Globalization is the integration of world economies (Questia, 2004). It affects productivity, imports and exports, technology and growth rates.

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Globalization is the integration of world economies (Questia, 2004). It affects productivity, imports and exports, technology and growth rates. Globalization has become identified with a number of trends, most of which have developed since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems and infrastructures to allow movement. More specifically, globalization refers to:

Increace in international trade at a faster rate than the growth in the world economy.

Increase in international flow of capital including foreign direct investment.

Greater transborder data flow, using such technologies such as the internet, comnmunication satellites and telephones.

Greater international cultural exchange, for example through the export of Hollywood and Bollywood movies.

Spreading of multiculturalism and better individual access to cultural diversity, with on the other hand, some reduction in diversity through assimilation, hybridization, Westernization, Americanization or Sinoization of cultures.

Erosion of national sovereignty and national borders through international agreements leading to organizations like the WTO and OPEC.

Greater international travel and tourism.

Greater immigration, including illegal immigration.

Development of global telecommunications infrastructure.

Development of global financial systems.

Increase in the share of the world economy controlled by multinational corporations.

Increase role of international organizations such as WTO, WIPO, IMF that deal with international transactions.

Increase in the number of standards applied globally; e.g. copyright laws.

Creation of local clusters of competence (Porters Clusters) having world wide competitive advantage. (encyclopedia.thefreedictionary, 2004)

Many of these trends are seen as positive by supporters of various forms of globalization, and in many cases globalization has been actively promoted by governments and other institutions. For example, there are economic arguments supporting globalization, such as the theory of comparative advantage suggesting that free trade leads to a more efficient allocation of resources, with all those involved in the trade benefiting. (encyclopedia.thefreedictionary, 2004)

Impact on International Trade

'International trade has been one of the engines of world growth over the past 50 years. The tonnes of goods traded around the world have grown by 16 times since 1950, reflecting the lowering of trade barriers. The growth of trade in services is even greater' (Globalization Guide, 2001). Today, world merchandise exports are roughly $5.5 trillion and service exports are approaching the $1.4 trillion mark (Wild et al, 2003).

Globalization of trade offers immediate benefits: higher living standards, new economic opportunities, job creation and obviously the most important faster growth. However, on the downside not all countries have benefited equally from the globalization phenomenon. The countries that are getting poorer are those that are not open to world trade, notably many nations in Africa. Those that do not have the technical capabilities, infrastructure and institutional capacity found themselves falling behind even further. For example according to the Johannesburg Summit on Sustainable Development (WSSD), 2002, "Africa for instance has only experienced marginal growth over recent years and its share in international trade dropped from 2.7% in 1990 to 2.1% in 2002".

In addition, 'China's opening to international trade has brought it growth in income from $1460 a head in 1980 to $4120 by 1999. In 1980 American's earned 12.5 times as much as the Chinese, per capital. By 1999, they were only earning 7.4 times as much. The gap between rich and poor is also shrinking with most nations in Asia and Latin America' (Globalization Guide, 2001).

Impact on Foreign...
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