United Nations Headquarters . Entering the era of globalization is like changing a horse cab for a Mercedes car. It allows you to travel much faster and more comfortably, but if you crash, the consequences can be daunting. This metaphor is obviously another way of saying that benefits and opportunities offered by globalization do not come free of charge and that important costs can be involved. That is why globalization has to be managed carefully in order to minimize its negative implications.
Globalization also means increased competition which puts additional pressure on national economies.
First, some important benefits brought about by globalization are typically not equally distributed. For instance, international capital flows, including especially FDI, are generally highly concentrated, favouring some selected countries and regions. Moreover, these information exchanges are sometimes deliberately restricted by legal measures imposed by developed countries. Second, growing economic and financial interdependence makes some countries and regions vulnerable to crises that take place in other parts of the world. Let us start with capital flows and take FDI as an example.