Meaning

Globalisation means opening up of the economy for world market by attaining international
competitiveness. Thus the globalisation of the economy simply indicates interaction of the
country relating to production, trading and financial transactions with the developed
industrialized countries of the world.

Definition

According to Stieglitz, Nobel Prize Winner for Economics (2001) and former Chief
Economists of the World Bank, “Globalisation is the closer integration of the countries
and peoples of the world which has been brought about by the enormous reduction of
costs of transportation and communications, and the breaking down of artificial
barriers to the flow of goods and services, capital, knowledge, and (to a lesser extent)
people across borders.”

Accordingly, the term, globalisation has four parameters:

(a) Permitting free flow of goods by removing or reducing trade barriers between the
countries,

(b) Creating environment for flow of capital between the countries,

(c) Allowing free flow in technology transfer and

(d) Creating environment for free movement of labour between the countries of the world.

The history of globalisation

History of Globalisation

The first wave lasted from 1870 to the start of World War I. Advances in transport and
reductions in trade barriers and the level of exports to world income doubled to 8% as
international trade boomed stimulated this.

It caused massive migration as people sought better jobs. About 10% of the world's
population moved to new countries. Sixty million people migrated from Europe to North
America and other parts of the New World. The same thing happened in densely populated
China and India where people moved to less densely populated countries like Sri Lanka,
Burma, Thailand, the Philippines and Vietnam.

The end of the First World War ushered in an era of protectionism. Trade barriers such as
tariffs were erected. World economic growth stagnated and exports as a percentage of world
income fell back to the 1870 level.

Following World War II, a second wave of globalisation emerged, lasting from about 1950 to
1980. It focused on integration between developed countries as Europe, North America and
Japan restored trade relations through a series of multilateral trade liberalizations.
During this period there was a surge in the economies of the countries in the Organization for
Co-Operation and Development that participated in this trading boom. But developing
countries were largely isolated from this wave of integration, unable to trade beyond primary
commodity exports.

The most recent wave of globalisation, which started in 1980, was spurred by a combination
of advances in transport and communications technologies and by large developing countries
who sought foreign investment by opening up to international trade

Some countries have profited from globalization.

 China: Reform led to the largest poverty reduction in history. The number of rural
poor fell from 250 million in 1978 to 34 million in 1999.
 India: Cut its poverty rate in half in the past two decades.
 Uganda: Poverty fell 40% during the 1990s and school enrollments doubled.
 Vietnam: Surveys of the country's poorest households show 98% of people improved
their living conditions in the 1990s. The government conducted a household survey at
the beginning of reforms and went back 6 years later to the same households and
found impressive reductions in poverty. People had more food to eat and children
were attending secondary school. Trade liberalization was one factor among many
that contributed to Vietnam's success. The country cut poverty in half in a decade.
Economic integration raised the prices for the products of poor farmers—rice, fish,
cashews—and also created large numbers of factory jobs in footwear and garments,
jobs that paid a lot more than existing opportunities in Vietnam

Neoliberalism

Neoliberalism, ideology and policy model that emphasizes the value of free market
competition. In particular, neoliberalism is often characterized in terms of its belief in
sustained economic growth as the means to achieve human progress, its confidence in free
markets as the most-efficient allocation of resources, its emphasis on minimal state
intervention in economic and social affairs, and its commitment to the freedom of trade and
capital.