Globalisation means the process which has reduced the barriers between the countries regarding economic activities. It also encouraged closer assimilation of economic, political and social activity.
The free market makes people all over the planet to become connected to each other, creating world that is turning into a huge “global village.”
It is necessary to recognize the fact that this unprecedented modern phenomenon is actually based on an old ideology. This is the ideology of the free-market which stipulates that there is absolute truth and desirability of unregulated global capitalism. Globalization is based on an interpretation of the classical liberal social philosophy of Adam Smith, which anticipated universal human progress through free trade.
Four basic arguments are developed with respect to the impact of financial globalization. First, globalization has increased the capital available to developing countries, which has the potential of attaining faster growth than if they had to rely exclusively on their own resources. This has produced competitive pressure among local and multi national companies for capital, labor and materials - the three important factors in any organization.
Not all capital inflows however could contribute to growth. Short-term flows and the purchase of existing assets are less valuable than acquiring investments in new facilities. At the same time, the increasing movement of bigger capital can also lead to greater instability which could have negative effects for growth.
Second, capital flows are not distributed equally by region and country, thus twisting the patterns of growth. Even within a country a noticeable uneven distribution of capital by geographic area, sector, type of firm, and social group are created. This creates division within the country's organizations particularly between winners and losers. Locally-based organizations with less capital often find themselves in the losing side.
Finally, policy changes at the global, regional, and national levels could lead to confusion among organizations in the country. Having clear policies however could solve the problems.
As competition pressure intensifies, and swift changes in market conditions are introduced, policymakers have to respond accordingly to develop new talents and the necessary human resources. To prepare the workforce for the huge structural transformations, individual economies have created and adopted specific strategies that make effective use of public resources, update labor market policies and provide education and training to help people become more employable, productive and internationally competitive. It is a common
concern to secure effective and efficient means of capacity building for sustainable economic development. Human resource policies are at the forefront of these changes.
