Globalization in economics refers to the increasing interdependence of national, regional, and local economies across the world through an intensification of cross-border movement of goods, services, technologies, and capital. It is one of the three main dimensions of globalization, along with political globalization and cultural globalization. Economic globalization primarily comprises the globalization of production, finance, markets, technology, organizational regimes, institutions, corporations, and people.
Some key features of economic globalization include:
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Global supply chain: The global supply chain consists of complex interconnected networks that allow companies to produce, handle, and distribute various goods and services to the public worldwide.
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Free trade: Governments worldwide have integrated a free market economic system through fiscal policies and trade agreements over the last 20 years. The core of most trade agreements is the removal or reduction of tariffs.
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Foreign direct investment: Foreign direct investment has increased from 6.5 percent of world GDP in 1980 to 31.8 percent in 2006.
Globalization has led to increases in standards of living around the world, but not all of its effects are positive. Some benefits of globalization include greater efficiency through competition and the division of labor, greater opportunity for people to tap into more diversified and larger markets around the world, and access to more capital, technology, cheaper imports, and larger export markets. However, some negative effects of globalization include job losses in developed countries due to outsourcing, exploitation of workers in developing countries, and environmental degradation.
In conclusion, economic globalization is a historical process that refers to the increasing integration of economies around the world through the movement of goods, services, and capital across borders. It has both positive and negative effects on different countries and people around the world.
