Costs and Benefits of Globalization and Localization

The debate over globalization and localization has long been fought as whether or not to pursue an international or isolationist foreign policy. Essentially, the term globalization means an integrationist approach to policy, whereas localization refers to a fragmentational approach to foreign policy. There are many issues in this debate, but none as complex and important as that of the costs and benefits of the economy. Other issues consequential to the topic are the political and social implications to these policies.

Economics runs all countries, whether or not they have a global or local approach to policy. Globalization, like all things, has both costs and benefits. Economically, the downfalls to globalization include the possibility that "the combination of increasing returns to scale and high transport costs may cause economic activity to concentrate somewhat accidentally in some areas at the expense of others"(Sachs 101). Simply, the costs of global trading will not balance among all states. Some states with many natural harbors and warm water ports will benefit from the increase in global trade more than countries that have few or no ports. Another problem certain countries may face is that if you have a wealth of a natural resource you may be forced to devote your economic strength on that one scarce resource instead of building an industry, which may prevent the development of your state (102). A third pitfall in economic globalization comes when "underrregulated and undercapitalzed banks" gamble with depositor funds (104). So banks without anyone to oversee their dealings and a small amount of money deposited within them have a tendency to recklessly invest the funds of their clients. In turn they lose most if not al...

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...d of state, which reduces the probability of living under the iron fist of an authoritarian government. Since typically democratic countries tend not to fight each other the possibility of war diminishes as well. Socially, globalization creates a multiculturalism that teaches acceptance of differences and appreciation of them. Understanding how other people live helps us define how we wish to live. Without knowing the cultures outside of our own we would always struggle to know what options we had.

Works Cited

Rodrick, Dani. "Globalisation, Social Conflict and Economic Growth," World Economy. Vol. 21, iss. 2 1998, 143-158.

Rosenau, James N. "The Complexities and Contradictions of Globalization," World Politics 98/99. 1998,15-19.

Sachs, Jeffrey. "International Economics-Unlocking the Mysteries of Globalization," Foreign Policy. Iss. 110, 1998, 97 111.