Globalization
is a process of interaction and integration
among the people, companies,
and governments of different nations,
a process driven by international
trade and investment and aided by information technology.
This process
has effects on the environment, on culture,
on political systems, on
economic development and prosperity,
and on human physical well-
being in societies around the world.
Globalization is not new, though.
For thousands of years, people—and,
later, corporations—have been buying from
and selling to each other in
lands at great distances,
such as through the famed Silk Road across
Central Asia that connected China and Europe during the Middle
Ages.
Likewise, for centuries,
people and corporations have invested in
enterprises in other countries.
In fact, many of the features of the
current wave of globalization are similar
to those prevailing before the
outbreak of the First World War in 1914.
But policy and technological developments
of the past few decades have
spurred increases in cross-border trade,
investment, and migration so
large that many observers believe the world has
entered a qualitatively
new phase in its economic development.
Since 1950, for example, the
volume of world trade has increased by 20 times,
and from just 1997 to
1999 flows of foreign investment nearly doubled,
from $468 billion to
$827 billion. Distinguishing this current wave
of globalization from
earlier ones, author Thomas Friedman
has said that today globalization
is “farther, faster, cheaper, and deeper.”
This current wave of globalization
has been driven by policies that have
opened economies domestically and internationally.
In the years since
the Second World War, and especially during
the past two decades, many
governments have adopted free-market
economic systems, vastly
increasing their own productive potential
and creating myriad new
opportunities for international trade and investment.
Governments also
have negotiated dramatic reductions
in barriers to commerce and have
established international agreements
to promote trade in goods,
services, and investment.
Taking advantage of new opportunities in
foreign markets, corporations
have built foreign factories and established
production and marketing
arrangements with foreign partners.
A defining feature of globalization,
therefore, is an international industrial
and financial business structure
Technology has been the other
principal driver of globalization. Advances
in information technology, in particular,
have dramatically transformed
economic life