Globalization refers to the process of Integration across societies & encompasses the flow of product, services, labour, finance, information & ideas moving across national borders. The frequency & intensity of the flow related to the upward or downward direction of Globalization as a trend. Globalization is arguably the most important factor currently shaping the world economy. Although it is not a new phenomenon the changes it is bringing in now occur far more rapidly, spread more widely & have a much greater business, economic & social impact than ever before.
Globalization is best thought of as a process that results in some significant changes for markets and businesses to address: For example, An expansion of trade in goods and services between countries (an opportunity for many businesses; a threat for others)It can be an increase in transfers of financial capital across national boundaries including foreign direct investment (FDI) by multi-national companies and the investments by sovereign wealth funds (e.g. Middle Eastern governments buying assets in the UK).
A key result of globalization is the increasing inter-dependence of economies. For example: Most of the world’s countries are dependent on each other for their macroeconomic health. Many of the newly industrializing countries are winning a growing share of world trade and their economies are growing faster than in richer developed nations. All countries have been affected by the credit crunch and decline in world trade, but many emerging market countries have slowed down rather than fall into a full-blown recession.
There is popular notion that there has been an increase of Globalization since the early 1980’s however comparison of the period between 1870 and 1940 the post-world war II era indicates degree of globalization in earlier part of the century than the latter half.
Globalization is a growing trend with a predominance of global economic integration that leads to greater interdependency among nations.
Between year 1990 and 2011 total output of export and imports of goods as a proportion of GD rose from 32.3% to 30.9% of 37.9% in developed countries and 33.8 % to 48.9% for low to middle income countries. From 1990 to 2013, international trade export rose by 3.42 to 7.3 trillion hence the general direction of globalization is growth that is unevenly distributed between wealthier and poorer countries.
By Dr Suvarna Deshpande,
Associate Professor, ISBS