Understanding Globalization: Impact, Changes, and Consequences
Globalization: An Overview
Globalization is an economic, technological, social, and cultural process that increases communication and interdependence among countries, uniting their markets, societies, and cultures through social, economic, and political interactions on a global scale. Globalization is a dynamic process driven by societies operating under democratic capitalism or liberal democracy, embracing the information revolution and liberalization of political culture, legal systems, and national economic and international relations.
International economic relations have intensified as corporations, governments, and international agencies operate from a global market and economy perspective. Globalization encompasses all these global phenomena. Economic relations between different parts of the world have always existed, but now occur with greater intensity and interdependence. Globalization is defined as the increasingly close interdependence of economies and policies of all countries.
Global Scale Structural Changes
Since the 1980s, the model has changed from the post-World War II era into a new international Globalization, still defined by the division between rich and poor countries inherited from the Industrial Revolution and European colonization.
First Major Split in World Regions:
Developed countries remain leaders of the global economy with a high standard of living compared to underdeveloped countries, which have lower living standards and economies dependent on rich countries, but now with different roles due to globalization.
- States have lost power over big business.
- Financial, economic power is replacing political power.
- The development of telecommunications enables more rapid management of statistics and data for the coordination of work at great distances for companies and organizations.
- Improvements in technology help reduce costs, making distance and space less important in the cost of a product.
Neoliberal policies developed since 1980 tend to deregulate the market, reduce state protectionism, and remove trade barriers to produce cheaper goods in various countries.
Changes Imposed by Globalization:
- Traditional areas like Europe and Japan face crises.
- New economic regions emerge, including emerging countries of Southeast Asia, Brazil, and China.
- Underdeveloped countries claim a new world order and accept the impact of multinational companies in their national economies.
- Developed countries waive part of their welfare state by cutting benefits and accepting the privatization of some services, also accepting the dismantling of their businesses.
Effects and Consequences of Globalization:
- Increased supply of cheap goods in rich countries.
- Greater specialization of countries in specific economic activities and increased productivity.
- Fast diffusion of technological progress.
- Multinationals can produce with lower costs and offer competitive prices.
- More possibilities to attract investment and generate wealth.
- A rise in the incomes of poor countries hosting companies from developed countries.
- The globalization of crime, drug trafficking, terrorism, and arms trade.
- Poor countries like sub-Saharan Africa have been left out of this globalization, and their population has been reducing its financial rent.
- Unemployment among workers in non-market sectors.
- The growth in international trade has mainly benefited Western Europe, North America, and Asia.
- Destruction of traditional economic systems and primitive groups like those in the Amazon or some parts of Indonesia.
- The old Cold War confrontation between communist and capitalist countries has been replaced by confrontation between some Islamic countries and the major economic powers in what is called international terrorism.
- Former communist countries have replaced their socialist or planned economies with market economies; only a few countries such as Cuba and North Korea continue with their economic policies.