What is Economic Globalization?

Economic globalization is a historical process, the result of human innovation and technological
progress. It refers to the increasing integration of economies around the world, particularly
through the movement of goods, services, and capital across borders. The term sometimes also
refers to the movement of people (labor) and knowledge (technology) across international
borders. (IMF, 2008).

The phenomenon can thus have several interconnected dimensions, such as

the globalization of trade of goods and services;

the globalization of financial and capital markets;
the globalization of technology and communication; and
the globalization of production.

What makes economic globalization distinct from internationalization is that while the latter is
about the extension of economic activities of nation states across borders, the former is
‘functional integration between internationally dispersed activities’ (Dicken 2004). That is,
economic globalization is rather a qualitative transformation than just a quantitative change. If,
however, globalization is indeed a ‘complex, indeterminate set of processes operating very
unevenly in both time and space.’

Economic Globalization

‘In economic terms globalization is nothing but a process making the world economy an “organic
system” by extending transnational economic processes and economic relations to more and
more countries and by deepening the economic interdependencies among them.’ (Szentes
2003).

Is economic globalization a new phenomenon?

Globalization is commonly thought of as a new phenomenon, but contact between diverse

individuals is not new. It began when prehistoric tribes settled and were able to outmuscle
wandering tribes. The premodern period saw technological advances that allowed trade and
communication to flourish.
 Frank and Gills (1993: 3) also called for a broader outlook, and located the origin of
globalization in the (very) distant past: ‘the existence of the same world system in which
we live stretches back at least 5,000 years’. The best known example of archaic
globalization is the Silk Road, which connected Asia, Africa and Europe.

If global economy did exist in the past, then it was only in the sense of ‘trade and
exchange, rather than production’ (Gereffi, 2005).

The relatively short period before World War I (that is, 1870 to 1913) is often referred to
as the ‘golden age’ of globalization, character-ized by relative peace, free trade and
financial and economic stability (O’Rourke and Williamson, 1999)

‘In economic terms globalization is nothing but a process making the world economy an “organic
system” by extending transnational economic processes and economic relations to more and
more countries and by deepening the economic interdependencies among them.