3.4.2 Economic Interdependence of Nations

3.4 Economic Interdependence of Nations

Another legacy of historical globalization is the fact that nations have become dependent on each other for their economic development. Very few, if any, nations in the world do not rely on each other for trade, loans, and investment. However, development is a complex issue influenced by many factors. Interdependence is when countries depend on each other for economic development.

With historical globalization, many nations have had to change from economic independence (relying only on themselves) to economic interdependence. In the past, one could use or buy only products that grew, or were produced, nearby. This limited economic growth and access to the variety of goods and services we now take for granted. For instance, Canada exports lumber and wheat; it imports produce from California, coffee from Central America and Africa, and manufactured goods from Asia. Canada exports oil, gas, and coal; it imports technology.

Cash crops were an outcome of globalization. Where once people grew products they needed for food, with imperialism, they began to grow products to sell. In the developing world, these goods are often items not directly used for food, including coffee, bananas, tea, cocoa, cotton, and rubber. If the crops failed, the people starved. If the crops were successful, they would purchase food grown elsewhere and perhaps have money left over to improve their lives.

This is still largely the case with nations in the South growing crops such as sugarcane and coffee for export. The presence of large agribusiness corporations tends to encourage cash crops with high-yield farming techniques often damaging to the environment. Most crops grown in North America and Europe are also grown for sale around the world.

Agrifarm with attached refinery for using organic material

In this way, nations have become increasingly interdependent.

Investment, foreign ownership, aid, and loans are other ways in which nations depend on each other. Beginning in the days of imperialism and continuing today, nations invest, buy property, use labor, and give and loan money to each other. A mining company might invest in research and development of a coal mine in another country. A corporation might wholly own or operate a factory in another location. More than half of Canada's oil and gas production is owned by foreign corporations.