Economic Causes and Effects
With the advent of the internet, information on prices of resources, about to be released products, as well as any changes in trade policy for trading, and other economy related activities can be made available to any area, within a few minutes, if not hours. After the invention of the world wide web in the 1990s {3}, there was an economic boom where “foreign direct investment... rose from $200 billion in 1990 to nearly $900 billion in 1999” {4}. Now when you want to do an investment on the stock market, all you have to do is to check the internet, and you do not have to wait for the newspaper that would come the next day.
Because of globalisation, many countries benefit by having expanded their global trading, helped their economies to grow. A study by the World Trade Organisation showed that around 24 countries, that included China and India “the ratio of exports to total GDP has doubled in the last two decades.”, whereas those that did not do much of global trading, such as the Middle East “the average share of exports to GDP has fallen over the last two decades” {4}.
A bustling business district in Singapore. Singapore's economic growth over the years is significant in modern Singapore.
Globalisation does not only affect the stock market. Any average Joe is affected by it too. A good example is the current oil crisis.
Current oil prices are already very high, over the hundred dollar mark {5} as seen in the image below. When this happened to the US, it affected many markets, not only those in the US. This definitely affects everybody, with the increased electricity prices, as well as for petrol for cars. Indirectly, this would cause the cost of everyday items to go up.
Graph showing the increase of the prices of crude oil over time.
(Source: http://commons.wikimedia.org/wiki/Image:Oil_Prices_Short_Term.png)
However, with globalisation, more companies are going to set up branches overseas, and this creates jobs for the locals. This would help the unemployment rate, and also helps the countries' economy. For those who are already employed, they would "increase wage levels" {4} as globalisation increases the productivity.
A poster advertising "handmade wanton noodles from Pontian, Malaysia". This Malaysian company set up a few branches in Singapore to sell this food.
(Taken at S11 food court, Bishan, Singapore)
Yet, this might contribute to inequality as the gap between high and low income workers increases. This is because companies are looking for more skilled workers to operate the newer technology. This benefits the upper class as the have a better education about the technology, and so they have a larger range of jobs they can apply for. The poor then have to take up jobs in the service industry. In the US, the amount of the total income that goes into the upper one-fifth of all the households " rose from 40.7 percent in 1975 to 46.5 percent in 1995" {4}. The richer are earning more of the total income than the poor, so this widens the income gap.