Contemporary World Ch. 1: Globalization

• Contemporary World, Chapter 1.

Globalization

• Globalization involves increasing interaction among people, states, and countries.
• This interaction grows though international flows of money, ideas, and culture.
• Primarily focused on economic integration, it includes social and cultural elements.
• Globalization reflects the interconnectedness of people and businesses worldwide.
• This leads to global, cultural, political, and economic integration.
• It is the ability to move and communicate easily with others internationally to conduct business.

Globalization: Definitions by Other Authors

• Martin Albrow and Elizabeth King define Globalization as a process integrating people into a single world society.
• Anthony Giddens describes it as the intensification of global social relations linking distant localities. Local events are thereby shaped by distant events.
• Roland Robertson views Globalization as the compression of the world and intensification of global consciousness.

Characteristics of Globalization

• Social mobility involves movement of people regardless of reason.
• Intensification of interactions occurs.
• It is an active process.
• Borderless interaction.
• Ideas, knowledge, technology, culture, religion, etc. spread globally.

Historical Context

• 1897: Charles Taze Russel coined the term "Corporate Giants" referring to large national trusts and enterprises.
• 1930: The word "Globalize" was used as a noun meaning a holistic view of human experience in education.
• Late 1970s: The term "Globalization" was coined.
• Early 1981: "Globalization" was first used in an economic sense.
• Late 1980s: Theodore Levitt popularized the term "Globalization".
• Late 2000s: The IMF identified four basic aspects of globalization.
• 2013: "Globalization" was used to define a "borderless society".
• 2017: "Globalization" was frequently used in the Academe.
• 2018: "Globalization" became used across all disciplines.

Indicators of Globalization

• Interdependence among countries in different social areas becomes visible.
• Advancement of science and technology accelerates.
• Environmental issues become global concerns.
• Increased awareness of the economic, cultural, and political globalization.

Nature of Globalization

• Globalization manifests as a conglomerate of units in different parts of the globe, linked by common ownership.
• Multiple units share a common pool of resources, including money, credit, information, patents, trade names, and control systems.
• The units respond to a common strategy.
• Product presence spans different world markets.
• Human resources are highly diverse.
• Transactions involving intellectual properties like copyrights, patents, trademarks, and process technologies occur globally.

Reasons for Globalization

• Rapid shrinking of time/distance globally makes accessing markets easier due to advancements in technology.
• Domestic markets are insufficient due to many interwoven issues.
• Companies seek political/economic stability by going global since some countries have better stability than their origins.
• Companies seek technological and managerial expertise from countries advanced in science, technology, education, and health.
• Globalization reduces high transportation costs.
• Businesses want to be closer to raw materials and markets for finished products unavailable domestically.
• The World Trade Organization (WTO) facilitates increased cross-border trade.
• Other global bodies exist like the UN and various arbitration forums where countries can reach agreements.

Stages of Globalization

• Stage 1: A domestic company enters new overseas markets via local dealers and distributors, representing an arm's length service activity.
• Stage 2: The company/institution independently manages these activities.
• Stage 3: A domestic company begins its own manufacturing, marketing, and sales in key foreign markets.
• Stage 4: The company transitions to a full insider position in markets, with complete business systems including Research and Development (R&D) and engineering.
• Stage 5: The company moves towards a genuinely global mode; global localization occurs, where the company serves local customers around the globe, responding to their needs and requiring organisational transition: the company must denationalize its operations and create a set of shared values with global managers.

Merits of Globalization

• Open economies foster fast innovation by importing fresh ideas.
• Export jobs tend to pay more than domestic jobs.
• Productivity grows faster when countries specialize in goods and services where they have a comparative advantage.

Demerits of Globalization

• Globalization can lead to the exploitation of underdeveloped countries.
• It may widen the gap between the rich and the poor.
• It can have harmful effects on small industries and businesses.