Scope of Globalization


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Prior to discussing the entire framework of globalization, we need to be aware of the fact that there is a fundamental change taking place in the world’s economy today. We are moving away from a circumstance where a country's economy is relatively independent and separated by barriers to cross the trade and investment borders regardless of distance, time zones, languages, as well as national differences in terms of the government regulation, culture, and business systems.

Then, we are moving as well towards the new world in which the barriers to trade and investment across borders is increasingly reduced, the distance is getting closer because of technological advances in transportation and communication, whereby material culture starts to look the same all over the world, and the national economy has become dependent on a single system integrated in the global economy. Hence, the process by which this phenomenon occurs is often referred to or what we call it as globalization.

In the current global economy, an American citizen might be driving a car to go to work where the car is originally designed by Germany, being assembled in Mexico by American car companies. Similarly, some components of a car designed by Ford Company can be made in the United States, where their steels belong to Korea while the rubbers belong to Malaysia.

Assuming that an American citizen whom we take as an example is a male, then, the next illustration of scenario is that he may fill his car with petrol at the GAS STATION BP (BritishPetroleum) owned by a multinational company in United Kingdom. This petrol could have been made from the pumped oil resources off the coast from Africa by the France oil companies, then send it to the United States through the shipment company owned by Greece. He may be drinking at a drive-through coffee shop run by a Korean immigrant, as he orders a cup of coffee milk without fat along with the chocolate-coated biscuits. The main ingredient which is the coffee beans may come from Brazil and Peru, while the biscuits are made locally using the old recipes from Italy.

In other parts of the world, a Singaporean-born citizen may speak to a brokerage company using a Nokia phone which is made in Finland, getting the phone assembled in Texas using the series of chips produced from Taiwan, as it is designed by the Indian engineers who work for Texas Instruments. In fact, he could tell a stock-brokerage company to purchase some shares of Deutsche Telekom – a telecommunication company from Germany.

Then, there is an India guy who might turn on the radio where the radio is made in Japan and getting the device assembled in Malaysia; simply to listen to certain popular songs from a hip-hop group from Denmark who has signed a recording contract with music companies from France in order to do their promotion in Asia.

Then, as soon as the hip hop songs end, a radio announcer might inform to all listeners that the anti-globalization protest is taking place during the meeting at World Economic Forum in Davos, Switzerland. After that, the announcer move on to the next topic, a news story report that talks about how the concern of rising interest rates in USA has led to Japan's Nikkei stock market index going down sharply.

So, as you can see from a simple illustration above, admit it or not this is the world we are currently living and being part of its system as a matter of fact. It is the world where the volume of goods, services, and investments across borders of countries are growing faster than the world’s output consistently for more than half a century. This is the world where roughly about $ 4 trillion of foreign exchange transactions occurred every day in which the value of $ 15 trillion goods and $ 3.7 trillion services are sold approximately across the border. It is the world where international institutions such as the World Trade Organization (the World Trade Organization – WTO) are established, the world where the material symbols and popular culture have increasingly been into a global phenomenon such as Coca-Cola, Starbucks, Sony PlayStation, Nokia cell phones, MTV, Disney, IKEA store, and Apple's first breakthrough product - Ipod.

This is the world where the products are made by specific ingredients or components which come from all over the world. After all, it is the world that we are currently residing and breathing in where the economic crisis in Asia back in somewhere 1997 / 1998 could lead to recession in United States; raising the interest rates of $US Dollar and Nikkei Japan went down in spring of 2006.

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