Globalization changes the way nations, businesses and people interact.
Specifically, it
changes the nature of international economic activity, expanding trade, opening global
supply chains and providing access to natural resources and labor markets.
Changing the way trade and financial exchange and interaction occur among nations also
promotes the cultural exchange of ideas. It removes the barriers caused by geographic
constraints, political boundaries and political economies.
For example, globalization enables businesses in one nation to access another nation's
resources. More open access changes the way products are developed, supply chains are
managed and organizations communicate. Businesses find cheaper raw materials and
parts, less expensive or more skilled labor and more efficient ways to develop products.
With fewer restrictions on trade, globalization creates opportunities to expand. Increased
trade promotes international competition. This, in turn, spurs innovation and, in some
cases, the exchange of ideas and know-how. In addition, people coming from other
nations to do business and work bring with them their own cultures, which influence and
mix with other cultures.
The many types of exchange that globalization facilitates can have positive and negative
effects. For instance, the exchange of people and goods across borders can bring fresh
ideas and help business. However, this movement can also increase the spread of disease
and promote ideas that might destabilize political economies.
For example, increased international trade and travel in the late 1990s led to West Nile
Virus being introduced to North America, likely as a result of infected species being
transported or people traveling there.
History of globalization
Although many people consider globalization a twentieth-century phenomenon, the
process has been happening for millennia. Examples include the following:
The Roman Empire. Going back to 600 B.C., the Roman Empire spread its economic
and governing systems through significant portions of the ancient world for
centuries.
Silk Road trade. These trade routes, which date from 130 B.C. to 1453 A.D.,
represented another wave of globalization. They brought merchants, goods and
travelers from China, through Central Asia and the Middle East, to Europe.
Pre-World War I. European countries made significant investments overseas in the
decades before World War I. The period from 1870 to 1914 is called the golden age
of globalization.
Post-World War II. The United States led the effort to create a global economic
system with a set of broadly accepted international rules. Multinational institutions
were established such as the United Nations, International Monetary Fund, World
Bank and World Trade Organization to promote international cooperation and free
trade.
The term globalization as it's used today came to prominence in the 1980s, reflecting
several technological advancements that increased international interactions. IBM's
introduction of the personal computer in 1981 and the subsequent evolution of the
modern internet are two examples of technology that helped drive international
communication, commerce and globalization.
Globalization has ebbed and flowed throughout history, with periods of expansion and
retrenchment. The 21st century has witnessed both. Global stock markets plummeted
after the Sept. 11, 2001, terrorist attacks in the United States, but rebounded in
subsequent years.
More recently, nationalist political movements have slowed immigration, closed borders
and increased trade protectionism. The pandemic had similar effects on borders and
immigration, and it also disrupted supply chains. However, overall, the early 21st century
has seen a dramatic increase in the pace of global integration. Rapid advances in
technology and telecommunications are responsible for much of this change, according to
economists.
What is the G20?
The G20, or Group of Twenty, is an international forum that aims to foster international
cooperation by addressing global economic issues, such as financial stability and climate
change. The G20 is made up of 19 countries and the European Union, including most of
the world's largest economies.
The nations involved account for 80% of the planet's population, 75% of global exports
and 85% of world GDP. It was founded in 1999, following the 1997 financial crisis, and has
met every year since then.
