One of the important characteristics of globalisation is free trade between counties.It also means absence of excessive governmental control over trade.(v) Globalisation makes domestic industries of developing countries to become conscious about price reduction and quality improvement to their products so as to face foreign competition.
According to Stieglitz, Nobel Prize Winner for Economics (2001) and former Chief Economists of the World Bank, “Globalisation is the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communications, and the breaking down of artificial barriers to the flow of goods and services, capital, knowledge, and (to a lesser extent) people across borders.” Stieglitz is a powerful critique of globalisation and thus clearly pointed out the non-inclusion of fourth parameter of globalisation, i.e., free flow of labour in the present format of globalisation advocated by developed countries. Now it is to be seen how far the developing countries would gain by adopting the path of globalisation in future.
The World Commission on the Social Dimension of Globalisation (WCSDG) set up by ILO has also made some important observations on globalisation. In the mean time, various countries of the world have adopted the policy of globalisation.
It also leads to creation of a new world order with no national boundaries. Economically, it simply means opening up of national market, free trade and commerce among nations, free flow of labour, capital and technology, and integration of national economies with the world economy.
Politically, it means limited powers and functions of state, more rights and freedoms granted to the individual and empowerment of the private sector culturally it means exchange of cultural values between societies and between nations; and ideologically, it means the promotion and spread of liberalism and capitalism.
In view of the current global recession and financial crisis, there is a paramount importance of global integration.
(i) Globalisation helps to boost the long run average growth rate of the economy of the country through: (a) Improvement in the allocative efficiency of resources; (b) Increase in labour productivity; and (c) Reduction in capital-output ratio.
Cost effectiveness and price reduction of manufactured commodities will improve the terms of trade in favour of agriculture.
(vii) Globalisation facilitates consumer goods industries to expand faster to meet growing demand for these consumer goods which would result faster expansion of employment opportunities over a period of time.
This would result trickle-down effect to reduce the proportion of population living below the poverty line.
(viii) Globalisation enhances the efficiency of the banking insurance and financial sectors with the opening up to those areas to foreign capital, foreign banks and insurance companies. Following are some of these disadvantages: (i) Globalisation paves the way for redistribution of economic power at the world level leading to domination by economically powerful nations over the poor nations.