Economics and Globalization

Topics: Economics, Business cycle, Economic development Pages: 5 (1030 words) Published: September 10, 2004
Globalization Everyday you hear it on the news, you read it in the papers, you overhear people talking about it...and in every single instance the world globalization seems to have a different meaning. So, what is globalization?, there were a lot of debate about this issue. At a top political and economic level, globalization is the process of denationalization of market, political and legal systems. The consequences of this political and economic restructuring on local economies, human welfare and environment are the subject of an open debate among international organizations, governmental institutions and the academic world. (7, www.globalization.com/intro.cfm)

"What is globalization? Is it the integration of economic, political, and cultural systems across the globle? Or is it Americanization and United States dominance of world affairs? Is globalization a force of economic growth, prosperity, and democratic freedom? Or is it a force for environmental devastation, exploitation of the developing world, and suppression of human rights?"( www.globalization101.org)

Globalization is not a phenomenon it is not just some passing trend. today it is an overarching international system shaping the domestic politics and foreign relations of virtually every country, and we need to understand it as such".

Globalization is much like fire. Fire itself is neither good or bad. Used properly, it can cook good, sterilize equipment, from iron, and heat our homes. Used carelessly , fire can destroy lives, towns and forests in an instant. As friedman says

:"globalization can be incredibly empowering and incredibly coercive it can democratize opportunity and democratize panic. It makes the whales bigger and the minnows stronger. It leaves you behind faster and faster, and it catches up to you faster and faster. While it is homogenizing cultures, it is also enabling people to share their unique individuality farther and wider".*+(web)

But the question here what is driving globalization?, globalization

"Is driven by the strategic responses of firms as they exploit market opprtunties and adapt to change in their technological and institutional environment, and attempt to steer these changes to their advantage. The O E C D groups the factors shaping globalization into four general categories, which are inter-linked:

-firm behavior :

Strategic , pre-emptive and imitative behavior.

Exploitation of competitive advantages: use of superior technology , organization, production or marketing.

Consolidation of competitive advantages: gain access to highly skilled people, advanced technological and commercial infrastructure, lower Labour costs, and raw material.

Organizational changes; adoption of lean production methods and more horizontal internal and external organizational structure.

-Technology Related factors"

declining computing, communication, co-ordination and transport costs.

Increasing importance of R &D , coupled with rising R & D costs.

Shortening product lives.

Shortening of limitation time lags.

Rapid growth of knowledge -intensive industries.

Increasing customization of both intermediate and finished goods.

Increasing importance of customer oriented services.

Economic factors

Availability of key production factors

Productivity differentials.

Fluctuations in exchange rates.

Differences in the business cycle.

Catching up by lagging economies."

(changing paradigms , Thomas Claake and stewaat clegg, p90)).

But according to Thomas Friedman in his book Lexus and the Olive tree he explains three major factoes for the spread of globalization:

Which are

-the democratization of tecngology.

- the democratization of finance.

-the democratization of information.

International expansion has been driven by firm strategies based on their technologies and organizational advantages shaped by a number of factors of government policies ,

technological factors...
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