What Is Globalization?

What Is Globalization?

Globalization is a process of interaction and

integration among the people, companies, and

governments of different nations, a process driven by

international trade and investment and aided by

information technology. This process has effects on

the environment, on culture, on political systems, on

economic development and prosperity, and on human

physical well-being in societies around the world.

Globalization is not new, though. For thousands of

years, people—and, later, corporations—have been

buying from and selling to each other in lands at

great distances, such as through the famed Silk

Road across Central Asia that connected China and

Europe during the Middle Ages. Likewise, for

centuries, people and corporations have invested in

enterprises in other countries. In fact, many of the

features of the current wave of globalization are

similar to those prevailing before the outbreak of the

First World War in 1914.

But policy and technological developments of the

past few decades have spurred increases in cross-

border trade, investment, and migration so large that

many observers believe the world has entered a

qualitatively new phase in its economic development.

Since 1950, for example, the volume of world trade

has increased by 20 times, and from just 1997 to

1999 flows of foreign investment nearly doubled,

from $468 billion to $827 billion. Distinguishing

this current wave of globalization from earlier ones,

author Thomas Friedman has said that today

globalization is “farther, faster, cheaper, and deeper.”

This current wave of globalization has been driven

by policies that have opened economies domestically

and internationally. In the years since the Second

World War, and especially during the past two

decades, many governments have adopted free-

market economic systems, vastly increasing their

own productive potential and creating myriad new

opportunities for international trade and investment.

Governments also have negotiated dramatic

reductions in barriers to commerce and have

established international agreements to promote

trade in goods, services, and investment. Taking

advantage of new opportunities in foreign markets,

corporations have built foreign factories and

established production and marketing arrangements

with foreign partners. A defining feature of

globalization, therefore, is an international industrial

and financial business structure.

Technology has been the other principal driver of

globalization. Advances in information technology, in

particular, have dramatically transformed economic

life. Information technologies have given all sorts of

individual economic actors—consumers, investors,

businesses—valuable new tools for identifying and

pursuing economic opportunities, including faster

and more informed analyses of economic trends

around the world, easy transfers of assets, and

collaboration with far-flung partners.

Globalization is deeply controversial, however.

Proponents of globalization argue that it allows

poor countries and their citizens to develop

economically and raise their standards of living,

while opponents of globalization claim that the

creation of an unfettered international free market

has benefited multinational corporations in the

Western world at the expense of local enterprises,

local cultures, and common people. Resistance to

globalization has therefore taken shape both at a

popular and at a governmental level as people and

governments try to manage the flow of capital,

labor, goods, and ideas that constitute the current

wave of globalization.

To find the right balance between benefits and costs

associated with globalization, citizens of all nations

need to understand how globalization works and the

policy choices facing them and their societies.

Globalization101.org tries to provide an accurate

analysis of the issues and controversies regarding

globalization, without the slogans or ideological

biases generally found in discussions of the topics.