase in Religious Conflicts
Like culture, people from different countries have their own different cultures so each individual wants to follow his religion while living in the same country so there are chances that if the people from different cultures will get together in a country to work then there will arise the religious conflicts in that country which will not good for the economies of emerging markets but it will harm the businesses of those countries in a very dangerous way.
Less Investment Opportunities for Local Businesses
The emerging markets always remain open for the foreign investors because with the increase in the foreign investments the economies of the countries will also become very strong but this thing will reduce the investment opportunities for the local businesses because each business will get more benefit if any foreign investor will invest in that. So globalization brings this negative point for local investor of emerging markets.
Conclusion
As I have discussed above in detail the positive and negative effects of globalization on the emerging markets, I can say with confidence that globalization is a very good strategy to adopt by the emerging markets because it makes their economies stronger. Although globalization sometimes affects the emerging markets negatively but the positive effects are far greater than the negative ones and without globalization the markets will need a lot of time to become progressive and successful, globalization makes this process so much easy for the emerging markets.
