The Costs and Benefits of a More Globalized World

The Costs and Benefits of a More Globalized World

Globalization is a process that has been ongoing for centuries, and is not a new concept limited to the modern age. Starting with small villages trading with one another, leading to the famed "silk route" across Asia and cumulating into the near completely global system we have today. However the recent form of globalization, driven by technology and political reform is unlike and other method of connectedness seen before. Since 1950 the volume of world trade has increased 20 fold and levels of foreign investment have skyrocketed well over 100%. Thomas Friedman describes this new wave of globalization as being "farther, faster, cheaper and deeper" than any method witnessed before. The world is very quickly becoming increasingly more connected, a concept that leaves many concerned for the outcomes it may bring. Globalization requires nations to forfeit a small amount of national sovereignty in order to effectively integrate into the global market, a concept that can bring with it an array of negative consequences. A global world also brings with it the risks associated with having nation's economies interdependent with another, presents large barriers to entry into markets and can perpetuate a capitalistic unfair tendencies. Although there are substantial risks this essay will show how the tremendous benefits of economic competitiveness, efficiency, and interconnectedness as well as foreign investment greatly outweigh the potential costs of globalization.

In order to accurately explore both the costs and benefits of a more connected world, the concept of globalization must first be defined and it's modern development understood. Michael Intrilligator interprets globalization as "the major increases in worldwide trades and exchanges in an increasingly open, integrated and borderless international economy." It is important to note that the trades and exchanges of globalization are not restricted to economic mediums but also include the flow of people, culture, information and ideas. These social elements alongside trading of goods and services as well as less traditional economic transfers of technology, currencies and investment make up the avenues of which globalization occurs. While these methods of exchange have always been present throughout history the last century has seen tremendous growth around the world, thrusting nations into a new level of global connectedness. This tremendous rate of globalization is largely due to advances in technology by allowing for more effective transportation and communication, and the global shift to more liberalized economic structures. These innovations have enabled nations to bypass barriers to trade and international borders, creating a network of globally connected independent nations.

Significant advances in technology have been a pivotal source of globalization over the past half century and have allowed for the rapid expansion towards a globally connected world to take place. Specifically, modern technology has allowed for methods of transportation and communication to greatly increase in efficiency, while driving down their costs. The nineteenth century saw massive railroad expansions all around the globe, opening the world to an effective method of transport for massive amounts of goods. Before the implementation of railroads it was only financially feasible to transport items with a high weight-value ratio, as the cost to move heavier goods was simply too high. The late nineteenth century also brought the innovation steam-powered ships, which cut down trans-ocean travel time by 70% and successfully connected the American markets to the rest of the world. These major advances in transportation signaled the beginning of rapid global expansion in trade, eventually leading to improved trans-ocean shipping, highways and air travel. Although advances in transportation have plateaued over the past two decades, developments in communication technology have been astounding. Since the laying of the first transatlantic cable in 1866, the cost of global communication has been steadily declining while its effectiveness and reliability have continued to grow. From 1930, the cost of a three minute call from London to New York has dropped a massive 99%, while the reliability, quality and ease of the call has risen substantially. More recently, with the invention of the Internet global communication has never been easier or more efficient and globalization efforts have been able to take great advantage of this innovation. The creation of the Internet along with improvements towards telecommunication technology have taken the barriers of distance and borders and rendered them irrelevant to human communication.

A second major source of globalization has been the worldwide trend of economic liberalization. The presence of more liberalized economies has lead to significantly fewer international trade barriers and a general world-wide movement towards open market economics systems. With the end of World War II, the globe embodied it's new approach to globalization in the 1946 General Agreement Tariffs and Trade (GATT) which has since evolved into the World Trade Organization (WTO). These agreements worked in order to alleviate barriers to trade around the world, lessening tariffs and encouraging the exportation of nation's goods. The collapse of the Soviet Union, and China's economic reform signaled another major shift towards globalization as the world's major economics all progressed towards an open market system. These events saw the privatization of companies in China and former Soviet states, allowing for their economies to begin connecting to the global economy and continue to grow.

The worldwide movement towards globalization brings with it a number of potential issues of which pose significant threats to the well-being of nations around the world. The perils of globalization provide a base for arguments against the movement towards a more connected Earth, and instead insist on the distinct separation of independent policies and economies. One of the major defining factors of an independent state is in its ability to self-determinate within its own borders, otherwise known as obtaining sovereignty from other competing nations. The concept of national sovereignty comes into direct conflict with the globalization movement, which is a cost that some individuals view as being too high of a price. In order to be globally connected, nations must sacrifice a portion of their sovereignty and adhere to a prescribed set of rules, regulations and procedures. States lose their absolute authority over national economies through three routes: trade integration, financial markets and competition for employment. With increasing international competition in trade