What is globalization economics

In fact, improvements in transport generally — faster ships, trains and airplanes — have allowed us to move around the globe much more easily. For example, when a company like Starbucks buys coffee from farmers in Rwanda, it is providing a livelihood and a benefit to the community as a whole. A multinational company's presence overseas contributes to those local economies because the company will invest in local resources, products and services. Socially responsible corporations may even invest in medical and educational facilities.

Globalization has not only allowed nations to trade with each other, but also to cooperate with each other as never before. Take the Paris Agreement on Climate Change , for instance, where countries all agreed to work towards reducing their carbon emissions for the greater global good. This chart, however, shows that global attitudes towards globalizing forces aren't all that good.

It shows that, in fact, in all but a couple of countries polled, people believe life was better in the old days. While some areas have flourished, others have floundered as jobs and commerce move elsewhere. Steel companies in the UK, for example, once thrived, providing work for hundreds of thousands of people.

But when China began producing cheaper steel, steel plants in the UK closed down and thousands of jobs were lost.

Every step forward in technology brings with it new dangers. Computers have vastly improved our lives, but cyber criminals steal millions of pounds a year. Global wealth has skyrocketed, but so has global warming. While many have been lifted out of poverty, not everybody has benefited. Many argue that globalization operates mostly in the interests of the richest countries, with most of the world's collective profits flowing back to them and into the pockets of those who already own the most.

Although globalization is helping to create more wealth in developing countries, it is not helping to close the gap between the world's poorest and richest nations. Leading charity Oxfam says that when corporations such as Starbucks can legally avoid paying tax, the global inequality crisis worsens. Basically, done wisely in the words of the International Monetary Fund globalization could lead to "unparalleled peace and prosperity".

The ability of countries to rise above narrow self-interest has brought unprecedented economic wealth and plenty of applicable scientific progress. However, for different reasons, not everyone has been benefiting the same from globalization and technological change: wealth is unfairly distributed and economic growth came at huge environmental costs.

How can countries rise above narrow self-interest and act together or designing fairer societies and a healthier planet? How do we make globalization more just? Lagarde defends we should pursue globalization policies that extend the benefits of openness and integration while alleviating their side effects.

How to make globalization more just is a very complex question that involves redesigning economic systems. But how? Globalization is deeply connected with economic systems and markets, which, on their turn, impact and are impacted by social issues, cultural factors that are hard to overcome, regional specificities, timings of action and collaborative networks. For some people, this global phenomenon is inherent to human nature.

Because of this, some say globalization begun about 60, years ago, at the beginning of human history. Since the old times, different civilizations have developed commercial trade routes and experienced cultural exchanges.

And as well, the migratory phenomenon has also been contributing to these populational exchanges. Especially nowadays, since traveling became quicker, more comfortable, and more affordable. This phenomenon has continued throughout history, notably through military conquests and exploration expeditions. Because of trade developments and financial exchanges, we often think of globalization as an economic and financial phenomenon. Nonetheless, it includes a much wider field than just flowing of goods, services or capital.

Often referred to as the globalization concept map, s ome examples of globalization are:. Globalization has benefits that cover many different areas.

It reciprocally developed economies all over the world and increased cultural exchanges. It also allowed financial exchanges between companies, changing the paradigm of work. Many people are nowadays citizens of the world.

The origin of goods became secondary and geographic distance is no longer a barrier for many services to happen. The most visible impacts of globalization are definitely the ones affecting the economic world.

Globalization has led to a sharp increase in trade and economic exchanges, but also to a multiplication of financial exchanges. In the s world economies opened up and the development of free trade policies accelerated the globalization phenomenon. Between and , world exports increased fold. This significantly contributed to increasing the interactions between different regions of the world. This acceleration of economic exchanges has led to strong global economic growth.

It fostered as well a rapid global industrial development that allowed the rapid development of many of the technologies and commodities we have available nowadays. Knowledge became easily shared and international cooperation among the brightest minds speeded things up. According to some analysts, globalization has also contributed to improving global economic conditions, creating much economic wealth thas was, nevertheless, unequally distributed — more information ahead.

At the same time, finance also became globalized. From the s, driven by neo-liberal policies, the world of finance gradually opened. This financial globalization has contributed to the rise of a global financial market in which contracts and capital exchanges have multiplied. Together with economic and financial globalization, there has obviously also been cultural globalization. Indeed, the multiplication of economic and financial exchanges has been followed by an increase in human exchanges such as migration, expatriation or traveling.

These human exchanges have contributed to the development of cultural exchanges. This means that different customs and habits shared among local communities have been shared among communities that used to have different procedures and even different beliefs. Good examples of cultural globalization are, for instance, the trading of commodities such as coffee or avocados.

Coffee is said to be originally from Ethiopia and consumed in the Arabid region. Nonetheless, due to commercial trades after the 11th century, it is nowadays known as a globally consumed commodity. Avocados , for instance, grown mostly under the tropical temperatures of Mexico, the Dominican Republic or Peru.

One clear result of globalization is that an economic downturn in one country can create a domino effect through its trade partners. For example, the financial crisis had a severe impact on Portugal, Ireland, Greece, and Spain.

All these countries were members of the European Union , which had to step in to bail out debt-laden nations, which were thereafter known by the acronym PIGS. Globalization detractors argue that it has created a concentration of wealth and power in the hands of a small corporate elite that can gobble up smaller competitors around the globe. Globalization has become a polarizing issue in the U. It's seen as a major factor in the economic squeeze on the middle class.

For better and worse, globalization has also increased homogenization. Starbucks, Nike, and Gap dominate commercial space in many nations. The sheer size and reach of the U. In essence, globalization is about the world becoming increasingly interconnected. Countries today are more connected than ever before, due to factors such as air travel, containerized sea shipping, international trade agreements and legal treaties, and the Internet.

In the world of business, globalization is associated with trends such as outsourcing, free trade, and international supply chains.

Proponents of globalization will point to the dramatic decline in poverty that has taken place throughout the world over the past several decades, which many economists attribute in part to increased trade and investment between nations.

Similarly, they will argue that globalization has allowed products and services such as cellphones, airplanes, and information technology to be spread far more widely throughout the world. Globalization can also have negative environmental impacts due to economic development, industrialization, and international travel. Globalization is important because it is one of the most powerful forces affecting the modern world, so much so that it can be difficult to make sense of the world without understanding globalization.

For example, many of the largest and most successful corporations in the world are in effect truly multinational organizations, with offices and supply chains stretched right across the world.

These companies would not be able to exist if not for the complex network of trade routes, international legal agreements, and telecommunications infrastructure that were made possible through globalization. Important political developments, such as the ongoing trade conflict between the United States and China, are also directly related to globalization.

Peterson Institute for International Economics. Accessed July 30, Congressional Research Service. Emerging Markets. Your Privacy Rights. The resulting spread of slavery demonstrates that globalization can hurt people just as easily as it can connect people.

The rate of globalization has increased in recent years, a result of rapid advancements in communication and transportation. Advances in communication enable businesses to identify opportunities for investment. At the same time, innovations in information technology enable immediate communication and the rapid transfer of financial assets across national borders. Improved fiscal policies within countries and international trade agreements between them also facilitate globalization.

Political and economic stability facilitate globalization as well. The relative instability of many African nations is cited by experts as one of the reasons why Africa has not benefited from globalization as much as countries in Asia and Latin America. Benefits of Globalization Globalization provides businesses with a competitive advantage by allowing them to source raw materials where they are inexpensive.

Globalization also gives organizations the opportunity to take advantage of lower labor costs in developing countries, while leveraging the technical expertise and experience of more developed economies.

With globalization, different parts of a product may be made in different regions of the world. Globalization has long been used by the automotive industry , for instance, where different parts of a car may be manufactured in different countries. Businesses in several different countries may be involved in producing even seemingly simple products such as cotton T-shirts.

Globalization affects services too. Many businesses located in the United States have outsourced their call centers or information technology services to companies in India.

The result is more jobs in countries where jobs are needed, which can have a positive effect on the national economy and result in a higher standard of living. China is a prime example of a country that has benefited immensely from globalization. Another example is Vietnam, where globalization has contributed to an increase in the prices for rice, lifting many poor rice farmers out of poverty. As the standard of living increased, more children of poor families left work and attended school.

Consumers benefit too. In general, globalization decreases the cost of manufacturing. This means that companies can offer goods at a lower price to consumers. The average cost of goods is a key aspect that contributes to increases in the standard of living. Consumers also have access to a wider variety of goods.