Economic globalization

Economic globalization refers to increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital. It is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market. Depending on the paradigm, globalization can be viewed as either a positive or a negative phenomenon.

Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries. Whilst economic globalization has been occurring for the last several hundred years (since the emergence of trans-national trade), it has begun to occur at an increased rate over the last 20–30 years. This recent boom has been largely accounted by developed economies integrating with less developed economies, by means of foreign direct investment, the reduction of trade barriers, and in many cases cross border immigration.

History

International Commodity markets, labor markets, and capital markets make up the economy and define economic globalization. Beginning as early as 4000 BC, people were trading goats and livestock as a means of money. People residing in an early civilization in Mesopotamia (Sumer) came up with a token system that was seen as one of the first forms of commodity money. Labor markets consist of workers, employers, wages, income, supply, and demand. Labor markets have been around as long as commodity markets. Labor markets grew out of commodity markets because labor was needed to grow the crops and tend to the livestock. The growth of commodity and labor markets grew into a capital market where companies and governments handle longstanding funds. The process of this collaboration of markets in the economy took thousands of years to become what it is today.

By the early 1900s, it was rare to come across a town that was not influenced by foreign markets—whether it be in labor, prices, or any other policy of business. With advances in boat technology and the inventions of the railroad and telephone, communication with other parts of the country and world was readily available. Towns were no longer limited to what they alone could produce and what the next two towns over would trade with them. People everywhere had the accessibility and resources to obtain goods from the other side of the world.However, these great advances in economic globalization were disrupted by World War I and the Great Depression in the late 1920s. This caused a slowing of world-wide trade and even led to other countries introducing immigration caps. Globalization of the economy didn’t fully resume until the 1970’s.

Irreversibility

According to China's prominent economist Gao Shanquan, economic globalization is an irreversible trend due to the fact the world markets are in great need of science and information technologies. With the growing demands of science and technology, Shanquan states that with world markets take on an "increasing cross-border division of labor" that works its way down to every facet of globalized markets from both developed and developing nations.

Debate over exploitation due to economic globalization

Some may argue that many developing countries are at an extreme disadvantage in the global economy. Economists have theorized on how to combat these disadvantages. Currently, developed Northern countries are working to ease this disadvantage by issuing a new round of trade negotiations. However, the same advantaged countries continue to control the economic agenda. In order to rectify the social injustice dilemma, international economic institutions (such as the World Bank and the IMF) must give voice to developing countries. It is important to issue global rules that protect developing countries; however it is still difficult for leaders of developing nations to have an influence over these global rules.

In order to create better economic relations globally, international lending agencies must work with developing countries to “help reverse the international concentration of credit and expedite the financial development of these countries”. There is a need for social respect of all persons worldwide. It is suggested that in order to ensure such social respect, the United Nations should expand its agenda to work more rigorously with international lending agencies. Despite their title, international lending agencies tend to be nation based and should expand to be more inclusive of all nations. It is also proposed that there is a need for universal competitiveness. A key factor in achieving universal competition is the spread of knowledge at the State level. This would entail a greater investment in “education, vocational and business training, and science and technology”.

Several movements, such as the Fair Trade movement and the anti-sweatshop movement, have worked towards promoting a more socially just global economy. The Fair Trade movement has played a significant role in alleviating exploitation due to economic globalization. For example, in relation to the global food market, Fair Trade sales account for 1.6 billion US dollars each year. The Fair Trade movement works towards improving trade, development and production for disadvantages producers. Furthermore, the movement works to raise consumer awareness of exploitation of developing countries. Fair Trade works under the motto of “trade, not aid”, to improve the quality of life for farmers and merchants by participating in direct sales, providing better prices and supporting the community.

Positive effects of economic globalization

There are at least three positive financial effects of economic globalization. "Per capita GDP growth in the post-1980 globalizers accelerated from 1.4 percent a year in the 1960s and 2.9 percent a year in the 1970s to 3.5 percent in the 1980s and 5.0 percent in the 1990s. This acceleration in growth is even more remarkable given that the rich countries saw steady declines in growth from a high of 4.7 percent in the 1960s to 2.2 percent in the 1990s. Also, the nonglobalizing developing countries did much worse than the globalizers, with the former's annual growth rates falling from highs of 3.3 percent during the 1970s to only 1.4 percent during the 1990s. This rapid growth among the globalizers is not simply due to the strong performances of China and India in the 1980s and 1990s—18 out of the 24 globalizers experienced increases in growth, many of them quite substantial." The information is represented in the chart below.

Despite many analysts concern about the inequality gap between developed and developing nations, there is no evidence to suggest that inequality increases as international trade increases. Rather, growth benefits of economic globalization are widely shared. While several globalizers have seen an increase in inequality, most notably China, this increase in inequality is a result of domestic liberalization, restrictions on internal migration, and agricultural policies, rather than a result of international trade.

Economic globalization also has helped to decrease poverty around the world. Poverty has been reduced as evidenced by a 5.4 percent annual growth in income for the poorest fifth of the population of Malaysia. Even in China, where inequality continues to be a problem, the poorest fifth of the population saw a 3.8 percent annual growth in income. In several countries, those living below the dollar per day poverty threshold declined. In China, the rate decline from 20 to 15 percent, and in Bangladesh the rate dropped from 43 to 36 percent.

The final positive effect to be mentioned is the narrowing gap between the rich and the poor. While many feel that economic globalization increases the gap between rich and poor nations, evidence suggests otherwise. The growth of globalizers in relation to rich countries suggests that globalizers are narrowing the per capita income gap. China, India, and Bangladesh, who were among the poorest countries in the world twenty years ago, have greatly influenced the narrowing of worldwide inequality due to their economic expansion.

As we see from the information above, economic globalization can be beneficial for several financial reasons. Through the process of increasing economic integration between countries, the poorest members of the worldwide society see improvements in living conditions, and financial status, that they would not have otherwise seen. Economic globalization improves the financial well being of all nearly all classes of society, but is most evidenced in the poorest of nations.

Effects on world cultures

Economic globalization may have various strong impacts on different world cultures. Populations may mimic the international flow of capital and labor markets in the form of immigration and the merger of cultures. Foreign resources and economic measures may impact different native cultures and may cause assimilation of a native people Researchers are now studying the effects of economic globalization on the youth in various world populations such as Arab, South American, South East-Asian, Caribbean, and African populations. As these populations are exposed to the English language, Computers, western music, and North American culture, changes are being noted in shrinking family size, immigration to larger cities, more casual dating practices, and gender roles are transformed.

See also

• Free Trade
• Globalization
• Mundialization
• World Economy
• Jihad vs. McWorld