Economic globalization is the integration between economies around the world that is due to the increase in international trade, flow of international capital, and the growth of technology. It reflects the trend of economic development by the rapid growth of technology and information. Scientific and technological advancements have cut the price of transportation and communication, making economic globalization achievable.
In order to participate in economic globalization, many countries have dissolved or lessened their tariffs and non-tariff barriers. Multinational corporations (MNCs) have expanded economic globalization. Multinational corporations have globally organized production and allocated resources according to the principle of profit maximization¹.
Economic globalization is seen as the process of global industrial restructuring and readjustment¹. Technological development has increased income level, resulting in the upgrading and readjustment of industrial structures in other companies. The United States and other western countries possess most of the control of international economic and financial organizations, allowing these countries to dominate the development of globalization¹.
When developing countries are included in the globalization process, they are better able to utilize their comparative advantages and foreign capital¹. Globalization also increases market competition and hinders monopolistic behaviours.
Globalization still comes with disadvantages to markets, evident by the fact that the gap between the North and South has expanded¹. Globalization has also had negative impacts within the United States. “Offsore Outsourcing”, the movement of production process outside the firm and overseas, has caused major job loss in the United States². With the constant development of technology and communication overseas, globalization is a significant topic in economics.
1. Shangquan, Gao. (2000). Economic Globalization: Trends, Risks, and Risk Prevention. Retrieved from www.un.org/esa/policy/devplan/cdpbackgroundpapers/bp2000_1shangquan.pdf
2. Brookings. Retrieved from www.brookings.edu