INTRODUCTION TO GLOBAL INTERNATIONAL TRADE

What is Globalization?
Definition of Globalization
 It is named as the process of increasing connectivity and interdependence of the world’s
markets and businesses. Globalization entails two things:
 Connectivity - is the existence and affordability of a communication and
transportation network. These networks or infrastructures are vital to the creation
of an environment conducive to international trade and commerce.
 Economic Interdependence - is a characteristic of a society w/ a high degree of
division of labor, where people depend on each other for goods and services
required to sustain life and living. Connectivity and economic interdependence
pave the way for global/international trade.

BRIEF HISTORY OF GLOBALIZATION 

Silk Roads
 Luxury products from China started to appear on the edge of the Eurasian
Continent.
 Spice Routes
 Muslim Traders already dominated Mediterranean and Indian Ocean trade.  Age
of Discovery
 European explorers connected East and West – and accidentally discovered the
Americas.
 Scientific Revolution
 First Wave of Globalization
 Great Britain had started to dominate the world
 First Industrial Revolution  The World Wars
 Financial Markets, which were still connected in a global web, caused a
further breakdown of the global economy and its links.  Second and Third Wave of
Globalization
 The end of World War II marked a new beginning for the global economy
  Second Industrial Revolution  Globalization 4.0
 New frontier of globalization is the cyber world

Who Benefits from Globalization?

Globalization has its winners and losers, allegedly at the cost of poorer nations. Some argue that
globalization only benefits richer nations. Certain groups of people are not capable of
functioning within the increased competitive pressures of globalization. Who benefits from
globalization will depend on a nation’s ability to build its own infrastructure prior to trade
liberalization regardless of first world/third status.

GLOBALIZATION & THE MONOPOLY POWERS OF LARGE CORPORATIONS

 When there is only one seller in a market, there is monopoly power, which may be
demonstrated by concrete proof that the company utilized its position to set prices and
limit the amount of an item or service that was offered.
 To some, globalization simply means Americanization because of the proliferation of
United States multinationals.
 Anti-globalists believe that globalization will deprive nations of their sovereignty like
what happened in an international organization like the World Trade Organization
(WTO) that has officials not elected by popular vote.

GLOBALIZATION & THE ENVIRONMENT

 Environmentalists point to firms that move their operations solely in order to circumvent
strict environmental regulations in their home country which is commonly referred to as
the "race to the bottom" or "lowest common denomination" debate.
 Race to the bottom - when nations or areas loosen environmental regulations or standard
enforcement in an attempt to entice more firms and tax income, a race to the bottom may
result.