Globalization Case

Globalization, in the last two decades has advanced radically. Globalization involves the free transfer of goods and services across national borders. It is a process of increasing global connectivity and international interdependence. Confined local and nationalistic perceptions are introduced to the interdependent and interrelated planet. It has been greatly influenced by the advancement in technology, telecommunication and infrastructure. On the economic front globalization consists of two important policies of privatization and deregulation. Governments have let private firms to take over and the free market is allowed to run the economy. One of the main reason being the governments incompetence to face competition. Deregulation suggests easing out strict trade regulations for business. It also allows foreign competition with the main objective being participation of domestic industries in the global market. Opportunities and competition boosts economic growth. However, it includes restricted movement of manual labour and, as opined by some economists it may harm small, weak or feeble economies if applied unsystematically. In today's times globalization is a powerful phenomenon for this purpose it is important to first understand the meaning of an open and closed economy.

Closed economy traditionally known as autarky which is a state of self sufficiency and independence. An economy or political state which does not work together with other economies of the world and forbids international trade which is export and imports of goods and services is termed as a closed economy. It is considered to be a glitch in the current times as it focuses on economic isolation. It is an economic approach which concentrates only on inward bound transactions. The main motive being all consumer wants and needs with regards to purchase and sale of goods are met within the country. All the possible natural resources, physical and intellectual capabilities of the population within the limits of the country are employed to comply with all the need and desires of the people. However, progress of closed economies is hindered because of the shortage of natural resources of such as oil and natural gas. Although some governments control external cultural and political pressure, the dominance of international trade compels them to indulge in some kind of trade. Thus, closed economies are rarely seen.

On the contrary open economy is the complete reverse of closed economy. When the idea of an open economy is applied to a physical location or a country it is considered to have no restrictions on free market activity. Such activities are carried out with few but constructive regulations on taxes, licensing requisite, tariffs, unionization, incentives and subsidies. Goods and services which cannot be produces internally and made available at competitive prices can be imported from other economies who offer them at competitive rates. However, no market economy is completely open or closed it lies within the scale of these two ideas. The main intention being integration of global economies. Simultaneously countries produce those goods and services which can be produced at minimum costs and fetch them some profit when sold in other countries. Some religious countries which attempt to sustain a closed economy also indulge in some form of global dealings and relations.

As a closed economy refutes all trade activities and relations with other nations it is considered to arrest economic growth which is one of its major disadvantage, however there are a few advantages as well. A closed economy being self-contained it is not affected but the global economy. As it is an independent economy there is no trepidation of intrusion or intimidation from other countries. Transportation cost such as shipment costs are mitigated in an isolated economy. So, more income is left with the internal economy. Rules and restrictions on goods produced internally are relatively less. Safe products can be ensured as no check is to be kept on imports. A closed economy produces all the goods and services needed hence they do not rely on others which makes them self sufficient. Under no circumstances a closed economy is affected by the financial crises of global economies. However, other dependent nations can be greatly influenced.

It is difficult for such countries to prolong and sustain life as compared to those which function with an open economy. As such agrarian economies have a closed economic strategy which contributes greatly to their economy. Thus any natural calamities such as drought or floods can affect the produce as well as the inhabitants. Over the years closed economies have been associated with strict dictatorial political governments or capitalist paradigms.

The advantage of an open economy is a wide range of choices. Consumers can choose from products which are produced in domestic markets as well as from those which come from overseas which range from branded clothing,

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