Globalization: Economic Dimension For many people

Transcript:Globalization: Economic Dimension For many people:
Globalization: Economic Dimension For many people when they think about globalization, economics is what typically comes mind, and it is this area that generates the most controversy and debate. Over the past few decades, the world has seen a rapidly developing system of international trade and economic relations, fostered by technological change and dramatic shifts in world politics- e.g. between 1996 and 2005, world exports in goods and services nearly doubled in size from $ 6.6 trillion to nearly $ 12 trillion. Technological change and the liberalization of markets in recent decades have also helped foster a growing internationalization of investment, as firms and funds move into markets overseas in pursuit of greater profits- Foreign direct investment, or the purchase of assets in a country by a foreign firm which was just under 7 percent of world GDP in 1980 had grown to 23 percent by 2003. MNCs Dominating Global Markets Assisted by more open markets and reduced costs for transportation, large firms such as IBM, Honda, McDonald’s, and Johnson and Johnson control assets and make profits in the billions of dollars. These economic developments are compounded by expanding global communications. Recent recessions notwithstanding, the development of electronic commerce, with its ability to link far-flung businesses globally, is transforming the way in which markets, firms, and individuals interact. Technological innovations have reduced many of the traditional barriers to trade. Firms and people are able to buy goods and services from around the world using fewer or no intermediaries. Thus, markets are more open and firms face greater competition. A business in China or Chile, for example, can market its goods and services directly to other firms or individuals anywhere in the world. The Area of Investment In the area of investment, too, online banking and investment allow people to move their money internationally with a few mouse clicks. Finally, economic globalization also applies not just to trade, firms, or finances, but also to labour. Globalization may shift not only where things are made, but also where labour is located. Optimists see in these dramatic changes the mechanism for future global prosperity. Through the expansion of international economic connections, goods and services, labour , and other resources can be allocated more effectively through a broader market, unfettered by tariff barriers and other obstacles that states erect. Encouragement to Innovation, Specialization, & Lowering of Cost Countries are able to export what they