Impact Of Globalization On The Economy

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There was a time when most regions were economically self-sufficient. Locally produced foods, fuel, and raw materials were processed for local consumption. Trade between different regions was very limited. Today, the economies of most countries are so interconnected that they form part of a single, interdependent global economy. Globalization has been defined as “the process of international integrating arising from the interchange of world views, products, ideas, and other aspects of culture. ” With this meaning, perspectives, social norms, and business conducts are being exchanged across cultures. It has changed the world in more ways than we can imagine. The most profound impact of globalization is on the economy in nearly all markets.…show more content…
” These distinct systems would also prevent global financial crises from happening as the systems would not be dependent on each other. As time progressed, so did the policies and practices of free trade. Citizens felt that as long as financial systems were separate, global free trade was safe. Soon, the barricades to open, flowing capital began to disappear and citizens forgot the lessons of the past and became more comfortable with global commerce exchange. Some drivers of globalization are economic policies, political changes and technological innovations. Indeed, the advancement of science and technologies has greatly reduced the cost of transportation and communication, making economic globalization possible. Today’s ocean shipping cost is only a half of that in the year 1930, the current airfreight 1/6, and telecommunication cost 1%. The price level of computers in 1990 was only about 1/125 of that in 1960, and this price level in 1998 reduced again by about 80%. These kinds of technological advancements greatly reduce the cost of international trade and investment, thus making it possible to organize and coordinate global production. At the forefront of globalization are multinational corporations (MNC); these corporations have become the main carriers of economic globalization. They are globally organizing production and allocating resources to insure profit maximization. The technological advancement at almost every level, from widespread Internet access to
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