September 29, 2011
Globalization has reduced the disconnection and miscommunication between world regions. Regional economics previously were known to associate within and isolate others; now the tables have turned and globalization has opened up so many trading channels. In this paper globalization will be defined, traditional international trade theories that support concept of globalization will be identified, the description of major drivers of globalization and examples of each will be provided, and the effect of globalization and the impact it has on communities and organizations will be explored. What is globalization?
According to Hill (2009), “globalization refers to the shift toward a more integrated and interdependent world economy. Globalization has several different facts including the globalization of markets and the globalization of production.” Globalization introduces free trade. Because of free trade, the consumption of goods has risen, which has resulted in the need for more production. This has allowed countries the richness of producing more without the cost increasing. Cost is an important factor because as long as costs stay down, the more fruitful the operation will be when cost rises; it rises on all ends, such as production, trading, importing, exporting, and consumption. Traditional International Trade Theories
In the name of the economy, free trade is questioned. Debates have occurred questioning if free trade is a good thing or bad thing for the economy. After reviewing different sorts of information, there is no one theory that has been proven to be more effective than another; it is truly based on preference. Certain theories such as New Trade, Life Cycle, Smith, Mercantilism, and Heckscher-Ohlin, enlighten to help decide what factors hold importance when determining whether the concept of free trade is right or wrong....