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What Is Economic Globalization?

One popular aspect of globalization is economic trade, in which goods and services are exchanged among nations.
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  • Written By: Karize Uy
  • Edited By: Lauren Fritsky
  • Last Modified Date: 23 July 2014
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Economic globalization is a worldwide phenomenon wherein countries’ economic situations can depend significantly on other countries. Many allied countries would supply resources to each other that the other countries do not have. These resources can cover imported products, technology, and even human labor. Many people have observed that this phenomenon may lead to a “one-world government,” which consists of a centralized government for all nations.

One popular activity under globalization is international trade, in which products and services are exchanged between or among nations. Many countries that have abundant natural resources rely on this trading system to market their unique local products and, in turn, improve their economic state. International trade has been practiced for centuries, as evidenced by the Silk Road that connects Asia and Europe for trading purposes. One modern example of this type of trade is the toy industry, wherein many American-sold toys have the phrase “Made in China” embossed on their surface.

Economic globalization may involve the financial and economic aspects of a nation primarily, but its interdependent nature can inevitably affect a country’s lawmaking system and cultural identity. Trading policies and tax treaties are created between countries to regulate trade and protect either country from threats of terrorism. Multinational companies are changing some cultural aspects of many countries; fast food restaurants, for example, have changed the eating habits of Asian countries that consider rice as a staple food. Fashion trends from European countries are also carried over to the opposite side of the globe.

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Depending on a person’s perspective, economic globalization has both advantages and disadvantages. Advocates assert that the phenomenon increases a country’s productivity with increased job opportunities and possible higher salaries. This can lead to economic growth and a higher standard of living. The reliance of countries on each other has also led to better chances of international peace. It has also paved the way for cultural awareness and understanding, largely through the help of technology.

On the other side, some people believe that globalization has more disadvantages than benefits. One negative result is that natural resources are depleted at a faster rate, since the demand for raw materials has increased among many countries. Another drawback is the violation of human rights, as many countries can exploit human labor outsourced from developing countries. Others say that it's a method for more powerful countries to colonize less developed ones by taking control of the latter’s economic situation. Whether economic globalization has positive or adverse effects, no one can doubt the phenomenon’s influence and impact on today’s global development.

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Discuss this Article

anon946757
Post 3

What's the difference between global economic system and economic globalization?

rjh
Post 2

I definitely stand on the negative side of economic globalization. An obvious negative effect that I'm sure everyone remembers is the housing bubble of 2007 spreading throughout the world to countries like Britain, Ireland and Iceland. Electronic commerce also makes it harder for tax authorities to do their job, meaning the government stands to lose tax revenues.

Engelbert
Post 1

Regardless of whether it's a good or a bad thing, I think economic globalization was bound to happen, the reason being the fall in the costs of doing business with other countries due to the so called IT revolution. The IT revolution - mainly talking about the Internet here - resulted in a massive drop in communication and information costs. Because the barriers between countries were breaking down and the importance of trade was becoming more apparent, national policies responded by beginning to remove restrictions on capital markets (shares, bonds, investments). The daily turnover of foreign exchange on world markets increased by 150 per cent in the 90s alone.

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