The Drivers of Globalization
Globalization is the process of integration and interaction among organizations, government, and people across the world. It refers to the market integration in worldwide economy, leading to increase the inter connectedness of national economy. It brings many potential advantages to national economies and international manufacturers.
In this way, globalization allows global access to the sources of low-cost materials and enables the organization to be cost competitive in the local market and also global markets. As a result of increased revenue and cost reduction, globalization can make increased profit for shareholders.
Globalization has directed to increased inward investment flow among nations that generated benefits for beneficiary countries. Also, these benefits include the sharing if technology and knowledge between countries.
Along with that, globalization defines the current process through which regional cultures, societies, and economiesmix through the global system of trade, travel and communication, and cultural expansion (Liuet al. 2011).
Globalization has been a phenomenon since the beginning of the 19th century, and at present, it is possibly the most powerful force that shapes contemporary society, management, business, economy, etc.
This study aims to outline and examine the key drivers which made it possible for globalization to develop. Furthermore, this study also focuses on the extent of the drivers in regards to globalization.
Drivers of Globalization
Government, market, competition, and cost, those are the four key regions of drivers proposed for globalization. The fundamental state for the point of view of globalization is influenced by those external drivers.
Moreover,the parts that are remembered for the market drivers are movable marketing and the prerequisite of the basic consumer, wherever the appearance of international market place for institutionalized merchandise has enabled the companies to fulfill the requests inside the new marketplace through the flow items.
The impact of government is likewise a fundamental driver, through strategies coordinating to the reductions in the obstructions of trade and a move toward the open market economy.
Concerning the entreein the New Market and the Human Capital and in the territory of cost-advantage drivers, the company is equipped for increasing new “economies of scale” by finding the advantage of “low-cost production”through outsourcing and importingand selling at more noteworthy quantities.
In context to the “competitive drivers”, the developing trade among the countries in cooperation withFDI (“Foreign Direct Investment”) has helped to build up the association in the organization and countries.Furthermore, it also presenting the organizations to their new competitors (Fijnaut, 2012).
Now, this essaywill be based on three progressively exact drivers from those four regions; the distinctions of cost amid the nations, quickly changing innovation, such as the web and the decreasing quantity of trade barriers with regards to trade linearization.
Besides that, the word “Globalization” is phases of expanding interconnection had been displayed acrossworld, for example; the connection among Europe and Asia by Silk Road. Consequently, the explanation for the given accentuation of three drivers is because of their importance in controlling and coordinating the present propensity of globalization.
Then again, government’s trade policies help to presented the portal to their economy and the distinctions as far as cost offers incitements for investment funds, such as, the foreign organizations scanning for getting profit by low-cost economy, at the same time, the shiftingtechnology helps for quickening the fast dispersion of free enterprise by new methods of advanced communication and mobility.
So as to direct the worldwide financial position, various government has utilized approaches trade to control the quantity of importation and exportation of the nation.
A most extreme number of the preventivepolicies are planned for imports through the use of obstructions, such as traffic barriers and non-traffic barriers. In addition, liberalization on trade regarding service and product comes to be one of the significant parts of globalization (Glatzer, 2012).
Along with that, a critical inspiration for these activities is commonly connected with the experts of the market because of the reaction of various organizations to the choice of one individual to someone else about advancement, with most governments are profiting by advertise get to offered by other perceived government to the export enterprises.
For example; from when restructurings for changing commercial center in 1978, trade andthe maximumvolume of GDP growth is practiced by China.
Despite the fact that a general move toward a path to trade liberalization is all over the globe, different nations have some various degrees of liberalization and the policies dependent upon the periods of political elements, culture, and development (Labontéet al. 2011).
WTO is characterized as one noticeable overall association that supports trade liberalization and conveyed numerous decreases terms of hindrances of trade. In addition, WTO has the abilities not exclusively to actualize the current understanding of trade yet in addition to seek after the novel possibilities of trade liberalization.
Moreover, the special trading agreement can happen among the nations, i.e. “North American Free Trade Agreement” (NAFTA) and “European Union” (EU), where normal foreign trade policies, which are for the people. Despite the fact that worldwide trade has been progressively liberal, it has not had the option to have similar advantages for all nations.
For instance, after the marketliberalization, the appearance of subsidized and cheapagricultural product from the western nations to the poordeveloping nations of the South devastated numerous neighborhood manufacturers and expanded poverty, just like the Mexican corn (Jaumotteet al. 2013).
Contrasts in cost between nations
Because of the assortment of components, such as improvement, demography, and place among the nations, there is a distinction in the cost of production factors, land, labor, and capital. In this way, foreign investment and trade will likewise be expanded by this separation, and therefore, the globalization will be determined.
For example, in the city of Guangzhou, 10,000 workers exertion legitimate hours by sewing shoes for the organization, Nike. Along these lines, it gives organizations i.e. Nike an incredible impetus to work redistributed in China and another low-costeconomy, in which the products can be set up at a small amount of the cost contrasted with the developed nations (Bernardet al. 2011).
As stated by Baldwinand Forslid (2010), in garments organization, a few quantities of trade have gone to the developed nation in which the boundaries for section are nearly small and just need least degrees of financial progress in the host nation.
For example, the mobile stageof “Intel Centrino Duo”, was nearly created in the Indian center of Intel. During the time of expanding the wages alongside the economic evolution, the production may be moved to a more low-cost economy. In this way, the assorted variety of uses isn’t just explicit to human capital however in numerous different zones as a product, which might be impacted by the topographical area of the nation.
The quick change in technology
With reference to several previous decades, a significant improvement to worldwide communication, connectivity, and mobility has been driven by technological development. Moreover, this development, thusly, helped to streamline and be driven by globalization.
Occasions for improving globalization by the assistance of technological progressions can be seen in practically all segments, for example, in agriculture, production, and finance and lines (Dix‐Carneiro, 2014).
Then again, the inventionin term of transportation innovations has improved geological portability, because of decline state of proficiency and the transportationspeed. For instance, enhancement in aviation technologythat has reduced the time of going by shifting the propeller aircraft to the jet passenger aircraft.
Moreover,general improvement as far as transportation advancements, including the communication technology has arranged currentmulti-layered worldwide economic system likely through beating the confrontations of space and time (Khandelwalet al. 2013).
The fundamental drivers regardingthe ongoing globalization are exhibited through this essay. Additionally, the entirety of the drivers has a few limits toward the degree of their effect upon the globalization. All key drivers of globalization are comparatively important, because they are all preferring globalization compatibly.
The drivers of globalization are the combination of numerous factors that companies look to outside their domestic market for growth opportunities. Moreover, it is generally the joint effects of these few distinct factors that are more serious than the individual factors.In addition, it is clear that the government policies and behavior, and technological improvement distinctly and separately are certainly adding to the increasing pace of globalization.
The privatization and liberalization have been fortified. As a result of these changes, the globalization has been preferred through its essential characteristic to become deeper and stronger with the modernization and capitalist development (De Loecker, 2011). As a result of these objectives, foreign direct investment has increased substantially over the years and, inevitably, the number of cross-border integration and acquisitions has also increased.
Companies are trying to reduce the production costs by shifting to the production to country with low-cost labors and abundant resources, like raw materials. Eastern Europe, China, India have in recent years achieved comparative advantage of production through FDI targets because of the large and low-paid labor force.
Baldwin, R.E. and Forslid, R., 2010. Trade liberalization with heterogeneous firms. Review of Development Economics, 14(2), pp.161-176.
Bernard, A.B., Redding, S.J. and Schott, P.K., 2011. Multiproduct firms and trade liberalization. The Quarterly journal of economics, 126(3), pp.1271-1318.
De Loecker, J., 2011. Product differentiation, multiproduct firms, and estimating the impact of trade liberalization on productivity. Econometrica, 79(5), pp.1407-1451.
Dix‐Carneiro, R., 2014. Trade liberalization and labor market dynamics. Econometrica, 82(3), pp.825-885.
Fijnaut, C., 2012. The globalisation of police and judicial cooperation: drivers, substance and organisational arrangements, political complications: Cyrille Fijnaut. In Cross-Border Law Enforcement (pp. 18-32). Routledge.
Glatzer, W., 2012. Cross-national comparisons of quality of life in developed nations, including the impact of globalization. In Handbook of social indicators and quality of life research (pp. 381-398). Springer, Dordrecht.
Jaumotte, F., Lall, S. and Papageorgiou, C., 2013. Rising income inequality: technology, or trade and financial globalization?. IMF Economic Review, 61(2), pp.271-309.
Khandelwal, A.K., Schott, P.K. and Wei, S.J., 2013. Trade liberalization and embedded institutional reform: Evidence from Chinese exporters. American Economic Review, 103(6), pp.2169-95.
Labonté, R., Mohindra, K. and Schrecker, T., 2011. The growing impact of globalization for health and public health practice. Annual review of public health, 32.
Liu, X., Dai, H. and Cheng, P., 2011. Drivers of integrated environmental innovation and impact on company competitiveness: evidence from 18 Chinese firms. International Journal of Technology and Globalisation, 5(3-4), pp.255-280.
Academic Research Writing Arm of Global Research Services.