Globalization is from the word

Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term globalization first appeared in the early 20th century (supplanting an earlier French term mondialization), developed its current meaning some time in the second half of the 20th century, and came into popular use in the 1990s to describe the unprecedented international connectivity of the post-Cold War world.[1] Its origins can be traced back to 18th and 19th centuries due to advances in transportation and communications technology. This increase in global interactions has caused a growth in international trade and the exchange of ideas, beliefs, and culture. Globalization is primarily an economic process of interaction and integration that is associated with social and cultural aspects. However, disputes and international diplomacy are also large parts of the history of globalization, and of modern globalization.

Economically, globalization involves goods, services, data, technology, and the economic resources of capital.[2] The expansion of global markets liberalizes the economic activities of the exchange of goods and funds. Removal of cross-border trade barriers has made the formation of global markets more feasible.[3] Advances in transportation, like the steam locomotive, steamship, jet engine, and container ships, and developments in telecommunication infrastructure, like the telegraph, Internet, mobile phones, and smartphones, have been major factors in globalization and have generated further interdependence of economic and cultural activities around the globe.[4][5][6]

Though many scholars place the origins of globalization in modern times, others trace its history to long before the European Age of Discovery and voyages to the New World, and some even to the third millennium BCE.[7] Large-scale globalization began in the 1820s, and in the late 19th century and early 20th century drove a rapid expansion in the connectivity of the world’s economies and cultures.[8] The term global city was subsequently popularized by sociologist Saskia Sassen in her work The Global City: New York, London, Tokyo (1991).[9]

In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people, and the dissemination of knowledge.[10] Globalizing processes affect and are affected by business and work organization, economics, sociocultural resources, and the natural environment. Academic literature commonly divides globalization into three major areas: economic globalization, cultural globalization, and political globalization.[11]

Etymology and usage

The word globalization was used in the English language as early as the 1930s, but only in the context of education, and the term failed to gain traction. Over the next few decades, the term was occasionally used by other scholars and media, but it was not clearly defined.[1] One of the first usages of the term in the meaning resembling the later, common usage was by French economist François Perroux in his essays from the early 1960s (in his French works he used the term mondialization (literary worldization), also translated as mundialization).[1] Theodore Levitt is often credited with popularizing the term and bringing it into the mainstream business audience in the later in the middle of 1980s.[1]

Since its inception, the concept of globalization has inspired competing definitions and interpretations. Its antecedents date back to the great movements of trade and empire across Asia and the Indian Ocean from the 15th century onward.[12][13]
Due to the complexity of the concept, various research projects, articles, and discussions often stay focused on a single aspect of globalization.[14]

In 1848, Karl Marx noticed the increasing level of national inter-dependence brought on by capitalism, and predicted the universal character of the modern world society. He states:

“The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. . . . In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations.”[15]

Sociologists Martin Albrow and Elizabeth King define globalization as «all those processes by which the people of the world are incorporated into a single world society.»[2] In The Consequences of Modernity, Anthony Giddens writes: «Globalization can thus be defined as the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa.»[16] In 1992, Roland Robertson, professor of sociology at the University of Aberdeen and an early writer in the field, described globalization as «the compression of the world and the intensification of the consciousness of the world as a whole.»[17]

In Global Transformations, David Held and his co-writers state:

Although in its simplistic sense globalization refers to the widening, deepening and speeding up of global interconnection, such a definition begs further elaboration. … Globalization can be on a continuum with the local, national and regional. At one end of the continuum lie social and economic relations and networks which are organized on a local and/or national basis; at the other end lie social and economic relations and networks which crystallize on the wider scale of regional and global interactions. Globalization can refer to those spatial-temporal processes of change which underpin a transformation in the organization of human affairs by linking together and expanding human activity across regions and continents. Without reference to such expansive spatial connections, there can be no clear or coherent formulation of this term. … A satisfactory definition of globalization must capture each of these elements: extensity (stretching), intensity, velocity and impact.[18]

Held and his co-writers’ definition of globalization in that same book as «transformation in the spatial organization of social relations and transactions—assessed in terms of their extensity, intensity, velocity and impact—generating transcontinental or inter-regional flows» was called «probably the most widely-cited definition» in the 2014 DHL Global Connectiveness Index.[19]

Swedish journalist Thomas Larsson, in his book The Race to the Top: The Real Story of Globalization, states that globalization:

is the process of world shrinkage, of distances getting shorter, things moving closer. It pertains to the increasing ease with which somebody on one side of the world can interact, to mutual benefit, with somebody on the other side of the world.[20]

Paul James defines globalization with a more direct and historically contextualized emphasis:

Globalization is the extension of social relations across world-space, defining that world-space in terms of the historically variable ways that it has been practiced and socially understood through changing world-time.[21]

Manfred Steger, professor of global studies and research leader in the Global Cities Institute at RMIT University, identifies four main empirical dimensions of globalization: economic, political, cultural, and ecological. A fifth dimension—the ideological—cutting across the other four. The ideological dimension, according to Steger, is filled with a range of norms, claims, beliefs, and narratives about the phenomenon itself.[22]

James and Steger stated that the concept of globalization «emerged from the intersection of four interrelated sets of ‘communities of practice’ (Wenger, 1998): academics, journalists, publishers/editors, and librarians.»[1]: 424  They note the term was used «in education to describe the global life of the mind»; in international relations to describe the extension of the European Common Market, and in journalism to describe how the «American Negro and his problem are taking on a global significance».[1] They have also argued that four forms of globalization can be distinguished that complement and cut across the solely empirical dimensions.[21][23] According to James, the oldest dominant form of globalization is embodied globalization, the movement of people. A second form is agency-extended globalization, the circulation of agents of different institutions, organizations, and polities, including imperial agents. Object-extended globalization, a third form, is the movement of commodities and other objects of exchange. He calls the transmission of ideas, images, knowledge, and information across world-space disembodied globalization, maintaining that it is currently the dominant form of globalization. James holds that this series of distinctions allows for an understanding of how, today, the most embodied forms of globalization such as the movement of refugees and migrants are increasingly restricted, while the most disembodied forms such as the circulation of financial instruments and codes are the most deregulated.[24]

The journalist Thomas L. Friedman popularized the term «flat world», arguing that globalized trade, outsourcing, supply-chaining, and political forces had permanently changed the world, for better and worse. He asserted that the pace of globalization was quickening and that its impact on business organization and practice would continue to grow.[25]

Economist Takis Fotopoulos defined «economic globalization» as the opening and deregulation of commodity, capital, and labor markets that led toward present neoliberal globalization. He used «political globalization» to refer to the emergence of a transnational élite and a phasing out of the nation-state. Meanwhile, he used «cultural globalization» to reference the worldwide homogenization of culture. Other of his usages included «ideological globalization», «technological globalization», and «social globalization».[26]

Lechner and Boli (2012) define globalization as more people across large distances becoming connected in more and different ways.[27]

«Globophobia» is used to refer to the fear of globalization, though it can also mean the fear of balloons.[28][29][30]

History

There are both distal and proximate causes which can be traced in the historical factors affecting globalization. Large-scale globalization began in the 19th century.[31]

Archaic

Archaic globalization conventionally refers to a phase in the history of globalization including globalizing events and developments from the time of the earliest civilizations until roughly the 1600s. This term is used to describe the relationships between communities and states and how they were created by the geographical spread of ideas and social norms at both local and regional levels.[32]

In this schema, three main prerequisites are posited for globalization to occur. The first is the idea of Eastern Origins, which shows how Western states have adapted and implemented learned principles from the East.[32] Without the spread of traditional ideas from the East, Western globalization would not have emerged the way it did. The interactions of states were not on a global scale and most often were confined to Asia, North Africa, the Middle East, and certain parts of Europe.[32] With early globalization, it was difficult for states to interact with others that were not close. Eventually, technological advances allowed states to learn of others’ existence and thus another phase of globalization can occur. The third has to do with inter-dependency, stability, and regularity. If a state is not dependent on another, then there is no way for either state to be mutually affected by the other. This is one of the driving forces behind global connections and trade; without either, globalization would not have emerged the way it did and states would still be dependent on their own production and resources to work. This is one of the arguments surrounding the idea of early globalization. It is argued that archaic globalization did not function in a similar manner to modern globalization because states were not as interdependent on others as they are today.[32]

Also posited is a «multi-polar» nature to archaic globalization, which involved the active participation of non-Europeans. Because it predated the Great Divergence in the nineteenth century, where Western Europe pulled ahead of the rest of the world in terms of industrial production and economic output, archaic globalization was a phenomenon that was driven not only by Europe but also by other economically developed Old World centers such as Gujarat, Bengal, coastal China, and Japan.[33]

The German historical economist and sociologist Andre Gunder Frank argues that a form of globalization began with the rise of trade links between Sumer and the Indus Valley civilization in the third millennium BCE. This archaic globalization existed during the Hellenistic Age, when commercialized urban centers enveloped the axis of Greek culture that reached from India to Spain, including Alexandria and the other Alexandrine cities. Early on, the geographic position of Greece and the necessity of importing wheat forced the Greeks to engage in maritime trade. Trade in ancient Greece was largely unrestricted: the state controlled only the supply of grain.[7]

Trade on the Silk Road was a significant factor in the development of civilizations from China, Indian subcontinent, Persia, Europe, and Arabia, opening long-distance political and economic interactions between them.[34] Though silk was certainly the major trade item from China, common goods such as salt and sugar were traded as well; and religions, syncretic philosophies, and various technologies, as well as diseases, also traveled along the Silk Routes. In addition to economic trade, the Silk Road served as a means of carrying out cultural trade among the civilisations along its network.[35] The movement of people, such as refugees, artists, craftsmen, missionaries, robbers, and envoys, resulted in the exchange of religions, art, languages, and new technologies.[36]

Early modern

«Early modern» or «proto-globalization» covers a period of the history of globalization roughly spanning the years between 1600 and 1800. The concept of «proto-globalization» was first introduced by historians A. G. Hopkins and Christopher Bayly. The term describes the phase of increasing trade links and cultural exchange that characterized the period immediately preceding the advent of high «modern globalization» in the late 19th century.[37] This phase of globalization was characterized by the rise of maritime European empires, in the 15th and 17th centuries, first the Portuguese Empire (1415) followed by the Spanish Empire (1492), and later the Dutch and British Empires. In the 17th century, world trade developed further when chartered companies like the British East India Company (founded in 1600) and the Dutch East India Company (founded in 1602, often described as the first multinational corporation in which stock was offered) were established.[38]

Lisbon in the 1570s had many Africans.

An alternative view from historians Dennis Flynn and Arturo Giraldez, postulated that: globalization began with the first circumnavigation of the globe under the Magellan-Elcano expedition which preluded the rise of Global Silver Trade.[39]

Early modern globalization is distinguished from modern globalization on the basis of expansionism, the method of managing global trade, and the level of information exchange. The period is marked by such trade arrangements as the East India Company, the shift of hegemony to Western Europe, the rise of larger-scale conflicts between powerful nations such as the Thirty Years’ War, and the rise of newfound commodities—most particularly slave trade. The Triangular Trade made it possible for Europe to take advantage of resources within the Western Hemisphere. The transfer of animal stocks, plant crops, and epidemic diseases associated with Alfred W. Crosby’s concept of the Columbian Exchange also played a central role in this process. European, Muslims, Indian, Southeast Asian, and Chinese merchants were all involved in early modern trade and communications, particularly in the Indian Ocean region.

Modern

According to economic historians Kevin H. O’Rourke, Leandro Prados de la Escosura, and Guillaume Daudin, several factors promoted globalization in the period 1815–1870:[40]

  • The conclusion of the Napoleonic Wars brought in an era of relative peace in Europe.
  • Innovations in transportation technology reduced trade costs substantially.
  • New industrial military technologies increased the power of European states and the United States, and allowed these powers to forcibly open up markets across the world and extend their empires.
  • A gradual move towards greater liberalization in European countries.

During the 19th century, globalization approached its form as a direct result of the Industrial Revolution. Industrialization allowed standardized production of household items using economies of scale while rapid population growth created sustained demand for commodities. In the 19th century, steamships reduced the cost of international transportation significantly and railroads made inland transportation cheaper. The transportation revolution occurred some time between 1820 and 1850.[31] More nations embraced international trade.[31] Globalization in this period was decisively shaped by nineteenth-century imperialism such as in Africa and Asia. The invention of shipping containers in 1956 helped advance the globalization of commerce.[41][42]

After World War II, work by politicians led to the agreements of the Bretton Woods Conference, in which major governments laid down the framework for international monetary policy, commerce, and finance, and the founding of several international institutions intended to facilitate economic growth by lowering trade barriers. Initially, the General Agreement on Tariffs and Trade (GATT) led to a series of agreements to remove trade restrictions. GATT’s successor was the World Trade Organization (WTO), which provided a framework for negotiating and formalizing trade agreements and a dispute resolution process. Exports nearly doubled from 8.5% of total gross world product in 1970 to 16.2% in 2001.[43] The approach of using global agreements to advance trade stumbled with the failure of the Doha Development Round of trade negotiation. Many countries then shifted to bilateral or smaller multilateral agreements, such as the 2011 South Korea–United States Free Trade Agreement.

Since the 1970s, aviation has become increasingly affordable to middle classes in developed countries. Open skies policies and low-cost carriers have helped to bring competition to the market. In the 1990s, the growth of low-cost communication networks cut the cost of communicating between countries. More work can be performed using a computer without regard to location. This included accounting, software development, and engineering design.

Student exchange programs became popular after World War II, and are intended to increase the participants’ understanding and tolerance of other cultures, as well as improving their language skills and broadening their social horizons. Between 1963 and 2006 the number of students studying in a foreign country increased 9 times.[44]

Since the 1980s, modern globalization has spread rapidly through the expansion of capitalism and neoliberal ideologies.[45] The implementation of neoliberal policies has allowed for the privatization of public industry, deregulation of laws or policies that interfered with the free flow of the market, as well as cut-backs to governmental social services.[46] These neoliberal policies were introduced to many developing countries in the form of structural adjustment programs (SAPs) that were implemented by the World Bank and the International Monetary Fund (IMF).[45] These programs required that the country receiving monetary aid would open its markets to capitalism, privatize public industry, allow free trade, cut social services like healthcare and education and allow the free movement of giant multinational corporations.[47] These programs allowed the World Bank and the IMF to become global financial market regulators that would promote neoliberalism and the creation of free markets for multinational corporations on a global scale.[48]

With a population of 1.4 billion, China is the world’s second-largest economy.

In the late 19th and early 20th century, the connectedness of the world’s economies and cultures grew very quickly. This slowed down from the 1910s onward due to the World Wars and the Cold War,[49] but picked up again in the 1980s and 1990s.[50] The revolutions of 1989 and subsequent liberalization in many parts of the world resulted in a significant expansion of global interconnectedness. The migration and movement of people can also be highlighted as a prominent feature of the globalization process. In the period between 1965 and 1990, the proportion of the labor force migrating approximately doubled. Most migration occurred between the developing countries and least developed countries (LDCs).[51] As economic integration intensified workers moved to areas with higher wages and most of the developing world oriented toward the international market economy. The collapse of the Soviet Union not only ended the Cold War’s division of the world – it also left the United States its sole policeman and an unfettered advocate of free market.[according to whom?] It also resulted in the growing prominence of attention focused on the movement of diseases, the proliferation of popular culture and consumer values, the growing prominence of international institutions like the UN, and concerted international action on such issues as the environment and human rights.[52] Other developments as dramatic were the Internet’s becoming influential in connecting people across the world; As of June 2012, more than 2.4 billion people—over a third of the world’s human population—have used the services of the Internet.[53][54] Growth of globalization has never been smooth. One influential event was the late 2000s recession, which was associated with lower growth (in areas such as cross-border phone calls and Skype usage) or even temporarily negative growth (in areas such as trade) of global interconnectedness.[55][56]

The China–United States trade war, starting in 2018, negatively affected trade between the two largest national economies. The economic impact of the COVID-19 pandemic included a massive decline in tourism and international business travel as many countries temporarily closed borders. The 2021–2022 global supply chain crisis resulted from temporary shutdowns of manufacturing and transportation facilities, and labor shortages. Supply problems incentivized some switches to domestic production.[57] The economic impact of the 2022 Russian invasion of Ukraine included a blockade of Ukrainian ports and international sanctions on Russia, resulting in some de-coupling of the Russian economy with global trade, especially with the European Union and other Western countries.

Economic globalization

U.S. Trade Balance and Trade Policy (1895–2015)

Economic globalization is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, services, technology, and capital.[59] Whereas the globalization of business is centered around the diminution of international trade regulations as well as tariffs, taxes, and other impediments that suppresses global trade, economic globalization is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market.[60] Depending on the paradigm, economic globalization can be viewed as either a positive or a negative phenomenon. Economic globalization comprises: globalization of production; which refers to the obtainment of goods and services from a particular source from locations around the globe to benefit from difference in cost and quality. Likewise, it also comprises globalization of markets; which is defined as the union of different and separate markets into a massive global marketplace. Economic globalization also includes[61] competition, technology, and corporations and industries.[59]

Current globalization trends can be largely accounted for by developed economies integrating with less developed economies by means of foreign direct investment, the reduction of trade barriers as well as other economic reforms, and, in many cases, immigration.[62]

International standards have made trade in goods and services more efficient. An example of such standard is the intermodal container. Containerization dramatically reduced the costs of transportation, supported the post-war boom in international trade, and was a major element in globalization.[41] International standards are set by the International Organization for Standardization, which is composed of representatives from various national standards organizations.

A multinational corporation, or worldwide enterprise,[63] is an organization that owns or controls the production of goods or services in one or more countries other than their home country.[64] It can also be referred to as an international corporation, a transnational corporation, or a stateless corporation.[65]

A free-trade area is the region encompassing a trade bloc whose member countries have signed a free-trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers – import quotas and tariffs – and to increase trade of goods and services with each other.[66]
If people are also free to move between the countries, in addition to a free-trade agreement, it would also be considered an open border.
Arguably the most significant free-trade area in the world is the European Union, a politico-economic union of 27 member states that are primarily located in Europe. The EU has developed European Single Market through a standardized system of laws that apply in all member states. EU policies aim to ensure the free movement of people, goods, services, and capital within the internal market,[67]

Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximize efficiency while safeguarding legitimate regulatory objectives.

Global trade in services is also significant. For example, in India, business process outsourcing has been described as the «primary engine of the country’s development over the next few decades, contributing broadly to GDP growth, employment growth, and poverty alleviation».[68][69]

William I. Robinson’s theoretical approach to globalization is a critique of Wallerstein’s World Systems Theory. He believes that the global capital experienced today is due to a new and distinct form of globalization which began in the 1980s. Robinson argues not only are economic activities expanded across national boundaries but also there is a transnational fragmentation of these activities.[70] One important aspect of Robinson’s globalization theory is that production of goods are increasingly global. This means that one pair of shoes can be produced by six countries, each contributing to a part of the production process.

Cultural globalization

Shakira, a Colombian multilingual singer-songwriter, playing outside her home country

Cultural globalization refers to the transmission of ideas, meanings, and values around the world in such a way as to extend and intensify social relations.[71] This process is marked by the common consumption of cultures that have been diffused by the Internet, popular culture media, and international travel. This has added to processes of commodity exchange and colonization which have a longer history of carrying cultural meaning around the globe. The circulation of cultures enables individuals to partake in extended social relations that cross national and regional borders. The creation and expansion of such social relations is not merely observed on a material level. Cultural globalization involves the formation of shared norms and knowledge with which people associate their individual and collective cultural identities. It brings increasing interconnectedness among different populations and cultures.[72]

Cross-cultural communication is a field of study that looks at how people from differing cultural backgrounds communicate, in similar and different ways among themselves, and how they endeavour to communicate across cultures. Intercultural communication is a related field of study.

Cultural diffusion is the spread of cultural items—such as ideas, styles, religions, technologies, languages etc.
Cultural globalization has increased cross-cultural contacts, but may be accompanied by a decrease in the uniqueness of once-isolated communities. For example, sushi is available in Germany as well as Japan, but Euro-Disney outdraws the city of Paris, potentially reducing demand for «authentic» French pastry.[73][74][75] Globalization’s contribution to the alienation of individuals from their traditions may be modest compared to the impact of modernity itself, as alleged by existentialists such as Jean-Paul Sartre and Albert Camus. Globalization has expanded recreational opportunities by spreading pop culture, particularly via the Internet and satellite television. The cultural diffusion can create a homogenizing force, where globalisation is seen as synonymous with homogenizing force via connectedness of markets, cultures, politics and the desire for modernizations through imperial countries sphere of influence.[76]

Religions were among the earliest cultural elements to globalize, being spread by force, migration, evangelists, imperialists, and traders. Christianity, Islam, Buddhism, and more recently sects such as Mormonism are among those religions which have taken root and influenced endemic cultures in places far from their origins.[77]

McDonald’s is commonly seen as a symbol of globalization, often called McDonaldization of global society.

Globalization has strongly influenced sports.[78] For example, the modern Olympic Games has athletes from more than 200 nations participating in a variety of competitions.[79] The FIFA World Cup is the most widely viewed and followed sporting event in the world, exceeding even the Olympic Games; a ninth of the entire population of the planet watched the 2006 FIFA World Cup Final.[80][81][82][83]

The term globalization implies transformation. Cultural practices including traditional music can be lost or turned into a fusion of traditions. Globalization can trigger a state of emergency for the preservation of musical heritage. Archivists may attempt to collect, record, or transcribe repertoires before melodies are assimilated or modified, while local musicians may struggle for authenticity and to preserve local musical traditions. Globalization can lead performers to discard traditional instruments. Fusion genres can become interesting fields of analysis.[84]

Music has an important role in economic and cultural development during globalization. Music genres such as jazz and reggae began locally and later became international phenomena. Globalization gave support to the world music phenomenon by allowing music from developing countries to reach broader audiences.[85] Though the term «World Music» was originally intended for ethnic-specific music, globalization is now expanding its scope such that the term often includes hybrid subgenres such as «world fusion», «global fusion», «ethnic fusion»,[86] and worldbeat.[87][88]

Bourdieu claimed that the perception of consumption can be seen as self-identification and the formation of identity. Musically, this translates into each individual having their own musical identity based on likes and tastes. These likes and tastes are greatly influenced by culture, as this is the most basic cause for a person’s wants and behavior. The concept of one’s own culture is now in a period of change due to globalization. Also, globalization has increased the interdependency of political, personal, cultural, and economic factors.[90]

A 2005 UNESCO report[91] showed that cultural exchange is becoming more frequent from Eastern Asia, but that Western countries are still the main exporters of cultural goods. In 2002, China was the third largest exporter of cultural goods, after the UK and US. Between 1994 and 2002, both North America’s and the European Union’s shares of cultural exports declined while Asia’s cultural exports grew to surpass North America. Related factors are the fact that Asia’s population and area are several times that of North America. Americanization is related to a period of high political American clout and of significant growth of America’s shops, markets and objects being brought into other countries.

Some critics of globalization argue that it harms the diversity of cultures. As a dominating country’s culture is introduced into a receiving country through globalization, it can become a threat to the diversity of local culture. Some argue that globalization may ultimately lead to Westernization or Americanization of culture, where the dominating cultural concepts of economically and politically powerful Western countries spread and cause harm to local cultures.[92]

Globalization is a diverse phenomenon that relates to a multilateral political world and to the increase of cultural objects and markets between countries. The Indian experience particularly reveals the plurality of the impact of cultural globalization.[93]

Transculturalism is defined as «seeing oneself in the other».[94] Transcultural[95] is in turn described as «extending through all human cultures»[95] or «involving, encompassing, or combining elements of more than one culture».[96]

Political globalization

Political globalization refers to the growth of the worldwide political system, both in size and complexity. That system includes national governments, their governmental and intergovernmental organizations as well as government-independent elements of global civil society such as international non-governmental organizations and social movement organizations. One of the key aspects of the political globalization is the declining importance of the nation-state and the rise of other actors on the political scene.
William R. Thompson has defined it as «the expansion of a global political system, and its institutions, in which inter-regional transactions (including, but certainly not limited to trade) are managed».[97]
Political globalization is one of the three main dimensions of globalization commonly found in academic literature, with the two other being economic globalization and cultural globalization.[11]

Intergovernmentalism is a term in political science with two meanings. The first refers to a theory of regional integration originally proposed by Stanley Hoffmann; the second treats states and the national government as the primary factors for integration.[98]
Multi-level governance is an approach in political science and public administration theory that originated from studies on European integration. Multi-level governance gives expression to the idea that there are many interacting authority structures at work in the emergent global political economy. It illuminates the intimate entanglement between the domestic and international levels of authority.

Some people are citizens of multiple nation-states. Multiple citizenship, also called dual citizenship or multiple nationality or dual nationality, is a person’s citizenship status, in which a person is concurrently regarded as a citizen of more than one state under the laws of those states.

Increasingly, non-governmental organizations influence public policy across national boundaries, including humanitarian aid and developmental efforts.[100] Philanthropic organizations with global missions are also coming to the forefront of humanitarian efforts; charities such as the Bill and Melinda Gates Foundation, Accion International, the Acumen Fund (now Acumen) and the Echoing Green have combined the business model with philanthropy, giving rise to business organizations such as the Global Philanthropy Group and new associations of philanthropists such as the Global Philanthropy Forum. The Bill and Melinda Gates Foundation projects include a current multibillion-dollar commitment to funding immunizations in some of the world’s more impoverished but rapidly growing countries.[101] The Hudson Institute estimates total private philanthropic flows to developing countries at US$59 billion in 2010.[102]

As a response to globalization, some countries have embraced isolationist policies. For example, the North Korean government makes it very difficult for foreigners to enter the country and strictly monitors their activities when they do. Aid workers are subject to considerable scrutiny and excluded from places and regions the government does not wish them to enter. Citizens cannot freely leave the country.[103][104]

Globalization and gender

Globalization has been a gendered process where giant multinational corporations have outsourced jobs to low-wage, low skilled, quota free economies like the ready made garment industry in Bangladesh where poor women make up the majority of labor force.[105] Despite a large proportion of women workers in the garment industry, women are still heavily underemployed compared to men.[105] Most women that are employed in the garment industry come from the countryside of Bangladesh triggering migration of women in search of garment work.[105] It is still unclear as to whether or not access to paid work for women where it didn’t exist before has empowered them.[105] The answers varied depending on whether it is the employers perspective or the workers and how they view their choices.[105] Women workers did not see the garment industry as economically sustainable for them in the long run due to long hours standing and poor working conditions.[105] Although women workers did show significant autonomy over their personal lives including their ability to negotiate with family, more choice in marriage, and being valued as a wage earner in the family. This did not translate into workers being able to collectively organize themselves in order to negotiate a better deal for themselves at work.[105]

Another example of outsourcing in manufacturing includes the maquiladora industry in Ciudad Juarez, Mexico where poor women make up the majority of the labor force.[106] Women in the maquiladora industry have produced high levels of turnover not staying long enough to be trained compared to men.[106] A gendered two tiered system within the maquiladora industry has been created that focuses on training and worker loyalty.[106] Women are seen as being untrainable, placed in un-skilled, low wage jobs, while men are seen as more trainable with less turnover rates, and placed in more high skilled technical jobs.[106] The idea of training has become a tool used against women to blame them for their high turnover rates which also benefit the industry keeping women as temporary workers.[106]

Other dimensions

Scholars also occasionally discuss other, less common dimensions of globalization, such as environmental globalization (the internationally coordinated practices and regulations, often in the form of international treaties, regarding environmental protection)[107] or military globalization (growth in global extent and scope of security relationships).[108] Those dimensions, however, receive much less attention the three described above, as academic literature commonly subdivides globalization into three major areas: economic globalization, cultural globalization and political globalization.[11]

Movement of people

An essential aspect of globalization is movement of people, and state-boundary limits on that movement have changed across history.[109] The movement of tourists and business people opened up over the last century. As transportation technology improved, travel time and costs decreased dramatically between the 18th and early 20th century. For example, travel across the Atlantic ocean used to take up to 5 weeks in the 18th century, but around the time of the 20th century it took a mere 8 days.[110] Today, modern aviation has made long-distance transportation quick and affordable.

Tourism is travel for pleasure. The developments in technology and transportation infrastructure, such as jumbo jets, low-cost airlines, and more accessible airports have made many types of tourism more affordable. At any given moment half a million people are in the air.[111] International tourist arrivals surpassed the milestone of 1 billion tourists globally for the first time in 2012.[112]
A visa is a conditional authorization granted by a country to a foreigner, allowing them to enter and temporarily remain within, or to leave that country. Some countries – such as those in the Schengen Area – have agreements with other countries allowing each other’s citizens to travel between them without visas (for example, Switzerland is part of a Schengen Agreement allowing easy travel for people from countries within the European Union). The World Tourism Organization announced that the number of tourists who require a visa before traveling was at its lowest level ever in 2015.[113]

Immigration is the international movement of people into a destination country of which they are not natives or where they do not possess citizenship in order to settle or reside there, especially as permanent residents or naturalized citizens, or to take-up employment as a migrant worker or temporarily as a foreign worker.[114][115][116]
According to the International Labour Organization, as of 2014 there were an estimated 232 million international migrants in the world (defined as persons outside their country of origin for 12 months or more) and approximately half of them were estimated to be economically active (i.e. being employed or seeking employment).[117] International movement of labor is often seen as important to economic development. For example, freedom of movement for workers in the European Union means that people can move freely between member states to live, work, study or retire in another country.

2010 London Youth Games opening ceremony. About 69% of children born in London in 2015 had at least one parent who was born abroad.[118]

Globalization is associated with a dramatic rise in international education. The development of global cross-cultural competence in the workforce through ad-hoc training has deserved increasing attention in recent times.[119][120] More and more students are seeking higher education in foreign countries and many international students now consider overseas study a stepping-stone to permanent residency within a country.[121] The contributions that foreign students make to host nation economies, both culturally and financially has encouraged major players to implement further initiatives to facilitate the arrival and integration of overseas students, including substantial amendments to immigration and visa policies and procedures.[44]

A transnational marriage is a marriage between two people from different countries. A variety of special issues arise in marriages between people from different countries, including those related to citizenship and culture, which add complexity and challenges to these kinds of relationships.
In an age of increasing globalization, where a growing number of people have ties to networks of people and places across the globe, rather than to a current geographic location, people are increasingly marrying across national boundaries. Transnational marriage is a by-product of the movement and migration of people.

Movement of information

Internet users by region[122]

Region 2005 2010 2017 2019 2021
Africa 2% 10% 21.8% 27.7% 39.7%
Americas 36% 49% 65.9% 75.9% 83.2%
Arab States 8% 26% 43.7% 55.2% 70.3%
Asia and Pacific 9% 23% 43.9% 48.9% 64.3%
Commonwealth of
Independent States
10% 34% 67.7% 76.3% 83.7%
Europe 46% 67% 79.6% 81.7% 89.5%

Before electronic communications, long-distance communications relied on mail. Speed of global communications was limited by the maximum speed of courier services (especially horses and ships) until the mid-19th century. The electric telegraph was the first method of instant long-distance communication. For example, before the first transatlantic cable, communications between Europe and the Americas took weeks because ships had to carry mail across the ocean. The first transatlantic cable reduced communication time considerably, allowing a message and a response in the same day. Lasting transatlantic telegraph connections were achieved in the 1865–1866. The first wireless telegraphy transmitters were developed in 1895.

The Internet has been instrumental in connecting people across geographical boundaries. For example, Facebook is a social networking service which has more than 1.65 billion monthly active users as of 31 March 2016.[123]

Globalization can be spread by Global journalism which provides massive information and relies on the internet to interact, «makes it into an everyday routine to investigate how people and their actions, practices, problems, life conditions, etc. in different parts of the world are interrelated. possible to assume that global threats such as climate change precipitate the further establishment of global journalism.»[124]

Globalization and disease

In the current era of globalization, the world is more interdependent than at any other time. Efficient and inexpensive transportation has left few places inaccessible, and increased global trade has brought more and more people into contact with animal diseases that have subsequently jumped species barriers (see zoonosis).[125]

Coronavirus disease 2019, abbreviated COVID-19, first appeared in Wuhan, China in November 2019. More than 180 countries have reported cases since then.[126] As of April 6, 2020, the U.S. has the most confirmed active cases in the world.[127] More than 3.4 million people from the worst-affected countries entered the U.S. in the first three months since the inception of the COVID-19 pandemic.[128] This has caused a detrimental impact on the global economy, particularly for SME’s and Microbusinesses with unlimited liability/self-employed, leaving them vulnerable to financial difficulties, increasing the market share for oligopolistic markets as well as increasing the barriers of entry.

Measurement

One index of globalization is the KOF Index of Globalization, which measures three important dimensions of globalization: economic, social, and political.[129] Another is the A.T. Kearney / Foreign Policy Magazine Globalization Index.[130]


2014 KOF Index of Globalization

Rank Country
1 Ireland
2 Belgium
3 Netherlands
4 Austria
5 Singapore
6 Denmark
7 Sweden
8 Portugal
9 Hungary
10 Finland
  2006 A.T. Kearney / Foreign Policy Magazine
Globalization Index

Rank Country
1 Singapore
2 Switzerland
3 United States
4 Ireland
5 Denmark
6 Canada
7 Netherlands
8 Australia
9 Austria
10 Sweden

Measurements of economic globalization typically focus on variables such as trade, Foreign Direct Investment (FDI), Gross Domestic Product (GDP), portfolio investment, and income. However, newer indices attempt to measure globalization in more general terms, including variables related to political, social, cultural, and even environmental aspects of globalization.[131][132]

The DHL Global Connectedness Index studies four main types of cross-border flow: trade (in both goods and services), information, people (including tourists, students, and migrants), and capital. It shows that the depth of global integration fell by about one-tenth after 2008, but by 2013 had recovered well above its pre-crash peak.[19][55] The report also found a shift of economic activity to emerging economies.[19]

Support and criticism

Reactions to processes contributing to globalization have varied widely with a history as long as extraterritorial contact and trade. Philosophical differences regarding the costs and benefits of such processes give rise to a broad-range of ideologies and social movements. Proponents of economic growth, expansion and development, in general, view globalizing processes as desirable or necessary to the well-being of human society.[133]

Antagonists view one or more globalizing processes as detrimental to social well-being on a global or local scale;[133] this includes those who focus on social or natural sustainability of long-term and continuous economic expansion, the social structural inequality caused by these processes, and the colonial, imperialistic, or hegemonic ethnocentrism, cultural assimilation and cultural appropriation that underlie such processes.

Globalization tends to bring people into contact with foreign people and cultures. Xenophobia is the fear of that which is perceived to be foreign or strange.[134][135] Xenophobia can manifest itself in many ways involving the relations and perceptions of an ingroup towards an outgroup, including a fear of losing identity, suspicion of its activities, aggression, and desire to eliminate its presence to secure a presumed purity.[136]

Critiques of globalization generally stem from discussions surrounding the impact of such processes on the planet as well as the human costs. They challenge directly traditional metrics, such as GDP, and look to other measures, such as the Gini coefficient[137] or the Happy Planet Index,[138] and point to a «multitude of interconnected fatal consequences–social disintegration, a breakdown of democracy, more rapid and extensive deterioration of the environment, the spread of new diseases, increasing poverty and alienation»[139] which they claim are the unintended consequences of globalization. Others point out that, while the forces of globalization have led to the spread of western-style democracy, this has been accompanied by an increase in inter-ethnic tension and violence as free market economic policies combine with democratic processes of universal suffrage as well as an escalation in militarization to impose democratic principles and as a means to conflict resolution.[140]

On 9 August 2019, Pope Francis denounced isolationism and hinted that the Catholic Church will embrace globalization at the October 2019 Amazonia Synod, stating «the whole is greater than the parts. Globalization and unity should not be conceived as a sphere, but as a polyhedron: each people retains its identity in unity with others»[141]

Public opinion

This article needs to be updated. Please help update this section to reflect recent events or newly available information. (December 2019)

As a complex and multifaceted phenomenon, globalization is considered by some as a form of capitalist expansion which entails the integration of local and national economies into a global, unregulated market economy.[142] A 2005 study by Peer Fis and Paul Hirsch found a large increase in articles negative towards globalization in the years prior. In 1998, negative articles outpaced positive articles by two to one.[143] The number of newspaper articles showing negative framing rose from about 10% of the total in 1991 to 55% of the total in 1999. This increase occurred during a period when the total number of articles concerning globalization nearly doubled.[143]

A number of international polls have shown that residents of Africa and Asia tend to view globalization more favorably than residents of Europe or North America. In Africa, a Gallup poll found that 70% of the population views globalization favorably.[144] The BBC found that 50% of people believed that economic globalization was proceeding too rapidly, while 35% believed it was proceeding too slowly.[145]

In 2004, Philip Gordon stated that «a clear majority of Europeans believe that globalization can enrich their lives, while believing the European Union can help them take advantage of globalization’s benefits while shielding them from its negative effects.» The main opposition consisted of socialists, environmental groups, and nationalists. Residents of the EU did not appear to feel threatened by globalization in 2004. The EU job market was more stable and workers were less likely to accept wage/benefit cuts. Social spending was much higher than in the US.[146] In a Danish poll in 2007, 76% responded that globalization is a good thing.[147]

Fiss, et al., surveyed US opinion in 1993. Their survey showed that, in 1993, more than 40% of respondents were unfamiliar with the concept of globalization. When the survey was repeated in 1998, 89% of the respondents had a polarized view of globalization as being either good or bad. At the same time, discourse on globalization, which began in the financial community before shifting to a heated debate between proponents and disenchanted students and workers. Polarization increased dramatically after the establishment of the WTO in 1995; this event and subsequent protests led to a large-scale anti-globalization movement.[143]
Initially, college educated workers were likely to support globalization. Less educated workers, who were more likely to compete with immigrants and workers in developing countries, tended to be opponents. The situation changed after the financial crisis of 2007. According to a 1997 poll 58% of college graduates said globalization had been good for the US. By 2008 only 33% thought it was good. Respondents with high school education also became more opposed.[148]

According to Takenaka Heizo and Chida Ryokichi, as of 1998 there was a perception in Japan that the economy was «Small and Frail». However, Japan was resource-poor and used exports to pay for its raw materials. Anxiety over their position caused terms such as internationalization and globalization to enter everyday language. However, Japanese tradition was to be as self-sufficient as possible, particularly in agriculture.[149]

Many in developing countries see globalization as a positive force that lifts them out of poverty.[150] Those opposing globalization typically combine environmental concerns with nationalism. Opponents consider governments as agents of neo-colonialism that are subservient to multinational corporations.[151] Much of this criticism comes from the middle class; the Brookings Institution suggested this was because the middle class perceived upwardly mobile low-income groups as threatening to their economic security.[152]

Economics

The literature analyzing the economics of free trade is extremely rich with extensive work having been done on the theoretical and empirical effects. Though it creates winners and losers, the broad consensus among economists is that free trade is a large and unambiguous net gain for society.[153][154] In a 2006 survey of 83 American economists, «87.5% agree that the U.S. should eliminate remaining tariffs and other barriers to trade» and «90.1% disagree with the suggestion that the U.S. should restrict employers from outsourcing work to foreign countries.»[155]

Quoting Harvard economics professor N. Gregory Mankiw, «Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.»[156] In a survey of leading economists, none disagreed with the notion that «freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.»[157] Most economists would agree that although increasing returns to scale might mean that certain industry could settle in a geographical area without any strong economic reason derived from comparative advantage, this is not a reason to argue against free trade because the absolute level of output enjoyed by both «winner» and «loser» will increase with the «winner» gaining more than the «loser» but both gaining more than before in an absolute level.

In the book The End of Poverty, Jeffrey Sachs discusses how many factors can affect a country’s ability to enter the world market, including government corruption; legal and social disparities based on gender, ethnicity, or caste; diseases such as AIDS and malaria; lack of infrastructure (including transportation, communications, health, and trade); unstable political landscapes; protectionism; and geographic barriers.[158] Jagdish Bhagwati, a former adviser to the U.N. on globalization, holds that, although there are obvious problems with overly rapid development, globalization is a very positive force that lifts countries out of poverty by causing a virtuous economic cycle associated with faster economic growth.[150] However, economic growth does not necessarily mean a reduction in poverty; in fact, the two can coexist. Economic growth is conventionally measured using indicators such as GDP and GNI that do not accurately reflect the growing disparities in wealth.[159] Additionally, Oxfam International argues that poor people are often excluded from globalization-induced opportunities «by a lack of productive assets, weak infrastructure, poor education and ill-health;»[160] effectively leaving these marginalized groups in a poverty trap. Economist Paul Krugman is another staunch supporter of globalization and free trade with a record of disagreeing with many critics of globalization. He argues that many of them lack a basic understanding of comparative advantage and its importance in today’s world.[161]

As of 2017, there were 2,754 U.S. dollar billionaires worldwide, with a combined wealth of over US$9.2 trillion.[162]

The flow of migrants to advanced economies has been claimed to provide a means through which global wages converge. An IMF study noted a potential for skills to be transferred back to developing countries as wages in those a countries rise.[10] Lastly, the dissemination of knowledge has been an integral aspect of globalization. Technological innovations (or technological transfer) are conjectured to benefit most developing and least developing countries (LDCs), as for example in the adoption of mobile phones.[51]

There has been a rapid economic growth in Asia after embracing market orientation-based economic policies that encourage private property rights, free enterprise and competition. In particular, in East Asian developing countries, GDP per head rose at 5.9% a year from 1975 to 2001 (according to 2003 Human Development Report[163] of UNDP). Like this, the British economic journalist Martin Wolf says that incomes of poor developing countries, with more than half the world’s population, grew substantially faster than those of the world’s richest countries that remained relatively stable in its growth, leading to reduced international inequality and the incidence of poverty.

Of the factors influencing the duration of economic growth in both developed and developing countries, income equality has a more beneficial impact than trade openness, sound political institutions, and foreign investment.[164]

Certain demographic changes in the developing world after active economic liberalization and international integration resulted in rising general welfare and, hence, reduced inequality. According to Wolf, in the developing world as a whole, life expectancy rose by four months each year after 1970 and infant mortality rate declined from 107 per thousand in 1970 to 58 in 2000 due to improvements in standards of living and health conditions. Also, adult literacy in developing countries rose from 53% in 1970 to 74% in 1998 and much lower illiteracy rate among the young guarantees that rates will continue to fall as time passes. Furthermore, the reduction in fertility rate in the developing world as a whole from 4.1 births per woman in 1980 to 2.8 in 2000 indicates improved education level of women on fertility, and control of fewer children with more parental attention and investment.[165] Consequently, more prosperous and educated parents with fewer children have chosen to withdraw their children from the labor force to give them opportunities to be educated at school improving the issue of child labor. Thus, despite seemingly unequal distribution of income within these developing countries, their economic growth and development have brought about improved standards of living and welfare for the population as a whole.

Per capita gross domestic product (GDP) growth among post-1980 globalizing countries 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 seems 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 non-globalizing developing countries seem to fare 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.[166]

Worlds regions by total wealth (in trillions USD), 2018

The globalization of the late 20th and early 21st centuries has led to the resurfacing of the idea that the growth of economic interdependence promotes peace.[167] This idea had been very powerful during the globalization of the late 19th and early 20th centuries, and was a central doctrine of classical liberals of that era, such as the young John Maynard Keynes (1883–1946).[168]

Some opponents of globalization see the phenomenon as a promotion of corporate interests.[169] They also claim that the increasing autonomy and strength of corporate entities shapes the political policy of countries.[170][171] They advocate global institutions and policies that they believe better address the moral claims of poor and working classes as well as environmental concerns.[172] Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.[173]

Globalization allows corporations to outsource manufacturing and service jobs from high cost locations, creating economic opportunities with the most competitive wages and worker benefits.[68] Critics of globalization say that it disadvantages poorer countries. While it is true that free trade encourages globalization among countries, some countries try to protect their domestic suppliers. The main export of poorer countries is usually agricultural productions. Larger countries often subsidize their farmers (e.g., the EU’s Common Agricultural Policy), which lowers the market price for foreign crops.[174]

Global democracy

Democratic globalization is a movement towards an institutional system of global democracy that would give world citizens a say in political organizations. This would, in their view, bypass nation-states, corporate oligopolies, ideological non-governmental organizations (NGO), political cults and mafias. One of its most prolific proponents is the British political thinker David Held. Advocates of democratic globalization argue that economic expansion and development should be the first phase of democratic globalization, which is to be followed by a phase of building global political institutions. Francesco Stipo, Director of the United States Association of the Club of Rome, advocates unifying nations under a world government, suggesting that it «should reflect the political and economic balances of world nations. A world confederation would not supersede the authority of the State governments but rather complement it, as both the States and the world authority would have power within their sphere of competence».[175] Former Canadian Senator Douglas Roche, O.C., viewed globalization as inevitable and advocated creating institutions such as a directly elected United Nations Parliamentary Assembly to exercise oversight over unelected international bodies.[176]

Global civics

Global civics suggests that civics can be understood, in a global sense, as a social contract between global citizens in the age of interdependence and interaction. The disseminators of the concept define it as the notion that we have certain rights and responsibilities towards each other by the mere fact of being human on Earth.[177] World citizen has a variety of similar meanings, often referring to a person who disapproves of traditional geopolitical divisions derived from national citizenship. An early incarnation of this sentiment can be found in Socrates, whom Plutarch quoted as saying: «I am not an Athenian, or a Greek, but a citizen of the world.»[178] In an increasingly interdependent world, world citizens need a compass to frame their mindsets and create a shared consciousness and sense of global responsibility in world issues such as environmental problems and nuclear proliferation.[179]

Baha’i-inspired author Meyjes, while favoring the single world community and emergent global consciousness, warns of globalization[180] as a cloak for an expeditious economic, social, and cultural Anglo-dominance that is insufficiently inclusive to inform the emergence of an optimal world civilization. He proposes a process of «universalization» as an alternative.

Cosmopolitanism is the proposal that all human ethnic groups belong to a single community based on a shared morality. A person who adheres to the idea of cosmopolitanism in any of its forms is called a cosmopolitan or cosmopolite.[181] A cosmopolitan community might be based on an inclusive morality, a shared economic relationship, or a political structure that encompasses different nations. The cosmopolitan community is one in which individuals from different places (e.g. nation-states) form relationships based on mutual respect. For instance, Kwame Anthony Appiah suggests the possibility of a cosmopolitan community in which individuals from varying locations (physical, economic, etc.) enter relationships of mutual respect despite their differing beliefs (religious, political, etc.).[182]

Canadian philosopher Marshall McLuhan popularized the term Global Village beginning in 1962.[183] His view suggested that globalization would lead to a world where people from all countries will become more integrated and aware of common interests and shared humanity.[184]

International cooperation

Military cooperation – Past examples of international cooperation exist. One example is the security cooperation between the United States and the former Soviet Union after the end of the Cold War, which astonished international society. Arms control and disarmament agreements, including the Strategic Arms Reduction Treaty (see START I, START II, START III, and New START) and the establishment of NATO’s Partnership for Peace, the Russia NATO Council, and the G8 Global Partnership against the Spread of Weapons and Materials of Mass Destruction, constitute concrete initiatives of arms control and de-nuclearization. The US–Russian cooperation was further strengthened by anti-terrorism agreements enacted in the wake of 9/11.[185]

Environmental cooperation – One of the biggest successes of environmental cooperation has been the agreement to reduce chlorofluorocarbon (CFC) emissions, as specified in the Montreal Protocol, in order to stop ozone depletion. The most recent debate around nuclear energy and the non-alternative coal-burning power plants constitutes one more consensus on what not to do. Thirdly, significant achievements in IC can be observed through development studies.[185]

Economic cooperation – One of the biggest challenges in 2019 with globalization is that many believe the progress made in the past decades are now back tracking. The back tracking of globalization has coined the term «Slobalization.» Slobalization is a new, slower pattern of globalization.[186]

Anti-globalization movement

Anti-globalization, or counter-globalization,[187] consists of a number of criticisms of globalization but, in general, is critical of the globalization of corporate capitalism.[188] The movement is also commonly referred to as the alter-globalization movement, anti-globalist movement, anti-corporate globalization movement,[189] or movement against neoliberal globalization. Opponents of globalization argue that power and respect in terms of international trade between the developed and underdeveloped countries of the world are unequally distributed.[190] The diverse subgroups that make up this movement include some of the following: trade unionists, environmentalists, anarchists, land rights and indigenous rights activists, organizations promoting human rights and sustainable development, opponents of privatization, and anti-sweatshop campaigners.[191]

In The Revolt of the Elites and the Betrayal of Democracy, Christopher Lasch analyzes[192] the widening gap between the top and bottom of the social composition in the United States. For him, our epoch is determined by a social phenomenon: the revolt of the elites, in reference to The Revolt of the Masses (1929) by the Spanish philosopher José Ortega y Gasset. According to Lasch, the new elites, i.e. those who are in the top 20% in terms of income, through globalization which allows total mobility of capital, no longer live in the same world as their fellow-citizens. In this, they oppose the old bourgeoisie of the nineteenth and twentieth centuries, which was constrained by its spatial stability to a minimum of rooting and civic obligations. Globalization, according to the sociologist, has turned elites into tourists in their own countries. The denationalization of business enterprise tends to produce a class who see themselves as «world citizens, but without accepting … any of the obligations that citizenship in a polity normally implies». Their ties to an international culture of work, leisure, information – make many of them deeply indifferent to the prospect of national decline. Instead of financing public services and the public treasury, new elites are investing their money in improving their voluntary ghettos: private schools in their residential neighborhoods, private police, garbage collection systems. They have «withdrawn from common life».
Composed of those who control the international flows of capital and information, who preside over philanthropic foundations and institutions of higher education, manage the instruments of cultural production and thus fix the terms of public debate. So, the political debate is limited mainly to the dominant classes and political ideologies lose all contact with the concerns of the ordinary citizen. The result of this is that no one has a likely solution to these problems and that there are furious ideological battles on related issues.
However, they remain protected from the problems affecting the working classes: the decline of industrial activity, the resulting loss of employment, the decline of the middle class, increasing the number of the poor, the rising crime rate, growing drug trafficking, the urban crisis.

D.A. Snow et al. contend that the anti-globalization movement is an example of a new social movement, which uses tactics that are unique and use different resources than previously used before in other social movements.[193]

One of the most infamous tactics of the movement is the Battle of Seattle in 1999, where there were protests against the World Trade Organization’s Third Ministerial Meeting. All over the world, the movement has held protests outside meetings of institutions such as the WTO, the International Monetary Fund (IMF), the World Bank, the World Economic Forum, and the Group of Eight (G8).[191] Within the Seattle demonstrations the protesters that participated used both creative and violent tactics to gain the attention towards the issue of globalization.

Opposition to capital market integration

World Bank Protester, Jakarta, Indonesia

Capital markets have to do with raising and investing money in various human enterprises. Increasing integration of these financial markets between countries leads to the emergence of a global capital marketplace or a single world market. In the long run, increased movement of capital between countries tends to favor owners of capital more than any other group; in the short run, owners and workers in specific sectors in capital-exporting countries bear much of the burden of adjusting to increased movement of capital.[194]

Those opposed to capital market integration on the basis of human rights issues are especially disturbed[according to whom?] by the various abuses which they think are perpetuated by global and international institutions that, they say, promote neoliberalism without regard to ethical standards. Common targets include the World Bank (WB), International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO) and free trade treaties like the North American Free Trade Agreement (NAFTA), Free Trade Area of the Americas (FTAA), the Multilateral Agreement on Investment (MAI) and the General Agreement on Trade in Services (GATS). In light of the economic gap between rich and poor countries, movement adherents claim free trade without measures in place to protect the under-capitalized will contribute only to the strengthening the power of industrialized nations (often termed the «North» in opposition to the developing world’s «South»).[195][better source needed]

Anti-corporatism and anti-consumerism

Corporatist ideology, which privileges the rights of corporations (artificial or juridical persons) over those of natural persons, is an underlying factor in the recent rapid expansion of global commerce.[196] In recent years, there have been an increasing number of books (Naomi Klein’s 2000 No Logo, for example) and films (e.g. The Corporation & Surplus) popularizing an anti-corporate ideology to the public.

A related contemporary ideology, consumerism, which encourages the personal acquisition of goods and services, also drives globalization.[197] Anti-consumerism is a social movement against equating personal happiness with consumption and the purchase of material possessions. Concern over the treatment of consumers by large corporations has spawned substantial activism, and the incorporation of consumer education into school curricula. Social activists hold materialism is connected to global retail merchandizing and supplier convergence, war, greed, anomie, crime, environmental degradation, and general social malaise and discontent. One variation on this topic is activism by postconsumers, with the strategic emphasis on moving beyond addictive consumerism.[198]

Global justice and inequality

Global justice

Differences in national income equality around the world as measured by the national Gini coefficient, as of 2018[199]

The global justice movement is the loose collection of individuals and groups—often referred to as a «movement of movements»—who advocate fair trade rules and perceive current institutions of global economic integration as problems.[200] The movement is often labeled an anti-globalization movement by the mainstream media. Those involved, however, frequently deny that they are anti-globalization, insisting that they support the globalization of communication and people and oppose only the global expansion of corporate power.[201] The movement is based in the idea of social justice, desiring the creation of a society or institution based on the principles of equality and solidarity, the values of human rights, and the dignity of every human being.[202][203][204] Social inequality within and between nations, including a growing global digital divide, is a focal point of the movement. Many nongovernmental organizations have now arisen to fight these inequalities that many in Latin America, Africa and Asia face. A few very popular and well known non-governmental organizations (NGOs) include: War Child, Red Cross, Free The Children and CARE International. They often create partnerships where they work towards improving the lives of those who live in developing countries by building schools, fixing infrastructure, cleaning water supplies, purchasing equipment and supplies for hospitals, and other aid efforts.

Global share of wealth by wealth group, Credit Suisse, 2017

The economies of the world have developed unevenly, historically, such that entire geographical regions were left mired in poverty and disease while others began to reduce poverty and disease on a wholesale basis. From around 1980 through at least 2011, the GDP gap, while still wide, appeared to be closing and, in some more rapidly developing countries, life expectancies began to rise.[205] If we look at the Gini coefficient for world income, since the late 1980s, the gap between some regions has markedly narrowed—between Asia and the advanced economies of the West, for example—but huge gaps remain globally. Overall equality across humanity, considered as individuals, has improved very little. Within the decade between 2003 and 2013, income inequality grew even in traditionally egalitarian countries like Germany, Sweden and Denmark. With a few exceptions—France, Japan, Spain—the top 10 percent of earners in most advanced economies raced ahead, while the bottom 10 percent fell further behind.[206] By 2013, 85 multibillionaires had amassed wealth equivalent to all the wealth owned by the poorest half (3.5 billion) of the world’s total population of 7 billion.[207]

Critics of globalization argue that globalization results in weak labor unions: the surplus in cheap labor coupled with an ever-growing number of companies in transition weakened labor unions in high-cost areas. Unions become less effective and workers their enthusiasm for unions when membership begins to decline.[174] They also cite an increase in the exploitation of child labor: countries with weak protections for children are vulnerable to infestation by rogue companies and criminal gangs who exploit them. Examples include quarrying, salvage, and farm work as well as trafficking, bondage, forced labor, prostitution and pornography.[208]

Women often participate in the workforce in precarious work, including export-oriented employment. Evidence suggests that while globalization has expanded women’s access to employment, the long-term goal of transforming gender inequalities remains unmet and appears unattainable without regulation of capital and a reorientation and expansion of the state’s role in funding public goods and providing a social safety net.[209] Furthermore, the intersectionality of gender, race, class, and more remain overlooked when assessing the impact of globalization.[210]

In 2016, a study published by the IMF posited that neoliberalism, the ideological backbone of contemporary globalized capitalism, has been «oversold», with the benefits of neoliberal policies being «fairly difficult to establish when looking at a broad group of countries» and the costs, most significantly higher income inequality within nations, «hurt the level and sustainability of growth.»[211]

Anti-global governance

Beginning in the 1930s, opposition arose to the idea of a world government, as advocated by organizations such as the World Federalist Movement (WFM). Those who oppose global governance typically do so on objections that the idea is unfeasible, inevitably oppressive, or simply unnecessary.[212] In general, these opponents are wary of the concentration of power or wealth that such governance might represent. Such reasoning dates back to the founding of the League of Nations and, later, the United Nations.

Environmentalist opposition

a shows carbon footprint (CF) hotspots of foreign final consumption in China. bd show carbon footprint hotspots of the consumption of the United States, Hong Kong, and Japan, respectively. Among all foreign regions, the United States, Hong Kong, and Japan have the largest CFs in China, contributing ~23.0%, 10.8%, and 9.0%, respectively, to the total foreign CF in China in 2012.

Environmentalism is a broad philosophy, ideology[213][214][215] and social movement regarding concerns for environmental conservation and improvement of the health of the environment. Environmentalist concerns with globalization include issues such as global warming, global water supply and water crises, inequity in energy consumption and energy conservation, transnational air pollution and pollution of the world ocean, overpopulation, world habitat sustainability, deforestation, biodiversity loss and species extinction.

One critique of globalization is that natural resources of the poor have been systematically taken over by the rich and the pollution promulgated by the rich is systematically dumped on the poor.[216] Some argue that Northern corporations are increasingly exploiting resources of less wealthy countries for their global activities while it is the South that is disproportionately bearing the environmental burden of the globalized economy. Globalization is thus leading to a type of» environmental apartheid».[217]

Helena Norberg-Hodge, the director and founder of Local Futures/International Society for Ecology and Culture, criticizes globalization in many ways. In her book Ancient Futures, Norberg-Hodge claims that «centuries of ecological balance and social harmony are under threat from the pressures of development and globalization.» She also criticizes the standardization and rationalization of globalization, as it does not always yield the expected growth outcomes. Although globalization takes similar steps in most countries, scholars such as Hodge claim that it might not be effective to certain countries and that globalization has actually moved some countries backward instead of developing them.[218]

A related area of concern is the pollution haven hypothesis, which posits that, when large industrialized nations seek to set up factories or offices abroad, they will often look for the cheapest option in terms of resources and labor that offers the land and material access they require (see Race to the bottom).[219] This often comes at the cost of environmentally sound practices. Developing countries with cheap resources and labor tend to have less stringent environmental regulations, and conversely, nations with stricter environmental regulations become more expensive for companies as a result of the costs associated with meeting these standards. Thus, companies that choose to physically invest in foreign countries tend to (re)locate to the countries with the lowest environmental standards or weakest enforcement.

The European Union–Mercosur Free Trade Agreement, which would form one of the world’s largest free trade areas,[220] has been denounced by environmental activists and indigenous rights campaigners.[221] The fear is that the deal could lead to more deforestation of the Amazon rainforest as it expands market access to Brazilian beef.[222]

Food security

Globalization is associated with a more efficient system of food production. This is because crops are grown in countries with optimum growing conditions. This improvement causes an increase in the world’s food supply which encourages improved food security.[223] The political movement ‘BREXIT’ was considered a step back in globalisation; it has greatly disrupted food chains within the UK, as they import 26% of food produce from the EU.

Norway

Norway’s limited crop range advocates globalization of food production and availability. The northernmost country in Europe requires trade with other countries to ensure population food demands are met. The degree of self-sufficiency in food production is around 50% in Norway.[224]

See also

  • Civilizing mission
  • Cosmopolitanism
  • Deglobalization
  • Environmental racism
  • Eurasianism
  • Franchising
  • Free trade
  • Global civics
  • Global commons
  • Global mobility
  • Globalism
  • Global public goods
  • List of bilateral free-trade agreements
  • List of globalization-related indices
  • List of multilateral free-trade agreements
  • Middle East and globalization
  • Neorealism (international relations)
  • North–South divide
  • Outline of globalization
  • Postdevelopment theory
  • Technocapitalism
  • The No-Nonsense Guide to Globalization
  • Transnational cinema
  • Transnational citizenship
  • Triadization
  • United Nations Millennium Declaration
  • Vermeer’s Hat
  • World Englishes
  • Global regionalization

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Further reading

  • Ampuja, Marko. Theorizing Globalization: A Critique of the Mediatization of Social Theory (Brill, 2012)
  • Conner, Tom, and Ikuko Torimoto, eds. Globalization Redux: New Name, Same Game (University Press of America, 2004).
  • Eriksen, Thomas Hylland. «Globalization.» in Handbook of Political Anthropology (Edward Elgar Publishing, 2018).
  • Frey, James W. «The Global Moment: The Emergence of Globality, 1866–1867, and the Origins of Nineteenth-Century Globalization.» The Historian 81.1 (2019): 9. online, focus on trade and Suez Canal
  • Gunder Frank, Andre, and Robert A. Denemark. ReOrienting the 19th Century: Global Economy in the Continuing Asian Age (Paradigm Publishers, 2013);
  • Hopkins, A.G., ed. Globalization in World History (Norton, 2003).
  • Lechner, Frank J., and John Boli, eds. The Globalization Reader (4th ed. Wiley-Blackwell, 2012).
  • Leibler, Anat. «The Emergence of a Global Economic Order: From Scientific Internationalism to Infrastructural Globalism.» in Science, Numbers and Politics (Palgrave Macmillan, Cham, 2019) pp. 121–145 online[dead link].
  • Mir, Salam. «Colonialism, Postcolonialism, Globalization, and Arab Culture.» Arab Studies Quarterly 41.1 (2019): 33–58. online
  • Olstein, Diego (2015) “Proto-globalization and Proto-glocalizations in the Middle Millennium.” In Kedar, Benjamin and Wiesner-Hanks, Merry (Eds.), Cambridge World History. Volume 5: Expanding Webs of Exchange and Conquest, 500-1500 CE. Cambridge University Press, pp. 665-684
  • Pfister, Ulrich (2012), Globalization, EGO — European History Online, Mainz: Institute of European History, retrieved: 25 March 2021 (pdf).
  • Pieterse, Jan Nederveen. Globalization and culture: Global mélange (Rowman & Littlefield, 2019).
  • Rosenberg, Justin. «Globalization Theory: A Post Mortem,» International Politics 42:1 (2005), 2–74.
  • Steger, Manfred B. Globalization: A Very Short Introduction (4th ed. Oxford University Press, 2017)
  • Van Der Bly, Martha C.E. «Globalization: A Triumph of Ambiguity,» Current Sociology 53:6 (November 2005), 875–893
  • Wallerstein, Immanuel. «Globalization or the Age of Transition? A Long-Term View of the Trajectory of the World System,» International Sociology 15:2 (June 2000), 251–267.

External links

  • Comprehensive discussion of the term at the Site Global Transformations Archived 12 October 2009 at the Portuguese Web Archive
  • Globalization Website (Emory University) Links, Debates, Glossary etc.
  • BBC News Special Report – «Globalisation»
  • Globalization collected news and commentary at The Guardian Edit this at Wikidata
  • «Globalization» Stanford Encyclopedia of Philosophy Analysis of the idea and its history.
  • OECD Globalization statistics
  • Mapping Globalization, Princeton University
  • List of Global Development Indexes and Rankings

What is globalization?

Globalization is the process by which ideas, knowledge, information,  goods and services spread around the world. In business, the term is used in an economic context to describe integrated economies marked by free trade, the free flow of capital among countries and easy access to foreign resources, including labor markets, to maximize returns and benefit for the common good.

Globalization, or globalisation as it is known in some parts of the world, is driven by the convergence of cultural and economic systems. This convergence promotes — and in some cases necessitates — increased interaction, integration and interdependence among nations. The more countries and regions of the world become intertwined politically, culturally and economically, the more globalized the world becomes. 

How globalization works

In a globalized economy, countries specialize in the products and services they have a competitive advantage in. This generally means what they can produce and provide most efficiently, with the least amount of resources, at a lower cost than competing nations. If all countries are specializing in what they do best, production should be more efficient worldwide, prices should be lower, economic growth widespread and all countries should benefit — in theory.

Policies that promote free trade, open borders and international cooperation all drive economic globalization. They enable businesses to access lower priced raw materials and parts, take advantage of lower cost labor markets and access larger and growing markets around the world in which to sell their goods and services.

Money, products, materials, information and people flow more swiftly across national boundaries today than ever. Advances in technology have enabled and accelerated this flow and the resulting international interactions and dependencies. These technological advances have been especially pronounced in transportation and telecommunications.

Among the recent technological changes that have played a role in globalization are the following:

Internet and internet communication. The internet has increased the sharing and flow of information and knowledge, access to ideas and exchange of culture among people of different countries. It has contributed to closing the digital divide between more and less advanced countries.

Communication technology. The introduction of 4G and 5G technologies has dramatically increased the speed and responsiveness of mobile and wireless networks.

list of benefits of 5G network technology

Increased speed and bandwidth are among the benefits of 5G technology.

IoT and AI. These technologies are enabling the tracking of assets in transit and as they move across borders, making cross-border product management more efficient.

Blockchain. This technology is enabling the development of decentralized databases and storage that support the tracking of materials in the supply chain. Blockchain facilitates the secure access to data required in industries such as healthcare and banking. For example, blockchain provides a transparent ledger that centrally records and vets transactions in a way that prevents corruption and breaches.

list of 10 benefits of blockchain technology

10 benefits of blockchain technology

Transportation. Advances in air and fast rail technology have facilitated the movement of people and products. And changes in shipping logistics technology moves raw materials, parts and finished products around the globe more efficiently.

Manufacturing. Advances such as automation and 3D printing have reduced geographic constraints in the manufacturing industry. 3D printing enables digital designs to be sent anywhere and physically printed, making distributed, smaller-scale production near the point of consumption easier. Automation speeds up processes and supply chains, giving workforces more flexibility and improving output.

Why is globalization important?

Globalization changes the way nations, businesses and people interact. Specifically, it changes the nature of economic activity among nations, expanding trade, opening global supply chains and providing access to natural resources and labor markets.

Changing the way trade and financial exchange and interaction occurs among nations also promotes the cultural exchange of ideas. It removes the barriers set by geographic constraints, political boundaries and political economies.

For example, globalization enables businesses in one nation to access another nation’s resources. More open access changes the way products are developed, supply chains are managed and organizations communicate. Businesses find cheaper raw materials and parts, less expensive or more skilled labor and more efficient ways to develop products.

With fewer restrictions on trade, globalization creates opportunities to expand. Increased trade promotes international competition. This, in turn, spurs innovation and, in some cases, the exchange of ideas and knowhow. In addition, people coming from other nations to do business and work bring with them their own cultures, which influence and mix with other cultures.

The many types of exchange that globalization facilitates can have positive and negative effects. For instance, the exchange of people and goods across borders can bring fresh ideas and help business. However, this movement can also heighten the spread of disease and promote ideas that might destabilize political economies.

History of globalization

Although many people consider globalization a twentieth century phenomenon, the process has been happening for millennia. Examples include the following:

  • The Roman Empire. Going back to 600 B.C., the Roman Empire spread its economic and governing systems through significant portions of the ancient world for centuries.
  • Silk Road trade. These trade routes, which date from 130 B.C. to 1453 A.D., represented another wave of globalization. They brought merchants, goods and travelers from China through Central Asia and the Middle East to Europe.
  • Pre-World War I. European countries made significant investments overseas in the decades before World War I. The period from 1870 to 1914 is called the golden age of globalization.
  • Post-World War II. The United States led the effort to create a global economic system with a set of broadly accepted international rules. Multinational institutions were established such as the United Nations (UN), International Monetary Fund, World Bank and World Trade Organization to promote international cooperation and free trade.

The term globalization as it’s used today came to prominence in the 1980s, reflecting several technological advancements that increased international interactions. IBM’s introduction of the personal computer in 1981 and the subsequent evolution of the modern internet are two examples of technology that helped drive international communication, commerce and globalization.

Globalization has ebbed and flowed throughout history, with periods of expansion and retrenchment. The 21st century has witnessed both. Global stock markets plummeted after the Sept. 11, 2001, terrorist attacks in the United States, but rebounded in subsequent years.

More recently, nationalist political movements have slowed immigration, closed borders and increased trade protectionism. The pandemic has had similar effects on borders and immigration and also disrupted supply chains. However, overall, the early 21st century has seen a dramatic increase in the pace of global integration. Rapid advances in technology and telecommunications are responsible for much of this change.

What is the G20?

The G20, or Group of Twenty, is an international forum that aims to foster international cooperation by addressing global economic issues, such as  financial stability and climate change. The G20 is made up of 19 countries and the European Union, including most of the world’s largest economies.

The nations involved account for 60% of the planet’s population, 75% of global trade and 80% of world GDP. It was founded in 1999, following the 1997 financial crisis, and has met every year since then.

Since 2008, the G20 has held an annual summit that brings together heads of state to discuss important economic issues. The G20’s president is selected annually on a rotating basis, and that person’s home country hosts the summit.

In 2019, the summit was held in Osaka, Japan, and it addressed issues such as women’s empowerment, climate change and artificial intelligence. The 2020 summit was to be in Riyadh, Saudi Arabia, but was held virtually because of the pandemic. Three of the main themes addressed were empowering people, especially women and youth; safeguarding the planet; and long-term strategies to share the benefits of innovation and technological advancement. The 2021 summit will be held in Rome, Italy, and will focus on recovery from the pandemic and climate change.

The members of G20 are Argentina, Australia, Brazil, Canada, China, France, Germany, Japan, India, Indonesia, Italy, Mexico, Russia, South Africa, Saudi Arabia, South Korea, Turkey, the United Kingdom, the United States and the European Union. Spain is a permanent guest of the organization.

Types of globalization: Economic, political, cultural

There are three types of globalization.

  1. Economic globalization. Here, the focus is on the integration of international financial markets and the coordination of financial exchange. Free trade agreements, such the North American Free Trade Agreement and the Trans-Pacific Partnership are examples of economic globalization. Multinational corporations, which operate in two or more countries, play a large role in economic globalization.
  2. Political globalization. This type covers the national policies that bring countries together politically, economically and culturally. Organizations such as NATO and the UN are part of the political globalization effort.
  3. Cultural globalization. This aspect of globalization focuses in a large part on the technological and societal factors that are causing cultures to converge. These include increased ease of communication, the pervasiveness of social media and access to faster and better transportation.

These three types influence one another. For example, liberalized national trade policies drive economic globalization. Political policies also affect cultural globalization, enabling people to communicate and move around the globe more freely. Economic globalization also affects cultural globalization through the import of goods and services that expose people to other cultures.

Effects of globalization

The effects of globalization can be felt locally and globally, touching the lives of individuals as well as the broader society in the following ways:

  • Individuals. Here, a variety of international influences affect ordinary people. Globalization affects their access to goods, the prices they pay and their ability to travel to or even move to other countries.
  • Communities. This level encompasses the impact of globalization on local or regional organizations, businesses and economies. It affects who lives in communities, where they work, who they work for, their ability to move out of their community and into one in another country, among other things. Globalization also changes the way local cultures develop within communities.
  • Institutions. Multinational corporations, national governments and other organizations such as colleges and universities  are all affected by their country’s approach to and acceptance of globalization. Globalization affects the ability of companies to grow and expand, a university’s ability to diversify and grow its student body and a government’s ability to pursue specific economic policies.

While the effects of globalization can be observed, analyzing the net impact is more complex. Proponents often see specific results as positive and critics of globalization view the same results as negative. A relationship that benefits one entity may damage another, and whether globalization benefits the world at large remains a point of contention.

Comparison of internationalization and localization product strategies

Internationalization and localization are both product strategies used in globalizing industries.

Examples of globalization

Multinational corporations are a tangible example of globalization. Some examples include the following:

  • McDonald’s had 39,198 fast-food restaurants in 119 countries and territories, according to its Securities and Exchange Commission filing at the end of 2020. It employed more than 2.2 million people at that time, the filing said.
  • Ford Motor Company reported in 2021 that it works with about 1,200 tier 1 suppliers around the globe.
  • Amazon’s recent expansion has it using tens of thousands of suppliers and employing more than nearly 1.3 million full- and part-time employees.

Through their influence on social and economic development in the countries that host them, multinational corporations embody the contradictions of globalization. They bring jobs, skills and wealth to the region they are investing or doing business in. But they also can destroy local businesses, exploit cheap labor and threaten indigenous cultures. The benefits they offer are often unsustainable because the loyalty of multinationals is to their investors and bottom lines and not to the local people, economies and cultures where they are doing business.

Another example of globalization is the response to the COVID-19 pandemic. Because the world was able to communicate across boundaries, nations were able to work together to quickly produce vaccines for the virus. In addition, doctors traveled where they were needed. For example, Cuba sent doctors to Italy at the beginning of the pandemic to assist with the crisis as it developed there.

However, countries also enacted strict travel restrictions and many closed their borders to cut down on the free movement of people and spread of the virus.

Benefits of globalization

Globalization enables countries to access less expensive natural resources and lower cost labor. As a result, they can produce lower cost goods that can be sold globally. Proponents of globalization argue that it improves the state of the world in many ways, such as the following:

  • Solves economic problems. Globalization moves jobs and capital to places that need these resources. It gives rich countries access to lower cost resources and labor and poorer countries access to jobs and the investment funds they need for development.
  • Promotes free trade. Globalization puts pressure on nations to reduce tariffs, subsidies and other barriers to free trade. This consequently promotes economic growth, creates jobs, makes companies more competitive and lowers prices for consumers.
  • Spurs economic development. Theoretically, globalization gives poorer countries access to foreign capital and technology they would not otherwise have. Foreign investment can result in an improved standard of living for the citizens of those nations.
  • Encourages positive trends in human rights and the environment. Advocates of globalization point to improved attention to human rights on a global scale and a shared understanding of the impact of people and production on the environment.
  • Promotes shared cultural understanding. Advocates view the increased ability to travel and experience new cultures as a positive part of globalization that can contribute to international cooperation and peace.

Negative consequences of globalization

Many proponents view globalization as way to solve systemic economic problems. But critics see it as increasing global inequality. Among the critiques of globalization are the following issues:

  • Destabilizes markets. Critics of globalization blame the elimination of trade barriers and the freer movement of people for undermining national policies and local cultures. Labor markets in particular are affected when people move across borders in search of higher paying jobs or companies outsource work and jobs to lower cost labor markets.
  • Damages the environment. The transport of goods and people among nations generates greenhouse gas and all the negative effects it has on the environment. Global travel and trade also can introduce, sometimes inadvertently, invasive species to foreign ecosystems. Industries such as fishing and logging tend to go where business is most lucrative or regulations are less strict, which has resulted in overfishing and deforestation in some parts of the world.
  • Lowers living standards. When companies move operations overseas to minimize costs, such moves can eliminate jobs and increase unemployment in sectors of the home country.
  • Facilitates global recessions. Tightly integrated global markets carry a greater risk of global recessions. The 2007-2009 financial crisis and Great Recession is a good example of how intertwined global markets are and how financial problems in one country or region can quickly affect other parts of the world. Globalization reduces the ability of individual nations to effectively use monetary and fiscal policy to control the national economy.
  • Damages cultural identities. Critics of globalization decry the decimation of unique cultural identities and languages that comes with the international movement of businesses and people. At the same time, the internet and social media are driving this trend even without the movement of people and commerce.
  • Increases the likelihood of pandemics. Increased travel, critics say, has the potential to increase the risk of pandemics. The H1N1 (swine flu) outbreak of 2009 and coronavirus in 2020 and 2021 are two examples of serious diseases that spread to multiple nations quickly.

Future of globalization

Technological advances, particularly blockchain, mobile communication and banking, are fueling economic globalization.

Nonetheless, rising levels of protectionism and anti-globalization sentiment in several countries could slow or even reverse the rapid pace of globalization. Nationalism and increasing trends toward conservative economic policies are driving these anti-globalization efforts.

Global trade is also made more difficult and facing rising threats from other factors, such as these:

  • climate change
  • decaying infrastructure
  • cyber attacks
  • human rights abuses

The takeaway

Globalization is a longstanding trend that is in the process of changing and possibly slowing. There are advantages to the more open border and free trade that globalization promotes, as well as negative consequences.

In a modern, post-pandemic world, individuals, businesses and countries must consider both sides of the globalization issue. Learn how companies are rethinking global supply chains to avoid disruption and reap the benefits of 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.

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Today, Americans rely on the global economy for many of the things they buy and sell, and to expand their businesses and make investments. Many products and services have become affordable to the average American through the coordination of production across countries.

Today, Americans rely on the global economy for many of the things they buy and sell, and to expand their businesses and make investments. Many products and services have become affordable to the average American through the coordination of production across countries.

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.

Subscribe to the PIIE Insider Weekly Newsletter

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.

GLOBALIZATION IN CHARTS

Foreign direct investment (FDI) involves establishing ownership or controlling interest of a business in another country.

Foreign direct investment (FDI) involves establishing ownership or controlling interest of a business in another country.

China, India, and Brazil dropped their rates to enter the World Trade Organization (WTO).

China, India, and Brazil dropped their rates to enter the World Trade Organization (WTO).

Global supply chains are production networks that assemble products using parts from around the world (known as intermediate goods). Today, 80 percent of world trade is driven by supply chains run by multinational corporations. Trade in intermediate goods is now nearly twice as large as trade in final goods and is especially important in advanced manufacturing, like autos.

Global supply chains are production networks that assemble products using parts from around the world (known as intermediate goods). Today, 80 percent of world trade is driven by supply chains run by multinational corporations. Trade in intermediate goods is now nearly twice as large as trade in final goods and is especially important in advanced manufacturing, like autos.

The surplus in services suggests the competitive strength of US services in the global market. The United States had an overall trade deficit of $447 billion in 2017, according to the US International Trade Commission, as a result of Americans spending more than they earn and financing the difference with foreign credit. For more, watch the video, “Is the US Trade Deficit a Problem?”

The surplus in services suggests the competitive strength of US services in the global market. The United States had an overall trade deficit of $447 billion in 2017, according to the US International Trade Commission, as a result of Americans spending more than they earn and financing the difference with foreign credit. For more, watch the video, “Is the US Trade Deficit a Problem?”

FAQ: What has been the role of international financial flows?

Separate from trade in goods and services, global financial integration is a much-debated but important topic. Here is a quick summary.

Globalization also encompasses the purchase and sale of financial investments

Many countries have large international financial flows or investments, consisting of assets and liabilities.
These include FDI, securities (which are bought and sold), and debts.
They are generally held by or owed to firms, banks and other financial institutions, or governments.
This chart shows how yearly US transactions grew over time as the global economy and financial system became increasingly
integrated but dropped dramatically during the global financial crisis of 2008–09. (Total US foreign assets in
2016 were $26 trillion, equal to 140 percent of US GDP. Total US liabilities to foreigners were $34 trillion in
2016, or 185 percent of GDP.)

Some types of investment are relatively stable. Others are more volatile.

This chart shows how FDI has grown steadily while the growth of portfolio holdings (foreign equity or foreign debt) and “other” assets (which are
largely composed of bank loans) has been more volatile. Reserves are international assets held by the US
government.

As a result of financial globalization, countries can be susceptible to crises from sudden stops in capital inflows

This chart shows the collapse of financial inflows to South Korea during two periods, the 1997–98 Asian
financial crisis and the global financial crisis of 2008–09, especially in “other liabilities” like bank loans.
Korea was hit in 2008–09 even though the epicenter of the crisis was in the United States and Europe.

“I saw that you could not separate the idea of commerce from the idea of war and peace. … [and] that wars were often largely caused by economic rivalry conducted unfairly. …I embraced the philosophy that…unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war. …[I]f we could get a freer flow of trade—freer in the sense of fewer discriminations and obstructions—so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance for lasting peace.”

Cordell Hull, Secretary of State under
President Franklin D. Roosevelt, written in his memoirs in 1948

GLOBALIZATION AS A TOOL FOR PROSPERITY AND PEACE

After World War II, the United States helped build a global economic order governed by mutually accepted rules and overseen by multilateral institutions. The idea was to create a better world with countries seeking to cooperate with one another to promote prosperity and peace. Free trade and the rule of law were mainstays of the system, helping to prevent most economic disputes from escalating into larger conflicts. The institutions established include:

EFFECTS OF GLOBALIZATION

MORE GOODS AT LOWER PRICES

Globalization encourages each country to specialize in what it produces best using the least amount of resources, known as comparative advantage. This concept makes production more efficient, promotes economic growth, and lowers prices of goods and services, making them more affordable especially for lower-income households.

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SCALED UP BUSINESSES

Larger markets enable companies to reach more customers and get a higher return on the fixed costs of doing business, like building factories or conducting research. Technology firms have taken special advantage of their innovations this way.

BETTER QUALITY AND VARIETY

Competition from abroad drives US firms to improve their products. Consumers have better products and more choices as a result.

INNOVATION

Expanded trade spurs the spread of technology, innovation, and the communication of ideas. The best ideas from market leaders spread more easily.

JOB CHURN

Globalization supports new job opportunities but also contributes to job displacement. It does not significantly change the total number of positions in the economy, as job numbers are primarily driven by business cycles and Federal Reserve and fiscal policies. Nevertheless, a Peterson Institute study finds 156,250 US manufacturing jobs were lost on net each year between 2001 and 2016 from expanded trade in manufactured goods, which represents less than 1 percent of the workers laid off in a typical year.1 Low-wage workers in certain regions are most affected. Many of them also face lower earnings or have dropped out of the workforce. Bigger factors than trade that drive job displacements are labor-saving technologies, like automated machines and artificial intelligence. Better-paying positions have opened up in manufactured exports—especially in high-tech areas, such as computers, chemicals, and transportation equipment—and other high-skill work, notably in business services, such as finance and real estate (see Jobs section).

DECLINE IN INEQUALITY GLOBALLY, BUT WIDER WITHIN UNITED STATES

Globalization has helped narrow inequality between the poorest and richest people in the world, with the number living in extreme poverty cut by half since 1990. But within many countries, including the United States, inequality is rising. A consensus of scholarly work holds that globalization has contributed marginally to rising US wage inequality, putting this factor at 10 to 20 percent. A leading explanation for rising US inequality [pdf] is that technology is reducing demand for certain low- and middle-wage workers and increasing demand for high-skilled, higher-paid workers. Wages have also stagnated, though economists are still debating the exact causes. Countries exposed to globalization have alleviated inequality to different degrees through tax and welfare systems. The United States has done the least among advanced economies to mobilize government policies to reduce inequality.


1In 2016, 19.9 million workers [pdf] were laid off or discharged (i.e., involuntary separations).

GLOBALIZATION HAS DISPLACED SOME WORKERS, WHILE SUPPORTING HIGH-SKILL JOBS

Globalization changes the types of jobs available but has little effect on the overall number of jobs in the ever-changing US labor market. That being said, some workers have directly benefited from expanding global commerce, while others have not. Certain manufacturing and industry workers in specific geographic regions lost out, such as those in furniture, apparel, steel, auto parts, and electrical equipment industries in Tennessee, Michigan, and the mid-Atlantic states. A widely cited study [pdf] shows that between 1991 and 2007, lower-wage manufacturing workers within industries that faced import competition experienced large and lasting earnings losses, while higher-wage workers in these industries did not. The lower-wage workers may have lacked the skills and mobility to transition to other lines of work, whereas higher-wage workers relocated to companies outside manufacturing. Studies show that globalization has also diminished US worker bargaining leverage to demand higher wages.

FAQ: What has happened to American manufacturing employment?

Since World War 2, American jobs have increasingly been in service-providing industries instead of manufacturing.

US manufacturing production keeps growing but with fewer employees needed.

The percent of US jobs in manufacturing has steadily declined since the 1940s, before the rise of China, NAFTA,
or the WTO, mainly because technology has made it easier to produce goods. American industrial production is at
historically high levels, but fewer people are needed to achieve this success. Manufacturing employment share has also declined
because consumers are spending a smaller percent of their incomes on manufactured goods and more on services, which include housing, health care, dining out, travel, and legal services.
Employment in service industries has grown from about half to 84 percent of all
nonfarm, nongovernment employment.

Because US firms often beat international competitors at supplying high-skill services—like engineering, legal, consulting, research, management, and information technology—workers in these fields have benefited the most from globalization.

Business-service employment expanded more than 20 percent between 2006 and 2016. These jobs pay more than 20 percent higher wages than the average manufacturing job.

Foreign-owned companies that do business in the United States have hired Americans at a faster rate than US private employers between 2007 and 2015. They also pay better, do more research and development, export more, and invest more than the average US firm. The same is true, by comparison with local averages, of US firms that invest abroad. One in five American manufacturing workers is now employed by a foreign-owned company operating in the United States.

Demand will likely increase for more highly-skilled manufacturing workers, in areas such as engineering, management, finance, computer and mathematical occupations, and sales. The greatest areas of job growth now in the United States are in professional and business services, health care and social assistance, and educational services. More job training and education is needed to prepare workers for these jobs.

WHY SUPPORT GLOBALIZATION IF IT DISPLACES JOBS?

Economists look at the effects of globalization across the entire economy to weigh the pros vs. cons. Since the overall payoff is so much greater than the costs to individual workers or groups who have lost out, nearly all economists support having an open global market versus closing it off (see example).

Note: Trade expansion refers to the effects caused by additional manufactured imports and exports. Source: Gary Clyde Hufbauer and Zhiyao (Lucy) Lu, The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers. For chart sources, see Figure 3 in Policy Brief. Total manufacturing job separations from Job Openings and Labor Turnover Survey, Bureau of Labor Statistics.

Note: Trade expansion refers to the effects caused by additional manufactured imports and exports. Source: Gary Clyde Hufbauer and Zhiyao (Lucy) Lu, The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers. For chart sources, see Figure 3 in Policy Brief. Total manufacturing job separations from Job Openings and Labor Turnover Survey, Bureau of Labor Statistics.

Other common arguments:

  • Globalization is like technological progress. Both disrupt some livelihoods while enlarging the economic pie and opening up new and better-paying job opportunities. The internet, for instance, made many jobs obsolete but also created new higher-paying jobs and industries unheard of only a few decades ago.
  • Protectionism helps select groups but at a higher cost for everyone else. Imposing tariffs on steel, for instance, helps certain domestic steel producers, but many more jobs depend on businesses that need some imported steel to make goods that are affordable. US consumers end up paying more for foreign goods because of the tariff and more for domestic goods because domestic producers often raise prices in the absence of foreign competition. Damage worsens when trading partners retaliate with their own tariffs on US exports. US agriculture is particularly vulnerable to retaliation.

One study shows that US tariffs on Chinese tires under President Barack Obama saved 1,200 tire manufacturing jobs. But US consumers paid $900,000 per job saved, and 3,700 retail jobs were lost as tires became more expensive.

  • The United States must keep open markets to stay competitive globally. Other countries are continuing to open their markets to each other, forming regional supply chains that make production more efficient and products more affordable within their trading blocs. By not joining these deals, US exports have a difficult time competing. US businesses may also opt to move operations abroad to gain access to foreign markets.

US real income in 2030 is estimated to be $133 billion less than it would have been if President Trump had remained in the Trans-Pacific Partnership (TPP) trade deal. Other countries signed a deal in 2018 without the United States, giving them preferential access to each other’s markets.

  • Operating within a rules-based system allows for peaceful conflict resolution. There are cases when unfair trade practices and abuses harm US producers. Maintaining international systems to address those problems is key to preventing mutually destructive trade wars—even real wars. Economic integration strengthens US security alliances, while trade wars weaken the ability of the United States to collaborate with allies.

FAQ: How can the United States help workers find new jobs without sacrificing trade gains?

In an ideal world, displaced workers from trade competition could find new jobs, sometimes by moving or gaining new
skills. In reality, it has been very difficult for many of these workers to transition, with lasting effects on
individuals and their communities. Trade expert Gary Clyde Hufbauer points out that the national income gains
from expanded trade are at least 10 times greater than what is needed to meaningfully assist workers who lose
their jobs to import competition.

Instead of sacrificing trade gains, many economists recommend domestic policies like wage insurance, expanded
tax credits, better unemployment benefits, and subsidies for health insurance for all displaced workers regardless
of the cause. Such policies could reduce worker anxiety about job turnover across the board, whether it be from
trade or other bigger factors. Currently, there is government support through a program called Trade Adjustment
Assistance (TAA), though it only helps workers directly impacted by trade and the amounts paid are limited. The
United States spends only a fifth of what other advanced economies spend on average to help people find new jobs
through education, training, job search assistance, and other active labor market programs.

Broader domestic policies can also help workers adapt to the continuously changing job market, such as access
to higher education and health care, but Americans remain conflicted about the government’s role in these social
safety net programs. Other advanced economies have generally increased the size of government programs as they
opened up to trade.

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CHINA’S RISE IN THE GLOBAL ECONOMY CREATES COMPLICATED PROBLEMS

As a major world trading partner and manufacturing hub, China has become one of the most dominant forces in the global economy. It entered the World Trade Organization in 2001 and undertook many reforms, cutting tariffs and other trade barriers. But it still has not completely transformed into a market-oriented economy as its trading partners expected. Many big Chinese companies have close ties with the government, and certain practices have skewed the playing field in trade. For instance, China’s government unfairly demands that US intellectual property be handed over in certain cases as the price of doing business there. And Beijing routinely subsidizes its industries. These practices discriminate against not only Americans but also US allies.

US administrations have taken different approaches to deal with these concerns. Negotiated under President Obama, the Trans-Pacific Partnership (TPP) agreement was intended to entice China to improve its practices by allowing the country in on the lucrative deal only if it agreed to new rules, but President Trump withdrew from the deal. There are ongoing efforts started in December 2017 by the European Union, United States, and Japan to negotiate new rules that would potentially be embedded within the WTO.

In 2018, the Trump administration started imposing tariffs on China citing a variety of reasons, including helping American manufacturing, countering forced technology transfers, and reducing China’s large bilateral trade surplus in goods. Beijing retaliated with its own tariffs on US goods, escalating into a trade war. By late 2019, tariffs had increased to around 20 percent and new duties covered over half of exports from each country. To prevent further escalation, China committed to a “phase one deal” to expand purchases from the United States in 2020 and 2021, but it is unlikely China will meet its targets, and the deal does not address many concerns, including China’s industrial subsidies. Evidence to date is that the cost of tariffs has been borne by importing companies, sometimes resulting in higher prices for consumers. Tariffs remain elevated under President Joseph R. Biden Jr., as of mid-2021.

The trade war with China illustrates how globalization has become so widely entrenched in the US and world economies that undoing its complicated web of activities risks other damaging consequences. Below is a list of various protectionist actions and their economic, diplomatic, and national security risks.

Trade actions

Risks

Engaging in a trade war, with escalating tit-for-tat tariffs

  • Both countries lose economically when trade volumes decline
  • Costs rise, harming US competitiveness and making it harder for families to afford products
  • Retaliation hurts US exports

Withdrawing from free trade agreements

  • Disrupts global supply chains that domestic businesses, workers, and consumers rely on to hold costs and
    inflation down
  • Can put the United States at a disadvantage since other countries continue to strike their own deals with each other that
    improve their competitiveness
  • Leads to higher tariffs on US exports, which would dampen sales and hurt US businesses and workers
  • Jeopardizes role of the United States as a world leader in international cooperation, making it more difficult to
    achieve solutions on national security, immigration, and the environment

Violating WTO rules or circumventing established processes

  • Weakens rules-based trading system that the United States and much of the world relies on to keep foreign
    markets open and settle disputes

Promoting “Buy America” policies

  • Causes more lost jobs than they create as other countries retaliate
  • Makes government purchases more expensive

Imposing tariffs to save US manufacturing jobs at specific companies

  • Saves few jobs at very high cost to taxpayers and consumers
  • With global supply chains dominating world trade, it is difficult to hit another country
    and avoid hitting your own or your allies

Restricting imports from specific countries to try to reduce bilateral trade deficits

  • Does not improve the overall US trade deficit
  • Bilateral trade deficits are not an appropriate measure for economic improvement
  • Not a successful negotiating strategy for trade deals
  • Countries can and will retaliate

THE PUBLIC HAS MIXED VIEWS ON GLOBALIZATION

How do Americans feel about globalization? Listening to the debates can be confusing. Not surprisingly, polls vary widely depending on how and when the question is posed.

Globalization can be a hard sell to the public because the benefits are widely distributed and not as easily understood, compared with the personal costs to very specific companies or workers.

The problem is compounded because policymakers have done little to help workers and communities adjust at a time when the wealthiest Americans have gained the most in recent years. In general, younger people are more supportive of free trade, as most have never known a world without the current system.

Before 2016, Republicans generally favored US trade deals and Democrats generally voted against them. President Trump canceled TPP and threatened withdrawing from NAFTA, the Korea-US Free Trade Agreement (KORUS) (later revised and signed), and the WTO. His administration negotiated the US-Mexico-Canada Agreement (USMCA) to replace NAFTA; the agreement entered into force in 2020. Some GOP congressional members spoke out against Trump on certain trade issues (see example) or drafted bills to limit his authority on tariffs. The Trump administration pushed for more power to impose tariffs.

Survey Question: In general do you think that free trade agreements between the United States and other countries have been a good thing or a bad thing for the United States?

This Pew Research poll finds more support than not for free trade agreements. But a 2016 Bloomberg poll asked, “Do you think US trade policy should have more restrictions on imported foreign goods to protect American jobs, or have fewer restrictions to enable American consumers to have the most choices and the lowest prices?» This resulted in 65 percent of respondents wanting more restrictions, the opposite of the sentiment expressed in the Pew poll.

This Pew Research poll finds more support than not for free trade agreements. But a 2016 Bloomberg poll asked, “Do you think US trade policy should have more restrictions on imported foreign goods to protect American jobs, or have fewer restrictions to enable American consumers to have the most choices and the lowest prices?» This resulted in 65 percent of respondents wanting more restrictions, the opposite of the sentiment expressed in the Pew poll.

SUSTAINING GLOBALIZATION THROUGH POLICY ACTION

The global economy has yielded enormous economic gains for the United States, but problems undoubtedly remain. There are abuses within the system and rules need to be updated. Trade agreements should account for the modern digital age. Disputes continue on the trade of certain goods—whether items are flooding other markets too much, how industries are being subsidized, lingering protections on specific goods or economic sectors, etc. Solving these types of issues, which will inevitably arise and change over time, is best done through negotiation and coordination with trading partners—applying due process—in order to prevent costly trade wars, where more and more barriers end up hurting all sides.

But trade negotiations can only go so far. Not enough has been done to help those who have lost out from trade competition. And the reality is that the problems people face today go far beyond the effects of globalization. Manual work is increasingly being automated, lowering demand for workers. Wages are stagnant, as health care and higher education costs rise. Inequality is widening.

Domestic policies that support not just those left behind because of trade competition but all Americans will maximize gains while ensuring inclusive growth critical for national well-being and preventing erosion of multilateral systems that the United States helped build and that have served the country—and the world—well for most of the last century.

The global market still has great potential for the US economy. With anyone in the world now a text, click, call, or plane flight away, 95 percent of potential customers for goods and services are outside the United States, ready to buy goods and services from other countries if US producers are barred from their markets. If American producers want to reach those consumers, the United States must let producers from overseas reach American consumers, as they have over the years for cars, appliances, smartphones, and other products Americans want. More open trade could add another $540 billion to the US economy by 2025, equivalent to $1,600 a year in income per person.

Here are some of the crucial areas that economists have proposed the United States should focus on, as outlined in many studies at the Peterson Institute and other policy organizations. While these goals are simply stated and obviously will pose challenges to resolve, the stakes are high to rebuild trust in a global system that has helped secure prosperity and peace.

Invest in better and more inclusive education to prepare people for tomorrow’s economy.

Give all displaced workers sufficient financial and administrative support to find new jobs and some compensation for lost income.

Address growing income inequality through the tax system and spending programs.

Make sure the healthcare system does not impede workers from finding new jobs or cause significant financial hardship.

Use free trade agreements to improve the competitiveness of US businesses, increase total trade, and boost overall economic growth.

Work within the WTO and various free trade agreements to settle disputes, ensure fairness, protect intellectual property and investment rights, and promote reciprocity and growth. Improve the rules of the system rather than abandon them.

Coordinate with allies to confront trade abuses.

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GLOSSARY

Goods are physical, produced items traded between countries, like corn, machinery parts, or chemicals.

Services are business activities conducted between countries, such as tourism, finance, insurance, real estate, science exchanges, professional services, business management, education, health care, arts, entertainment, accommodation, and food services.

Exports are goods and services that are sold to individuals or companies outside of their country of origin.

Imports are goods or services purchased from outside the country.

A trade deficit occurs when spending on imports exceeds what is earned from selling exports. A trade surplus is the opposite, when earnings from exports top spending on imports. A country’s trade balance, either a surplus or deficit, is not affected by tariffs or trade agreements but by larger economic factors, like government spending and monetary policy.

Protectionism is the term for government restrictions on international trade aimed at blocking foreign products and driving companies and consumers to purchase domestically produced goods and services. The government may enact taxes on imports (called tariffs), limits on the quantity of imports (called quotas), subsidies to domestic industries, or other regulations. Tariffs are paid by domestic importers, not foreign governments or exporters.

Trade liberalization is the opposite of protectionism—when countries allow people and businesses to buy and sell across borders with fewer restrictions. In this context, liberal refers to more free or open trade.

CREDITS

Written by Melina Kolb

Edited by Madona Devasahayam, Helen Hillebrand, and Steven R. Weisman

Graphics by William Melancon

Videos by Daniel Housch

Chart data collected by Christopher G. Collins and Soyoung Han

Additional research by Anjali Bhatt, Cathleen Cimino-Isaacs, and Zhiyao (Lucy) Lu

Special thanks to C. Fred Bergsten, Chad P. Bown, Cullen S. Hendrix, Gonzalo Huertas, Gary Clyde Hufbauer, Douglas A. Irwin, Fredrick Toohey, Jeffrey J. Schott, and Eitan Urkowitz for their contributions.

This feature was first published on October 29, 2018 and last updated on August 24, 2021.

© 2021 Peterson Institute for International Economics. All rights reserved.

The Peterson Institute for International Economics 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 Institute discloses all sources of funding, which comes through donations and grants from corporations, individuals, private foundations, and public institutions, as well as income on the Institute’s capital fund and from publishing revenues. Donors do not influence the conclusions or policy implications drawn from Institute research. All Institute research is held to strict standards of replicability and academic integrity. Visit piie.com to learn more.

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PHOTOS

Associated Press/Abe Fox

Flickr/Levan Ramishvili and Leon Yaakov

Library of Congress

National Aeronautics and Space Administration

National Archives and Records Administration

Reuters/Daniel Acker, Russell Boyce, Marcos Brindicci, Larry Chan, Kevork Djansezian, Regis Duvignau, Gary Hershorn, Leah Millis, Charles Platiau, John Sommers II, and Piroschka van de Wouw

Senate of Berlin

US Air Force

US Army

US Census

US Marine Corps

William Henry Fox Talbot, Public Domain

World Trade Organization

WTO/Jay Louvion, Studio Casagrande

SOURCES

Autor, David H., David Dorn, and Gordon H. Hanson. 2016. The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade [pdf]. Annual Review of Economics 8: 205–240.

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Each of us has some friends we share with. Each of your friends has different brands of mobile phones. Some of them are Made in Japan, some of them Made in the Us, and some of them in Made in South Korea.

Each of you lives in a same country and buys a phone from your local electronics’ shops. So how did the products made from different countries come to you?

Suppose you go to big multiplexes and buy foreign brand clothes that come from almost all overseas. How is it possible?

 All this is possible as a result of globalization. The answer to these questions is hidden in one word, that is, globalization.

So let’s find out the answer to the question- What is Globalization? What about the history of globalization.

The Information and Communication Technology (ICT) revolution, the free flow of information-based and knowledge-based economies, the growing integration with the global economy of the national economy, and the market economy, is the key to globalization.

So globalization is the process by which the free market economy is ensured all over the world. In this process, foreign companies are doing trade throughout the world. That’s why you can get all the foreign products at a minimal price from your doorstep. 

It is also a mechanism of mutual interaction and interconnection that initiates coordination and interaction between governments, institutions and peoples of different nations. The driving force of this approach is international trade and investment, and its main supporting force is information technology.

Environment, culture, political system, economic development and progress, and human and social progress; It has a clear effect on everything. Although research on globalization has literally begun, this matter must be quite ancient.

Although globalization is broadly used since 1970 but globalization as a concept we can find from ancient times, people have been shown to participate in international trade. Although there was no general policy then. The history of globalization begins from thousands of years ago, in the middle Ages, the Silk Road was used to trade China with Europe through Central Asia.

Must-Read– 5 Important Types of Globalization

Features of Globalization

From the above discussion, we also find some features of globalization. These are-

  1. Integration of Economies
  2. Liberalization
  3. Privatization
  4. Free Trade
  5. Interconnectedness

1. Integration of Economies

The integration of economies throughout the world is necessary for interaction and integration among people, companies, and governments worldwide.

 It is a process in which agreements are done among the countries within a particular geographic region for reducing tariff barriers to ensure a free flow of goods and services.

2. Liberalization

To ensure integration of economies among the countries it is necessary to implement the process of liberalization in their own countries.

Like integration of economies, liberalization also is a process by which a country reform their economic policies for open their market to all. It ensures freedom of the entrepreneurs for the establishment of any kind of legal trades or industries in their own countries or abroad.

3. Privatization

After liberalization, it’s time for privatization. Without liberalization there is no existence of privatization. Privatization refers to the transfer of ownership of any property, corporation or business or services from government to the privately owned sectors.

Globalization would not be possible without LPG. Here L refers to Liberalization, P for Privatization and lastly G for Globalization. It can be said that liberalization and Privatization are the precondition of globalization. 

4. Free Trade

It refers to free flow trade among the countries without tariff barriers. Free trade can be possible when some countries within a same geographic region sign an agreement for the free trade among their countries. 

5. Interconnectedness

It provides us a framework to explore the world through interaction with different people, animals, nature by using several technological tools without any kind of barriers.

Must-Read- Advantages and Disadvantages of Globalization

History of Globalization

Globalization is not a new phenomenon. Today’s globalization has developed through the different phases which are started from ancient time.

Human being always moved from one place to other place with the purpose of trade. They exchanged goods, skill and ideas with other people from the history.

Silk Road

history of globalization

I have already mentioned that China used the Silk Road for their trade to Europe through Central Asia. Around 1st Century BC, Silk Road was first introduced to the Roman Empire.

 Throughout history Eurasia is one of the important paths for communication and trade which links from china. This route or path is called today as Silk Road. Through this road, people share their knowledge, ideas, culture, and beliefs. 

Trader along with this road not only attached to trade but also intellectual and cultural exchange. Silk was a more expensive and luxurious product that was traded between east and west through this road. Besides silk, there were many products that were traded such as textiles, spices, grain, vegetables, and fruits, etc.

Spice Trade 

Trade of spice was happened from the 7th to 15th centuries by the Islamic merchants in the Middle East. Islamic merchants traded spice from the Middle East to East Asia. The main purpose of that trade was to spread the Islamic religion. As a result of this initiative you can see a country like Indonesia where the most population is a Muslim majority.

The dominating product of Islamic trade was spice. Spice was traded mainly through sea and they were very much focusing on international trade in medieval age.

Age of Exploration

From the 15th to the 18th Century was the era of exploration. During this time the exploration of the Europeans connected the East and the West. Columbus’s discovery of America is believed to have begun the journey of modern globalization.

At this time, three things were mainly focused on. These are called as 3C 

1. Christianity

Christianity represents western civilization. Based on this notion, Western society sought to spread their religion throughout the world and had many successes.

2. Civilization

Christianity was one of the means of reaching Western civilization all over the world. As we look at the countries of Africa and Asia, we can see that there are many areas where Christianity is particularly prevalent. Although their Ethnic Identity is different.

If you want to know about Ethnicity then this article is a must read.

Western civilization is perfect and the rest of religion or culture is barbaric. In order to establish this idea, they imposed their culture on these backward countries.

3. Commerce

Now the question is why did they impose their religion or culture on others?

The answer is trade. If you consider Western civilization to be superior, their practical products will attract you. Almost every civilized society is now accustomed to wearing western clothing and others. Their real purpose was to ensure that western trade was forever.

Must-Read– Globalization is a Myth or Reality

What are the Four Phases in the History of Globalization?

To understand globalization better, you need to be aware of every phase of it. Then you will understand exactly how globalization has become today’s globalization.

There are mainly four phases of globalization. These are:

First Phase in the History of Globalization

The first phase of globalization began primarily from the 19th century onwards and continued until the beginning of the First World War, which means 1914.

As a result of the industrial revolution, Great Britain influenced the world through their trade. Inventions such as steam engines, industrial weaving machines, and more accelerated trade worldwide. The global trade began in the true sense from this period.

Prior to this phase, the growth rate of world trade on average 3% per year. However, since the Industrial Revolution, global trade increased by 6% and subsequently increased by 14%.

 During this time, trade in these countries, besides England, France, Portugal, USA, had increased greatly. But England was all around. That is to say, England took huge advantage in this phase of globalization.

Then came the First World War (1914) and all the countries close their borders again. Global trade was fall down again.

Great Depression

Since the First World War, there has been a gradual shift in each country, and world trade has become limited. The result was a recession which was also called as Great Depression.

The recession began in the 1929 and ended at the end of the decade of 1930. It is a long-lasting and widespread recession of the twentieth century.

In the 20th century, the Great Depression was used as an example of the collapse of the global economy.

The recession began in the United States after the stock market collapsed on September 4, 1929.

Later on October 29, 1929, the news spread to the global stock market, known as Black Tuesday.

Global GDP declined by about 15% between 1929 and 1932. In some economies was recovered in the middle of the 1930s, the effects of the Great Depression on the economy of many countries continued until the beginning of World War II. Then after World War II, world trade almost stopped. However, this is not the end of globalization.

Second and Third Phase in the History of Globalization

After World War II, another new chapter in globalization was launched under the leadership of USA and World trade has increased again. This time, Iron Curtain divided the whole world into two parts – the USA led on one end and USSR led on the other. But in 1989, the iron curtain was broken and globalization gaining a rapid boost.

The EU’s Free Trade and USA’s rapid increasing of trade at the beginning of the 1950 helped strengthen the global economy. On the other hand USSR increase their global trade in similar to USA but using centralized planning rather than free trade. This time, the world economy returns to its old rhythm. Export once again increase to 14% of global GDP which was achieved in the 1914.

Ever since the collapse of the Soviet Union, free trade has been rampant throughout the world. The World Trade Organization is created to promote free trade around the world.

Fourth Phase In the History of Globalization

The world we are living in now is actually the fourth phase of globalization. The two powers that govern the current world now are the USA and the other is China.

Now the Internet is the main driving force of globalization. Now we talk more about digital economy such as E-commerce, digital-services, 3D printing and so on.

However, negative globalization is also expanding, such as the adverse effects of climate change on earth, cross-border cyber attacks, terrorism, etc.

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Globalization has promoted multiculturalism in many countries of the world.

Globalization has promoted multiculturalism in many countries of the world.

What Globalization Means?

Globalization refers to the international interaction among people, companies, and governments of different countries through the exchanging of ideas, products, and cultural practices. Globalization is enhanced by the trading partnerships between different countries, as well as the use of the internet and mobile phones. Improvement in transportation systems like electric trains, container ships, and airplanes have made it possible for countries or people to access information about commodities offered in different places around the world.

Gloobalization In The Modern World

Globalization in the 19th century was attained as a result of industrial transformation during the civil war in the US. Industrialization promoted manufacturing of commodities in bulk and hence created the need to exchange with other people either for money or other products that were not produced locally. With the improved and reduced transport costs more can be exported and imported. Besides, people can move from one place to another and learn new skills that are not present in their area of origin.

Movement Of People

People are an important aspect of globalization, and hence their movement from one area to another plays a vital role in making the exchange of products a success. People move due to different reasons some of which includes tourism, immigration, and international education. Tourists travel to different countries for pleasure and interaction with others, therefore increasing interaction. When people visit different places, they end up buying products that they find different countries and in the process learn different cultures. Immigrants move from one country to another where they can settle and can gain employment. Their migration is facilitated by the readily available and affordable means of transport. International students seek education all over the world, buy products and mostly learn new culture.

Movement of Information, Goods, And Services

With globalization, information can be conveyed to any person regardless of the distance. The social media and telephones have made communication possible unlike in the past when people had to send letters through the courier or horsemen to deliver the mail and it occasionally could fail to deliver. Economic globalization has made it possible to move goods, services, and capital across the border. The improved means transport have made this possible.

Cultural Globalization

People exchange ideas, meanings, and values in the course of interaction through cultural globalization, where is has become possible for one to access whatever one wants to see at the click of the bottom.

Political Globalization

Globalization has impacted how different governments in the world function, as well as how they implement policies. For instance, the World Health Organization (WHO) formulates policies regarding health aspects that affect all member countries and therefore influencing them to work together. Non-government organizations influence public policies in different countries they operate in regard to the development projects they establish.

Importance Of Globalization

Globalization is a significant step towards the development of each nation. Every country can access the products, services, and even technology whenever they want. Hence, development in each country can be attained with the utilization of the available resources. Governments are promoting this aspect to ensure that social interaction, exchange of products and service is possible and thus none of the countries will suffer at the expense of others.

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