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 countries’ economies interact with each other.
In the economic sphere, globalization has been happening 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 structured by countries with considerable economic opening and integration of their financial markets, including.
How did the globalization process start?
Globalization is an economic and social factor that has both increased and decreased dramatically in some periods, especially during the Great Wars.
In its early stages, globalization had to confront 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 geographic reasons.
In the same century, the term “comparative advantage” was used, with an emphasis on international trade, which occurs when a country produces goods more efficiently than others. When this occurs, it is possible to sell to other countries, while they do the same with those goods that are more specialized.
The effects of globalization began to advance in the 19th century, with the development of production and transport technologies, in addition to greater integration of policy and prices.
Currently, markets are increasingly in tune, as transport costs continue to fall and many governments are putting economic openness into practice.
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 perceived today with the presence of smartphones worldwide. In addition to the products offered, globalization is seen as 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.
- Access to products that are not produced nationally;
- 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.
- Greater spread of financial and economic crises;
- Some sectors of the economy may not adapt to competition and increase unemployment in the country;
- In developing countries, it can be difficult to invest in new industries that already exist in developed countries at reduced costs and with better technology;
- In small countries, the entry of multinationals can affect smaller producers, creating monopolies in the economy;
- Exploitation of raw materials and cheap labor from companies in developed countries in the poorest.
Causes and effects of globalization
Privatizations have been one of the main factors that demonstrate 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 greatest 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 the current world, globalization is growing, being pulled not only by the policies adopted, but also by the decrease in transport costs, which makes investments across borders possible.
Other common effects can be felt with the globalized world, through the growing number of multinational companies or, still, the worldwide standardization of measures and quality for products and services.