Globalization is the tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnection of the world. Globalization has had the effect of markedly increasing international trade and cultural exchange.
BREAKING DOWN ‘Globalization’
Proponents of globalization say that it helps developing nations catch up to industrialized nations much faster through increased employment and technological advances; critics of globalization say that it weakens national sovereignty and allows rich nations to ship domestic jobs overseas where labor is much cheaper.
Globalization is used to explain the recent integration of domestic economies, industries, cultures and government policies around the world. This integration has occurred through increases in the technological capabilities and efficiency of world trade, communication and transportation. Primarily, globalization refers to the economic integration of the global markets, but it is also used to describe the socio-cultural integration that has been brought on by the rise of the Internet.
Driving Factors of Globalization
Public policy and technology are the two main driving factors behind current globalization. Recent implementations of government policy, both domestic and internationally, have opened economic borders for countries across the world. Over the past 20 years, world governments have integrated a free-market economic system into fiscal policies, monetary policies and trade agreements. This evolution of economic systems has stimulated domestic production potential and opened countries to increased financial opportunities abroad. World governments now focus on decreasing barriers to trade and actively promote international commerce in relation to investments, goods and services.
Technology has also been a major reason for the growth in globalization. Advancements in information technology (IT) and the flow of information across borders have empowered individuals to take control of their financial lives. Technology has helped people become more informed about economic trends and allows people to transfer financial assets and take advantage of investment opportunities. Technology has increased the ability to communicate internationally, closing the gap between different cultures.
The Controversy Behind Globalization
At first glance, globalization is an amazing development. Those who believe in globalization as a force of good cite increases in standards of living in developing countries as benefits of globalization. Those who do not believe in globalization, however, cite the fact that it has disproportionately benefited corporations in the Western world at the damage of developing economies, cultures and people. These critics actively work to strengthen domestic economies at the expense of free trade.