Factors in Globalisation

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Factors in Globalisation

The globalization of the past quarter-century has been caused by four important and interrelated factors: a new international division of labour, an international- ization of finance, a new technology system, and a homogenization of international consumer markets.

The new international division of labour has involved three main changes. First, the United States has declined as an industrial producer, relative to the spec- tacular growth of Japan and the resurgence of Europe as industrial producers. Second, manufacturing production has been decentralized from all of these core regions to some semi peripheral and peripheral countries. An important reason for this trend has been the prospect of keeping production costs low by exploit- ing the huge differential in wage rates around the world. Third, new specializations have emerged within the core regions of the world-system, specifically high-tech manufacturing and producer services(that is, such services as information services, insurance, and market research that enhance the productivity or efficiency of other firms’ activities or that enable them to maintain specialized roles). One significant result of this new international division of labour is that global trade has grown much more rapidly over the past 30 years than global production—a clear indication of the increased economic integration of the world-system. The second factor contributing to today’s globalization is the internationalization of finance—the emergence of global banking and globally integrated financial markets. These changes are, of course, tied to the new international division of labour. In particular, they are a consequence of massive increases in levels of inter- national direct investment. Between 1988 and 1998, the flow of investment capital from core to semi peripheral and peripheral countries increased more than twenty- fold. All in all, about US$100 billion worth of currencies are traded...
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