Globalization and liberalization are both important economic phenomena. Both the terms allude to relaxing social and economic policies for better integration of the two or more economies. A growing economy requires flexibility and greater integration that globalization and liberalization provide.
This article aims to provide a clear understanding of the two concepts so you can easily identify the Difference Between Globalization and Liberalization.
What is Globalization?
Globalization is the phenomenon of the growing interdependence of the world’s economies, cultures, and populations. It is brought about by cross-border trade, the spread of technology, and the free flow of people, investment, and information across the globe.
Globalization can benefit all inter-dependent counties by creating economies of scale. However, the positive impact may not be equally distributed in all the countries.
What is Liberalization?
Liberalization is more focused on the local economy than the global. It refers to easing rules and regulations on political or social matters. The term is used chiefly in the economic sense, where it means the removal of restrictions on trade and other economic activities.
Liberalization is closely linked to privatization, which refers to the transfer of public sector ownership to private hands. It creates an environment for a free market and boosts competition, which results in increased productivity and an improved economy.
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Difference Between Globalization and Liberalization
Area of Difference
Globalization refers to the integration of the local economy with the world economy through cross border flow of trade, technology, idea, manpower and capital.
Liberalization is the easing of government controls and restrictions for the ease of doing business.
It aims to create a global marketplace for economies of scale. Global integration can also benefit nations socially and politically.
It aims to grow and expand the local economy by bringing enough flexibility.
- Foreign Direct Investment
- Adopting foreign technology
- Bringing foreign exchange
- Exchange of manpower
- Global outsourcing of business and services
- Reduction in tariffs
- Abolishing licensing
- Tax reforms
- Deregulation of the Industrial sector
- Foreign trade policy reforms
- Financial sector reforms
- Economic growth and access to resources
- Increased global co-operation
- Cross Border Investment
- Access to new cultures, markets and talents
- Lower Cost of Production
- Higher Standard of living
- Reduced monopoly of private sectors
- Increased development and reduced poverty
- Increase in employment opportunities
- Di-licencing of industries
Increase in foreign direct investment
- Liberalisation of foreign technology
- Increased competition
- Disproportionate growth and exploitation of the home market
- Exploitation of labour
- Environmental and ecological concerns
- Increased foreign dependence
- Unbalanced development of industries
- Compromised social justice and public welfare
Globalization includes liberalization.
Liberalization paves the way for globalization.
Globalization and liberalization foster faster growth in developing countries. However, they also come with some negative consequences. However, global, regional, and national policy changes to extract maximum benefits from globalization and liberalization can tackle such consequences.
FAQs on the Difference Between Globalization and Liberalization
Q.1. What is the Difference Between Globalization and Liberalization in meaning?
The Difference Between Globalization and Liberalization is that globalization integrates the local economy with the world economy through a cross-border flow of trade, technology, idea, human resources, and capital, whereas liberalization is the easing of government controls and restrictions for the ease of doing business.
Q.2. What is the Difference Between Globalization and Liberalization in aim?
The Difference Between Globalization and Liberalization with regard to their aim is that globalization aims to create a global marketplace for economic, social, and political benefits, whereas liberalization seeks to grow and expand the local economy by bringing enough flexibility.
Q.3. What is the Difference Between Globalization and Liberalization in the method adopted?
The Difference Between Globalization and Liberalization in the method adopted is that globalization can be brought about by inviting foreign direct investment, adopting foreign technology, exchanging resources, etc., whereas liberalization can be brought about by reducing tariffs, deregulating the industrial sector, abolishing licensing, and bringing tax and other reforms.
Q.4. Despite the Difference Between Globalization and Liberalization, are they interrelated?
Yes, despite the Difference Between Globalization and Liberalization, the two concepts are interrelated because liberalization paves the way for globalization.