Globalization in Economics and Its Consequences (Essay Sample)

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Globalization in Economics and Its Consequences
Globalization is the international incorporation of financial and labor markets (Palley 4). This process is controlled by corporations, through increased competition for profits and new markets. Businesses have ventured into opportunities in the global market, and embraced new technology, as a result of globalization. As for economics, globalization facilitates the expansion of trade, which is influenced by the global political environment. Technical innovation has increased the movement of financial and physical capital. Globalization is also controlled by economic policies, which seek to eliminate barriers to the mobility of goods between countries. Technical innovation, expansion of trade, and free flow of goods have been facilitated by globalization.
Expansion of trade, because of globalization, has driven the global economy forward. When it is combined with the development of markets fostering on trade, the result is a dynamic process of growth. Exchange of goods between countries has been brought about by improved welfare of trading partners. However, nations have opposed different kinds of trade, leading to conflicts. In 2008, some of the leaders of the United States advocated the reduction or limitation of foreign trade (Colander 5).The reason for this move was the rules of the North American Free Trade Agreement (NAFTA), which made it difficult to trade other goods (Palley 6). Trading over the international front has also decreased the demand for domestic goods.
Technical innovation is evident in many countries around the world. Today, production processes of companies with headquarters in New York take place in China (Palley 6). This process is controlled by integrated computers and electronic communication, which ensures efficiency in production (Colander 3). High quality goods are produced and shipped to the headquarters rapidly. Innovation has also lowered expenses incurred in transactions in the financial market. This has been achieved through removal of controls on international movement of money (Colander 4). Highly technical processes of production of goods have also been facilitated by technical innovation. Therefore, durable goods are present in the global market, because of technical innovation.
Elimination of barriers to the free flow of services, capital, and goods has been the major driver of globalization. During the 1930s, several nations introduced barriers to international trade (Palley 12). Nevertheless, after World War II, industrial nations of the West made a commitment to remove the barriers to free flow of goods (Palley 25). As a result, the removal of trade barriers made globalization possible. There was an explosive growth of trade, and economic development in countries that embraced the new way of trading. Countries began specializing in the production of goods in order to satisfy consumer needs.
The emerging Multi-National Companies (MNCs) is a significant aspect of both economics and globalization (Blinder 119). Big companies have been the main drivers for transfer of technology in developing countrie...