Globalization refers to the growing interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and through the more rapid and widespread diffusion of capital (Guiness, 2011). A long controversial subject in all areas of studies, globalization is an overwhelming force that has swept the world. The strong connectivity that now characterizes ties between countries contributes to enhancing the ease of exchanging products, information, or capital. As the world seems to be shrinking with globalization, we now have a better understanding of foreign
Recent Trends of Globalization However, despite financial globalization has increased the interdependence between countries’ economies, allowing more foreign net capital inflows to pour into developing and developed countries, there are still certain setbacks to such phenomenon. Some of which could be seen in the recent wave of financial globalization. In this new wave, there are two important developments worth noting: the drastic increase in the worldwide net capital flows and the increase in domestic investors using foreign financial services. As shown in figure 1 and 2, it is easy to see as the net capital flows surged dramatically since the 1970s, so have the proportion of net private capital. Which is approximately three times greater than official development assistance and official aid.
Not only foreign investments but also domestic investments have boosted to a new level. For example, “The UAE is an important participant in global capital markets through several investment institutions, including, among others, the Abu Dhabi Investment Council, the Dubai Port, Dubai Holding, and the Abu Dhabi’s International Petroleum Investment Co. (IPIC)” (United Arab Emirates 2007, 2007, p.76). It is true that U.A.E is highly dependent on oil but as a result of globalization, it also has major areas of growth in tourism, manufacturing and financial sectors. Tourism also counts as the U.A.E.’s biggest source of income as thousands of people visit it every year. This in turn encourages businessmen from other countries to come and invest in both, the public and the private
AP Comparative Government and Politics: Briefing Paper (Questions and Responses) Q1. Define “globalization”. Explain some of the interconnections that characterize globalization. A1. Globalization, driven by advanced technological innovation, is the process that results in the rapid growth of interconnectivity of the world; this inevitably prompts increasing interdependence between economies, political system, and societies.
Economists typically use the term “ Globalization “ to refer to international integration in commodity , capital and labor markets (Bordo et al., 2003) Since the mid-19th century , there have been at least two episodes of globalization (Baldwin and Martin, 1999). The first began around the mid-19th century and ended with the commencement of World War I , while the second began in the aftermath of World War II and continues today . Both theses episodes were accompanied with rapid changes in trade and output and changing size of economies . The interplay of various factors like migration, GDP growth and trade and foreign investment help us understand their influences on the changes globalization. ( See Table 1 ) FIRST PHASE Pre world war 1 , from about 1850-1914 globalization referred to mainly to the growth in world industrialization and trade managed mainly by Great Britain who rested on free trade and open markets,was mainly reliant on its colonies for raw materials and production factors and reliant on consumers in the more developed countries.
Globalization is a multielement concept. Friedman divided it into three stages. The first stage is from 1492 to 1800. Columbus discovered the America. The second is with the development of the economy, international trade has grown rapidly cause the economic globalization.
In my opinion, globalization is an important issue, as it allows countries to collaborate politically, socially and economically. As every concept, it has its own negatives and positives, so is globalization. Globalization is important as it is a term of changes in societies and worlds economy, that leads to border movement, new investments, and cultural changes. Globalization process has been used for many centuries, but only in recent time globalization became the most focused discussion. One of the reasons why globalization is important issue is because of the world economic problem and different businesses.
Global trade is the international exchange of products and services between different countries or territories. It involves the activities of the government and individuals and is usually formed by exports and imports. For many countries, global trade is a significant share of the gross domestic product (GDP). The importance in economic social and political life has been increasing rapidly in recent years. This increase can be mainly attributed to globalization and multinational corporations.
However, the speed of globalization varies from nation to nation and sector to sector. Generally, globalization not only can be seen in the economic activities, it also includes the proliferation of technologies where communications and distribution networks are becoming significant in people’s life. The area that surrounds globalization in our modern era involves Industrial, financial, political, information and cultural globalization. Our world has achieve better growth among all these areas and globalization has become more apparent with the intensification of the greater international movement of commodities, money, information, people and the development of technology, organizations, legal systems, and infrastructure. This has resulted in the existence of certain patterns in the global market, as seen economically, culturally, technologically, as well as legally.
According to Investopedia, Globalisation is the tendency of investment funds and business to move beyond domestic and national markets to other markets around the global, thereby increasing the interconnection of the world. Globalisation increases international trade and cultural exchange. Globalisation has been around for many years, especially in emerging markets and the big winners are obvious. More and more small and mid-size companies are beginning to have global ambitions. However it is not as easy as it looks, managing in a globalised world has its challenges.