What is Globalization in Economics?
Globalization in economics refers to the interdependence of nations around the globe promoted through free trade. Reduction of barriers between national economies facilitates the spread of products, information, jobs and technology across national borders. Globalization in economics has facilitated the growth of international trade, cultural aspects and transportation. This had led to integration among people, companies and regulatory authorities worldwide.
In this article, we are going to provide you the top 4 examples of globalization.
Top 4 Real Life Examples of Globalization in Economics
Let us now look at the examples of globalization
Globalization Example #1
Globalization has resulted in increased connectivity among people across borders thereby encouraging the exchange of ideas by means of communication. Social media connectivity platforms such as Facebook, Twitter, LinkedIn and Instagram are good examples of globalization. People can connect with others from diverse backgrounds, culture and professions. It is estimated that Facebook has 2.38 billion monthly active users (Source: Zephoria). Every minute on Facebook, numerous comments are posted and photos are uploaded which can be accessed by viewers throughout the world.
Google Search is one of the most used search engines on the World Wide Web across all platforms. People make use of this to view information on topics of their interest. For example, an individual wants to bake a cake and has no guidance around – he/she would make use of Google to watch videos on the ingredients required and the process of baking a cake. Since social media platforms have been actively used by a number of people, it has helped in faster communication that may positively impact the lives of people. An individual can circulate the important message on Facebook for help required in a particular city affected by a natural calamity, motivational thoughts, job opportunities available in companies and so on.
Global news networks like CNN provides the latest news on business, politics, weather, media and entertainment. An individual keen to know about the currency rates, commodity prices and economics may refer to the Bloomberg site to access information and keep himself abreast with the market developments. The use of internet has acted as a catalyst in globalization in economics.
Globalization Example #2
Let us take the case of a 30-year-old upper-middle-class person living in India in the 1970s. He used more of Indian brands as global brands were rarely available in India. He drove Premier Padmini or Hindustan Ambassador, both Indian brands. There was only one government-owned channel – DD National, which he was compelled to watch. He refreshed himself with Thumbs Up or Goldspot owned by Parle, an Indian brand. For apparel and shoes, the Indian brands were Reliance Group’s Vimal, Bombay Dyeing and Bata. HMT was a government-owned enterprise that made both tractors and watches.
Now let’s take the case of a 30-year-old upper-middle-class person living in India today. He has an iPhone, which is an American company carrying out manufacturing operations in China. He has a Sony LED TV, which is a Japanese brand. On Smart TV, he watches content on OTT platforms like Netflix and Amazon Prime, which are US companies. He uses Surf, Lux, Brooke Bond, which are made by HUL (parent company is Unilever) which is a British-Dutch transnational consumer goods company. He uses Paytm for transferring money which is funded among others by Japanese major Softbank.
These two contrasting examples of two people living in different eras show the impact of global companies and MNCs in our lives. In developing countries, the transfer of technology has helped to boost innovation and productivity. The improved developments in transportation have paved the way for airlines. The reforms and liberalization process which started in 1991, is to be credited with the spread of globalization in India.
Globalization Example #3
Globalization has advanced under the framework of General Agreement on Tariffs and Trade and the World Trade Organization. The World Trade Organization has been instrumental in reducing trade barriers and providing a more integrated global economy. Foreign Direct Investment has aided in the growth of global companies, technological transfer, industrial restructuring and efficiency in processes.
A country can import and export goods and services. The trade between countries facilitates revenue generation and synergies while conducting business operations. For example, India imports products such as mineral fuels, precious metals, machinery, organic chemicals etc from other countries. India imports nearly 80% of its oil requirement. The US has imposed restrictions on Venezuela and Iran to export oil. Reduction in the supply of oil would further escalate the oil prices and would hamper the current account deficit of the oil importing countries. Also, the US-China trade war would have an impact on the economies and has shown traces of slowdown in manufacturing activities as well as external consumption.
It is critical for the traders to keep track of the currency movements as that would impact the transactions. For example, US Dollar revenue driven companies in India such as IT would benefit from the US Dollar appreciating as that would help them to earn higher revenue.
Globalization Example #4
One of the examples of globalization is media and entertainment such as magazines and movies being made available and released throughout the world.
Marvel Studio’s Avengers: Endgame movie recently released in April 2019 did a whopping business of Rs.225 crore in just 4 days of its release in India. Some other successful Hollywood movies released in India have been Avengers: Infinity War and Jungle Book. Bollywood movies such as Baahubali 2, Dangal and PK have been appreciated in foreign countries such as the US. The Chinese film Crouching Tiger, Hidden Dragon grossed a whopping $128 million in the US (Source: IMDB).
Indians can access world content through TV channels and OTT platforms like Netflix and Amazon Prime. Olympics began in ancient Greece and has continued over the years. FIFA World Cup is one of the most watched sports that has attracted viewers from all over the world.
The entertainment industry has undergone innumerable changes as a result of globalization which has led to the growth of the industry and the network has expanded globally. The digital advancements have enhanced film making ability to entice and connect with a larger audience.
The International Monetary Fund had identified four basic aspects of globalization in economics: trade and transactions, capital and investment movements, migration and movement of people and dissemination of knowledge. There are various advantages of globalization such as reduction of trade barriers, advanced technology, communication, travel, exchange of ideas and access to media. Some of the demerits would include income inequality, terrorism, etc. Globalization has indeed accelerated the process of global interconnection and is a phenomenon that would be difficult to reverse in the current age of technology.
This has been a guide to what is Globalization in Economics. Here we discuss the top 4 real-life examples of globalization with a detailed explanation. You can learn more about finance from the following articles –