What Is Globalization, and When Did It Begin - Book Report/Review Example

Globalization Empirical Evident What is Globalization, and when did it Begin? Globalization is a worldwide movement where the countries are moving towards the financial, economic, communications and trade integration. The globalization entails the opening the nationalistic and the local perspectives to a broader outlook of an interdependent and interconnected world with the transfer of the goods, capital and services in all national frontiers. Some people argued that globalization started as early 1498. The strongest evidence shows that most of the globalization took place in ninetieth century. The globalization does not involve the unhindered flow of labor, and some economists say that it can result in some harm to the fragile and smaller economies if used indiscriminately (Rourke, 2002). The globalization and its political and economic consequences had not risen out of anything, but from a global process of unequal economic development over centuries if not millennium. Many varying ways have shaped the globalization process in different world regions through interaction with one another in not only migration, trade, and investment but also culturally and politically over many years. The globalization may not be having specific time or duration when it started, but people had tried to figure out when the whole issue started. History literature has been written to give some background of the international trade. Over the last two decades, the trade has been influenced by the industrial revolution in many parts of the world. This economic growth has led to ushering in of the globalization in the nineteenth century. The globalization period has been characterized by significant technological advancements and the imperialism that played a crucial role in facilitating the new technology (O’Rourke, 2002). The advanced technology brought markets closer and opened the most gaps that had been existing between various regions. It has also produced reliable labor between the primary producers and the manufacturing core. The time is dating back to 1815 to 1914, marked the new era of the political emergence of Pax Britannica and economically by the development of the new steam technology that led to the growth of the industrial revolution. In this period, the sense of globalization was started and was evident by lowering the price gaps for commodities that were bulky between two regions that are the origin and the point of destination. This change in prices occurred due the significant decline of the transport costs of various commodities that were earlier sold at higher values. At the end of the period was marked by the start of the backlash that was rivaling globalization with the rise of industrialization in United States and Germany. The first case and one that can be termed as the golden globalization was the one that came to a sudden and an abrupt stop after the emergence of the First World War. The interwar of 1918 to 1939 was dominated politically and economically to a catastrophe that led technological and trade advancements to end. In 190s saw the trials reconstruct the economy after but it only had a slim success that was enjoyed (Kevin H. Rourke, 2007). In 1930s, the great depression adversely affected the growth of globalization and result to its decline. After the WWII, much of the globalization has taken place and has led to a new level of trade and economy for many countries to grow significantly. The Classical Gains from Trade Trade has brought a lot of impacts in the areas where it is practiced. Taking an example of the countries that started the business some time back they have developed more than the countries that are in the tender stages of trade (David Romer, 1999). There are other factors that determine the growth of the country through the influence of trade. For instance, the case of New Zealand, the economic growth has been slow due to its distance from the other members who they are engaged in the trade with. New Zealand and Belgium were once at the same state but since Belgium is much closer to the members who they are involved in the trade with, it has grown much faster as compared to the New Zealand, which is at the periphery. The countries that are bigger have their people engaging in trade with their members alone but in the smaller countries the trade among the citizens is less likely due to their numbers. Thus, where the states are bigger there is likelihood of the trade being grown to an extra mile and the type of trade that the country does is far much improved compared to the one done in the developing and smaller nations. States with high numbers of residents trading with the foreigners have a greater chance of getting more income compared to the countries that have few residents trading with the foreigners. The countries that venture well in the international trade have good markets at their national level. Such countries have significantly grown in terms of the economy and the impact of trade can be noted easily compared to the countries where that do not have good trade links with the outside world or even the domestic ones. Thus, the size of the country influences the impact of the trade in its growth, and the same case applies to the distance from the other countries that they are trading with. The countries that are far from the location of the business are significantly affected negatively by the distance in terms of the income and this result to the slow growth in terms of the economy of the country. The Geography also affects the trade in a country and this result to different reactions to the trading parties. Some places may not be accessible or can be accessible but with less population; this makes the cost trading in the place a bit costly. The place with high population provides a ready market, and the investors can invest in the area. The investment results in higher income to the area, and this triggers its growth after they earn the revenue. Countries that have significant deposits of the raw materials for industries and energy have greater market as compared to the non-oil producing nations (Marko Tervio, 2002). The trade in those countries grows faster as compared to the trade in the Asia continent where they have vast oil deposits. These countries with these natural resources get a lot of revenues, and they have economies that are growing faster. Trade and the Distribution of Income There has been a changing in world trade in the past two decades. Before 1970s, the countries that were under the category of the developing nations were exporting primary products rather than the manufactured goods. The trade that existed had a very significant effect on the distribution of the income. The trades where the goods that are produced with the unskilled labor are the most the prices are affected most. In such a case the prices go too low, which affects the income to the distributors. There is a reduction of wages to the less educated workers. The other factor that affects the amount of income that is earned and how it is distributed it is the ratio of the imports and the exports that a country has (Krugman, 2008). The countries that imports gets a lot of the foreign revenue while those that imports they give out the revenue to the country where they are importing goods. The trade may change which results to shift in markets or the level of goods and services that are offered in a particular place to change. The countries that are in the category of the developing ones tend to have the lower incomes as compared to the developed ones. The developing nations have very little to offer in the international markets as compared to the already established countries. The developed countries are likely to earn more due to the industries that produce finished goods that sell to the developing countries. When this happens, more revenue goes to the developed nations and the developing nations will give their income to purchase the goods from the developed countries (Acemoglu, 2002). This imbalance of the status of the countries results in the income shift from one side to another. There are countries that have their industrial sector growing very fast. Taking an example of the Chine that has its economy growing exponentially, this is happening due to the technological advancement in the nation. The technology is resulting in new developments that are fetching high demand in the markets. When these [products are sold, the country gets income as compared to the countries that are selling the old technology goods. The current market is focusing on to those goods and services that are abiding with the new technology, thus when the countries the new technology based gadgets and take them to the markets the greater income will go that nation. Much has been done catch up with the developed nations by some countries in China and Asia. These countries have improved their level of income due to the advancements that they have done. The current market is focusing much on the technology. For instance, the case of the mobile phones the technology matters a lot. The buyers are willing to purchase a gadget that has the current software, so the countries that are producing such devices are gaining a lot of the revenue from the sales of those high technology goods (Krugman, 2008). The other countries like U.S. are also gaining a lot of income from the industries that produce the high technology goods like semiconductors and the IPod gadgets. Trade and Economic Growth The policy circles of Europe and North America have in recent past gave some explanation on how the economy of a country can grow. Some institutions such as the IMF, World Bank, and OECD have regularly given advice to the countries that have economies that are a growing. The key factor contributing to the economic growth is the policies that have been put in place. A country with an open and out oriented economies are like to succeed in economy growth compared to the countries with the trade restrictions and on the foreign regimes (Dani Rodrik and Francisco Rodriguez, 2001). The trade liberalization offers a reduction of the dispersion of the income among the involved countries and leads to the economic growth and the improvement of the economy. The liberalization has also been a key contributing factor to the economic growth of many countries. Taking a look on to countries that never put into consideration to liberalize the trade they are lagging in terms of the economic growth. The income dispersion when coincides with economic integration it slows down the growth. Looking at the post-war, there was a lot of decrease of dispersion, which resulted in the economic growth. The countries that have high policy-induced barriers relative to the international trade have their economies that grow faster as compared to the countries that have the low-barrier trade economics. The countries with the trade and business links that are open are likely to grow faster as compared to the other countries that have the no openness in their trade links. The trade policy is imperative for economic growth, and the nations that have not had good systems tend to have the slow growth rate. The countries with open trade policies have some sense of the reduced tariff or sometimes having no tariff barriers in the aspect of trading are significantly related to the economic growth. The countries that have lower trade barriers have relative higher economic growth. These lower economic trade barriers to the foreign trade are imperative to the economic growth (Dani Rodrik and Francisco Rodriguez, 2001). Some institutions such as the multilateral corporations generate a lot of the openness, which contributes significantly towards the economic growth. The international trade policies that a country has had a greater impact on the growth of the economy of the country. The trade barriers that are imposed on a country's trade affairs may affect the economy growth either positively or negatively. Other factors that affect the economic growth are the technological changes, market imperfections and the other real-world phenomena such as learning. The index of distortion indicates the level with which the trade restrictions are applied to the economy growth. Environment, Trade and the Theory of Second Best For some years, the environmentalists have been arguing about the business environment and the policy that can favor the growth of the trade. The market forces and other factors that contribute significantly to its growth frequently influence trade. Lack of common language affects the business considerably since people who are involved will not come to an agreement as they bargain for a good or service. If people understand one another are engaged in a trade, they will agree, and they get solve any issue arising from the business they are carrying out. Sound policies of the countries such as the tax, tariffs, and other trade-related policies significantly affects the trade in a given country or region. An area or nation with real policies that favor trade or business will owe many investors to venture into the place and invest as they are motivated by the terms of the business. Trade also thrives well in a place where there is a customer base, and goods and services are in high demand (Brian R. Copeland, 2004). The locations where the forces of the privatization and the government policies are at equilibrium also favor the trade growth and investors will be very much willing to invest their resources in such an environment. Many investors will be motivated to invest in a business environment where they can be able to see possibilities of trade gains are favoring some returns. These gains will be influenced by the policies that are put in place, and they can be influenced positively or negatively (Frankel, 2005). For trade to grow well in an individual country, the international should constraint it not to use the foreign law and avoid the local terms. This idea will favor the nation to develop the trade and provide a favorable environment for business to thrive well. Market pollution affects the business, if the governments regulate the pollution the trade thrives better. Some areas the trade liberalization has caused many problems to the trade. The liberalization policy has been in some areas a critical factor in business growth. Thus, its impact on business may vary from one nation to another. Business requires some flexibility of markets, in places where there is the flexibility it has thrived well. There are areas where the access is not available; in these places, the trade development has proved to be difficult. There should be a way the people and the services or goods can get to the marketplace, and the exchange can take place. The theory of the second best requires attainment of the optimum conditions (Frankel, 2005). The theorem states that if a constraint is introduced to the equilibrium state of the system it will prevent the fulfillment of the conditions of the Paretian. The theorem follows the significant negative corollary, where there is no way to judge from different conditions the one that has Paretian optimum. The theory states that the maximization function will be maximized if there is at least one constraint. Agglomeration, Geography and Trade Trade has led to the considerable growth of the urbanization, and many people have settled in major cities and towns in search of jobs and their living. Those places that were started as the centers have significantly grown to a bigger towns and cities since people have settled there. These settlements in the cities have led to the growth of trade, and the economy has consequently improved as a result of that. Places where their industries located people have moved and settled in those areas; this can be explained that people are moving closer to the supplier so as to have fair prices of the products as compared to those who are very far from the producer or supplier. The other reason that triggers people to settle in towns is because the jobs they are working are in towns and the business some are undertaking are also in town. These people are likely to end near their places of work to access the jobs with less difficulty. Some places like the case of the Japan where cities were bombed, this led to the cities being taken back to their original relative positions. These effects have significantly affected most of the growth of such places in economic and the trade as the initial investment that they had done had been ruined by the bombing. Some areas are densely populated compared to other places. For instance in Japan the nation is so much populated had a greater impact on the trade growth in the country (David Weinstein, 2002). Since many people were finding the living in various ways, people were becoming innovative, and they used available resources to make the livelihood out of it. Many cities as a result of agriculture since the place was previously been used for the agricultural reasons people settled there and erected some structures and the place expanded and became urban centers. Many people ended up settling in the place, and the trade of the place also grew up and this led to the economic growth of the area. Again, the number of people living in urban centers has been changing with different periods. For instance in the Jomon period the population of people in major cities was relatively small compared to the population of the current situation. For places that are bombed and the population is drastically reduced or the productive capacity of the city is destroyed, this results in the permanent effects that affect the growth of the place. These effects will also affect the trade growth of the area. For instance, the bombing of Japanese cities during the WWII resulted in very long lasting effects that are even felt today (David Weinstein, 2002). Taking the case of Hiroshima and Nagasaki were people were killed, and others went missing left a lot of shocks with people. These shocks extended even to the cities that were not affected by the bombing. These fear that was inflicted on the people affected the trade growth and affected the economic growth since some people who were contributing substantially top the economy growth fled towns. References Acemoglu, D. (2002). Technical Change, Inequality and the Labor Market, Journal of Economic Literature, 7-72. Brian R. Copeland, M. (2004). Trade, Growth and the Environment, Journal of Economic Literature, 7-71. Dani Rodrik and Francisco Rodriguez, D. (2001). Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence. MIT Press, Cambridge. David Romer, J. (1999). Does Trade Cause Growth? American Economic Review, (pp. 379-399.). David Weinstein, D. (2002). Bones, Bombs, and Break Points: The Geography of Economic Activity. American Economic Review, 1269-1289. Frankel, J. (2005). The Environment and Economic Globalization, in Michael W. Weinstein (ed.), Globalization: What’s New? Columbia University Press, New York. Kevin H. Orourke, R. (2007). Power and Plenty: Trade, War, and the World Economy in the Second Millennium. Princeton and Oxford. Krugman, P. (2008). Trade and Wages Reconsidered, Brookings Papers on Economic Activity, 103-154. Marko Tervio, D. (2002). Does Trade Raise Income? Evidence from the Twentieth Century. Princeton University Press. Rourke, K. (2002). When did globalization begin? European Review of Economic History (6th ed., pp. 13-50). Princeton University Press. Read More