The increasing globalization of markets

This page is being edited by Peter Friedl EMBA09. In case of any questions/remarks contact me.

Description:

Globalization describes the process of growing integration of information, technology, capital, goods, services, and people throughout the world.

By the globalization of markets the growing interconnection and integration of markets, like financial markets, labour markets, trade markets etc. can be understood.

Globalization of Production: It can been observed that companies are increasingly dispersing parts of their production process to different locations around the globe to take advantage of national differences in the cost and quality of production factors (land, labor, capital, legislation).

Globalization of Markets: It has been argued that the world is moving away from an economic system in which national markets are distinct entities, isolated from each other by trade barriers and barriers of distance, time, and culture, toward a system in which national markets are merging together into one huge global marketplace.

Causes of Global Shift: Two factors underlie the trend toward the increasing globalization of markets and of production. The first is the delcine in barriers to the free flow of goods, services, and capital. The second factor has been the dramatic changes in communication, information, and transportation technologies.

Consequences of Global Shift: Companies need to recognize that industry boundaries do not stop at national borders and that they have to face this change to be remain competitive. Also nations or regions have to take steps to stay competitive in this global environment.

Enablers:

• Importance of global organisations like WTO, OECD, IMF, World Bank
• Participation of China, India and other emerging markets in the global markets
• Number and importance of multinational companies
• Technological developement especially information technology
• Transport efficiency
• Specialisation and outsourcing
• Harmonization and recognition of international Intellectual Property laws
• Internationalization of education
• Access to international media

Inhibitors

• Nationalism and protectionism
• Local power lobbies and corruption
• Religious conflicts like the disparity of Muslim and Christian countries
• Trade barriers and tariffs
• Financial of economic crisis
• War and terrorism

Paradigms:

Market globalization decreasing the control on unemployment, GDP fluctuations, etc. Laws and regulations should therefore be made on a global basis.

Possible decreasing power of governments and increasing power of companies, which set a totally different political and economic arena. The rules to adhere to in this situation has yet to be created.

The globalization of markets can benefit—and has benefited—rich and poor alike. But the integration of the global economy is outpacing the development of a healthy global polity. To realize the values and rules critical to a secure and just world—and to make the full benefits of a global market available to all—will require a better global politics.

If the globalization of the market leads to continents or countries which cannot compete anymore, trade barriers (= de-globalization) might be a counter reaction.

Experts:

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Timing:

Globalization started with the rise of the first trade links in ancient times.

The 19th century saw a peak in globalization. Industrialization lead to reduced costs for produciton items, while rapid population growth created sustained demand for commodities and manufactures. Globalization in this period was decisively shaped by nineteenth-century imperialism. The European colonies in Africa, South-America and Asia became source for valuable natural resources and consumers for European exports.

The first World War, followed by the Great Depression in the late 1920s and early 1930s put a halt to this kind of globalization.

After World War II globalization, was largely the result of planning by politicians to break down borders hampering trade to increase prosperity and interdependence thereby decreasing the chance of future war. The removal of restrictions on free trade lead to an increase in global trade and a specialization of the manufacturing industry. The technological progress in transport infrastructure and communication technology in the 1990s was another important spur for globalization.

Although the globalization of the markets seems well progressed, the limits of globalizations are not reached. Large regions of emerging and less developed countries are not taking part in the globalized markets yet.

Web Resources:

• [1] OECD Globalization statistics

• [2] Globalisation shakes the world - article at BBC News (2007)

• [3] Global Markets Require Good Global Politics — article at The Brookings Institution (2003)

• [4] The Third Wave in Globalization Theoriesnbnsp;- article by Luke Martell (2007)

• [5] Embracing the Challenge of Free Trade: Competing and Prospering in a Global Economy — speach by Federal Reserve chairman Ben Bernanke (2007)

• [6] Rethinking Globalisation - blog by Global Trade Watch

• [7] Globalization and Me - blog on views and viewpoints on globalization

• [8] Mapping Globalization — globalization project with a collection of maps