Globalization is a term used to describe how trade and technology have made the world

into a more connected and interdependent place. Globalization also captures in its
scope the economic and social changes that have come about as a result. It may be
pictured as the threads of an immense spider web formed over millennia, with the
number and reach of these threads increasing over time. People, money, material
goods, ideas, and even disease and devastation have traveled these silken strands,
and have done so in greater numbers and with greater speed than ever in the present
age.

When did globalization begin? Many scholars say it started with Columbus’s voyage to
the New World in 1492. People traveled to nearby and faraway places well before
Columbus’s voyage, however, exchanging their ideas, products, and customs along the
way. The Silk Road, an ancient network of trade routes across China, Central Asia, and
the Mediterranean used between 50 B.C.E. and 250 C.E. is perhaps the most well-
known early example. As with future globalizing booms, new technologies played a key
role in the Silk Road trade. Advances in metallurgy led to the creation of coins;
advances in transportation led to the building of roads connecting the major empires of
the day; and increased agricultural production meant more food could be trafficked
between locales. Along with Chinese silk, Roman glass, and Arabian spices, ideas such
as Buddhist beliefs and the secrets of paper-making also spread via these tendrils of
trade.

Unquestionably, these types of exchanges were accelerated in the Age of Exploration,

when European explorers seeking new sea routes to the spices and silks of Asia
bumped into the Americas instead. Again, technology played an important role in
the maritime trade routes that flourished between old and newly discovered continents.
New ship designs and the creation of the magnetic compass were key to the explorers’
successes. Trade and idea exchange now extended to a previously unconnected part of
the world, where ships carrying plants, animals, and Spanish silver between the Old
World and the New also carried Christian missionaries.

The web of globalization continued to spin out through the Age of Revolution, when
ideas about liberty, equality, and fraternity spread like fire from America to France to
Latin America and beyond. It rode the waves of industrialization, colonization, and war
through the eighteenth, nineteenth, and twentieth centuries, powered by the invention of
factories, railways, steamboats, cars, and planes.

With the Information Age, globalization went into overdrive. Advances in computer and
communications technology launched a new global era and redefined what it meant to
be “connected.” Modern communications satellites meant the 1964 Summer Olympics
in Tokyo could be watched in the United States for the first time. The World Wide Web
and the Internet allowed someone in Germany to read about a breaking news story in
Bolivia in real time. Someone wishing to travel from Boston, Massachusetts, to London,
England, could do so in hours rather than the week or more it would have taken a
hundred years ago. This digital revolution massively impacted economies across the
world as well: they became more information-based and more interdependent. In the
modern era, economic success or failure at one focal point of the global web can be felt
in every major world economy.

The benefits and disadvantages of globalization are the subject of ongoing debate. The
downside to globalization can be seen in the increased risk for the transmission of
diseases like ebola or severe acute respiratory syndrome (SARS), or in the kind of
environmental harm that scientist Paul R. Furumo has studied in microcosm in palm oil
plantations in the tropics. Globalization has of course led to great good, too. Richer
nations now can—and do—come to the aid of poorer nations in crisis. Increasing
diversity in many countries has meant more opportunity to learn about and celebrate
other cultures. The sense that there is a global village, a worldwide “us,” has emerged.

After centuries of technological progress and

advances in international cooperation, the world
is more connected than ever. But how much has
the rise of trade and the modern global economy
helped or hurt American businesses, workers,
and consumers? Here is a basic guide to the
economic side of this broad and much debated
topic, drawn from current research.

Globalization is the word used to describe the growing interdependence of the world’s
economies, cultures, and populations, brought about by cross-border trade in goods and services,
technology, and flows of investment, people, and information. Countries have built economic
partnerships to facilitate these movements over many centuries. But the term gained popularity
after the Cold War in the early 1990s, as these cooperative arrangements shaped modern
everyday life. This guide uses the term more narrowly to refer to international trade and
some of the investment flows among advanced economies, mostly focusing on the United
States.

The wide-ranging effects of globalization are complex and politically charged. As with major
technological advances, globalization benefits society as a whole, while harming certain groups.
Understanding the relative costs and benefits can pave the way for alleviating problems while
sustaining the wider payoffs.

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Today, Americans rely on the global economy for many of the things they buy and sell,
expanding businesses, and making investments. Many products and services have
become affordable to the average American through the coordination of production
across countries.

THE HISTORY OF GLOBALIZATION IS DRIVEN BY

TECHNOLOGY, TRANSPORTATION, AND
INTERNATIONAL COOPERATION
Since ancient times, humans have sought distant places to settle, produce, and exchange goods
enabled by improvements in technology and transportation. But not until the 19th century did
global integration take off. Following centuries of European colonization and trade activity, that
first “wave” of globalization was propelled by steamships, railroads, the telegraph, and other
breakthroughs, and also by increasing economic cooperation among countries. The globalization
trend eventually waned and crashed in the catastrophe of World War I, followed by
postwar protectionism, the Great Depression, and World War II. After World War II in the mid-
1940s, the United States led efforts to revive international trade and investment under negotiated
ground rules, starting a second wave of globalization, which remains ongoing, though buffeted
by periodic downturns and mounting political scrutiny.

What Is Globalization?
Globalization is the spread of products, technology, information, and jobs across national borders
and cultures. In economic terms, it describes an interdependence of nations around the globe
fostered through free trade.

On the upside, it can raise the standard of living in poor and less developed countries by
providing job opportunity, modernization, and improved access to goods and services. On the
downside, it can destroy job opportunities in more developed and high-wage countries as the
production of goods moves across borders.

Globalization motives are idealistic, as well as opportunistic, but the development of a global
free market has benefited large corporations based in the Western world. Its impact remains
mixed for workers, cultures, and small businesses around the globe, in both developed and
emerging nations.

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Globalization
Globalization Explained
Corporations gain a competitive advantage on multiple fronts through globalization. They can
reduce operating costs by manufacturing abroad. They can buy raw materials more cheaply
because of the reduction or removal of tariffs. Most of all, they gain access to millions of new
consumers.

Globalization is a social, cultural, political, and legal phenomenon.

 Socially, it leads to greater interaction among various populations.

 Culturally, globalization represents the exchange of ideas, values, and artistic expression
among cultures.
 Globalization also represents a trend toward the development of single world culture.
 Politically, globalization has shifted attention to intergovernmental organizations like
the United Nations (UN) and the World Trade Organization (WTO).
 Legally, globalization has altered how international law is created and enforced.

KEY TAKEAWAYS

 Globalization has sped up to an unprecedented pace since the 1990s, with public policy
changes and communications technology innovations cited as the two main driving
factors.
 China and India are among the foremost examples of nations that have benefited from
globalization.
 One clear result of globalization is that an economic downturn in one country can create
a domino effect through its trade partners.

The History of Globalization

Globalization is not a new concept. Traders traveled vast distances in ancient times to buy
commodities that were rare and expensive for sale in their homelands. The Industrial
Revolution brought advances in transportation and communication in the 19th century that eased
trade across borders.

The think tank, Peterson Institute for International Economics (PIIE), states globalization stalled
after World War I and nations' movements toward protectionism as they launched import taxes
to more closely guard their industries in the aftermath of the conflict. This trend continued
through the Great Depression and World War II until the U.S. took on an instrumental role in
reviving international trade.

Globalization has since sped up to an unprecedented pace, with public policy changes and
communications technology innovations cited as the two main driving factors.

One of the critical steps in the path to globalization came with the North American Free Trade
Agreement (NAFTA), signed in 1993. One of NAFTA's many effects was to give American auto
manufacturers the incentive to relocate a portion of their manufacturing to Mexico where they
could save on the costs of labor. As of February 2019, the NAFTA agreement was due to be
terminated, and a new trade agreement negotiated by the U.S., Mexico, and Canada was pending
approval by the U.S. Congress.
Governments worldwide have integrated a free market economic system through fiscal
policies and trade agreements over the last 20 years. The core of most trade agreements is the
removal or reduction of tariffs.

This evolution of economic systems has increased industrialization and financial opportunities in
many nations. Governments now focus on removing barriers to trade and promoting international
commerce.

Globalization Advantages
Proponents of globalization believe it allows developing countries to catch up to industrialized
nations through increased manufacturing, diversification, economic expansion, and
improvements in standards of living.

Outsourcing by companies brings jobs and technology to developing countries. Trade initiatives
increase cross-border trading by removing supply-side and trade-related constraints.

Globalization has advanced social justice on an international scale, and advocates report that it
has focused attention on human rights worldwide.

Disadvantages of Globalization
One clear result of globalization is that an economic downturn in one country can create a
domino effect through its trade partners. For example, the 2008 financial crisis had a severe
impact on Portugal, Ireland, Greece, and Spain. All these countries were members of the
European Union, which had to step in to bail out debt-laden nations, which were thereafter
known by the acronym PIGS.

Globalization detractors argue that it has created a concentration of wealth and power in the
hands of a small corporate elite which can gobble up smaller competitors around the globe.

Globalization has become a polarizing issue in the U.S. with the disappearance of entire
industries to new locations abroad. It's seen as a major factor in the economic squeeze on
the middle class.

For better and worse, globalization has also increased homogenization. Starbucks, Nike, and Gap
Inc. dominate commercial space in many nations. The sheer size and reach of the U.S. have
made the cultural exchange among nations largely a one-sided affair.

Real World Examples of Globalization

A car manufacturer based in Japan can manufacture auto parts in several developing countries,
ship the parts to another country for assembly, then sell the finished cars to any nation.

China and India are among the foremost examples of nations that have benefited from
globalization, but there are many smaller players and newer entrants. Indonesia, Cambodia, and
Vietnam are among fast-growing global players in Asia.
Ghana and Ethiopia had the fastest-growing African economies in the world in 2018, according
to a World Bank report.

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