DEFINITION: The term “globalization” refers to the flow of trade of all kinds—economic goods and services, jobs, financial products, information, technology, and cultural images, ideas, and practices—far beyond national borders, eventually extending to the entire world.
In economic terms, “globalization” describes the growing interdependence of nations around the globe that is resulting from the afore-mentioned kinds of trade.
ETYMOLOGY: The verb “globalization” was coined about 1960 by the Harvard economist Theodore Levitt. However, the related verb “to globalize” is attested from some 15 year earlier.
Both “to globalize” and “globalization” derive, of course, from the English noun “globe,” which is attested from the fifteenth century.
“Globe” derives, via Middle English, from Middle French globe, with the same meaning, which, in turn, derives from Latin globus, globi, meaning “ball,” “sphere,” or “globe.”
USAGE: Globalization provides international corporations with a robust competitive edge, enabling them to reduce operational expenses by a variety of different means, including outsourcing production overseas, skirting tariffs to procure cheaper raw materials, and gaining entrée to large new markets composed of millions of previously inaccessible consumers.
Globalization comprises many different aspects, i
ncluding legal, political, social, and cultural dimensions:
- In the realm of law, globalization has brought about changes in the enactment and enforcement of international legal norms
- With respect to politics, globalization has focused attention on the role of intergovernmental organizations, such as the World Trade Organization (WTO) and the United Nations (UN)
- In regard to society, globalization has fostered increased migration and other forms of interaction among diverse populations hailing originally from many different countries
- On the level of culture, globalization has contributed to the proliferation of ideas, values, and artistic expression across political and ethnic boundaries and spheres of influence. Moreover, globalization represents, for better or worse, the emergence of an increasingly unified global culture.
Some will contemplate these trends with satisfaction, others with alarm. But both sides in the “culture wars” will be obliged to acknowledge that these effects of globalization are real, they are consequential, and they are likely to endure.
In a sense, globalization is not a recent phenomenon. In Antiquity, traders embarked on long journeys to obtain scarce and valuable goods, which they would then sell when they returned home.
The Industrial Revolution of the eighteenth and nineteenth centuries introduced vast improvements in transportation and communications, which facilitated international trade.
Globalization in the modern sense began to take off in earnest during the 1990s, notably, with the signing of the North American Free Trade Agreement (NAFTA) in 1993. One notable outcome of NAFTA was that American auto manufacturers began to shift many of their production facilities to Mexico, to save money on labor costs. This trend has greatly expanded over the intervening 30 years.
Globalization fosters new employment opportunities and economic expansion through the international movement of goods, capital, and labor. However, it also has at least two major drawbacks.
For one thing, while each factory that moves abroad to take advantage of low-cost labor brings with it real economic opportunities to the foreign community that welcomes it, those opportunities are not evenly distributed among the various nations of the world.
The same thing is true for particular sectors in specific nations. For example, the textile industry in the United States or corn farming in Mexico, have experienced significant disruption or even complete collapse due to the heightened competition flowing from NAFTA.
For another thing, every factory that relocates abroad leaves behind it in its former country a community that is economically devastated.
In addition to globalization’s obvious practical advantages, the public discussion surrounding the phenomenon includes no small amount of idealistic rhetoric. Yet, the establishment of a global free market has primarily favored major corporations headquartered in Western countries.
Thus, globalization’s effects present a complex picture for workers, small businesses, and communities worldwide, spanning developed and emerging nations alike.
Pros and Cons of Globalization
- An enlarged market for goods and services
- Lower consumer prices
- Outsourcing, which may benefit both domestic firms and foreign labor
- A rising standard of living in the foreign country
- Many developing countries may be left out
- Homogenization of cultures and consumer products around the world
- Concentration of wealth
- Devastation of communities in the international company’s original home country