What is globalization and what does it mean for Singapore’s economy?
Globalization is the process in which businesses develop international influence and/or start operating on a global scale across international borders. When globalization occurs, it opens up free markets internationally.
This process is especially relevant to Singapore’s economy because they are already entwined in the globalization process. Singapore is a provider of specific materials to the rest of the world which they cannot wholly consume themselves and is also a consumer of foreign products itself. So what does all of this mean for Singapore?
What are the Pros of Globalization for Singapore?
One of the best things about globalization is that it allows businesses to begin working directly with their partners regardless of their location without red tape holding them back. Under this set up, local producers can sell their products within the vicinity of their nearby communities or as far away as the other side of the world. And they can do this with ease. Businesses can partner up with manufacturers in different countries and have the freedom to make choices that benefit their companies.
This means that Singapore businesses can sell to other countries. And other countries may look to Singapore to run their businesses which ends up creating employment for Singaporeans and ultimately improves the well-being of their economy.
Globalization also allows far more lenient credit and financial leverage to businesses because money is moving fast between national and international borders. This allows for growth in demand which leads to more hiring, higher productivity, and expansion. In essence, it creates a positive cycle of income and employment growth.
This all sounds wonderful and incredibly appealing, right? But with such fantastic pros come a set of potentially devastating cons.
What Problems Can Globalization Lead to?
The integration of different markets creates one global market that has new risks which are different for each of the players involved. Under a new global market, competition intensifies as businesses watch each other scrambling for top profit. For example, without proper international patent laws, knock off products are easily created which creates competition for the original company that wasn’t there before. Besides direct knock offs, there are problems with imitation products and profit margin swings.
Profit margin swings occur because people are trying to cash in on a business’ growing success. But you can see how this frenzied type of investment can easily throw things out of whack. It makes unpredictable business demands, leaving businesses with little pricing power.
Things can worsen farther when economies spin out of control. Nations may try to step out of this treacherous cycle by devaluing their currency and implementing trade barriers. This can lead to trade wars, which is never a pretty place to be.
Globalization in Singapore?
As you can see, globalization poses rich rewards as well as very real threats. Moving forward, it’s important to remember that great gains can quickly swing the other way with great losses. Tread carefully and embrace the positive side of globalization.
For example, such intense competition on the free market is an incentive for innovation and would be the driving force that pushes Singapore forward. Since Singapore’s economy is so wrapped up in the globalization movement, it’s not an option to simply ignore it. Singaporeans must embrace technological advances, remain updated, and move forward lest they get left behind.
The Government has rolled out new initiatives including the Progressive Wage Model to help low-income citizens upgrade their skills and gain better wages. Another program called the Medishield Life and Silver Support are also in the works.
Keep yourself informed and always look for the best opportunities to remain on top of the game.
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