Globalization Overview

Globalization

• Globalization is the increasing interdependence of countries worldwide or the increasing connectivity of people and places.
• Globalization can be social, economic, cultural, or political.
• Social globalization is the ability to connect with people instantly across the world.
• Economic globalization is the movement of goods and services across the world supported by transnational corporations (TNCs).
• Cultural globalization is the sharing of foods and cultural practices across the globe.
• Political globalization is the collaboration of countries through international agreements.
• Globalization is not a new process but the speed at which it is occurring has dramatically increased.
• The increased speed of globalization is called time-space compression.

Dimensions of Globalization

• Flows of globalization are things that move around the world and connect people and places.
• Flows of globalization include capital, labor, products, services, and information.
• Flows of capital refer to money moving around the world through investment, trade, and production.
• Flows of capital through foreign direct investment (FDI) increased from $400 billion in 1996 to $1,500 billion in 2016.
• Repatriation of profits occur when TNCs invest in a country but then the profits are returned to the TNC's origin country.
• Aid is money transferred from one country to another to help with development, an example is the World Bank which gives out loans to countries.
• Remittances are money that migrants send back to their families in their origin country.
• Flows of labor are people moving around the world as migrants.
• Flows of labor have increased significantly with globalization.
• An increase in the flow of labor can be seen on flow diagrams and maps.
• Many young men move from Nepal to countries in the Middle East for work and send remittances back to Nepal.
• In 2014, 25% of Nepal's Gross Domestic Product (GDP) was from remittances sent back home.
• Economic migrants leave their origin countries to make money and send remittances back with the goal of supporting their families.
• Flows of products and services refer to goods and services being traded across national borders.
• Trade is often between “High-Income Countries” (HICs) as a result of the Industrial Revolution, but shifted to “Low-Income Countries" (LICs) and "Newly Emerging Economies" (NEEs) as a result of de-industrialization and the global shift.
• In the 1970s, the deregulation of financial markets opened up markets for investment globally – creating a greater flow of services.
• Flows of information refer to data being shared electronically through emails, the internet, and social media.

Global Marketing

• Global marketing promotes and sells goods and services to one global market.
• TNCs often develop a global brand for a given good, meaning the good remains the same but it is sold globally.
• Global brands allow for economies of scale, with the ability to increase production and make more profit.
• TNCs also use glocalization, where a good is adapted to suit a particular location or population in order to increase sales.

Patterns of Production, Distribution, and Consumption

• Production is where something is made.
• Distribution is how a good is moved across the world.
• Consumption is where a product is used.
• Previously, production and consumption were often in the same location.
• De-industrialization and the global shift led to a movement of the production of goods from “High-Income Countries” (HICs) to “Low-Income Countries” (LICs) and “Newly Emerging Economies” (NEEs).
• The Chinese "open door policy" encouraged investment in China and manufacturing moved to China.
• Consumption is still predominantly in HICs, but it is also increasing in NEEs., particularly in China, due to an increase in the middle class.
• Containerization has dramatically impacted the distribution of goods, as standardized containers can be moved quickly and efficiently across the world.

Factors of Globalization

• Globalization is influenced by:
  • Development of technology (communications, transportation, and information systems)
  • Systems and relationships (financial, transport, security, communications, management, and information systems)
  • Trade agreements
• Technological improvements have led to the “shrinking world effect” which occurs when the world becomes more interconnected and people feel closer to each other.
• The “shrinking world effect” is caused by improvements to transportation (e.g., air travel and container ships) and information technology (e.g., internet and the rise of cell phones).
• Just-in-time production relies heavily on efficient ordering systems and reliability – often managed through Information and Communications Technology (ICT).
• International organizations, governments, banks, companies, and investors make up the world's global financial system.
• Deregulation of financial markets led to a free flow of capital around the world in the 1980s.
• Neoliberal policies encourage free trade and global investment which has led to an increase of flows of capital around the world.
• The World Trade Organization, the International Monetary Fund (IMF), and the World Bank support neoliberal policies.
• Container ships provide a standardized transportation system for goods, moving seamlessly between ships, trains, and lorries, which has lowered transportation times and costs.
• Air travel increases the speed of delivery for goods, increases tourism, and facilitates the movement of people between countries.
• Security measures are put in place to protect transport networks.
• Security can also limit globalization as countries tighten security measures in order to reduce the flow of people.
• Communication advancements such as the rise of the internet and the use of satellites allow people to connect instantly across the world.
• The internet, social media, and email increased the flow of information around the world.
• Submarine communication cables transmit telecommunications signals across the seafloor.
• Management and information systems make companies and businesses more efficient.
• Global supply chains support TNCs by providing access to raw materials, manufacturing, and sales.
• Offshoring moves a business entirely abroad, often to locations with cheaper labor.
• Outsourcing hires another company to carry out specific tasks within a business.
• Trade agreements are between countries and are designed to govern the flow of goods and services.
• The key players of global trade include the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank.
• Free trade areas eliminate internal barriers between countries, but they maintain independent external barriers.
• NAFTA (North American Free Trade Agreement) is an example of a free trade area.
• Customs unions are similar to free trade areas but they also have a common external barrier.
• Common markets are the same as customs unions but they also allow for the free flow of resources between member nations.
• Political unions include all the previous features but also have a uniform set of economic policies for all member countries.
• The European Union (EU) is an example of a customs union, common market, and political union.
• The EU is more integrated than NAFTA.
• Trade agreement are often between geographically close countries.
• The benefits of trade agreements include:
  • Promoting global peace and cooperation.
  • Encouraging economic growth.
  • Promoting more free trade.
  • Creating economies of scale.
  • Increasing the movement of labor.
  • Attracting investment.
• Trade agreements can cause exploitation, as countries can take advantage of cheaper labor in countries with lower levels of economic development.
• In 2020, NAFTA was renamed USMCA (United States, Mexico, Canada Agreement).
• Brexit is the United Kingdom's exit from the EU.
• Some argue that Brexit is evidence of deglobalization as it is a move to restrict trade.
• Some argue that the United States’ relationship with the EU and Japan are examples of trade agreements that go beyond geographic proximity.
• The Transatlantic Trade and Investment Partnership (TTIP) was a trade agreement that had been proposed between the EU and the United States, it was not finalized.
• The Trans-Pacific Partnership (TPP) is a trade agreement that had been signed between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States. The TPP was never ratified.

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This quiz explores the concept of globalization, highlighting its various dimensions such as social, economic, cultural, and political aspects. It discusses how these forms of globalization interconnect people and places while emphasizing the rapid pace at which this process is unfolding. Test your understanding of the flows and impacts of globalization across the globe.