4.2 Economic Globalization


What are the origins of contemporary economic globalization?


Throughout the ages, great thinkers have considered the ways that nations deal with their economies. Some believe that the government of each nation must control its economy by imposing tariffs and taxes, limiting imports, and/or increasing exports. Others believe that trade between nations should be uncontrolled or free. These ideas have shaped not only how nations do business, but also how individuals and corporations. Their ideas have had great impact on our wealth, poverty, and freedoms.

Globalization is the way in which nations are interconnected. Most definitions of globalization focus on the economic interdependence of nations.

GLOBALIZATION is a buzz word that refers to the trend for people, firms, and governments around the world to become increasingly dependent on and integrated with each other. This can be a source of tremendous opportunity as new markets, workers, business partners, goods and services, and jobs become available, but also a source of competitive threat that may undermine economic activities viable before globalization.

Source: The Economist, a leading British magazine on the international economy


The term "globalization" generally refers to the opening of international borders to flows of free trade, people, investment, technology, culture, and ideas among countries. Opening international borders results in global markets instead of local or national markets. This includes markets for goods, services, labor, and capital.

Source: The International Monetary Fund