GLOBALIZATION

Globalization

Globalization

Introduction

Globalization is the creation and expansion of economic and social connections among people and organizations around the world. The movement of people, goods, ideas, technology, and money fuels the process across national boundaries.

The populations of different cultures have interacted and established economic and cultural links for centuries. In the middle Ages, merchants and explorers exchanged goods and ideas throughout Europe, across North Africa, and between the Middle East and Asia. However, in recent decades, globalization has advanced at an increasingly rapid pace. Two major forces in this development have been the Internet, which has sped up communications, and businesses, which have expanded to reach markets on distant continents. (Charles, 2008)

Although people still identify with their local communities and national governments, many increasingly see themselves as part of a global society. However, globalization does not affect all regions in the same way. Individuals and corporations in industrialized countries tend to benefit more than those in developing countries.

Impact on Trade

Goods and services now move more freely among countries than ever before. Ongoing declines in the cost of long-distance communication and transportation and in national restrictions on international trade and investment have allowed economies around the world to become increasingly integrated, thereby enhancing productivity growth and expanding consumer choices. In parts of the developing world and especially in East Asia, globalization has been accompanied by an increase in living standard hardly imagined just a generation ago. At the same time, globalization has also become the focus of widespread controversy. In particular, concerns about adverse consequences for income distribution have fuelled policy initiatives that threaten to turn back the clock. (Helen, 2003)

While there is little disagreement that globalization has been accompanied by increased inequality within many countries, both rich and poor, this is not the same as establishing a causal relationship. On the contrary, numerous systematic studies have concluded that the redistributive changes the public and policy makers often attribute to globalization are due mainly to other changes in the economy. Thus, while discussions of globalization frequently turn to its contribution to inequality, discussions of rising inequality often fail even to mention globalization or dismiss it as playing at most a minor role in explaining recent trends in income distribution. Many U.S. trade and labour economists conclude that the primary cause of increased wage inequality is that the rate of skill-biased technical change has exceeded the growth rate of skilled labour. However, most technical change ...