The Future of Globalization

Topics: Globalization, World Bank, International Monetary Fund Pages: 13 (5316 words) Published: April 7, 2011
“The Future of Globalization”
What exactly is globalisation?
Before I talk about the future of globalization it is first of all important to understand what it truly means. From my research on the topic I feel that the following definition by the IMF is the most accurate. They describe globalization as the “growing economic interdependence of countries worldwide through the increasing volume and a variety of cross-border transactions in goods and services and of international capital flows and also through the more rapid and widespread diffusion of technology”. Thomas Freeman, author of “The Lexus and the Olive Tree” describes Globalization as the inexorable integration of markets, nation states and technologies to a degree never witnessed before in a way that is enabling individuals, corporations and nation states to reach around the world, farther, faster, deeper and cheaper than ever before. To put it very simply globalization brings many companies and products to very different parts of the world and this is changing the globe that we live in today. It will also have a huge bearing on the success and downfall of all future economies and the livelihoods of each country’s inhabitants. It is said that Globalization has many facets, the main two being the Globalization of markets and production. The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross trade have made it far easier to sell on an international scale. Tastes and preferences are converging on some global norm which is helping to create a global market. Firms are utilizing the trend by offering standardized products worldwide and thus creating a global market. (Hill, 2007) Products such as Coca Cola, Kleenex tissues, Disney toys, IKEA furniture and Sony Playstations are examples of these. The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production, including land, labor and capital. By doing this, companies hope to lower their overall cost structure and/or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively. Companies are taking advantage of modern communications technology, like the Internet, to outsource service activities to low-cost producers in other nations. One such example is how the internet has allowed hospitals in America to outsource some radiology work to India, while U.S. physicians sleep images from MRI scans and the like are read at night and the results are ready in the morning. (Hill, 2007) This is a very common procedure in which many international companies such as Apple will carry out their R&D work in developed and well educated countries such as the U.S and Ireland. They will then do their basic manufacturing work such as packaging in India where cheap labor is available. It is not just markets and products which globalization affects. It can influence cultures, believes, languages, religions and social trends. China will soon become the number one English speaking country in the world. Students are currently being prepared for jobs that don’t even exist yet using technologies that haven’t yet been invented. The US is 18 places behind Bermuda in terms of internet connection. Perhaps this further helps to understand why globalization is occurring at such a fast pace. ( as accessed on 20th February 2011) As globalization has increased and more business activity has transcended national borders, institutions have been needed to help manage, regulate and police the global marketplace and to promote the establishment of multinational treaties to govern the global system. (Hill, 2007) Such institutions include; the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), the International Monetary...
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