Globalization refers to the interaction, integration, and interdependence of people and organizations across the world. Globalization involves integrating cultures, societies, and economies of different countries using trade, politics, and technology without barriers such as land, borders, and territories separating different countries. Globalization affects all people in different ways since a local person can purchase clothes or electronic devices manufactured in a foreign country. A person in Asia can also listen to music from North America easily due to the existence of globalization.
The present paper investigates the concept of globalization by exploring early modern and modern globalization, factors influencing globalization, different theories regarding globalization, and the importance and role of globalization in the 21st century.
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Early Modern and Modern Globalization
Early modern globalization refers to the period that spanned from 1600 to 1800. The period is characterized by increased nationalism, religion, trade connections, and cultural exchange that immediately precede the emergence of the modern globalization period (Held, 1999). Trade practices such as slave trade, large-scale wars between powerful countries such as the Thirty Year War, the emergence of the Western European hegemony, and the East India Company characterize the early modern globalization (Zinkina, 2019). The Triangular Trade allowed Europe to capitalize on resources in the western hemisphere while the movement of animal and plant products and epidemic illnesses contributed to the early modern globalization (Held, 1999). Participants in the early modern globalization included Chinese and Southeast Asian, Indian, Muslim, and European traders mainly along the Indian Ocean area.
Complex global network based on technological and capitalistic exchange characterized the shift from early modern globalization to modern globalization (Zinkina, 2019). The change, however, led to the collapse of cultural exchange. Modern globalization emerged during the 19th century following the end of the Napoleonic conflicts, which led to a peace, emergence of transportation technologies that decreased costs, appearance of a powerful Europe and United States through industrial military technologies that allowed them to seek markets across the globe, and a steady shift in favor of increased liberalization in Europe (Held, 1999). Industrial revolution greatly influenced modern globalization as it introduced the concept of economies of scale in the production of standardized household goods (Zinkina, 2019). Product demand during this period also increased due to rapid growth in population while the emergence of transportation technologies such as steamships and railroads between 1820 and 1850 reduced travel costs both globally and domestically (Zinkina, 2019). Countries also adopted global trade extensively, particularly following the introduction of shipping containers while imperialism by Western countries in Asia and Africa during the period shaped globalization (Held, 1999). The adoption of the Bretton Woods System lowered trade barriers through the establishment of a framework for global monetary policy, finance, commerce, and the formation of different global institutions such as the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO) that enhanced economic growth (Zinkina, 2019). The integration of global cultures and economies increased further from the late 19th century to the early 20th century, slowed during the Great Depression, following the two World Wars and the Cold War, and later continued during the 1980s and the 1990s (Held, 1999).
Further development in transportation technologies such as air travel and the emergence of low-cost communication networks increased the movement of both people and information across the world. The cultural exchange also increased through student exchange programs in different countries. The expansion of neoliberal ideologies and capitalism in the 1980s enhanced globalization through reductions in government expenditure in social services, deregulation of laws that conflicted with the free market concept, and privatization of public companies (Zinkina, 2019). Movement of people and migration also characterized the modern globalization through the flow of labor force as workers sought higher wages. The collapse of the Soviet Union ended the world divisions based on the Cold War, allowed the United States to advocate for free market, led to a focus on disease movement, popular culture and consumer values proliferation, increased importance of the United Nations, and combined global action on human rights and the environment (Zinkina, 2019). The internet also emerged as a vital tool for connecting people across the globe during this period.
Factors Influencing Globalization
The combination of different factors characterizes the globalization process. Some of these forces fuel globalization while others restrain globalization (Das, 2011). Examples of driving forces include technology, liberalization, trade flows, capital flows, and factor mobility (Das, 2011). Cheap and fast technological innovations such as cell phones, electronic mail, video conferencing, satellite technology and computer technology have led to the emergence of the digital economy, which has in turn broken national barriers of space and time and enhanced integration of markets across the world. Economic liberalization based on both tariff structure and regulations has facilitated the globalization of investment and trade. The World Trade Organization induced a multilateral trade system, which has decreased both non-tariff and tariff barriers. Elimination of trade barriers has enhanced trade flows across the world. Technological innovations have established a global distribution channel that cannot be hindered by protectionist policies, which further facilitates trade flows. The internet age has also facilitated capital flows by increasing the mobility of capital across the world. Movement of knowledge, information, and people as agents of production and states has leveled the globalization process by encouraging knowledge exchange, information flows, and interaction of people (Das, 2011).
Factors that restrain globalization include regulatory controls, trade barriers, cultural factors, nationalism, conflicts, and management myopia (Das, 2011). Some national governments implement regulatory controls to restrict foreign direct investment and portfolio, which in turn affect capital and monetary flows across boundaries. In turn, this hinders companies from expanding. While the WTO restricts countries from increasing tariffs and implementing clear non-tariff barriers, countries have imposed WTO compatible marketing barriers. Examples of these barriers include laws related to human exploitation such as child labor, environmental issues, technical and quality conditions. Developed countries impose these restrictions over products from developing states who find it challenging to defend against the actions. Cultural factors such as collective nationalism that support home-grown industries and the concern over terrorism make foreign management of local organizations challenging, which in turn restrains the entry of international corporations. Nationalism feelings that emerge due to domestic industry and trade, political parties, trade unions, and other local interest groups can restrain globalization (Das, 2011). For examples, the availability of imported quality products at low prices benefits many consumers but negatively affects the local industries. Conflicts encourage a hostile business environment that scares global companies from investing in a country (Das, 2011). Some domestic companies fail to expand globally because of factors such as risks, availability of resources, and the top management negative attitude.
Different Theories Concerning Globalization
There are five theories of globalization. They are the globalist theory, positive globalist theory, negative globalist theory, internationalist theory, and transformationalist theory (Cochrane & Pain, 2004). According to Cochrane and Pain (2004), the globalist theory considers globalization to be influential and unavoidable as it affects people and countries all over the world. The positive globalist approach highlights the quality of life benefit that globalization fosters by enabling the interaction of people and knowledge sharing. The negative globalist theory considers globalization to be less beneficial since it encourages a homogenous world, which makes the world less diverse because dominant political and economic powers impose their agendas. The internationalist theory doubts globalization by disputing the fundamental changes brought about by globalization. Based on this theory, the flow of capital and trade across the world does not differ from earlier periods. Transformationalists also states that the benefits of globalization are exaggerated even though they claim that globalization has positively affected the world.
Importance and Roles of Globalization in the 21st Century
In the 21st century, globalization positively and negatively affects the world. Mourdoukoutas (2013) argue that the benefit of globalization entails the opportunities and efficiencies that open markets create. It is easier for companies to communicate easily with other stakeholders such as clients, suppliers, and partners while managing their distribution network, inventories, and supplies effectively. Domestic companies can quickly sell their goods globally effectively as they can sell the same products locally. For example, Sony Corporation can sell its game consoles rapidly in New York as it can in Tokyo while Apple can sell its phones quickly in Tokyo as it can in New York. Globalization also fosters increasing leverage, and easy credit due to the easy capital flows across boundaries. In turn, this facilitates aggregate demand, creates a virtuous cycle of employment and income in the global economy, and fuels financial bubbles that perpetuate the cycle (Mourdoukoutas, 2013). Globalization also encourages knowledge flows across countries in which people learn about each other’s cultures, access news, entertainment, and books (Sheffield, 2013). In turn, this enhances progressive thinking as people can tolerate different world views and cultures and influences social reforms in society.
Globalization, nevertheless, creates new uncertainties and risks due to the increased level of market integration, increased competition, increased imitation levels, profit and price swings, and product and business destruction (Mourdoukoutas, 2013). Multinationals that benefit from globalization must face challenges such as unpredictable and unstable demand and opportunities for growth. They also lose their pricing power due to constant pressure from new companies that compete for similar profits (Mourdoukoutas, 2013). Globalization also encourages reduced capital flows, deleverage, and strict credit since creditors must restrict lending both to bad and good borrowers. In turn, this reduces demand, and leads to loss of employment and income and negative economic growth across the globe (Mourdoukoutas, 2013). Globalization also promotes consumerism behaviors across the world in which local practices, products, and ideas are ignored (Sheffield, 2013). In turn, this destroys local cultures in favor of foreign cultures. Globalization also negatively affects local business due to the entry of cheap international products compared to expensive local products (Sheffield, 2013). Another disadvantage of globalization is the risk of new diseases spreading across boundaries as people migrate and travel between countries.
Conclusion
Different factors fueled different globalization eras. Elements that enhanced the early modern globalization include religious and cultural expansion, nationalism, empire building, military expansion, and migratory movements. Factors that influenced modern globalization include military, political, and economic development. Globalization is beneficial as it fosters increased foreign capital and trade flows, information flows, cultural and knowledge exchange, and innovation. The downside of globalization is that it disrupts local cultures and in some cases, negatively affects economic growth. Different theories attempt to explain the concept of globalization. They are the globalist theory, positive globalist theory, negative globalist theory, internationalist theory, and the transformationalist theory.
References
Cochrane, A., & Pain, K. (2004). A globalizing society. A globalizing world , 5-46.
Das, D. K. (2011, May 8). Conceptual Globalism and Globalisation: An Initiation [PDF]. Daejeon: Centre for the Study of Globalisation and Regionalisation. https://warwick.ac.uk/fac/soc/pais/research/researchcentres/csgr/papers/workingpapers/20 11/27511.pdf
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Held, D. (1999). Global transformations: Politics, economics and culture . Stanford, Calif: Stanford University Press.
Mourdoukoutas, P. (2013, January 22). The Good, The Bad, And The Ugly Side Of Globalization. Retrieved May 26, 2019, from https://www.forbes.com/sites/panosmourdoukoutas/2011/09/10/the-good-the-bad-and- the-ugly-side-of-globalization/#6e1c5b98483f
Sheffield, J. (2013). Globalization yesterday, today, and tomorrow . Litchfield Park, AZ: Emergent Publ.
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Zinkina, J. (2019). A Big History of Globalization: The Emergence of a Global World System . Springer.
