For some time now, the world economy has been experiencing an unprecedented intensification of economic and financial integration. The process of strengthening economic and financial linkages beyond geographic regions has come to be well-known as globalization. This international exchange of services, factors of production and final products acknowledges the diversity of economies, yet an independent and dependent variable. The paper purports to discuss the concept of globalization and the major forces behind its rise. First, the paper defines the concept of globalization. Secondly, it critically analyzes how those major forces shape the globalization process. The paper ends with a conclusion.
Defining the concept
The exact definition of globalization is certainly difficult to conjure, but different backgrounds may define it depending on their experiences. Suffice to say some common ground does exist. According to the World Bank (2002), globalization means the ‘growing integration of economies and societies around the world.’ This definition is general and crude. In the eyes of an economist, globalization means ‘notes that calls it the “building a society that is economically interdependent and the integration of all national economies into one economy within the framework of capitalist market.” (Rajaee, 2000: 24) while Friedman (2000) confines the definition of globalization to open, integrated and borderless international economy with its manifold dimensions; economic, political, security, environmental, health, social and others.
The common parlance seems to rest on the inescapable integration of markets, nation-states and technologies to a degree that is typically an outward growth path of trade and finance. Succinctly, a key issue of the concept may be the scale at which it takes place. All these global processes in whatever form need not actually encompass the whole globe to be associated with the phenomenon, but a least potential for its omnipresence (Giddens, 2009). Most importantly, globalization may be viewed as a force for advancing the world economy on one hand and as a serious danger to the world economy. Either way, there are opportunities and challenges.
Major forces (or drivers) behind the rise of globalization
Globalization is driven by many forces or drivers. Environmental drivers like political/legal, technological, economic and cultural all shape globalization by conditioning the use and relative value of economic and non-economic assets and capabilities. They may also act both as early warning mechanism or panacea to many problems people face today.
Source: The McGraw-Hill Companies, Inc., 2002.
Economic and the Free Market
As perceived by Todaro (2009), economic growth is the annual increase in real per capita income of a country over a long period of time. This definition brings out the main aim of economic growth which is the raising of living standard of people as it measures the total output of goods and services which an average person of the community will have for consumption and investment. The most widely used measure of economic growth is the real rate of growth in a country's total output of goods and services.
It is envisaged that the strong economic base in all nations (aggregate world economy) will act as a cushion when the world market opens up. In a globalized world, people can do business with virtually anyone, regardless of geographic location. The European Union and the North American Free Trade Agreement have almost no trade tariffs (Giddens, 2009). In this case, it may be easy to get manpower almost from anywhere and have the jobs done cheaply. This may inadvertently make unskilled labourers everywhere to compete with the entire world....