Globalization

Globalization

Corey T. Hunt

MGT448

September 16, 2010

Globalization

Global markets are now markets for industrial goods that serve a plethora of needs. In this paper I will define globalization and list some the traditional international trade theories that support globalization, I will list the major drivers of globalization along with examples and explain at least four effects of globalization that impact my community and organization. I will begin with my interpretation of what globalization is.

Globalization

According to how globalization is described in this book, globalization refers to “a global shift toward a more integrated and interdependent world economy that includes the globalization of markets and the globalization of production” (Hill, 2009). As barriers to international markets evaporate, it has become easier for businesses to find consumers for manufactured goods and also raw materials. Over the course of history, there have been many proponents for a global economy.

Trade Theories

Mercantilism is currently known as the earliest global trade model. The key thought in mercantilism is that a country should increase its wealth and prestige through the accumulation of gold and silver through foreign trade. To do this, a country would have had to create and maintain a trade surplus by exporting more than it imported.

An attack on mercantile thought was made by Adam Smith in his famous book, The Wealth of Nations. Adam Smith argued that instead of taking a distributive approach, that countries should use an absolute advantage. Absolute advantage is when a country uses its advantages to its benefit such as a country with suitable climate, soil and manpower focusing on agriculture. The theory of comparative advantage insists that a country should not only focus on the goods that it can produce efficiently but also buy goods that it cannot make efficiently from other countries.

Drivers of Globalization

Some of the driver’s globalization...