Globalization occurs when various countries in the world become more connected through trade and business. The benefits of globalization are often debated but have been proved in certain areas. Globalization provides competition and ensures a greater availability of products and services to consumers. Another one of the benefits of globalization is that it helps to provide economic stability in countries that have low economic status. It also provides a comparative advantage, which means that productivity is high because trade is open and resources are used more effectively.
A healthy level of competition keeps prices lower for consumers and helps keep production high. This can be a threatening concept for an industry because it is forced to work harder to stay viable, maintain high production and keep consumers happy, but it is beneficial for those purchasing products and services. Another of the benefits of globalization is a greater availability of products and services, because a globalized market has more businesses offering products and services to consumers. This means that consumers have more choices when it comes to their purchases.
Economic stability is one of the most important benefits of globalization. Poorer countries are able to sell products and services to those with more money, therefore creating economic gain. From a worldwide perspective, this is a good thing, because fewer nations are struggling with poverty. Countries that trade with one another have a vested interest in each other's well-being, which helps keep the political climate more stable as well. It is less likely for a country to wage war on another, for example, if it is reliant on the other for an important good or service.
A comparative advantage occurs in the area of globalization when countries are able to trade freely with one another. This keeps production at an optimal level, because countries are able to produce goods and services in areas where they are most efficient. In theory, with a closed trade system, countries would be forced to produce all of the goods and services that they need. A country is able to produce a product or service where it is efficient, so overall global production can increase because resources are being used in a more effective manner. This also can help the environment because resources are not being wasted, and attention can be paid to greener business practices.
