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What is Globalization?
What is Globalization?
1. Your shirt was made in Mexico and your shoes in China. Your wifi router comes from Japan. You can travel to Moscow and eat a Big Mac there and you can watch an American film in Rome. Today goods are made and sold all over the world, thanks to globalization.
2. For this class, we will define globalization as the worldwide movement of coming together as one. Globalization is the movement of nations becoming more interdependent upon each other for resources and the sharing of cultures.
3. Trade is a term that describes the buying and selling of products between countries. Free trade is part of globalization and occurs where there are no government interference in trade between nations.
4. Protectionism is a government's policy against free trade. Governments that don't like free trade impose tariffs or taxes on imports from other countries to protect their workers and business owners from foreign competition.
Is globalization and free trade worth it? Let's look at the benefits and the negatives.
Is globalization and free trade worth it? Let's look at the benefits and the negatives.
3. Globalization lets countries move closer to each other. People, companies and organizations in different countries can live and work together. We can exchange goods ,money and ideas faster and cheaper than ever before. Modern communication and technology, like the Internet, cell phones or satellite TV help us in our daily lives.
4. Globalization is growing quickly. A German company can produce cars in Argentina and then sell them in the United States. A businessman in Great Britain can buy a part of a company in Indonesia on one day and sell parts of another business in China the next, thanks to globalization. Fast food companies open shops around the world almost every day.
5. Globalization is not new. For thousands of years people have been trading goods and traveling across great distances. During the Middle Ages, merchants travelled along the Silk Road, which connected Europe and China.
6. The modern age of globalization started with the Industrial Revolution at the end of the 18th century. New machines were able to produce cheaper goods. Trains and steam-powered boats transported products farther and faster.
7. Since 1980, globalization has been moving at a faster pace. Today it is easier for companies to work in other countries. The Internet gives them the chance of reaching more customers around the world. Teleworkers work for firms that may be far away.
8. However , there is a growing debate over globalization. Governments are in favor of globalization because the economy can grow. Other people are not so sure that there are only advantages. Here are some arguments from both sides:
The Good of Globalization
9. Globalization lets countries do what they can do best; this is called comparative advantage. If, for example, you buy cheap steel from another country you don’t have to make your own steel. You can focus on computers or other things.
10. Globalization gives you a larger market. You can sell more goods and make more money. You can create more jobs. Consumers also profit from globalization. Products become cheaper and you can get new goods more quickly.
11. Some say that globalization leads to less wars as nations pursue more peaceful solutions to problems since we are all interdependent.
12. Free trade lowers prices and inflation for consumers and there is a less chance of war between trading nations.
The Bad of Globalization and Free Trade
13. Globalization causes unemployment (job losses) in industrialized countries because firms move factories to places where they can get cheaper workers. Some countries impose tariffs on imports from countries to lessen unemployment. A tariff is a tax on imported goods from another country. A tariff increases prices of goods for the importing country.
13. Globalization may lead to more environmental problems (pollution, wildlife endangerment, water and soil contamination, etc.). A company may want to build factories in other countries because environmental laws are not as strict as they are at home. Poor countries in the Third World may have to cut down more trees so that they can sell wood to richer countries.
14. Globalization can lead to financial problems. In the 1970s and 80s countries like Mexico, Thailand, Indonesia or Brazil got a lot of money from investors who hoped they could build up new businesses there. These new companies often didn’t work, so they had to close down and investors pulled out their money resulting in investors losing money and workers losing jobs.
15. Some of the poorest countries in the world, especially in Africa, may get even poorer. Their population is not as educated as in developed countries and they don’t have the new technology that we do.
16. Human, animal, and plant diseases can spread more quickly through globalization.
17. Many experts say that we need a different kind of globalization in our world today. There must be ways to make sure that all countries profit from the good sides of globalization. We should help poorer countries by giving them better education and showing them how new technology works.
18. A country becomes more independent and increases the number of jobs and pay for its workers when it protects it workers with tariffs by not buying into the globalization movement and this creates more patriotism.
18. Every year, leaders of the world’s biggest industrial countries get together to discuss economic problems. This meeting is called the G8 summit. In the last few years groups against globalization have organized protest marches and demonstrations to point out that not everyone is happy with how the world's economy is developing.
Free Trade vs Protectionism Summary
Free trade is part of globalization and occurs where there are no government interference in trade between nations.
Protectionism is a government's policy against free trade. Governments that don't like free trade impose tariffs or taxes on imported products from other countries to protect their workers and business owners from foreign competition.
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