- What is economic globalization?
- World actors of economic globalization
- Advantages of economic globalization
- Disadvantages of economic globalization
- Examples of economic globalization
- Other types of globalization
We explain what economic globalization is, its advantages, disadvantages and main actors. Also, other types of globalization.
What is economic globalization?
The globalization is a process of global integration launched in different aspects since the middle of the 20th century, which tends to overcome national borders and distinctions, marching towards a planet integrated, which operates as a single system of relationships.
Therefore, economic globalization refers to the productive, commercial and financial aspects of said global integration process. It is one of the three most important aspects of the world trend studied, along with political globalization and cultural globalization.
Economic globalization consists of the increasing integration of economies national and regional, through the rapid and significant increase in international operations and transactions: exchange of materials, services, technologies Y capitals.
Thus, economic globalization includes the violent internationalization of production, the financial market, the flow of large capital, the exchange of information Y technology, from the dynamics of cooperation Y competitiveness, and the job itself.
Never before could the humanity trade with such distant corners of the planet or work at such a distance as now. Thanks to new computerized information technologies, a business may have subsidiaries in various regions of the world, which allows it, for example, to produce in one place and move its merchandise to sell it en masse in another.
In this way, the contemporary economic fabric has become extremely complex. Economies that were traditionally unrelated have been integrated and new forms of exchange emerged, investment and of financing that put in check the ideas of the national, of the borders and of the sovereignty.
Economic globalization is an unstoppable force within globalization, capable of bringing great benefits and facilities, but also enormous risks and disadvantages.
World actors of economic globalization
The main actors involved in economic globalization have to do with:
- International Non-Governmental Organizations (NGO). Organizations with headquarters and activity in multiple countries, which generally pursue non-profit purposes, without the involvement of any of the governments nationals. Most of them have a humanitarian character and are therefore financed by donations and collaborations, which allows them a certain margin of Liberty to actuate.
- International Governmental Organizations (IGO). Organizations created by the signing of treaties or agreements between the different countries of a region or the world, in whose activity the state signatories and who normally have an important role in mediating between their needs and politics.
- Multinational or transnational corporations. These are gigantic companies with a presence in many countries around the world, capable of mobilizing huge investments in capital, materials and human Resources, and whose interests therefore can very often collide with those of States and governments. These great economic powers also tend to monopolize entire sectors of the market, thereby gaining influence in other areas of life, such as the culture and the politics.
Advantages of economic globalization
Globalization brought some economic growth to previously poorer countries.
Economic globalization can be a process full of opportunities, correcting difficulties and allowing money to move around the world. Among its main advantages are:
- Economic growth and generation of wealth. New markets become available with globalization, either due to the lack of competitors or due to the new scope that productive and commercial initiatives may have, or even due to the emergence of new types of employment, new areas of services and new types of exchange. This leads to a decrease in the poverty worldwide, especially in once-poor countries like China, India and Bangladesh.
- New ways of consumption. One of the greatest advantages of economic globalization has to do with the ability to exchange goods, services and information faster, far-reaching and massive that has ever been in the world. history. Electronic purchases, Commerce Digital and virtual work have irreversibly revolutionized the way of consumption.
- New supply chains. The international flow of raw material, technology and workforce it allows new productive mechanisms that take advantage of world economic differences. Thus, it is possible to find cheaper labor in other latitudes, which translates into greater Profits and new possible markets to invest.
- New global economic players. With the reduction of poverty and the opening of new markets, new powers economic conditions capable of rivaling or serving as a counterweight to the traditional ones, as has happened with the trade war between China and the United States. This allows for a more economically diverse world, for better and for worse.
Disadvantages of economic globalization
At the same time, economic globalization brings with it risks, dangers and problems, many of which also did not exist before in human history. Its main disadvantages are:
- Capital flight. Capital flight is called the massive, rapid and disorderly investment of assets or capital from a nation in the economic instances of another or others, which usually produces a forced devaluation of the local currency and a weakening of the economy, since wealth is literally going out. All of this is easier than ever before, thanks to the globalization of banking, financial and investment processes.
- Vulnerability of employee. Economic globalization gives strength to large international companies, whose presence in different countries makes them relatively immune to the legislation local, thus being able to mistreat their workers or have politics aggressive and abusive, since their can economic is such that no government can stand up to them.
- Competence unfair. Similarly, monopolies and unfair competition between the world's companies tend to occur in a global panorama in more brutal ways, since there is no single government capable of putting an end to them, and the limits of one jurisdiction end where those of another begin, which is not the case. with capital, which tends to flow freely between nations.
- Tax havens. Another unfair effect of economic globalization has to do with the possibility of large capital taking refuge in countries whose tax legislation is more lax and in which few questions are asked, which generates a competition that is not always fair between the tariff policies of the nations. . In addition, it allows a refuge for corruption and ill-gotten money, safe behind the excuse of sovereignty.
Examples of economic globalization
If we want a clear example of economic globalization, let's just look at the growing presence of large Chinese banks in America Y Europe: Industrial and Commercial Bank of China (ICBC), China Construction Bank Corporation (CCBC) or Bank of China.
These financial monsters have displaced other smaller local or regional companies, thanks to the advantages that the Chinese government allows them, since they are state-owned.
Another good example is the technological giants such as Apple, Huawei or Google, digital operation companies or telecommunications, whose market is no longer restricted to one country, not even one region. Like the McDonald’s chain, they are everywhere and have a stake in all markets, taking advantage of labor and economic differences between countries to maximize their revenues and gain an advantage over their competitors.
Other types of globalization
As we said at the beginning, there are two other great types of globalization:
- Political globalization. The tendency to integrate markets and productive activity is accompanied, of course, by enmities and associations between different states and nations. And thus, the trend towards political cooperation between nations whose interests are similar is accentuated in the global world, just as the global action of political and religious radicals is accentuated: terrorism, war defocused and even the imperialism they also draw on a global perspective.
- Cultural globalization.The free flow of information brings with it the creation of a new culture: culture 2.0 or of Internet, in which languages converge, users of different cultures and nationalities have contact, and new modes of personal relationships begin to emerge. This affects traditional cultures in two possible ways: 1) through integration and assuming as their own much of the culture “imported” from other regions of the globe; and 2) through the resistance and consolidation of the values local and traditional as a way of defending "one's own". Both options can be given in the same society at par.