Economic Globalization: Understanding Economic Globalization, Navigating a World Without Borders

By Fouad Sabry

What is Economic Globalization

Economic globalization is one of the three main dimensions of globalization commonly found in academic literature, with the two others being political globalization and cultural globalization, as well as the general term of globalization.Economic globalization refers to the widespread international movement of goods, capital, services, technology and information. It is the increasing economic integration and interdependence of national, regional, and local economies across the world through an intensification of cross-border movement of goods, services, technologies and capital. Economic globalization primarily comprises the globalization of production, finance, markets, technology, organizational regimes, institutions, corporations, and people.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Economic globalization

Chapter 2: Economy of Chile

Chapter 3: Economy of Guatemala

Chapter 4: Economy of South Korea

Chapter 5: Economy of Tanzania

Chapter 6: Tax

Chapter 7: Economy of the United States

Chapter 8: Economy of Singapore

Chapter 9: Informal economy

Chapter 10: Economic growth

Chapter 11: Economic development

Chapter 12: Supply-side economics

Chapter 13: Economic inequality

Chapter 14: Income distribution

Chapter 15: Offshoring

Chapter 16: International inequality

Chapter 17: Economic Freedom of the World

Chapter 18: Income inequality in the United States

Chapter 19: Economic liberalisation in India

Chapter 20: Redistribution of income and wealth

Chapter 21: Causes of income inequality in the United States

(II) Answering the public top questions about economic globalization.

(III) Real world examples for the usage of economic globalization in many fields.

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Economic Globalization.

• Language: English
• Publisher: One Billion Knowledgeable
• Release date: Mar 27, 2024

Book preview

Chapter 1: Economic globalization

Economic globalization is one of the three major characteristics of globalization often found in academic literature, alongside political globalization and cultural globalization, as well as the word globalization itself. Economic globalization refers to the extensive worldwide flow of products, money, services, and technology. It is the rising economic integration and interconnectedness of national, regional, and local economies around the globe as a result of increased cross-border flows of products, services, technology, and money. This recent expansion has been substantially supported by industrialized economies integrating with developing nations via foreign direct investment, the reduction of business costs, the elimination of trade barriers, and in many instances, cross-border migration.

International commodities markets, labor markets, and capital markets characterize economic globalization and constitute the economy.

Globalization is the process of linking individuals around the globe despite the existence of actual geographical barriers. World War I halted these economic globalization developments. The majority of global economic powers enacted protectionist economic policies and erected trade obstacles that brought trade growth to a standstill. This resulted in a slowdown in international commerce and even pushed other nations to implement immigration limits. Globalization did not restart in its entirety until the 1970s, when governments emphasized the advantages of trade.

The GATT/WTO structure, which was established in 1947, On October 27, 1986, the London Stock Exchange passed new deregulatory regulations that permitted worldwide connectivity of markets, anticipating massive growth in market activity. This phenomenon became known as the Big Bang.

By the time the GATT was replaced by the World Trade Organization in 1994, its membership had risen to 128 nations, including the Czech Republic, Slovakia, and Slovenia. The passage of the General Agreement on Trade in Services by the WTO in 1995 and the loss of the OECD's Multilateral Agreement on Investment in 1998 were setbacks on the path to economic globalization.

To take advantage of these possibilities, multinational firms restructured manufacturing. Labor-intensive industry relocated to regions with less expensive labor, After undergoing hard structural changes, the People's Republic of China (2001) and the remains of the former Soviet Union, such as Ukraine (2008) and Russia (2012), were accepted to the WTO process much later.

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, which went into effect on 1 July 2018, is an attempt to unify tax systems to prevent multinational corporations from using loopholes like Ireland's Green Jersey BEPS weapon.

An intergovernmental organization or international governmental organization (IGO) is an organisation founded by treaty in which two or more governments collaborate in good faith on matters of mutual interest. IGOs pursue peace and security and address economic and social issues. The United Nations, the World Bank, and on a regional scale are examples. among others, the North Atlantic Treaty Organization.

International non-governmental organizations consist of charity, advocacy organisations, commercial and cultural associations. International philanthropic activities surged after World War II, and NGOs offer more economic help to poor nations than governments of rich nations on average.

Since the 1970s, multinational corporations have depended increasingly on outsourcing and subcontracting over wide geographies due to the globalization of supply chains and the production of intermediate goods. Additionally, firms engage in inter-firm relationships and depend on overseas R&D. This is in contrast to previous eras in which companies kept manufacturing internal or within a limited geographical area. The transition away from internalization has been more viable due to technological advancements in communications and transportation, as well as increased economic openness and less political intrusion.

Through remittances, international migrants send considerable sums of money to lower-income family. Communities of migrants in the destination country often help newcomers with information and suggestions on how to make money. In certain instances, this has resulted in a disproportionately strong presence of specific ethnic groups in particular sectors, particularly if economic success motivates additional individuals to relocate from the originating nation. Movement of individuals also disseminates business-related technologies and cultural elements, and transfers acquired financial assets.

Following the acceleration of globalization, economic development surged and poverty fell worldwide.

The post-1980 globalizers' per capita GDP growth surged from 1.4% per year in the 1960s and 2.9% per year in the 1970s to 3.5% in the 1980s and 5% in the 1990s. This growth acceleration is even the more surprising when one considers that the affluent nations had a sustained fall in growth from a 1960s peak of 4.7% to a 1990s low of 2.2%. In addition, the non-globalizing emerging nations fared significantly worse than the globalizers, with annual growth rates dropping from highs of 3.3% in the 1970s to 1.4% in the 1990s. This quick development among globalizers is not just attributable to China and India's great performances in the 1980s and 1990s; 18 of the 24 globalizers had growth increases, several of which were fairly considerable.

Growth Rate of Real GDP per capita

According to the International Monetary Fund, economic globalization's growth advantages are broadly shared. While some globalizers, most notably China, have seen a rise in inequality, this growth is due to domestic liberalization, limits on internal migration, and agricultural policy, not international trade.

The global supply chain is comprised of complex, linked networks that enable businesses to create, manage, and distribute a variety of products and services to consumers throughout the globe.

Businesses manage their supply chains to take advantage of decreased manufacturing costs. A supply chain is a network of companies, people, activities, and resources involved in transporting a product or service from the supplier to the client. Supply chain operations include the transition of natural resources, raw materials, and components into an end-customer-delivered final product.

Globalization is frequently regarded as the source of a phenomena known as the race to the bottom, in which firms try to establish operations in nations with the least rigorous environmental and labor standards in order to reduce costs and boost delivery speed. If rivals decrease costs by the same ways, the pressure to do so increases. This not only results directly in terrible working conditions, low salaries, job instability, and pollution, but it also pushes governments to under-regulate in order to attract employment and economic investment.

In developing nations with lax labor rules, working long hours has negative health effects, and people are burdened by their participation in enormous global supply networks.

In developing nations with lax labor standards and a huge supply of low-skill, low-cost employees, there is a danger that certain workers, particularly women and children, may be mistreated.

Several groups, like the fair trade movement and the anti-sweatshop movement, claim to advocate for a more socially equitable global economy. The fair trade movement seeks to enhance commerce, production, and development for disadvantaged producers. The fair trade movement has attained yearly sales of $1.6 billion. In the meanwhile, the anti-sweatshop movement will oppose the unequal treatment caused by some businesses.

Multiple multinational groups push for the improvement of labor standards in developing nations. This includes labor unions, who are at a disadvantage in negotiations when a company may move or outsource activities to another nation.

The Argentine economic crisis of 2001 caused in a currency devaluation and capital flight which resulted in a sharp drop in imports.

Capital flight happens when assets or money migrate fast out of a nation due to a recent deterioration in its financial circumstances, such as an increase in taxes, tariffs, labor expenses, government debt, or capital restrictions. This is often followed by a dramatic decline in the afflicted country's currency rate or a forced devaluation for nations with set exchange rates. Currency depreciation improves the terms of trade, but reduces the monetary worth of a country's financial and other assets. This results in a decline in the buying power of the nation's