Summary BUSINESS GLOBALIZATION - Phases and Definitions - prof. Ramirez Zapata
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English Language
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English Language
An overview of the business globalization concepts, including the identification by the World Bank of three waves or phases of globalization, which happened between 1870 and the 21st century. The origins of the process are attributed to the falling costs of transport and the lowering of the polit...
, Business Globalization – Concepts and Phases
Business globalization is the ever-increasing process of integration of local and
regional markets into one unitary market of products, services and capital. The
main results of this process have been an increase in the interdependence of
traditionally national markets on the macroeconomic level and the
internationalization of corporate processes, especially production, distribution, and
marketing, as well as the adoption of international business strategies on the
microeconomic level.
Economists recognize the early signs of globalization in historical phenomena,
such as the increased economic activity in the Age of Discovery in the 16th and
17th centuries, which led to the founding of the British and Dutch east India
companies; and the new economic opportunities enabled by the scientific
discoveries of the 18th and 19th centuries, followed by the 20th century's breaking
ground on the Information Age.
The World Bank identifies three waves or phases of globalization, which happened
between 1870 and the 21st century. The origins of the process are attributed to the
falling costs of transport and the lowering of the politically driven trade barriers.
The first phase, trade in commodities developed into trade in manufactured goods.
Initially land intensive production became labor intensive. Mass migrations for work
became an everyday phenomenon, traveling becoming easier with the
development of the more advanced transport technologies. The telegraph allowed
more distant countries to benefit from the capital available on the stock exchanges,
as stock exchange institutions were brought to new locations, contributing to the
growth of financial markets. Two world wars blocked international trade as
individual countries turned protectionist.
The second phase begins leaving the developing world outside of the free trade
market. It was during this second phase of globalization, when the countries
started to specialize in production and the businesses started to function around
agglomerations and clusters that economies of scale started to matter. A
discussion on the wealth inequality and the rising poverty in the developing
countries started, resulting in the postulates to allow all the nations to participate in
the benefit of a free trade. The inequalities of the early globalization era in the 19th
century were largely related to the ownership of the land, crucial both for the
commodity trade and for the manufactures. However, the inequalities during the
second phase of globalization showed a more systemic nature, being driven by the
protectionist policies of the developed world.
The third phase of globalization brings the "death of distance" in a traditional
geographical sense. It does not matter anymore whether the whole business
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