A. What is globalization?Globalization can be defined as a shift toward a more integrated and interdependent world economy through the ability to produce any good or service anywhere in the world using capital, technology and components from anywhere and to sell the output anywhere and place the profits anywhere.
Globalization has several different facets including the globalization of markets and the globalization of production. The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace. The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital).
B. List the major drivers of globalization. Give three examples of each.
One major driver of globalization is the declining of barriers against free flow of services, goods, and capital.
One example is the 1947 General Agreement on Tariffs and Trade (GATT) which reduced barriers on the free flow of goods and services by freezing or reducing tariffs. A second example is the 2001 World Trade Organization (WTO) talks which focused on cutting tariffs on industrial goods, services and agricultural products as well as phasing out subsidies to agricultural producers and reducing barriers to cross-border investment. A third example is the removal of restrictions to foreign direct investment (FDI) through the creation of bilateral investment treaties which protect and promote investments between two countries and create a more favorable environment for foreign investments.
A second major driver of globalization is the technological advances in communication, information processing, and transportation. One example is the microprocessor which has vastly increased the amount of information that can be processed by individuals and organizations. A second example is the development of...