Globalization: Trends, Implications, and Challenges

Glob:

Refers to the trend towards a more integrated global economic system.

Glob in markets-

The merging of historically distinct and separate national markets into one huge global marketplace. Tastes and preferences of consumers in different nations are converging upon some global norm (Coca Cola, Starbucks, Sony PlayStation, and McDonald’s). However, most globalized markets are industrial goods and materials. Many factors mean that national markets and cultures are still very different and very hard in practice to standardize your product or service globally.

Glob Prod:

The sourcing of goods and services around the globe to take advantage of national differences in the cost and quality of factors of production. The goal is to lower the overall cost structure or improve the quality or functionality of products. From 1991 to 2013, Chinese global share of manufactured exports went from 2% to 20% and the USA lost 6 million manufacturing jobs.

Global Institut:

Manage, regulate, and police the global marketplace. Promote the establishment of multinational treaties. World Trade Organization polices the world trading system. In 2010, its 154 members accounted for 97% of world trade. International Monetary Fund orders the monetary system. World Bank focuses on economic development. United Nations works on international peace and security and solves problems related to human rights.

Declining Trade & Invest Barriers

International trade occurs when a firm exports goods or services to consumers in another country. Foreign direct investment occurs when a firm invests in business activities outside its country. In the 1920s and 1930s, countries erected barriers to protect domestic industries. After WW2, occidental countries started removing trade barriers. Lower trade barriers help companies view the world as a single market. In the 1980s, there was an acceleration of world trade and investment.

Role of Technological Change

After WW2, there were more advances in communication, information, and transportation. This led to lower costs in communication. The US had web-based transactions worth $133 billion in 2008 with 1.6 billion users in 2009. Technological change has implications for the globalization of production, such as lower transportation costs, bigger production systems, and more economical ways for firms to respond to international demands. It also has implications for the globalization of markets, such as low-cost communication networks helping electronic markets and the importance of innovation. Low-cost transportation facilitates the movement of people.

Current status

Globalization is under attack today. There is political backlash, such as Brexit and Trump's anti-China stance. Free movement of people is under pressure due to terrorism in France and the UK, as well as anti-establishment parties in France and Germany calling for closed borders. Free movement of capital is also under pressure, with backlash against globalized financial markets, US and UK taxes, and the EU ruling in 2016 that Apple must pay €13 billion in tax to Ireland.

Immigration

Immigration is needed but not wanted. The EU and Japanese population is aging, and immigration is important for economic growth. In Britain, there are concerns that migrants overburden the welfare state, while in the US, there are fears that migrants hold down the wages of American workers. The influx of different cultures poses integration issues, and