What Is Globalization?

What Is Globalization?
Globalization is a process of interaction and integration among the people,
companies, and governments of different nations, a process driven by international
trade and investment and aided by information technology. This process has effects
on the environment, on culture, on political systems, on economic
development and prosperity, and on human physical well-being in societies around
the world.

What Is Globalization?

Globalization is not new, though. For thousands of years, people—and, later,
corporations—have been buying from and selling to each other in lands at great
distances, such as through the famed Silk Road across Central Asia that connected
China and Europe during the Middle Ages. Likewise, for centuries, people and
corporations have invested in enterprises in other countries. In fact, many of the
features of the current wave of globalization are similar to those prevailing before
the outbreak of the First World War in 1914.

But policy and technological developments of the past few decades have spurred
increases in cross-border trade, investment, and migration so large that many
observers believe the world has entered a qualitatively new phase in its economic
development. Since 1950, for example, the volume of world trade has increased by
20 times, and from just 1997 to 1999 flows of foreign investment nearly doubled,
from $468 billion to $827 billion. Distinguishing this current wave of globalization
from earlier ones, author Thomas Friedman has said that today globalization is
“farther, faster, cheaper, and deeper.”
This current wave of globalization has been driven by policies that have opened
economies domestically and internationally. In the years since the Second World
War, and especially during the past two decades, many governments have adopted
free-market economic systems, vastly increasing their own productive potential
and creating myriad new opportunities for international trade and investment.

Governments also have negotiated dramatic reductions in barriers to commerce
and have established international agreements to promote trade in goods, services,
and investment. Taking advantage of new opportunities in foreign markets,
corporations have built foreign factories and established production and marketing
arrangements with foreign partners. A defining feature of globalization, therefore,
is an international industrial and financial business structure.

Technology has been the other principal driver of globalization. Advances in
information technology, in particular, have dramatically transformed economic
life. Information technologies have given all sorts of individual economic actors—
consumers, investors, businesses—valuable new tools for identifying and pursuing
economic opportunities, including faster and more informed analyses of economic
trends around the world, easy transfers of assets, and collaboration with far-flung

Globalization is deeply controversial, however. Proponents of globalization argue
that it allows poor countries and their citizens to develop economically and raise
their standards of living, while opponents of globalization claim that the creation of
an unfettered international free market has benefited multinational corporations in
the Western world at the expense of local enterprises, local cultures, and common
people. Resistance to globalization has therefore taken shape both at a popular and
at a governmental level as people and governments try to manage the flow of
capital, labor, goods, and ideas that constitute the current wave of globalization.
To find the right balance between benefits and costs associated with globalization,
citizens of all nations need to understand how globalization works and the policy
choices facing them and their societies.

Information Technology

In nearly every corner of the world, from Mumbai to Madrid, one cannot enter a
café or walk down the street without seeing someone talking, texting, or surfing the
Internet on their cell phones, laptops or tablet PCs. Information Technology (IT)
has become ubiquitous and is changing every aspect of how people live their lives.
Recent advances in our ability to communicate and process information in digital
form— a series of developments sometimes described as an “IT revolution”—are
reshaping the economies and societies of many countries around the world.
Information Technology
IT is a driving factor in the process of globalization. Improvements in the early
1990s in computer hardware, software, and telecommunications greatly increased
people’s ability to access information and economic potential. While
advancements in Internet-based tools over the past five to ten years, such as social
networking websites, twitter, and other Web2.0 applications are changing the way
people use and share information for personal, political, and commercial purposes.
These developments have facilitated efficiency gains in all sectors of the economy.
IT drives the innovative use of resources to promote new products and ideas across
nations and cultures, regardless of geographic location. Creating efficient and
effective channels to exchange information, IT has been the catalyst for global
Products based upon, or enhanced by, information technology are used in nearly
every aspect of life in contemporary industrial societies. The spread of IT and its
applications has been extraordinarily rapid. Just 30 years ago, for example, the use
of desktop personal computers was still limited to a fairly small number of
technologically advanced people. The overwhelming majority of people still
produced documents with typewriters, which permitted no manipulation of text and
offered no storage.
Twenty years ago, large and bulky mobile telephones were carried only by a small
number of users in just a few U.S. cities. According to a 2013 International
Telecoms Union (ITU) World Report, there were 6.8 billion cell phone
subscriptions worldwide at the end of 2012. Global mobile cellular penetration
reached 96 percent in 2012 (ICT Facts and Figures, 2013). In some developing
countries, mobile phones are used by more people than the fixed line telephone
But perhaps most dramatically, just fifteen years ago, only scientists were using (or
had even heard about) the Internet, the World Wide Web was not up and running,
and the browsers that help users navigate the Web had not even been invented yet.
Today, of course, the Internet and the Web have transformed commerce, creating
entirely new ways for retailers and their customers to make transactions, for
businesses to manage the flow of production inputs and market products, and for
job seekers and job recruiters to find one another. According to ITU World Report
2013, the total amount of users reached more than 2.7 billion (39 percent of the
world’s population) by 2013.
The news industry was dramatically transformed by the emergence of numerous
Internet-enabled news-gathering and dissemination outlets. Websites, blogs, instant
messaging systems, e-mail, social networking sites and other Internet-based
communication systems have made it much easier for people with common
interests to connect, exchange information, and collaborate with each other.
Education at all levels is continually transforming thanks to innovations in
communication, education, and presentation software. Websites now serve as a
primary source of information and analysis for the masses.
Globalization accelerates the change of technology. Every day it seems that a new
technological innovation is being created. The pace of change occurs so rapidly
many people are always playing catch up, trying to purchase or update their new
devices. Technology is now the forefront of the modern world creating new jobs,
innovations, and networking sites to allow individuals to connect globally. The
timeline below shows the rapid transformation of how technology has accelerated
within the last 20 years to 2012.
 18 years ago: Internet commercialized
 17 years ago: first mobile phone with Internet connectivity
 15 years ago: Google named the search engine of choice by PC magazine
 12 years ago: Blackberry launched
 9 years ago: Facebook launched
 7 years ago: Twitter launched
 6 years ago: iPhone, the first of the smart phones, introduced
 5 years ago: Groupon introduced
 2 years ago: 17 million smart tablets sold — estimated that 100 + million by
 1 year ago: Google Glass announced
 Every 60 seconds (so it seems): new apps, tailored to users’ specific needs