Economic Globalization: Models, Impacts, and Key Factors

Economic Globalization: Models and Impacts

Model A: Key Aspects of Economic Globalization

Items 1 to 8 model economic globalization's most famous aspects. Globalization responds to the term 'performance of large multinationals in all regions of the world', meaning the process of relocation of labor to cheaper areas. Small national companies must adapt strategies to survive as competition grows increasingly. There are other processes of culture, consumption, population, habits, information, and environmental problems.

2. The reference is the continuous exchange of goods, money, people, and information on a global scale. Within these international trade flows, which imply the exchange of products between different countries, and investment capital, we can distinguish direct investments in subsidiaries in another country or portfolio investments, which involve buying stock in import and export.

3. Improvements in technology, transportation, telecommunications, and international economic institutions, units, and regional economic competition between large companies are the factors driving globalization. Tariffs act as a brake to avoid competition from foreign sales of domestic products. This situation favors developing countries, allowing them to produce more and specialize in certain products. Thus, the global market necessitates certain controls to avoid an avalanche of areas to the development of companies.

6. A multinational has multiple work centers in a country and is led from its established office. A multinational subsidiary is located in a different country of origin, directed from its central office. A financial holding group controls the capital decisions of many companies working in different economic activities.

Model B: Historical Context and Modern Drivers

1. After an epoch in the fifteenth century, a type of political relationship developed. European shipping gave origin to the discoveries, and colonial empires were created. This period saw the expansion of European culture and commerce. Growth throughout the twentieth century allowed for decolonization. This meant political independence for many countries. Large states were to install companies in these countries to manufacture and sell their products. Economic relations increased.

2. In the last 20 years, revolutions in communications and transport have provided a new impetus for global integration.

3. The headquarters from which subsidiaries of multinationals are led is less unbalanced. Most are located in other developed countries, and developing countries are the countries with the most subsidiaries because maquiladoras are established there, meaning products are manufactured at very low costs and all their production is sold to the U.S.

5. Air transport is currently the most used mode of travel for passengers. Tourism has become a global phenomenon thanks to transportation. Aircraft use large planes for longer air routes to reduce the prices of tickets. All this has led to a growing flow of passengers on long-distance routes.

6. The twenty-first century saw the rise of the Internet, the network of networks that connected computers worldwide. The speed of information was faster. At the beginning of the fifteenth century, satellites produced television and radio broadcasting, and the telegraph emerged. Transportation of images is a slow, complex network of cords, first on the ground and then in the air.