Write down the advantages and disadvantages of interconnectedness of people and nation. (Write at least 2 each)​

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Explanation:

Advantages: Wider markets: Globalization enables the companies to enter the international market easily. It leads to free movement of goods and services among different nations around the world. Companies can approach a large number of customers worldwide and have a better chance to improve their sales.

Economies of scale: It enables the businesses to benefit themselves from economies of scale. Business can acquire cheap raw materials and labour from abroad which would lower their cost. They can also operate their manufacturing activities in other countries where the cost of operation is low. This would bring down the average cost and prices for customers.

Disadvantages: Contagion of financial crises is the most serious disadvantage of increased interdependence. This effect was most obviously witnessed in the late 1990s, where integration turned a currency crisis in Thailand into the Asian crisis, and turned the Asian crisis into a global recession.

Tax avoidance: Globalization has made the tax avoidance by big corporations quite easy. These corporations outsource all their activities in countries where there are less corporation tax or minimum tax restrictions. This way they pay very less tax in countries from where they operate most of their business.

Environmental degradation: Globalization has negative effects on the environment. It has encouraged free trade among countries which has increased the usage of non-renewable resources. Companies are easily able to outsource their production in countries where environmental standards are less strict. All this lead to an increase in pollution and global warming.

Extinct small scale industries: It has increased the overall competition in the market by allowing entry of large numbers of multinational corporations. Domestic firms lack skills and technologies as compared to these big corporations and are not able to compete with them.

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