Globalization

Over the past several decades, globalization has brought economical change, technological change and cultural change. From a global perspective, the interconnectedness of globalization can include increasing amounts of global trade, production processes, financial investments to political interaction, and social and cultural contact. As defined in the textbook, globalization is defined as the shift toward a more integrated and interdependent world economy. The national economies that were once separate entities and isolated from each other are now merging together and forming a more global and economic system. The trend towards greater globalization over the second half of the twentieth century can be explained by the decline of trade barriers, including international marketing and outsourcing, technological change, including communication and transportation, and international trade running the global economy.

Decline of Trade Barriers

One factor that aided the growth of globalization was the decline in trade barriers of goods, services and capital. During the 1920’s to the 1930’s, international trade barriers took the form of high tariffs on imports of manufactured goods. The idea was to protect domestic industries from foreign competition. The results from this contributed to countries raising trade barriers against one another and continued towards what is known as the Great Depression. After World War II, the GATT (General Agreement on Tariffs and Trade) worked to lower barriers to the free flow of goods and services. The lowering of trade barriers led to the globalization of production and market. According to “CSIS Globalization 101-Trade and Globalization,” the volume of world trade since 1950 has increased from $320 billion to $6.8 trillion. The trade of manufactured goods exceeds the increase of the rate of production of these goods by three times. As international trade barriers are lowered, businesses are now able to market globally as opposed to their own country. As businesses are able to use resources from other countries to market products, this will change the way products are made and produced.

Technological Change

The advancement of technology has changed drastically since the end of World War II. The improvements towards technology were highly seen in communications and transportation. The development of wireless technologies changed the way individuals communicated, both locally and internationally. The basic concept of cellular phones began in 1947, but it wasn’t until 1968 where the FCC increased frequency allocation, freeing the airwaves for more mobile phones. As technology increased in telecommunications and became readily available, the prices of phone calls decreased. As a whole, businesses benefited because as prices fell, so did the cost of coordinating and controlling a global organization. In addition to cellular phones, the Internet and World Wide Web also emerged. The 1990’s was ultimately known as the “dot com” era, but really it was just the beginning of the internet boom. According to the “International Business: Competing in the Global Marketplace,” fewer than one million users were connected to the internet in 1990. It was forecasted that in 2005, this number grew to over one billion. The technological change in cellular phones and the internet made it possible for businesses to expand all over the world. For example, businesses can have an ecommerce website and allow purchases to be made inside and outside of the United States. In addition to the technological change of communication, transportation technology has also occurred. The development of commercial jet aircraft

have significantly reduced travel time around the world. Containerization also became increasingly important for transportation