economic dimension of globalization essay

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3 (page 37) p. 37 The economic dimension of globalization

• Published: April 2013
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‘The economic dimension of globalization’ explores how the way people have undertaken economic production has changed. The global economic order emerged after World War II, when the Bretton Woods Conference laid the foundations for the IMF, World Bank, and WTO. In the 1980s neoliberalism liberalized financial transactions. However, this unstable growth led to the Great Financial Crash, where banks traded toxic assets without regulation. Transnational corporations rival nation-states in economic power, and have had a profound effect on the structure and function of the global economy. The Washington Consensus was drafted to reform indebted developing countries, but it has thus far rarely helped countries develop.

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Economic Dimensions of Globalization

Introduction.

Changes in economic ideology as well as progress in technology have perpetuated increases in capital mobility between nations. The North now takes advantage of cheap labor and a favorable investment climate in the South. With the help of global financial institutions, it has been possible for elite nations to compel poor ones to assimilate into the global arena. These developing nations have altered the environment, foreign policy, and labor laws to meet such obligations. As a consequence, profits have grown for investors while poverty continues to increase. Economic dimensions of globalization are creating criticisms in certain countries and raising questions about their sustainability.

Drivers for economic aspects of globalization and their potential repercussions

Globalization has grown as a result of advances in technology. Transportation and communication have improved tremendously over the past few decades. This has made it relatively easy to move goods and people between borders (Micklethwait &Wooldridge 72). Investors do not need to spend a lot of money to transport their merchandise to global markets. Additionally, developments in information storage and processing have also revolutionized global trade. Business is now taking place at the speed of thought owing to advancements in information technology. The internet makes it relatively easy to locate suppliers, purchasers, distributors, and other global business partners. Furthermore, access to trading information is uncomplicated for those who want to target certain countries. This has leveled the playing field for new and old players in the global economy.

Regardless of these developments in technology, it may still be argued that the playing field is the only level for certain entities. Advocates of globalization claim that it may lead to the convergence of revenue in the international scene because poor nations will grow faster than rich ones if they tap into this phenomenon. However, it is no secret that economic globalization has brought about serious equity issues. Only a handful of emerging economies in East Asia are growing faster than rich ones.

The vast majority of poor nations in Central and South America, Asia and Africa are not reporting economic growth. Income disparities between wealthy and poor nations are growing at alarming rates because mostly the rich can tap into the technological developments that facilitate globalization. If poor wealth distribution continues, then the problem could perpetuate tensions between these nations; it may even lead to conflict.

Most countries in the global economy have embraced similar economic ideologies. The trend in the current global market is towards neoliberalism. This means that countries have reduced tariff barriers, deregulated their markets and minimized obstacles to the flow of capital (World Bank 148). This has opened borders and facilitated the flow of information, people and goods. Prior to the 1980s, the global trading region was divided into market economies and communist countries. Some countries like China saw the benefits of trade liberalization and instated economic and political changes to enjoy these gains. Central and European countries ended their support for communism after the collapse of the Soviet. Now the world is converging towards similar market ideologies. Nonetheless, Neoliberalism or the general liberalization of trade did not come as a unanimous decision among all world players. To a certain extent, it was forced upon poorer countries through global financial institutions.

The convergence of economic ideologies has not come without a price in the global economy. When most countries adhere to the same ideology, then this may expose other global markets to instability. Investors may assume that all the forces needed to perpetuate neoliberal economies are in place and may flood a market. This could cause financial crises in those host nations as well as in the global economy. A case in point was the Asian crisis of 1997 (Steger 51).

South East nations wanted to draw foreign investments, but they did not work on all the macroeconomic conditions that were needed to make neoliberalism work. Foreign investors were not aware of these flaws, so they quickly moved into those nations. The result was an economic crash that devastated the members of these nations. The crisis could have spread to other countries had an international bailout not been put in place. It may be argued that the global economic crisis is also another casualty of this convergence of economic ideologies. Trading patterns in the global North revolve around hedge funds and other futures stocks. This came from an excessive belief in the validity of the market. The 2008 global crisis was a result of these crashes, and thus demonstrates the vulnerability of nations to market changes.

Global financial institutions have played a large role in facilitating economic globalization. The International Monetary Fund, as well as the World Trade Organization, has been at the forefront of the neoliberal movement. The IMF and the World Bank were initially created in order to restrain communism. However, after this goal was achieved, the body soon became a creditor nation to developing nations. It provides them with loans that are supposed to perpetuate growth in the global economies.

Sadly, the latter goal has not been achieved. Instead of growing the developing nations, loans from global financial institutions have perpetuated dependency of poor nations on rich ones. Many of them can only access loans after abiding by structural adjustment programs. These rules have opened up borders in developing nations without leaving room for protective, state-led interventions (Hertz 109). Furthermore, since loan recipients are obligated to reduce public expenditure, many of them cannot invest in poverty alleviation programs.

The grants they receive are often misused by political leaders. If this is not the case, then many of them must deal with huge debt repayments. In fact, several African, Asian and South American countries that rely on the World Bank or IMF must forego developmental plans to service these loans. They are trapped by a system that has now come to be known as neocolonialism. This aspect of economic globalization puts into question the favorability of the phenomenon for poor nations.

Transnational corporations also explain why economic dimensions of globalization are evident today. Companies that initially dwelt on local markets have now expanded their contacts to the international environment. Multinational firms now enjoy greater productivity, control, and profits due to globalization. It was the ease of availability of resources in global markets, availability of larger markets, and the capacity to respond to changing market conditions that led to these changes. Some of these organizations have entered into strategic alliances with other firms throughout the world. Multinationals have also found ways of surpassing national economic barriers to meet their own interests (Stiglitz 38).

The latter approach brings into question the viability of globalization for the masses. Multinationals have become so powerful that they now play a significant role in the economic and political landscapes of targeted countries. Some of them have mastered production networks such that they can circumvent nationally-based worker organizations. These tactics have shown how transnational firms are not committed to ethical production.

Consumer lobbyists have launched attacks against multinationals on the basis of these inclinations. Several North American buyers of Nike shoes have boycotted the purchase of their commodities owing to their abuse of laborers as well as their employment of unfavorable employee conditions. In addition to challenges in production, some individuals feel that transnational firms are now holding their countries at ransom. If a multinational is so big, it can use this as leverage to arm-twist its production base. A case in point was the association between Nokia and its key production site- Finland. The country heavily depends on Nokia to support its economy. In fact, almost 67% of the stock market value in the country comes from Nokia. Furthermore, 20% of all exports in the nation are Nokia products (Steger 43).

This has given the multinational a lot of clout in the country. The cell phone maker witnessed a decline in revenue at some point and criticized the company’s corporate taxes for that result. The Finish government, in turn, responded by meeting the demands of Nokia’s managers. This came at the expense of the nation’s welfare system. Such domination by a transnational organization indicates that sometimes favorable economic policies for citizens will be sacrificed for the needs of these groups.

Globalization has created opportunities where few existed. However, this has come at the expense of inequity in resource distribution among nations. It has given transnational corporations too much clout, such that some of these bodies are misusing it. Furthermore, it has led to the economic vulnerability of global nations and failures in a few markets.

Works Cited

Hertz, Noreena. The Silent Takeover: Global Capitalism and the Death of Democracy . London: Heinemann, 2001. Print.

Micklethwait, John and Adrian Wooldridge. A Future Perfect: The Challenge and Hidden Promise of Globalization . New York: Random House, 2000. Print.

Steger, Manfred. Globalization: A very short introduction . Oxford: OUP, 2003. Print.

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World Bank. Globalization, Growth, and Poverty: Building an Inclusive World Economy. Washington DC: World Bank and New York: Oxford University Press, 2002. Print.

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Effects of Economic Globalization

Globalization has led to increases in standards of living around the world, but not all of its effects are positive for everyone.

Social Studies, Economics, World History

Bangladesh Garment Workers

The garment industry in Bangladesh makes clothes that are then shipped out across the world. It employs as many as four million people, but the average worker earns less in a month than a U.S. worker earns in a day.

Photograph by Mushfiqul Alam

Put simply, globalization is the connection of different parts of the world. In economics, globalization can be defined as the process in which businesses, organizations, and countries begin operating on an international scale. Globalization is most often used in an economic context, but it also affects and is affected by politics and culture. In general, globalization has been shown to increase the standard of living in developing countries, but some analysts warn that globalization can have a negative effect on local or emerging economies and individual workers. A Historical View Globalization is not new. Since the start of civilization, people have traded goods with their neighbors. As cultures advanced, they were able to travel farther afield to trade their own goods for desirable products found elsewhere. The Silk Road, an ancient network of trade routes used between Europe, North Africa, East Africa, Central Asia, South Asia, and the Far East, is an example of early globalization. For more than 1,500 years, Europeans traded glass and manufactured goods for Chinese silk and spices, contributing to a global economy in which both Europe and Asia became accustomed to goods from far away. Following the European exploration of the New World, globalization occurred on a grand scale; the widespread transfer of plants, animals, foods, cultures, and ideas became known as the Columbian Exchange. The Triangular Trade network in which ships carried manufactured goods from Europe to Africa, enslaved Africans to the Americas, and raw materials back to Europe is another example of globalization. The resulting spread of slavery demonstrates that globalization can hurt people just as easily as it can connect people. The rate of globalization has increased in recent years, a result of rapid advancements in communication and transportation. Advances in communication enable businesses to identify opportunities for investment. At the same time, innovations in information technology enable immediate communication and the rapid transfer of financial assets across national borders. Improved fiscal policies within countries and international trade agreements between them also facilitate globalization. Political and economic stability facilitate globalization as well. The relative instability of many African nations is cited by experts as one of the reasons why Africa has not benefited from globalization as much as countries in Asia and Latin America. Benefits of Globalization Globalization provides businesses with a competitive advantage by allowing them to source raw materials where they are inexpensive. Globalization also gives organizations the opportunity to take advantage of lower labor costs in developing countries, while leveraging the technical expertise and experience of more developed economies. With globalization, different parts of a product may be made in different regions of the world. Globalization has long been used by the automotive industry , for instance, where different parts of a car may be manufactured in different countries. Businesses in several different countries may be involved in producing even seemingly simple products such as cotton T-shirts. Globalization affects services, too. Many businesses located in the United States have outsourced their call centers or information technology services to companies in India. As part of the North American Free Trade Agreement (NAFTA), U.S. automobile companies relocated their operations to Mexico, where labor costs are lower. The result is more jobs in countries where jobs are needed, which can have a positive effect on the national economy and result in a higher standard of living. China is a prime example of a country that has benefited immensely from globalization. Another example is Vietnam, where globalization has contributed to an increase in the prices for rice, lifting many poor rice farmers out of poverty. As the standard of living increased, more children of poor families left work and attended school. Consumers benefit also. In general, globalization decreases the cost of manufacturing . This means that companies can offer goods at a lower price to consumers. The average cost of goods is a key aspect that contributes to increases in the standard of living. Consumers also have access to a wider variety of goods. In some cases, this may contribute to improved health by enabling a more varied and healthier diet; in others, it is blamed for increases in unhealthy food consumption and diabetes. Downsides Not everything about globalization is beneficial. Any change has winners and losers, and the people living in communities that had been dependent on jobs outsourced elsewhere often suffer. Effectively, this means that workers in the developed world must compete with lower-cost markets for jobs; unions and workers may be unable to defend against the threat of corporations that offer the alternative between lower pay or losing jobs to a supplier in a less expensive labor market. The situation is more complex in the developing world, where economies are undergoing rapid change. Indeed, the working conditions of people at some points in the supply chain are deplorable. The garment industry in Bangladesh, for instance, employs an estimated four million people, but the average worker earns less in a month than a U.S. worker earns in a day. In 2013, a textile factory building collapsed, killing more than 1,100 workers. Critics also suggest that employment opportunities for children in poor countries may increase negative impacts of child labor and lure children of poor families away from school. In general, critics blame the pressures of globalization for encouraging an environment that exploits workers in countries that do not offer sufficient protections. Studies also suggest that globalization may contribute to income disparity and inequality between the more educated and less educated members of a society. This means that unskilled workers may be affected by declining wages, which are under constant pressure from globalization. Into the Future Regardless of the downsides, globalization is here to stay. The result is a smaller, more connected world. Socially, globalization has facilitated the exchange of ideas and cultures, contributing to a world view in which people are more open and tolerant of one another.

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Related Resources

Globalization’ Economic and Political Dimensions Term Paper

Introduction, definition of globalization, political governance and globalization, pros and cons of globalization.

Globalization, in the contemporary era, is often regarded as revolutionary to political, social and economic structures globally. It has caused a “power shift” from the traditional nation-states to global institutions, a trend, which, according to some researchers, has created “virtual states” (Rosecrance, 1996).

Nation-states are slowly losing their political power to supranational organizations, regional non-governmental organizations (NGOs), devolved units and multinational companies. In this regard, globalization shifts political authority to different international institutions causing state institutions to converge under uniform international policies. Despite the power shift, political devolution can enhance the democratization process by facilitating the convergence of governance institutions.

Critics of globalization urge national governments not to relinquish governance functions such as immigration, national security and criminal justice to supranational agencies (O’Brien et al., 2000). They argue that if nation states lose these crucial governance functions, they become ineffectual and unpopular among its publics. Also, the power shift or deregulation enhances the power of non-governmental actors in public intervention areas, including environmental issues and humanitarian aid.

In major cities, such as Washington D.C. and Seattle, emerging political movements oppose the deregulation of international market and instead agitate for the protection of the local market (O’Brien et al., 2000). To understand the effects of globalization, this paper defines globalization, surveys its range and dimensions, and analyzes its pros and cons in the contemporary world.

Keohane and Nye (2000) define globalization as “the expansive networks that span intercontinental distances (p. 105). Thus, globalization covers many aspects of global politics, from the diminishing political power of nation-states (political globalization) to the homogenization of culture, trade policies, consumption and living standards (economic globalization).

Analysts attribute these changes to the elaborate transportation and communication networks. In this view, globalization encompasses linkages that lead to political and economic interdependence globally.

One important element of globalization is global economic integration. Economic integration, though not yet complete, has led to reduced trade barriers among nations, increased labor mobility and led to a more interconnected global economy. It is on this basis that Friedman (1999) defines globalization as “the inexorable integration of markets, technologies and nation-states, enabling corporations, people and nation-states to reach the rest of the world” (p. 7).

Friedman implies that globalization, though largely economic, also has a political dimension. It is the political decisions of nation-states to remove trade barriers in order to promote international trade and facilitate transportation and communication, which leads to globalization. Therefore, to understand the pros and cons of economic globalization in the U.S., understanding the role of political governance is important, as the two are intertwined.

Nation-states often exercise sovereignty and have legitimate authority within a country’s borders. They are controlled by one central governance unit, which has sovereign authority in the nation-state. In contrast, international trade corporations, supranational agencies and NGOs are part of the larger global governance system, i.e. international governance.

This shows that globalization has links with political governance of nation-states. Within nation-states, these links have three dimensions (Rosecrance, 1996): the centralization vs. the devolution of governance; political accountability; and the divergence or convergence of policies.

Typically, governance can be devolved or concentrated in a central authority. In a centralized governance structure, power is vested in one unit, which has exclusive authority to rule. In contrast, in dispersed governance, many devolved units exercise limited power within the nation-states. An example is the United States’ government; the state government has some level of jurisdiction within the specific state. In a multi-level governance structure, authority is transferred or delegated to other units (Rosecrance, 1996).

Globalization affects governance with regard to international disputes. In resolution of disputes, nation-states often delegate their sovereign power to a third entity to serve as an arbiter, with a pledge to comply with its determination. Therefore, globalization affects governance in nation-states through delegation of power.

The second dimension, political accountability, is related to the delegation of power. Accountability requires political actors to govern transparently and responsibly. Democracy within nation-states entails political accountability, whereby the elected leaders are mandated to act on behalf of the citizenry.

Keohane and Nye (2000) note that democracy, unlike accountability, does not extend beyond the borders of a nation-state. Although, democratic accountability is applicable to financial institutions such as the IMF, most NGOs associated with globalization lack internal democracy. Therefore, globalization affects governance through political accountability and democracy.

Globalization also affects governance through convergence or divergence of policies. Although globalization may not completely erode the roles of the state government, it may create countries that have more or less similar policies and governance structures.

Opponents of globalization argue that a globalized economy will force nation-states to adopt homogeneous policies and establish similar institutions (O’Brien et al., 2000). Also, globalization may lead to reduced government intervention in matters affecting its people. This may affect democratic accountability within nation-states.

Economic Effects

The effect of globalization on the economies of nation-states can be explained using the efficiency-based approach. The common economic policies of many countries are geared towards creating wealth; they entail opening up the markets to international investors.

Thus, according to Friedman (1999), internationalization of markets influences countries to adopt “neoliberal policies that promote international openness, reduced government participation and increased private investments” (p. 8). Therefore, one disadvantage of globalization is its larger control of the economic benefits, through reduced government role in nation-states’ economy. The international organizations dominate the local economic spheres limiting the societal issues the government can act on.

Globalization also causes a shift in power from the government to supranational and regional bodies. When this happens, resolution of transnational problems provides an avenue for the supranational authorities to expand their authority; an example is the EU and the North American Union. Also, regional institutions can position themselves strategically to protect their interests through transnational cooperation.

Such economic integrations influence the policy preferences of the nation-state political actors. According to Rosecrance (1996), economic globalization may cause trading countries to adopt similar trade policies; a phenomenon that has far-reaching implications on bilateral relations between states. Nevertheless, globalization expands opens up national and regional markets by disintegrating local monopolies in favor of international competitiveness.

Political Preferences

Rosecrance (1996) argues that economic integration facilitates free flow of labor and capital across the borders and fosters specialization and division of labor in the global arena. In a free economy, some countries may lose or gain in the wake of economic globalization. However, the aggregate benefits in the long run would compensate for the costs associated with globalization. Rosecrance (1996) further shows that free trade policies affect many factors of production.

For instance, labor and capital flow in the tourism industry will tend to favor certain trade policies in a trading bloc. Globalization also increases the number of players in favor of particular policies including activists and environmentalists, which ensures quality goods or services. However, marginalization of certain groups may arise and spillover into national politics leading to a struggle whereby the losing parties will attempt to derail integration while the winners will press for greater integration.

Proponents of globalization have a preference for particular policies and models that encourage economic openness. Also, some integration players prefer certain forms of governance more than others.

For example, in the United States, most NGOs prefer some level of regulation (consumer protection and labor regulation) at the national level rather than at the state level (Frieden, 1999). Integration critics argue that actor preferences for institutions such as the International Labor Organization tend to favor more stringent regulation of firms, which may affect their performance.

Besides policy preferences, convergence of cultures often leads to a homogenization of cultures, values and lifestyles. Critics argue that globalization erodes national cultures and creates new societal norms (Frieden, 1999). Thus, due to globalization, the consumption culture, market competition, education and public goods may become homogenous across nation-states. Such a scenario may ultimately influence policy preferences whereby policymakers prefer decentralized policies to centralized and localized policies.

Global Institutions

Most global institutions advocate for policies that favor particular interest groups. As Frieden (1999) notes, international institutions such as the UN influence the interactions at the international level, which affect economic and political outcomes. One way in which institutions affect globalization is through policy preferences. Influential political entities that favor a particular economic model would establish institutions to promote their ideals.

For instance, before 1914, the gold standard agitated for an open economy by removing barriers to international trade in the 19 th century; it, however, faced much domestic opposition from the American populists (Frieden, 1999). Thus, decentralized institutions can foster economic openness if they have political support.

The stability of a country’s governance also influences policy choices and investment decisions by international organizations. For example, countries with unstable governments will have fewer external investors willing to invest there as political instability is often associated with ineffective economic policies. Thus, under conditions of political instability, perceptions held by global and regional organizations such as the NAU, WTO or the EU will influence investment decisions of international corporations.

However, policy credibility can be enhanced if such governments sign bilateral treaties with stable governments. For instance, Mexico’s ratification of the NAFTA treaty reinforced its policy credibility at the international level (Frieden, 1999). Thus, regional and global institutions influence the local economic policies in a way that sustains a market economy and competitiveness.

Globalization has two dimensions; economic and political dimensions. Governance has links with globalization with regard to political institutions, cultural values and societal norms. From a cultural perspective, globalization erodes cultural values and norms through the convergence of cultures. Also, due to the interconnectedness of the different economies, financial crises in one part of the world affect the economies of other countries.

However, globalization promotes cultural tourism through the convergence of cultures and promotes competitiveness and democracy. Also, globalization, through supranational governance influences financial and monetary policies of nations and regional trading blocs resulting in greater economic benefits to member states. Overall, the phenomenon of globalization has far greater benefits for nation-states than disadvantages.

Frieden, J. (1999). Actors and Preferences in International Relations . Princeton: Princeton University Press.

Keohane, O., & Nye, S. (2000). Globalization: What’s New? What’s Not? (And So What?). Foreign Policy, 118 (4), 104-109

O’Brien, R., Goetz, A., Scholte, J., & Williams, M. (2000). Contesting Global

Governance: Multilateral Economic Institutions and Global Social Movements . New York: Cambridge University Press.

Rosecrance, R. (1996). The Rise of the Virtual State. Foreign Affairs, 75 (4), 45-61.

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This chapter analyzes shifts in the world economy since the 2008–09 downturn and their repercussions for advanced industrialized countries and developing/emerging markets. Time series data indicate that the global economic position of emerging markets significantly strengthened during the post-recession period. This development signals an enduring transformation of relations between developed countries and emerging markets, with major implications for global economic governance.

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Economic Dimension of Globalization.

Globalization is something that cannot be stopped. It is a phenomenon that started gradually, and it is set to continue. It is not a new phenomenon. It is a process that has seen the world being interconnected through different systems. There has been interconnectedness, and the world has shrunk especially in terms of space and time. The world feels small, and the distances between countries feel smaller too as compared to how it was. Globalization has been felt in many areas be it politics, economy, technology and many other frontiers. The world has been thrown into globalization, and we can say that it has accelerated a lot of the growth in the world today. Globalization is happening fast, and people are replacing nationalism with globalization. People have seen the importance that is attached with globalization, and they have embraced it fully. Globalization has made the world be like a single village that can be accessed within a day.

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Thanks to technology, we can now communicate with someone in America like we are having a face to face chat. Globalization has created a lot of business opportunities, and today we share the same cup of coffee just like the people in America thanks to the globalization of businesses. Today, the same cup of coffee served in America, is the same served in Tokyo, Cape Town, Shanghai and many areas. Businesses are no longer local but have gone international. Globalization has opened up borders and allowed free movement of both people and money. This means that more countries are now working together for the common good of the people. It cuts across national boundaries, through globalization there is free movement of people and goods, information, ideas, ideologies, and many other things.

One of the greatest dimensions of globalization that has happened is economic globalization. It is no longer a secret that globalization has worked so much on economic aspects of the world today. Globalization has been felt in free trade, privatization, deregulation and liberalization. It can be looked up as modernization that is speeded up. Through economic globalization, the monetary and fiscal policies are dominated by a lot of movements in the international financial markets, and this reduces the autonomy in terms of economy of nation-states. Economically, globalization has taken the world as a single unit and marketing has been enhanced. There are a lot of open and free markets which enhance free trade that experiences less regulatory obstacles. The economies surpass boundaries, and this leads to integration into international markets. The key issue here is to probe ourselves and ask questions that can make us understand it more. What has the economic dimension of globalization led to in the world that has seen the growth of the world economy? What spurs the growth of economy in terms of free trade and other limits? What role has the international financial institutions played in the growth of the economy today?

It is not a myth that globalization has had an impact on all spheres of the universal life, but looking at the impact on the economic dimension we see an area that has had a lot of changes thanks to globalization. The dimension is far more prominent than any other area. The economic dimension has had changes in a lot of its spheres. There has been the breaking down of the barriers in national economic activities, the spread of trade especially internationally, financial and production of activities as well as the growing power of the transnational companies that are establishing markets in new areas. The emergence of international financial institutions has also had an influence in this dimension. All these factors have contributed to the growth of new economies and creation of an impact in economic activities all over the globe. All these have been due to the impact that globalization has had on the economic dimensions of the universe.

The introduction of speed and extent of foreign investment has had a lot of influences on the instant flow of capital in the whole world. Many multinational companies have moved into new markets where they have found cheap labour, even the people themselves move to different areas where they get new jobs hence exposing themselves to different cultural worlds. It gives the model of free world market that does not have any restrictions and allows mobility. There has been a mass culture that has seen the world encompass the society. With new neo-liberal thinking, the world market has to efficiently fulfil its duties especially to allocate the functions that will guide the flow of goods, services, capital, and labour. This can be seen as moving the neo-liberal market model especially of the domestic economy into the world market. This means that people and enterprises have been moved from the nation-state constraints. These nation-constraints always have a limitation to the free flow of goods, services, and knowledge.

The economic dimension has been explained in terms of the ever-increasing interconnectedness as well as interdependence of the enterprises that is offered through the world market. This comes from the aspects of world trade, foreign investments, a consumer market that is world-wide, concentration of the markets as well as international labour migration. The major characteristics of the economic globalization include the free trade and free flow of money (Georgiou, 2015, pp. 365-370). The international economy today is no longer divided into separate national economies. This means that we are moving away from the national economy into an international economy. The economy is no longer divided vertically, but there is a horizontal division. There has been the replacement of the physical boundaries. The emergence of the free markets all over the world has set the world into a new structure in terms of the marketing policies.

Finances come in to represent a mechanism that binds the diversified structures that creates a vital network. This sees new structures in terms of prices of all goods, services and establishment of equities. Central to globalization is the aspects of direct investments and international trade. This is made possible by the removal of the barriers that happen in production, the information as a result of the ongoing progress in technology, and the domination of the utilitarian ideology (Georgiou, 2015, pp 365-360). With advancement in information technologies and fast information that is transferred at low costs, there is the creation of an image that represents global knowledge of the economic players in terms of the business environment. The development of transnational companies has had greater impacts to the trending globalization. These companies dominate economically in new territories and most of these countries financial systems have become part of the transnational financial structures.

With economic internationalization, we have seen many of the multinationals growing with this trend. What has played the biggest role herein is the international financial institutions like the International Monetary fund (IMF) and the World Bank. This means that the functioning market system is far much pronounced in individualism of the players. The institutions have spurred a lot of growth in terms of economy and have seen the advancement in terms of the financial services

Globalization has enhanced the issue of free flow of trade and services. This can be seen in terms of the establishment of World Trade Organization (WTO) which is an institution that has enhanced and improved trading in the world today. The introduction of the multilateral trading system and end of national economies has greatly helped and influenced the economic activities. There has been a lot of globalization of financial markets which has been done through the introduction of foreign direct investment. Something else that interests the analysis is the integrated production and functioning of multinational companies. This has seen the enhancement of liberalization especially in terms of investment. Infrastructural development, other aspects like Trade-related Intellectual Property Rights

We can say that liberalization is whereby there has been reduction in restrictions especially in areas that touch on economic and social aspects. This can be looked at in terms of trade liberalization or liberating the capital markets. This is what is called the neo-liberalism and has had a lot of influence on the economy today (Georgiou, 2015, pp. 350-365). The freeing up of markets and reduction in terms of the roles that governments play in issues to do with ownership and control of the means of production has seen a major revolution in terms of policies that have had an influence on the dimension. Markets have been freed up and the boundaries being removed.

We can say that globalization is a form of a complex connectivity. The growth in interconnectedness and interdependencies has characterized the modern life. There has been intensification of the life, and the economies of the world have had their share of influence. The world has seen a shift in terms of the world economy and this shift has had a lot of influences. With the aspects of Foreign Direct Investment, the impact on the economic growth has seen tremendous and positive aspects. The major characteristics of the economic globalization include the free trade and free flow of money (Morita, Takatsuka and Yamamoto, 2015, pp. 492-498). The international economy today is no longer divided into separate national economies. This means that the growth that has been experienced is a true testimony of the influence that globalization of the economy.

As much as the issue of globalization has had a lot positive influences, there have also been negative issues. This may have been seen in terms of accumulation of wealth. The world today is experiencing a lot of wealth that is in just few hands. The aspects of globalization have seen this accumulation of wealth and today as it stands almost 79% of the total wealth is owned by less than one billion people in the world. This can be seen as a result of the process of globalization. This means that as much as there has been opening of boundaries, the free trade has benefited few people across the world. The opening of new frontiers in business has seen the concentration of just but a few multinational corporations opening all over the world. These multinationals are the ones that get the benefit.

Morita, T., Takatsuka, H. and Yamamoto, K. (2015). Does Globalization Foster Economic Growth?. Japanese Economic Review, 66(4), pp.492-519.

Georgiou, M. (2015). Economic Growth, Economic Freedom, Globalization and Entrepreneurship. SSRN Electronic Journal, pp.350-398.

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