Globalization Questionnaire

Essay by loveandtennisUniversity, Bachelor'sA-, January 2009

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Globalization Questionnaire � PAGE �5�

Globalization Questionnaire

Globalization has minimized the gap between these entities and created an economy for all countries that was not possible 20 years ago. This paper will define globalization and identify some of the traditional international trade theories that support the concept of globalization. This paper will also list the major drivers of globalization along with three examples of each and explain four effects of globalization that impact the community and organization.


According to Hill (2009) globalization refers to the shift toward a more integrated and interdependent world economy. It has different facets such as the globalization of markets and production. The globalization of markets is the merging of national markets into one global marketplace. The globalization of production is the sourcing of goods and services from around the globe.

Trade Theories

While no single trade theory explains the exact patterns of international trade, taken together, these theories do make apparent certain important factors.

The theory of absolute advantage suggests that countries should specialize in the production and exportation of products in which the country excels. The country should then import the products that it does not have absolute advantage over. While the theory of comparative advantage states that countries should produce the products that they can manufacture most efficiently and import the products they cannot make as efficiently. This theory suggests that free trade will bring about increased world production and that this trade is a positive-sum game for all participants. The new trade theory suggests that with specialization, the prices of goods are reduced and the varieties of products are increased because countries specialize in the production of certain goods. Another popular theory is that of Heckscher-Ohlin. This theory states that international trade is determined by a country's endowments. This means that...