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Globalization can looked at in different dimensions, but in economic terms, it refers to the elimination of various trade restrictions, labor and capital market liberalization. According to (Hameed and Nazir, 2002) the concept of globalization envisions an enhanced economic integration, businesses adopting global thinking and technological change. The supporters of globalization view it as a panacea to economic development where the standard of life is improved through enhanced economic growth, efficient resources allocation and increased productivity. However, for those who oppose globalization, economic liberalization in developing countries leads to loss of jobs, skewed income distribution, unfair competition and an overall increase in poverty (Brune and Garret, 2004).

In an attempt to explain the polarized debate on globalization, (Brune and Garret, 2004), considers the effects of globalization as a function of government policies, population growth rate and institutional factors. The variation of these factors across countries results to different experiences of globalization. Further (Brune and Garret, 2004) attributes the lack of consensus in the globalization debate to the absence of a standardized method of measuring globalization by scholars. The difficulties encountered in drawing inferences about the relationship between integration and incomes further complicated matters.

To understand the globalization phenomenon and its effects as applied in the economic world, a deeper exploration of potential gains and possible adverse effects of globalization are necessary. According to (Intriligator, 2003), gains experienced from globalization can largely be attributed to competition and market expansion triggered by globalization. Competition and market expansion enhances efficiency and increased production due to specialization and the subsequent division of labor. Firms develop and adopt new technology to increase efficiency and gain a competitive edge over other players in the market. The expanded market results to firms enjoying economies of scale, reduced cost of production and low commodity prices to consumers. These benefits present a case for the potential of globalization in improving the living standard through increased productivity and high wages (Intriligator, 2003).

The major costs associated with globalization stems from unequal distribution of gains realized, both at national and international level. According to (Intriligator, 2003), the gains of globalization goes mainly to rich individuals and nations aggravating the issue of inequalities that globalization was intended to solve in the first place. (Round and Whalley, 2002), compares the phenomenal growth of the East Asian countries and the slow growth of African and South American countries. While the former are fast catching up with the developed countries, the later are becoming poorer. Further (Intiligator, 2003) points out of the inherent danger that comes with economic inter-dependence. An economic recession occurring in a single country can affect the rest of its economic partners as witnessed in Europe recently. It also results to a country over depending on foreign investment and business. The dominance of a country’s economy by foreign entities may undermine the sovereignty of such a state. Arm-twisting by such entities in an effort to have their needs met is common.

It emerges that while globalization can spur economic growth, it brings with it inequality issues. For a country to achieve its goals through globalization, a well defined and carefully planned framework should be put in place. The framework should take into account the unique circumstances prevailing in a country. In addition, global institutions should be established to help mitigate the adverse effects of globalization through arbitration, negotiation and offering economic assistance to adversely affected parties (Intiligator, 2003).

Hameed A and Nazir A, (2010). Economic Globalization and its Impact on Poverty and Inequality: Evidence from Pakistan. Retrieved October 7 2011 from http://www.ecosecretariat.org/ftproot/Publications/Journal/1/Article

Brune N and Garret G, (2004). The Globalization Rorschach test: International Economic
Integration, Inequality and The Role of Government. Forth coming in Annual Review of Political Science volume. 8, 2005, 1-5.

Intriligator D, (2003). World Economy: Potential Benefits and Costs and a Net Assessment. Los Angeles: Milken institute

Round J. and J. Whalley, (2002), “Globalization and Poverty: Implications of South Asian
Experience for Wider Debate”, DFID (Department of International Development) Project