Know what globalization is: origins, strengths and weaknesses

For the world economy, globalization is a process that takes place with the  integration of markets  , in which the economies of countries interact with each other.

In the economic sphere, globalization has been occurring for many years through international trade, especially when European countries were looking for products on other continents.

Globalization is also an effect that goes beyond the economy, since integration also involves social, cultural and, in our recent history, technological fields.

This process is characteristic of the capitalist system and is structured by countries with considerable economic openness and integration of their financial markets, included.

How did the globalization process begin?

Globalization is an economic and social factor that has increased and decreased dramatically in some periods, especially during the Great Wars.

In its early stages, globalization had to confront the defenders of 18th century mercantilism, where state control and protectionism dominated countries’ economic policies.

From this, the development of trade between countries took place as some produced better products. While others were unable to specialize, due to lack of techniques, technologies or geographical reasons.

In the same century, the term “comparative advantage” was used, with an emphasis on international trade, which occurs when one country produces goods more efficiently than others. When this happens, it is possible to sell to other countries, while they do the same with those products that are more specialized.

The effects of globalization began to advance in the 19th century, with the development of production and transportation technologies, as well as greater integration of policies and prices.

Today, markets are increasingly in tune as transportation costs continue to fall and many governments are implementing economic openness.

Advantages and disadvantages of globalization.

For the different economies of the world, globalization has the positive characteristic of integrating the technologies and products offered.

This process can be seen today with the presence of  smartphones  around the world. In addition to the products offered, globalization is considered an enrichment factor for emerging economies.

Despite this, with the integration of the world economy, many countries also end up sharing economic crises.

The most recent case was that of 2008, when a crisis in the United States real estate market hit several countries, which felt the effects for many years.

Positive aspects

  • Access to products that are not produced at the national level;
  • More competitive markets and well controlled inflation;
  • Greater flow of capital and investments between countries;
  • Greater technological development;
  • In the social aspect, globalization has allowed the meeting of different cultures and the development of sectors, such as tourism.

Negative aspects

  • Greater spread of financial and economic crises;
  • Some sectors of the economy may not adapt to competition and unemployment increases in the country;
  • In developing countries, it can be difficult to invest in new industries that already exist in developed countries at lower costs and with better technology;
  • In small countries, the entry of multinationals can affect small producers, creating monopolies in the economy;
  • Exploitation of raw materials and cheap labor of companies from developed countries in the poorest.

Causes and effects of globalization.

Privatizations have been one of the main factors showing that the policies adopted by countries are directed towards globalization, in addition to the reduction of regulations and bureaucracies that alienate foreign investors.

Free trade is also a common practice adopted between different countries.

Among the best examples are creations such as the single market between the United States and Canada, and also the European market, since 1993. Even in the case of Europe, integration could be even greater since the adoption of the euro as a common currency in several countries

In today’s world, globalization is growing, not only because of the policies adopted, but also because of the decrease in transport costs, which makes cross-border investments possible.

Other common effects can be felt with the globalized world, through the growing number of multinational companies or, even, the worldwide standardization of measures and quality for products and services.