ECONOMIC GLOBALIZATION: CHARACTERISTICS, ADVANTAGES AND EXAMPLES - ECONOMY - 2025

The economic globalization is the process of integration and interdependence of business, production and finance among nations. The interconnection of large-scale economies began in the nineteenth century and had its greatest boom in the twentieth century, based on technological advances and the development of telecommunications in the world.

Another element that influenced this process of economic integration was the reduction of costs in the distribution of products for marketing. In addition, the creation of new governmental policies and commercial organizations in the world facilitated this cooperation between countries for the beginning of a new global market.

Through economic globalization, integration in various areas of all countries of the world has been possible. Source: pixabay.com

It can be said that today is the era of large companies or the so-called “corporate giants”, which make up international networks not only economic, commercial and services, but also political and cultural.

In the 21st century, the idea of ​​globalization as global economic growth and interdependence acquires a more promising character that promotes the union of peoples and the achievement of common objectives that are aimed at achieving peace.

However, visions contrary to the previous one see the phenomenon of globalization as a process capable of shaping all aspects of life in each country in an interventionist way, which breaks the collective identity and sovereignty of the peoples.

characteristics

-It is the main process that shapes the international relations of trade and the economy today.

-It not only intervenes in the economic sphere and all its effects, but also in other spheres such as knowledge, culture, politics and the environment.

-Participates directly and focuses on geopolitical phenomena.

-Seeks the use of the productive capacities of each region

-The national and local economies are integrated through a frequent transaction of goods, services, technology and customs between different countries around the world.

-Suggests a deeper interrelation between countries, both in the economic, political and social spheres.

-It involves the reduction of trade barriers between nations through the union of the world market.

-Resize the value of skilled labor, recreating new forms of human work.

-It supposes the increase in the levels of both production and consumption of goods and services worldwide.

- Produces a cultural and economic rapprochement, creating links between countries and people around the world.

-Standardizes economic policies that generate the strengthening of international relations and the emergence of economic blocs.

-Establishing constant changes in the forms of communication through social networks and technological platforms for development and commercial and cultural exchange.

-Produces economic competition between global markets.

-Mobilizes specialized human resources throughout the world temporarily or permanently .

-International financial and credit institutions predominate.

Advantage

Market opening and free trade

Economic globalization opens up financial markets around the world, exchanging goods and services, and increasing the variety of products that can be offered in every part of the planet.

In this context, free trade occurs, through the free movement of goods and the reduction of tariffs. Likewise, business competition increases, which generates greater commercial opportunities and an increase in the quality of products.

Free trade produces greater business competitiveness and the creation of new market niches, where small and medium-sized companies can lead large markets.

In terms of raw material and labor costs, globalization leads to a decrease in these, which implies that the price of the products to be marketed also decreases.

Commercial development

Technological platforms are created for the commercialization and distribution of products and services around the world, which allows to consume the same product in many countries at the same time.

Similarly, new alliances emerge between countries and companies, having an impact on the generation and increase of new jobs.

Specifically in terms of products, economic globalization develops a diversity of items to choose from; at the same time, new consumer needs continually grow and seek to be satisfied quickly.

Research boom

Economic globalization has opened the field of research and new technological developments, which have revolutionized all areas and activities in general. Among the scientific-technical advances are the development of microelectronics, biotechnology and the creation of new materials, among many others.

Amplitude has also been generated in telecommunications, which allow integration and social and cultural interaction between countries and continents, bringing together and creating affinities in musical tastes, languages ​​and values.

Likewise, access to electronic devices has generated new professions, trades and knowledge in increasingly specialized areas that can be developed anywhere in the world.

Emergence of ethnic plurality

Migration processes have generated a mixture of races that has strengthened ties through cultural exchange, and this phenomenon has been possible in large part thanks to the development of economic globalization.

Disadvantages

-The indiscriminate exploitation of natural resources creates a negative impact on the environment, generating a crisis in the ecological sphere that affects all the inhabitants of the planet.

-The phenomenon of economic globalization strengthened the marked difference between developed and underdeveloped countries, creating the central-peripheral relationship and unbalancing underdeveloped countries economically due to their precarious financial capacity.

-Industrialized countries take over markets, leaving less developed countries a very narrow margin to access.

- A dependency of the less favored nations is created towards the central countries, and the accelerated pace of the economy does not allow them to focus on advancing towards their financial consolidation.

-In dependent countries, external debts are generated that condemn them to depend on other countries for generations, mortgaging the few assets and resources they possess.

-Transnational companies take their production centers to peripheral developing countries to lower the cost of raw materials and labor. This takes away job opportunities for the people of these powerful nations.

-Favors modern colonization and the unlimited expansion of powers in the territorial sphere.

-The free trade promoted by economic globalization is not accessible to all companies, since large corporations lead the markets because they have greater financial capacity.

-The interference of world powers in the internal affairs of nations interferes in issues related to national sovereignty.

-It may generate loss of identity. Many nations have been displaced in terms of their cultural patterns and customs, adopting the trends of the countries on which they financially depend. Uprooting and transculturation are present, losing nationalistic traits and customs.

-There is a tendency to transform positive and traditional values, which disappear in new generations as a result of the flow of information through new communication technologies.

-Economic globalization brought with it the permanent stimulus towards consumerism as a lifestyle, creating in some cases new superficial needs that are imposed as fashions and trends.

Examples

Free trade agreements

They are agreements between nearby countries or not that are mostly governed by the regulations of the World Trade Organization (WTO).

Some of these are the Free Trade Area of ​​the Americas (FTAA), the North American Free Trade Agreement (NAFTA), the Latin American Integration Association (ALADI), the Southern Common Market (MERCOSUR) and the Statistical Conference of the Americas (CEA).

Other examples of this type are the Free Trade Agreement between Mexico and the European Union (TLCUEM), the Free Trade Agreement between the United States, Central America and the Dominican Republic (DR-CAFTA), the Central European Free Trade Agreement (CEFTA) and the Grain and Feed Trade Association (GAFTA).

New business models

Franchises emerged as part of economic globalization, placing companies, networks of food stores, clothing, accessories and thousands of products around the world. Some examples are the cases of McDonald's, Hertz, Seven-eleven, KFC, Subway, Carrefour, GNC livewell, Wyndham Hotel Group and Tacobell.

Likewise, e-commerce emerged as electronic marketing companies to offer goods and services globally, which contributes to reducing operating costs. The most renowned are Amazon, E-bay, Wish, Alibaba, Shopify, Viajes Falabella and Bestday.

Financial sphere

A good example in this context is electronic banking. It is about online banking or e-banking, which allows access via the internet from any computer or application via mobile telephony, reducing the time of both personal and business banking operations.

Some companies that offer these platforms internationally are Bank Of América, Grupo Santander and Citi, among others.

Virtual currencies also stand out in this area. Electronic commerce forced the creation of new forms of payment, savings and financial transactions through the implementation of virtual currencies such as cryptocurrencies. Examples of this are Bitcoin, Litgcoin, Ethereum, Namecoin, Ripple, Dogecoin and Dashcoin, among others.

On the other hand, the globalization of capital has accelerated, producing increasingly accelerated access for investors and intermediaries in world securities markets. The main capitals of the world have their stock exchange in these stock markets.

The most prominent ones at present are the Tokyo Stock Exchange, New York Stock Exchange, Madrid Stock Exchange, London Stock Exchange, Frankfurt Stock Exchange and the Paris Stock Exchange, among others.

Technology and entertainment

Economic globalization brought with it the connection via mobile, creating telephone companies such as Movistar, AT&T, Claro and Digitel.

Likewise, this globalization touches other spheres of consumption, among which the cultural one stands out. This is achieved through new forms of entertainment, such as electronic games, the film industry, music and television. Advertising is the main source of commercial projection of these elements towards new markets.

Social networks and interconnectivity

The rise of personal networking and the need to find ways to sell and advertise products on a large scale promoted the breakdown of geographical barriers through new virtual forms of communication such as Facebook, Instagram, Telegram, Snapchat, WhatsApp and many more.

References

1. "Globalization" in Wikipedia. Retrieved on April 2, 2019 from Wikipedia: wikipedia.org.
2. "Economic Globalization" in Economic Encyclopedia. Retrieved on April 2, 2019 from Economic Encyclopedia: encyclopediaeconomica.com
3. "Advantages and disadvantages of economic globalization" in Simple Economics. Retrieved on April 2, 2019 from Simple Encyclopedia: economiasimple.net
4. Vite P. Miguel A. "Economic globalization: A new phase of the commodification of social life?" in Scielo. Retrieved on April 2, 2019 from Scielo: scielo.org.mx
5. "Globalization: advantages and disadvantages in today's world" in APD. Retrieved on April 2, 2019 from APD: apd.es