Positive and negative effects of globalization

• Author: Alexandru Olteanu - Madalina Antoaneta Radoi
• Position: PhD. Professor, Dean of Faculty of Economic Sciences, 'Nicolae Titulescu' University, Bucharest
• Pages: 209-212

Emilia Cornelia Stoica • Andrei Cristian Stoica

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LESIJ NO. XVII, VOL. 2/2010

POSITIVE AND NEGATIVE EFFECTS OF GLOBALIZATION

Alexandru OLTEANU∗

Madalina Antoaneta RADOI

Abstract

We still live in Europe, in one of the richest regions of the world. Most of us still have a well

paid and secure job. And yet social security is ensured for all of us, even for the less privileged

persons. These gains seem to be endangered by the growing competition from abroad, which

steals the productive potential and the jobs of the European economy. Has the pressure on the

European economy by means of the internationalization of the economy really in tensified in as far

as it is claimed? Is it true that globalization has enhanced in recent years in such a dramatic way?

The analysis shows us that we should make some distinctions.

Keywords: The global market, international trad e, interregional, economic location,

capital liberalization, global players, financial flows, direct investment exchange.

Introduction

Since the early '80s trade has developed a lot, increasing by approx. 7% per year. This

impressive growth is relative, if you consider historically the development of international trade

and the share of world export in the achievements of the global economy.

Since 1870 5% of world production has been exported. Only after 1960 the internationalization

of world trade has taken place and this made the connection with the level reached before the period

immediately preceding the First World War. It was an ongoing and difficult process, until world trade

increased and reached today’s record levels. In recent years the share of the world export in the world

economy has increased by 15% (85% – so, the biggest part of the global social product – remains as

before on the national markets for domestic consumption).

An analysis of the countries shows that domestic markets have a much greater role for

national markets than it has been considered till now.

Japan's foreign trade is not more than 10% of the gross national product. The orientation

of the U.S. economy towards domestic markets is well known. Only maximum 10% of the U.S.

economic achievements go abroad. And, although it may arouse surprise, the European Union is

not less oriented towards its own market. The contribution of foreign trade to the gross domestic

product has a value of up to 10%.

As a result of a more attentive analysis, the figures of foreign trade become relative also

for Germany. With a share of more than 25%, the German economy is still relatively expo rt-

oriented. But almost two thirds of the foreign trade is conducted on the European internal market,

in other words, interregionally. Thus the export in the extra-European countries is reduced up to

almost 10% of the domestic product.

In coming years, the volume of the world trade is likely to resume its trend. The conventions

within GATT, the Customs and General Conventions liberalized global trade in key areas. It is

expected that it will increase more than the global social product.

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∗ PhD. Professor, Dean of Faculty of Economic Sciences, “Nicolae Titulescu” University, Bucharest.