Nowadays It is very common to hear the word ‘Globalisation’, especially when people talk about technology and how easy is to communicate from anywhere around the world through social media. The truth is that there is more beyond the surface of this concept. What is it then? Have you ever thought of all the processes involved? or What about the factors?
Before going any further, it would be interesting to mention that globalisation has a long history, from stone age trade of materials like obsidian to the actual world trade. But in between, there were other events such as the spreading of the ancient Greek culture, The Silk Road (trade of goods and foods), the spread of Christian religion in Latin America or the Manilla Galleon also known as La Nao de China (The China Ship) which was a trade route between the Philippines and Mexico that, eventually, created also a cultural exchange.
The turning point in the history of globalisation was the Industrial Revolution. The introduction of factories, some supplied with raw material from distant places, and the exportations of the products were the key to the beginning of the acceleration of it. Although the information age, transportation and the already mentioned world trade, among other factors made it to grow into its modern form.
The main idea of Globalisation is connection, but the concept is bigger than that and to make it easy to explain how it works we’ll break it down in three parts: processes, dimensions and factors.
Processes
Globalisation is a set of processes linked together. These are economic, political, cultural and social interconnected spheres.
The economic process is characterized by the flow of capital, the creation of the World Trade Organization (WTO) which establishes rules in a global scale and supports economic development, and global corporations always expanding and growing in the market. The intention of the economic globalisation is to disappear trade barriers to create a bigger economic integration and therefore the internationalization of trade and finance. This process has been accelerated by the advance of science and technology giving the economy the facility to spread rapidly due to the reduce of costs and time in travel and communication between nations and organisations. The economical interconnectedness has also its ups and downs, for example, the financial crisis of the US in 2007 ended up affecting other countries very quickly.
How could this be accomplished? What’s the role of governments? Well, here is when politics comes to the picture.
To have a free movement of goods, capital and so on, it is necessary the cooperation of governments, so they can reach certain agreements depending on their interests. Some examples are the formation of political organisations like the European Union, NAFTA or Mercosur. As globalisation increases, the expansion of a global political system sets a way to tackle international issues, a good example of this is creation of the United Nations (UN). It has been said that this idea trends towards multilateralism, because a few years ago nation-states were responsible of everything happening inside their countries like security, human rights and welfare of their citizens. Now, political activity occurs at a global level through international schemes and movements.
As you probably might be thinking, the processes mentioned above have implications in the Cultural and Social spheres. The cultural globalisation has become more visible because of our global consumption and the mix and change of societies. The expansion of markets and the intensification of social relations have led to a homogenisation or standardisation of simple things such as clothing styles, nowadays it’s very rare to see people wearing regional clothes especially in big cities. For example, the traditional wear in Japan has been mostly replaced by modern clothes in cities like Tokyo. Entertainment, food and language are other examples of how globalisation is shaping a change in our societies. It’s very easy to watch films from other countries or going to an Indian restaurant to enjoy curry.
The social process is an important thing, it impacts on the work of people and life in general. As corporations expand they look for developing countries to move their factories and, by doing so, they don’t need to pay good wages because the cost of live in those countries is lower than in a city like London. It’s a way to reduce costs.
At this point it must be clear that connection through trade and other forms (i.e. technology), links people and places in a global scale, making lands interdependent and societies more dynamic and exposed to combination with a wide number of cultures and ideas. It is essential to see and understand globalisation from a geographical perspective. This will give you the ability to interrelate the processes and create your own opinions about this topic, it will also help you to recognise the advantages and disadvantages of it and detect that the environment is also involved and affected in these global changes.
Dimensions of globalisation
There are some significant aspects related to globalisation, each one playing a substantial role in the four processes. These are:
Flows of capital.
It is the movement of money (capital) for investment, production and trade by citizens and corporations through the world’s stock markets. By doing so, companies attract investors who buy shares of ownership.
Labour.
Lots of people tend to migrate to places where they might be able to improve the quality of their lives. A good example of this is the situation of Africans trying to go to Europe, some of them end up their journey in the Island of Malta where they are needed as construction workers due to the rapid development across the island.
Products.
The flow of products has widened because of the reduce of transportations costs and cheap labour, therefore the production has multiplied.
Services.
These services try to help the customer in different situations according their necessities. For example, DHL provides international courier and other mail services around the world, another example of a service are flights. Airlines offer you an air transport service to take you to anywhere you want.
Information.
We are experiencing the information era were the internet pays the central role giving us the opportunity to connect the world. It is possible to know the news in any part of the globe as soon as it happens. When a natural disaster hits a place, countries offer their assistance within minutes, for example, in the recent earthquake and tsunami in Indonesia the UK, Australia and New Zealand pledge aid.
Global marketing.
It is the way of how companies promote their product or services in all the countries where they have expanded on, so people will be attracted to it. In order to make it a success it is important to consider the marketing mix also know as the four P’s: product (design, branding), price, place and promotion (advertising, message).
Patterns of production.
Also called Business as usual (BAU), It is the way that production has been done for a long period of time. Our actual BAU is the exploitation and management of fossil fuels and natural resources in large quantities. This activity has terrible environmental impacts, and we can se it in the destruction of more than 80% of the Southeast Asia forests because of the palm oil production.
Distribution and consumption.
Linked to the patterns mentioned above, our consumption has led to an excessive production to satisfy the need of not only one place but the whole world, here is when distribution takes part. At first the production of avocado wasn’t as big as it is now, but the demand of this product has increased the production to be have the capacity to distribute to many countries. What are the implications? More space for the plantations, more cheap labour and more use of fuel for the distribution.
Factors in globalisation
Factors are the fuel of globalisation and the reason why we have this process in its modern form.
Development of technologies.
Science and technology are the key factors on the acceleration of globalisation. These two have shrunk the world in time and therefore costs, also have facilitated the communication between nations in so many ways. Today anyone can buy something online and have it the same day.
Science and Technology are involved in almost everything we know and use, and your smartphone is a proof of it. With it, you can connect to people, buy anything from anywhere, communicate to anyone, have access to information and news, find transport, read books, listen to music, watch videos uploaded by people in different parts of the world, you can also check the weather and even check the stocks. That’s globalisation and a clear evidence of the power of technology.
Financial
The financial system is a scheme to facilitate the flow of financial capital for enterprises and nations. The purpose of it is the investment and the facilitation in transactions (imports and exports of goods and services, transfer of wealth and purchase or sale of assets) with the help of banks and financial institutions. In short, financial system will seek the right methods for a good management of capital. There are pros and cons concerning this financial integration because of its fragility, if something goes wrong, all the involved will be affected just as it happened with Greece in 2009 spreading to other European countries like Portugal and Spain.
Transport.
Transportation improvements have reduced the costs of production and distribution because it’s become cheaper and faster than a few decades ago, even the costs of ocean shipping have decrease significantly making possible the constant transport of large cargo ships. This factor has completely shaped the route of globalisation.
Security.
In globalisation, it is crucial to have stability, whether is social, political or economic, to avoid conflict and crisis; If one of the processes comes down, the others will follow since are strongly interconnected and interdependent to one another. When it comes to trade, nations and companies look for economic security, for is a factor to create and have good international relations and because a lot of information is at a stake.
Communications.
The modern communication has made the instant contact a reality no matter where you are. Communication in globalisation goes beyond social media. Global communication helps global organisations or corporations to thrive, as long as they have a good strategy. If a company wants to expand to another country it will be imperative to know about the culture to avoid gaps between the stakeholders.
Management and information systems.
Enterprises are completely dependent of information systems since are important to strategic decisions. These systems set the direction of everything happening inside as they are in control of the methods, ways of communication among the people who works in it, and management of information which is the management of intellectual capital (the value of a company, the intangible and the things happening when employees end their shift).
Trade agreements.
The promotion of free trade has had an influence in the political decisions of nations to reach agreements that will benefit the involved. The trade agreements open borders eliminating quotas and trade restrictions. In this case, the International Monetary Fund (IMF) serves as a moderator having the right to report anomalies and violations of the agreements.
The European Union and NAFTA are the most famous trade agreements. The first one has an internal market to assurance the so called ‘four freedoms’ which are goods, services, labour and capital through a system of laws. The second one is the North America Free Trade Agreement, signed by the US, Canada and Mexico and it consisted in the elimination of tariffs in exports. The actual renegotiation is set to change the name to USMCA United States-Mexico-Canada Agreement.
To sums this up, globalisation is what it is because of technology. All of this, is controlled and ruled by governments, organisations and businesses for the purpose of trade, investments and the creation profits.
So, what is globalisation? It would be great if you make your own definition of what you understood. Here is an example by the Royal Geographical Society, so you can compare it with yours:
‘Globalisation is the increasing connections between places and people across the planet, established through trade, politics and cultural exchanges, and helped by technology and transport’.
Frequently Asked Questions
What is globalization, and what are its key drivers?
Globalization is the process of increased interconnectedness and interdependence among countries and regions. Key drivers include advances in technology, international trade, and cultural exchanges.
What are some positive impacts of globalization on the global economy?
Globalization can lead to economic growth, job creation, increased access to products and services, and improved standards of living in many parts of the world.
What are some challenges associated with globalization?
Challenges include income inequality, cultural homogenization, environmental degradation, and the vulnerability of economies to global economic crises.
How does globalization impact national sovereignty?
Globalization can diminish national sovereignty as countries may need to comply with international agreements and organizations, which may limit their control over certain policies.
How can nations harness the benefits of globalization while mitigating its negative consequences?
Nations can strike a balance by pursuing policies that promote economic growth and social well-being while also safeguarding against negative impacts, such as regulatory measures and social safety nets.