International Trade and Technology as Main Drivers of Globalization - Coursework Example

Which Set of Factors Has Been More Important in Driving Globalisation in the Last Fifty Years, Technology Or International Trade Liberalisation Agreements? Use Specific Examples In Your Answer Table of Contents Table of Contents 1 Introduction 2 Factors Driving Globalisation in the Last Fifty Years 4 Importance of Technology in Driving Globalisation 5 Importance of International Trade and International Trade Liberalisation Agreements on Driving Globalisation 8 Evaluation 12 Conclusion 14 14 References 15 18 Introduction Globalisation is a process which involves increasing the liquidity in terms of products, ideas along with helping to develop culture, politics and economies. In other words, globalisation can be defined as an international strategy with boundless transactions in worldwide market (Berghman, 2005). Globalisation has various scopes including economic, political, environmental, cultural and health among others. The word ‘globalisation’ has emerged as a new buzzword primarily in the past two decades. In keeping with the flow of globalisation, it has been observed that remarkable growth has been achieved in trade and exchanges. At the same time, it can be apparently observed that growth has not only been witnessed in terms of goods and services, but also with regard to the exchange of currencies and in capital movements. The effect of globalisation has been seen mostly evident in technology transfer and international trade activities owing to trade liberalisation agreements. As a result of globalisation, a massive improvement and advancement in world economy in terms technology and international trade during last fifty years has materialised. Over the last five decades, it has been observed that technological growth has progressed rapidly as a result of which international trade has also moved forward by a considerable extent. With these considerations, the study intends to present a brief overview of the most important factors driving globalisation primarily in the last fifty years. At the same time, a comparative evaluation will be made amid technology and international trade liberalisation agreements to ascertain which one of these key factors has been the primary factor driving the aspect of globalisation. Factors Driving Globalisation in the Last Fifty Years Several factors have contributed to globalisation since last fifty years. Due to the effect of globalisation, all the trade barriers have been largely removed during this period. As a result, it has been observed that international trade has become quite value deriving for nations around the world. During the year 1948, when for the first time, supervising authority General Agreement on Tariffs and Trade (GATT) started its operations at that point of time only 23 countries had taken part in the international trade activities. After sixty years of journey it deals with 159 countries in the globe (World Trade Organization, 2014). During the last twenty five years, the cost of transportation through sea has been fallen 70% as well as the expenses through air route has increased 4% in every year. Consequently, the impact has directly been implicated on globalisation. Thus, the factor of convenience in terms of transportation facility has been one of the key driving forces behind globalisation. Moreover, during the last five decades, the use of the internet and telecommunication services has increased considerably due to the technological development which has also been a key factor. Furthermore, the sustained emergence of e-commerce as business dealing and transaction medium has encouraged globalisation on a massive scale. Besides, trading blocs encourage global interdependency through creating regional trade agreement (RTA), altogether reducing cost, ensuring boundless trade license, arrangement of capital and technological advancement that have motivated incorporated organisations to diversify their business outside of the home country. Consequently, it can be ascertained that a multiple of factors have played a decisive role in driving globalisation in the past fifty years by a considerable extent (Homayounneja, n.d.; Rowbotham, 2000). Importance of Technology in Driving Globalisation During the last few decades, it has been recognised that there has been a massive revolution in the information technology front. During the course of past fifty a sea of change has been observed in terms of the use of computer based technology and other e-commerce based services which have been mostly possible due to technological developments in each decade. Today, due to technological developments human beings are using a few devices such as fifth generation computer, laptop, iPod, mobile phones, data-card and microchips among others. On the other hand, technological revolution has facilitated economic aspects such as productivity, development of new products and transportation as well. Moreover, technology has also helped to protect the intellectual property rights along with ensuring privacy protection. Thus, it can be asserted that the impact of technological development is noteworthy in modern society and also it has provided a wide range of benefits to uplift the facet of globalisation by a considerable extent (Lee, n.d.). In this regard, it is also apparent that basic technological domain has shown a substantial progress in electronic commerce over the internet. It has helped in conducting business activities in an efficient and convenient way through the means of communication, finance and retail trade among others. Apart from this, it has also helped to progress education and health services. Moreover, the effect of progression has been witnessed over the years. Thus, as a primary effect it is apparent that people have depended on technology in terms of executing different actions including trade and business transaction which in turn has been a crucial factor aiding globalisation. Correspondingly, the impact of technological development has put its major impact on three segments as illustrated below: A) Business and Commerce Technological effect has been mostly observed on business and commerce. In the middle of twentieth century, businesses were conducted through the traditional way. From the production to supply along with after sales service, everything used to be done manually. The use of technology was hardly seen during the production phase and transportation phase. In the present day context, the trend has changed significantly. Organisations are more dependent on technology rather before production. During the research and development (R&D) phase, the importance of technology is very high. Even after that, the use of technology has been observed during manufacturing, storing, distributing, and selling and at the same time post sales services activities. Due to the advancement of technology, organisations’ can promote their products and even sell them with the use of their own e-commerce website. This has played a major role to expand the reach of companies beyond their own domestic market at a relatively low cost, thereby aiding the process of globalisation. E-commerce can be regarded as one of the most prominent usages of technological innovation to propagate globalisation, which has saved inventory carrying cost by a considerable extent. Many business firms are outsourcing their products and/or services to international markets through telecommunication medium. Even, it has been observed during the previous few decades that plenty of firms have kept their commercial account and financial account by using technology. Consequently, it can be affirmed that technological liberalisation has been a key factor which has facilitated to develop streamlined business or commerce models and market structure directly and indirectly (Lee, n.d.). B) Medical and Education Advancement of technology has changed the traditional classroom environment and old-fashioned instrument usage. Due to the technological improvements, computer has been involved with the education and medical treatment. Technological developments have provided an opportunity to research and develop medicine facility and at the same time it has also aided to develop surgical instruments accordingly. By using computers and webcams medical institutes’ are practicing difficult operations. From the educational perspective, the importance of the internet is increasing steadily in aspects such as online education or e-learning. Thus, these factors driven by technological revolution have been imperative to drive globalisation in the past fifty years (Lee, n.d.). C) Society and Culture The effect of technological development has also been viewed in society and culture. In the socio-cultural point of view, developments in the field of communication and transportation have been a decisive factor to drive globalisation. It is observed that in different global communities with the aid of technological advancements transport systems including railways, airports and seaports along with highways have developed considerably paving the way for rapid business transaction which has aided the facet of globalisation, Moreover, development in technology has made the process of communication amid different individuals in distant location easier. E-mail, satellite technology, optical fibre based system along with telephone has allowed the relay of information from a particular point of the globe to the other at a high level of speed. In keeping with these advancements, it can be inferred that communication system development has enabled to transmit ideas and activities required for people which has been a decisive factor aiding globalisation (NotesAcademy, n.d.). Importance of International Trade and International Trade Liberalisation Agreements on Driving Globalisation International trade has been seen since the pre-historic period. In accordance with certain historians’ point of view, the prime instance of apparent international trade activities was viewed in the 19th century Before Christ (BC) during the period of Assyrian merchant. According to Joint Economic Committee (2002), in the modern era international trading had begun in the 17th century and it has continued since then to play a pivotal in augmenting the socio-economic status of a nation (Joint Economic Committee, 2002). As a result of globalisation, interdependence of countries has been increasing since last fifty years. It has been observed that there has been an amalgamation of trade, finance, people and ideas in the worldwide market. After the end of World War II, General Agreement on Tariffs and Trade (GATT) had been negotiated. This agreement ultimately turned out to be a key factor for trade liberalisation, thereby facilitating globalisation. Subsequently, the trend of international trade has transformed in every decade. Due to globalisation, international trade has become very familiar for entire world. It helps to lower down the cost of international transportation, communication and computation among others. Besides, large scale organisations are also able to move to different countries for expanding their business, which has been a key determinant for globalisation in the past five decades. The increasing trade and capital markets has helped to establish the platform of modern era international trading. From the arrangement of capital to export/ import of final goods and/or services, everything has played their crucial parts to propagate or drive globalisation (Joint Economic Committee, 2002). In this regard, it is further observed that the key policies associated with international trade were launched by the World Trade Organisation (WTO) and it was successfully controlled and supervised by International Monetary Fund (IMF). Over the years, it has been observed that developed and developing countries such as the United Kingdom, the United State of America, China, Japan, France, Germany, India, Russia and South Africa among others have predominantly involved in international trading through leveraging the trading agreements related liberalisation as propounded by WTO. Moreover, few underdeveloped countries have also started to be involved in international trade. Thus, it can be asserted that the actively engaged countries in international trade through leveraging laid down agreements have played a crucial role in amplifying globalisation (Krugman, 2001). Furthermore, globalisation has given the license of trading in a boundless manner to the entire world. As a result, a few facets have helped civilisations directly and indirectly. In terms of identifying the significance of globalisation, it is found that to a certain extent it has been possible to eradicate poverty and hunger. On the other hand, along with the reducing illiteracy rate the importance of education has increased all over the globe. In addition, due to globalisation, economic growth has been observed all over the world. It has driven growth in couple of major sectors, one of them being increasing the utilisation of existing resource and the other one aiding to develop new product resources through capital investment (World Bank, n.d.). Globalisation can be called as cross-border business integration. It generally helps to develop business bonding among the trading countries. It can be related with “BRICS”. “BRICS” denotes Brazil, Russia, India, China and South Africa. It is the bonding of inter business polices among these countries. Every year the Prime Ministers of each country sit for a meeting which is called “BRICS” summit. Through this summit, these countries are looking to address their own agendas relating with business and other resources. At the same time, it also has different objectives such as providing support to other countries’ on requirement (Ey, n.d.). Subsequently, a Preferential Trade Arrangement (PTA) has been enacted with the support of WTO amid the member nations of BRICS, which has been a key instigator for international trade activities thereby aiding globalisation (Sandrey & Jensen, 2013). According to the observation, it has been found that in excess of 300 preferential international trade agreements along with free trade agreements such as South Asian Free Trade Area (SAFTA) among others have been notified during the last fifty years. In accordance with WTO (2011), the effect of globalisation on international trade was very little during the 1950-1980. Subsequently, it has started developing rapidly. From the Figure 1, it can be affirmed that in the modern era the significance of global trade is very high to drive globalisation by a considerable extent. Figure. 1: World Trade Report, 2013 (WTO, 2013) According to the analysis, international trade liberalisation agreements have been ascertained to play a decisive role in driving globalisation. Mostly, it has been ascertained that in case of developing countries the importance of international trade is very high and during the last twenty years the growth rate has augmented in a massive way. In comparison with developed and under developed countries, it is found that the growth rate is quite high in developing country (WTO, 2011). Evaluation During the evaluation of most important factors which have been driving globalisation since last fifty years, it is determined that of the importance of technology is very high. Without the shelter of technology, human kind would not be able to reach the mark what it has been able to occupy today. However, on the contrary, it is worth mentioning that international trade liberalisation agreements are more crucial determinant to drive globalisation during last fifty years. According to the analysis, it is quite apparent that, the importance of technology is quite high because the path taken to ensure globalisation such as the use of transportation and communication among others has materialised primarily due to technological advancement. However, it has been observed that there are various factors that have also motivated international trading activities, and technology is only one of these factors. It can be argued that despite the presence of technology driven features, without the trade liberalisation agreements present today it would not have been possible to engage different countries in free trading activities, which has largely paved the path for successful globalisation. Moreover, it can also be argued technology has been able to act as a key driving force behind globalisation primarily because it is able to be utilised by countries as a facet for globalisation due to liberalisation of trading. Besides, it can be asserted that international trade liberalisation agreements have created the foundation for driving globalisation as can be witnessed from GATT. Without the presence of such pioneering moves by concerned authorities, the endeavour of making globalisation a reality would not have possible irrespective of the benefits provided technology. In addition, technology at times can be ascertained to be used beneficially by developed countries to a certain extent while conducting their trade activities, however certain developing and underdeveloped nations have not made much a beneficial use of technology still they have participated in globalisation related outcomes. This factor justifies the value of international trade liberalisation agreements over technology as more important factor for driving globalisation over the last fifty years. Conclusion International trade is determined as an interchange of resources between two/more of countries. On the other hand, technology is a medium which can resolve and fulfil human requirements. Both of these aspects are involved with each other. It is determined that these two variables the key factors driving globalisation over the last fifty years. During the analysis of these factors, it is observed the impact of technology is highly valuable for human kind in modern era and it has impacted beneficially on the domain of globalisation. At the same time, international trade has helped human society in various ways. It has unquestionable significance towards the development of culture, society and economies among others. During the last fifty years, international trade has been the key platform through which civilisations have been able to step up their existence convincingly. In keeping with this notion, it can be ascertained international trade and its allied agreements have been the more important factor driving globalisation by taking help assistance of technological developments. References Berghman, J. 2005. Social Protection, Globalised. Leuven University Press. Ey, No Date. Looking Beyond the Obvious Globalisation and New Opportunities for Growth. Overview. [Online] Available at: http://www.ey.com/GL/en/Issues/Driving-growth/Globalization---Looking-beyond-the-obvious [Accessed April 14, 2014]. Homayounneja, No Date. What Factors Have Contributed To Globalisation in Recent Years?. Redbornecommunitycollege. [Online] Available at: http://www.redbornecommunitycollege.com/_files/Curriculum/5F173131A1478B73B9D918395207B05C.pdf [Accessed April 14, 2014]. Joint Economic Committee, 2002. 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