Take a minute break and just think about things around you. Your laptop, your mobile phone, all electrical appliances, cars, make-up products, where are all these made and by whom? An iPhone, for example, is designed in California, assembled in China, from chip sets produced in Japan and Europe. A common car is designed in Germany, assembled in United States, from components made in China and Japan and fabricated from Indian steel and Malaysian rubber. And examples can continue.
This is the world in which we live, described by the phenomenon of globalization. Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by unrestricted cross-border trades in goods and services, technologies, flows of investment, people, and information. Today, the volume of goods, services and investments crossing national borders is expanding faster than the world output.
Globalization, however, isn’t a new concept. People have been trading goods for almost as long as they have been around. There are evidences that reveal to us that they have been doing it since antiquity. The beginning recognized by history starts with the silk road. For the first time, luxury products from China were sold to the Roman Empire, contributing to a first fusion of cultures. The next chapter in trade happened thanks to Islamic merchants, who were focused on trading spices. The impact of those trades, however, wasn’t powerful enough to take off globalization. All was triggered in the years of discovery, by persons like Columbus or Magellan, when trades between Asia, Europe and America truly exploded. First wave of globalization started in the 19th century, powered by the Industrial Revolution. Goods such as iron, textiles of manufactured goods were transported thousands of miles across countries to meet everyone’s needs.
Globalization of markets vs globalization of products
Now, globalization is a complex economic phenomenon, that’s why dividing it into two categories is necessary. The first one, globalization of markets means moving away from national markets, which are distinct entities, isolated by trade barriers, toward one global market, formed by merging all national markets. Globalization of production, on the other side, is a trend lead by individual firms which move some of their production processes to different locations around the globe, in order to take advantage of the cost, quality or production factors. As you might have already realized, these two processes involve both advantages and disadvantages. Some are listed below.
It is believed that global economy is driven toward a greater prosperity, that goods and services will have lower prices, that is promoted economic growth. Indeed, some consumers have higher incomes and there are a lot more job opportunities for everyone, but what about the antiglobalization protests? What are the hidden downsides? As we all know, businesses have in fact one goal: to make profit. There are a lot of abuses happening worldwide, starting from the exploitation of people from poor countries, such as African ones, and finishing with the well-known environmental issues, such as pollution or deforestation. That’s why the emergence of Global Institutions, such as World Trade Organization (WTO), World Bank or International Monetary Fund (IMF), in the last century seems to be savior, but many misuses still go unpunished. Moreover, globalization is not only an economic concept, but also a social one. The mix of cultures which we experience makes us no longer recognize our own one and the future will continue to make the boundaries between cultures even more blurred.
So, is the shift toward a more integrated and interdependent global economy a good thing? Is it possible for global institutions to regulate abuses? Think of that and analyze how many of the thinks you use are produced in more than one country. It’s surprising, right?
Bibliography:
https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/
Global Business Today 10th edition by Charles W. L. Hill and G. Thomas M. Hault
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