Globalization

Economic Aspects

Although globalization can and does entail a variety of dimensions, the term commonly refers to economic links and processes. Economic globalization concerns the expansion of production, trade, consumption, savings, and investment to markets beyond national and regional ones. Although trade has always crossed national boundaries, from spice routes to the East, to trade in the Roman Empire, to international shipping between Europe, Africa, and the Americas, the level of international trade has skyrocketed since about 1980.

With strong encouragement from leaders in private enterprise, political leaders have pushed for the reduction in tariffs on the trade of goods and service across national lines. The Uruguay round of trade talks (1986–1994) of the General Agreement on Tariffs and Trade (GATT, established in 1947), created the World Trade Organization (WTO). The WTO, which began officially in 1995, is an international institution consented to by various partner countries. It has the power to enforce agreed-upon treaties and to mediate trading disagreements among member countries. Critics maintain that the WTO governance is not democratic and privileges an ideology of the free market over social values. In this view, economic globalization that promotes free trade and growth of production comes at the expense of weaker economies and nations (who consent to membership out of a very limited set of options), the rights and protections of laborers, and environmental health.

The increased international flow of commodities is a visible form of globalization, but the rise in global financial markets dwarfs the markets in goods. With the technological developments discussed below, trillions of dollars change hands every day electronically. In unprecedented ways, global capital and currency markets have reshaped economic investment. This is not to say that investment across national lines is new; foreign investment as a share of total investment is not larger today than it was in the pre–World War I period. Concerned about speculation as well as seeking to finance a global infrastructure, some economists, activists, and policymakers have called for a tax (like the so-called Tobin tax) to be levied upon global financial transactions.

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