Last Updated 16 May 2021

Economics and Globalization

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Everyday you hear it on the news, you read it in the papers, you overhear people talking about it... And in every single instance the world globalization seems to have a different meaning. So, what is globalization? , there were a lot of debate about this issue. At a top political and economic level, globalization is the process of denationalization of market, political and legal systems. The consequences of this political and economic restructuring on local economies, human welfare and environment are the subject of an open debate among international organizations, governmental institutions and the academic world.

"What is globalization? Is it the integration of economic, political, and cultural systems across the globe? Or is it Americanization and United States dominance of world affairs? Is globalization a force of economic growth, prosperity, and democratic freedom? Or is it a force for environmental devastation, exploitation of the developing world, and suppression of human rights? " Globalization is not a phenomenon it is not Just some passing trend. Today it is an overarching international system shaping the domestic politics and foreign relations f virtually every country, and we need to understand it as such". Globalization is much like fire. Fire itself is neither good or bad. Used properly, it can cook good, sterilize equipment, from iron, and heat our homes. Used carelessly , fire can destroy lives, towns and forests in an instant. As Friedman says :"globalization can be incredibly empowering and incredibly coercive it can democratic opportunity and democratic panic.

It makes the whales bigger and the minnows stronger. It leaves you behind faster and faster, and it catches up to you faster and faster. While it is honeymooning cultures, it is also enabling people to hare their unique individuality farther and wider". But the question here what is driving globalization? , globalization "Is driven by the strategic responses of firms as they exploit market opportunities and adapt to change in their technological and institutional environment, and attempt to steer these changes to their advantage.

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The OECD groups the factors shaping globalization into four general categories, which are inter-linked: -firm behavior : Strategic , pre-emotive and imitative behavior. Exploitation of competitive advantages: use of superior technology , organization, Economics and Globalization By miss_love Consolidation of competitive advantages: gain access to highly skilled people, advanced technological and commercial infrastructure, lower Labor costs, and raw material.

Organizational changes; adoption of lean production methods and more horizontal internal and external organizational structure. -Technology Related factors" declining computing, communication, co-ordination and transport costs. Increasing importance of R &D , coupled with rising R & D costs. Shortening product lives. Shortening of limitation time lags. Rapid growth of knowledge -intensive industries. Increasing customization of both intermediate and finished goods.

Increasing importance of customer oriented services. Economic factors Availability of key production factors Productivity differentials. Fluctuations in exchange rates. Differences in the business cycle. Catching up by lagging economies. " (changing paradigms , Thomas Clarke and Stewart college, pop)). But according to Thomas Friedman in his book Lexus and the Olive tree he explains three major factors for the spread of globalization: Which are -the demagnification of technology. -the demagnification of information.

International expansion has been driven by firm strategies based on their technologies and organizational advantages shaped by a number of factors of government policies , technological factors driving expansion include the rapid growth of knowledge intensive industries which are foreign investment intensive industries which are foreign investment intensive use intra firm trade intensively and collaborate externally in development the need to recoup growing R & D costs find highly trained and skilled workers and organize production more efficiently underpinned by declining communication and transport costs.

Increase importance of customer severe. Macroeconomic factors include market development in different countries and region. Availability of key production factors, product differentials, fluctuation in exchange dates, differences in business cycle, catching up by lagging economies. Government policies , significant influence firm strategies by liberalizing capital investment and trade flows, promptly regional integration and promptly competitiveness.

Trade policy of liberalizing of trade and invested are enabling factors which have driven global expansion and increased the integration of production and markets. Intention policies(changing paradigms , Thomas Clarke and Stewart college, pop)). Second, the technology, people have been able to travel the world for the past 500 years, the difference now is that they are connected immediately. The internet boom in 1990 made people release that business could operate more or less unconstrained by geography, 24 a day , 7 days a week , 365 day a year.

This new faster moving changing business environment have driven companies of all sizes to organize themselves into smaller more responsive , focused unit. The faster that drives globalization is making behavior is more tribal. John Mannish, author of global paradox argues that the more we become economically interdependent the more we hold on to what constitute our core basic identity. Implementing a homogeneity western culture, such countries as Indonesia , Russia , France have passed laws to preserve their identity.

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