Economic globalization depends on national market economies opening up to the world.
Globalization describes the process by which the world becomes more deeply interconnected in all spheres. Economic globalization is the process of that interconnection relating to employment and the production of goods and services across national boundaries. According to the International Monetary Fund, or IMF, a "globalized" country typically benefits from a population who enjoy a relatively high standard of living when compared to countries that are not globalized.
Definition of Economic Globalization
According to United Nations University, economic globalization is "the free movements of goods, services and capital across borders." This process allows more powerful, richer economies to find new markets across the world, while bringing new economic opportunities to countries that are prepared to "globalize." Although most obviously associated with the trade of goods and flows of money, globalization also includes the movement of workers and technological knowledge around the world. A global marketplace means that multinational enterprises have developed and are described by the Organisation for Economic Co-operation and Development, or OECD, as economic globalization's "key vector."
Information Technology and Global Connectedness
Developments in information technology have facilitated the acceleration of economic globalization. Through the Internet and telephone communication, business can be carried out across oceans. Globalized nations are integrated into the world's economy, trading internationally in a way that wasn't possible before the dawn of the "IT Revolution." Data transfer via the Internet also allows cultural data to be disseminated much more easily, allowing different countries to learn more about each other as long as the Internet is not state-censored, as is the case in China.
Foreign Direct Investment
Foreign Direct Investment, or FDI, is an investment made by a business with a view to pursuing interests in another country. The investor and its foreign affiliate company embody a multinational corporation. FDI sets up a long-term relationship, and as a result, the investor expects to gain meaningful interest over the "direct investment enterprise," the body operating in the foreign country that receives the investment.
International Trade
Globalization is made more difficult by barriers to international trade, and so globalizing forces seek to remove the barriers. Import tariffs make imports more costly. The IMF states that international trade "promotes economic resilience and flexibility," encouraging countries to specialize in their own profitable areas and then export their goods and services around the world. By 2007, the IMF states that 62.1 percent of the world's gross domestic product, or GDP, was generated through international trade of goods and services. Furthermore, the global amount of workers based in foreign countries jumped from 78 million to 191 million people between 1965 and 2005.
