Globalization generally refers to cross-border networking. On the one hand, this means economic and political relationships between states and, on the other hand, personal relationships between people. The term is often associated with opportunities, but also often with risks. Globalization is playing an increasingly important role in our everyday life, as well as in politics and business, and is part of many future-oriented debates.
Globalization – definition
Globalization refers to a process in which all parts of the world are becoming ever stronger, faster and better connected with one another.
Networking can take place on the one hand at a state level, where states establish political and economic relationships, or on a personal level, where individuals maintain contacts with one another.
The importance of globalization
Through globalization, the whole world is connected with each other. This means that events that are important for society, for politics or for the economy in one part of the world, also become important for other parts of the world.
Many European countries get their gas from Russia. For example, if there are political tensions there and Russia no longer wants to supply gas, this will affect many European countries.
Globalization – Economy
Economic globalization refers to the historical process that arose from technological progress and innovation. It is believed that the economies of the entire world are becoming increasingly networked and integrated. Countries try to combine their strengths and work together economically. Customs duties will be abolished to simplify the movement of goods between countries.
This happens mainly through trade and financial flows. To learn more about «world trade» and «financial centers», please read our suitable summaries on the topics!
dimensions of globalization
In the meantime, however, other areas of life are also being influenced by globalization than just the economy. Globalization can be divided into several dimensions. It is an all-encompassing process that
- of politics
- the environment,
- the communication,
- of technology and
- the culture
can take place.
politics
Due to the economic cooperation of the countries and the increased interaction between them, legal agreements that apply internationally must come into force.
environment
Globalization has serious consequences for the environment. The increased production of goods and easier mobility leads to a large pollution of the environment through emissions and waste.
communication
The communication options have been improved – above all through the process of digitization.
You can find out more about the connection between digitization and globalization in the summary below. There you will also be explained what digitization means.
Innovations such as the Internet or smartphones make communication across national borders easier.
Technology
Globalization means that new techniques and technologies can be developed and disseminated better and faster. People in different regions of the world can work on new ideas and share their knowledge and skills with other researchers.
Culture
The cultures of the individual countries are becoming more and more interconnected, as there is increased exchange, travel is much easier and the import of foreign goods is increasing. This is how countries influence each other and cultures blur together.
In Figure 1 you can see that all parts of the world are connected. The lines here could be for example
- trade relations between countries,
- Communication processes between individuals of different countries or
- the connection between the international production of objects
represent. Figure 1 is intended to illustrate that there is an ever-increasing network and connection between the countries of the world.
Globalization in everyday life
The term globalization sounds rather abstract at first, but you also encounter the effects of this development on a daily basis. Globalization has a significant impact on everyone’s life. Here are two examples to show you how globalization is affecting everyday life.
In the supermarket you can find masses of fruit and vegetables that do not grow at all in Germany. Bananas, avocados or coconuts are just a few examples of goods imported from other countries. Without globalization and the associated simplified exchange of goods, these products could not be offered.
Wherever you encounter globalization in everyday life is the Internet. The whole world is networked through social networks such as Instagram, Twitter or Facebook. This also includes communication via email. The exchange between people from different parts of the world can happen in a matter of seconds. This is how information, knowledge and opinions are shared, which is one of the characteristics of globalization. Figure 2 shows people’s connections through the various means of communication.
Figure 2: Globalization through communicationSource: wirtschaft-global.de
Features of globalization
There are some characteristics of globalization which are explained below:
The liberalization of the world market
The liberalization of the world market means that tariffs are removed and free trade zones are created, so that the world market becomes more and more accessible. Free trade will be created and national restrictions will be largely abolished.
The increase in international trade
Trade across national borders is a feature of globalization. Economically, more and better relationships can be established between individual countries, which facilitates access to various goods.
Cross-border financial flows
These are mostly mutual fund investments in another country’s stock markets or bank loans to companies.
Global Markets
Goods and services traded worldwide have a uniform world market price on the global market. These world market prices can differ greatly from national and local prices due to transport costs, subsidies or customs duties.
The exchange of know-how
The exchange of know-how means the exchange of ideas, knowledge and information. For example, research can progress better through globalization, since knowledge that has already been researched can be disseminated more quickly and subsequent research can build on it.
Pros and cons of globalization
It is clear that such a global process has many effects. Globalization has countless advantages as well as disadvantages. Here are some important ones listed.
Advantages and disadvantages at a glance
advantages
Disadvantages
Increasing international trade and increasing global cooperation
pollution of the environment
Creation of new jobs
Labor exploitation (mainly in low-wage countries)
Distribution of wealth among the individual countries
Inequitable distribution of wealth
Steady growth of the world economy
Increasing competition for corporations
Dissemination of knowledge and innovations
dependence on other countries
Large supply of goods and falling goods prices
Relocation of companies abroad
increasing global tourism
Aggravation of global crime
Easier mobility of goods
Problems and crises become international problems
Communication with people all over the world possible
loss of cultures
Cultural exchange and merging of cultures
loss of languages
advantages of globalization
Globalization brings some benefits for individuals, but also for countries and states.
Large supply of goods through international trade
Globalization strengthens international cooperation between countries and expands trade. World trade makes it possible for us to have an incredibly large range of goods at our disposal. For example, foreign products can be offered in supermarkets.
In addition, international trade is becoming easier and easier. It was already explained in the previous section that the world market is being liberalized and international trade is increasing. Trade agreements or free trade zones are created, with the help of which one can freely trade with different countries.
Free trade means the unrestricted trade in goods across national borders.
Free trade zones arise from previously agreed customs agreements between certain trading partners. Customs duties and taxes are abolished so that there can be unrestricted trade in goods between the two partners and the range of goods can be expanded.
Increasing the prosperity of a country through competition between states
Another positive aspect is the competition between states. They fight for the big corporations and these in turn create jobs, increase the gross domestic product and thus the general prosperity of the nation increases. For this reason, attempts are always made to attract large companies through subsidies or favorable location factors.
Subsidies are grants or subsidies from the state. Favorable location factors are all elements that play a role in a company’s choice of location. If a location has good prerequisites for a company, it is more likely that it will settle there.
Pursuing common political goals on a global level
An advantage for politics is the increasing balance between the countries. Almost all countries today are democracies with liberal economies. As a result, common global goals can be pursued, which in turn favors diplomatic action and the emergence of international associations.
Faster research and development
Due to increasing networking and improved communication, information spreads very quickly. Not only news from all over the world – but also new technologies are spreading faster across the globe. As a result, new products and technologies can be developed extremely quickly.
A good example of this is the smartphone, which has continued to improve over the past few years. This could also happen so quickly because researchers from all over the world took part in the development.
Due to these increasing product innovations, which are accessible to everyone, a constant growth of the world economy is almost guaranteed.
Global Tourism
In addition, global tourism can be operated through the numerous transport options. All people can travel to almost any place in the world very easily.
You can find out more about «global tourism» in the associated summary.
Generally falling prices
As companies relocate from…