Globalization – Economic Dimension
In simple terms, the phenomenon of ‘globalization’ is perceived as increased inter-connectedness of the world (Papers4you.com, 2006). However there are three primary defining pillars of globalization that includes cultural, political and Economic dimensions (Potter, 2002). It was argued that ‘cultural globalization’ is increasing convergence of cultural styles on a global norm, with that norm being codified and defined by the global capitalist system.
Now cultural values and norms are shared and adopted among people in a way where we are giving rise to one global culture. Similarly it was asserted that ‘political globalization’ is regarding as erosion of the former role and power of the nation-state.
On the other hand, Potter (2002:192) defines ‘Economic globalization’ as economy where “distance has become less important to Economic activities, so that large countries sub-contract to branchplants in far distant regions, effectively operating within a ‘borderless’ world”. However Inoguchi (2001) attempted to differentiate between international and global economy.
International economy suggests importance of national economies working as units under national states as a result the international economy concerns activities that take place among various ‘national economies’. However global economy describes unity of globe where geographical distance is no longer obstacle to Economic activities.
It also implies aggregation of the movement of goods and services worldwide together with their concomitant activities including movement of technology information and currencies without ‘tyranny of distance’.
The Economic globalization was flourished in 1990s and many examples can be taken to validate this argument (Papers4you.com, 2006). For instance Western European integration was first step towards Economic globalization by European countries through signing Maastricht Treaty in 1991 that lead to creation of single market in 1992 and set base for European Union that was on full operation in 1999.
Similarly 12 members of European Community and seven members of EFTA formed European Economic Area for free trade including 380 million people and accounted for 40% of world trade (Meredith & Dyster, 1999).
How ever it was the signature on First Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations in April, 1994 that developed the official foundation of first real concept of borderless global economy (LeQuesene, 1996).
The primary aim of Uruguay Round was finalizing ways to reduce tariff barriers in developed countries as well as reduce non tariff barriers like elimination of safeguarding, antidumping restrictions and voluntary export restraint (Meredith & Dyster, 1999:291). Currently, WTO is a body looking after ensuring Economic globalization primarily through trade liberalization.
These attempts resulted in boom of what is known as ‘global Economic convergence’, that is ‘global integration of product’ (through world’s top manufacturing companies’ global operations by conducting planning, production and joint research with companies of myriad nationalities and outside their home countries) and financial markets through currency trading, baking and loans and investment in bonds and equity leading towards global homogenization (Kenworthy, 1997).
Globalization – Economic Dimension
Globalization is a term that refers to the increasing interconnectedness of the world’s economies, cultures, and populations. It is a process that has been ongoing for centuries, but it has accelerated dramatically since the mid-twentieth century. Today, the economic dimension of globalization is perhaps the most visible and controversial aspect of the phenomenon.
The economic dimension of globalization has been driven by a number of factors, including advances in transportation and communication technology, the liberalization of trade and investment policies, and the emergence of multinational corporations (MNCs). These developments have created a global marketplace in which goods, services, and capital flow freely across national borders.
One of the key features of the global economy is the increasing integration of production processes across countries. This means that goods and services are often produced in multiple locations around the world before being assembled and sold to consumers. For example, a smartphone might be designed in the United States, manufactured in China, and sold in Europe.
This integration of production processes has been made possible by advances in transportation technology, which have dramatically reduced the cost and time required to move goods and people across borders. It has also been facilitated by the liberalization of trade and investment policies, which have reduced barriers to the flow of goods, services, and capital between countries.
The emergence of MNCs has also played a critical role in the globalization of the world economy. These are large companies that have operations in multiple countries and often dominate particular sectors of the global economy. MNCs have been able to leverage their size and resources to take advantage of the opportunities created by globalization, such as the ability to access new markets and sources of labor and to exploit economies of scale.
While globalization has brought many benefits, it has also been a source of controversy and debate. One of the main criticisms of globalization is that it has led to increased inequality both within and between countries. Some argue that the benefits of globalization have been concentrated in the hands of a small elite, while many workers and communities have been left behind.
Another criticism of globalization is that it has led to a race to the bottom in terms of labor and environmental standards. As companies seek to cut costs and increase profits, they may relocate production to countries with lower wages and weaker regulations, leading to a race to the bottom in terms of labor and environmental standards.
Finally, some argue that globalization has contributed to the erosion of national sovereignty and cultural identity. As the world becomes more interconnected, some fear that national governments and cultural traditions will be undermined by global forces beyond their control.
Despite these criticisms, globalization is likely to continue to be a major force shaping the world economy in the coming decades. While there may be a need for policies to mitigate the negative effects of globalization, it is clear that the benefits of increased trade, investment, and cultural exchange are too great to be ignored.
What Is Globalization?
And How Has the Global Economy Shaped the United States?
After centuries of technological progress and advances in international cooperation, the world is more connected than ever. But how much has the rise of trade and the modern global economy helped or hurt American businesses, workers, and consumers? Here is a basic guide to the economic side of this broad and much debated topic, drawn from current research.
Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life. This guide uses the term more narrowly to refer to international trade and some of the investment flows among advanced economies, mostly focusing on the United States.
The wide-ranging effects of globalization are complex and politically charged. As with major technological advances, globalization benefits society as a whole, while harming certain groups. Understanding the relative costs and benefits can pave the way for alleviating problems while sustaining the wider payoffs.
THE GLOBAL ECONOMY MOVES FAST. WE HELP YOU NAVIGATE IT.
The Peterson Institute for International Economics (PIIE) is an independent nonprofit, nonpartisan research organization dedicated to strengthening prosperity and human welfare in the global economy through expert analysis and practical policy solutions.
THE HISTORY OF GLOBALIZATION IS DRIVEN BY TECHNOLOGY, TRANSPORTATION, AND INTERNATIONAL COOPERATION
Since ancient times, humans have sought distant places to settle, produce, and exchange goods enabled by improvements in technology and transportation. But not until the 19th century did global integration take off. Following centuries of European colonization and trade activity, that first “wave” of globalization was propelled by steamships, railroads, the telegraph, and other breakthroughs, and also by increasing economic cooperation among countries.
The globalization trend eventually waned and crashed in the catastrophe of World War I, followed by postwar protectionism, the Great Depression, and World War II. After World War II in the mid-1940s, the United States led efforts to revive international trade and investment under negotiated ground rules, starting a second wave of globalization, which remains ongoing, though buffeted by periodic downturns and mounting political scrutiny.
Inoguchi, T., (2001), ‘The World Economy’, in Inoguchi, T., (eds) (2001), Global Change- A Japanese Perspective, Hampshire: Palgrave.
Kneworthy, L., (1997), ‘Globalisation and Economic Convergence’, Competition and Change, 1997, Vol 2
LeQuesne, C., (1996), ‘The Uruguay Round’, in LeQuesne, C., (eds) (1996), Reforming World Trade, the Social and Environmental Priorities, Oxford: Oxfam
Meredith, D., & Dyster, B., (1999), ‘International Economic Impacts on Australia in the 1990s’, in Meredith, D., & Dyster, B., (eds) (1999), Australia In The Global Economy- Continuity and Change, Cambridge: Cambridge University Press.
Papers For You (2006) “P/B/653. Negative effects of globalisation”, Available from [19/06/2006]
Papers For You (2006) “S/M/81. IN THE MIST OF GLOBALISATION: CLASSICAL STRATEGIC MANAGEMENT IN THE 21ST CENTURY-IS IT WORKING?”, Available from Papers4you.com [19/06/2006]
Potter, C (2002), ‘Global Convergence, Divergence and Development’, in Desai V and Potter, R. (eds) (2002), The Companion to Development Studies, London: Arnold.
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Author: Mohammed A Bazzoun
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