Economic globalization: what it is, characteristics

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A economic globalization It is a process that is part of globalization and that has intensified since the second half of the 20th century. This facet of globalization is characterized by the integration of the world economy through global production chains, transnational companies and the increasingly intense flows of capital, services and goods between different territories. Economic globalization is also marked by the advent of financial capitalism and the spread of neoliberal ideas throughout the world, with the rise of the market as an important economic agent.

Like all phenomena that result in transformations on a global scale, economic globalization presents advantages such as boosting the economy and expanding production scales. However, points such as the deepening of socioeconomic inequalities count as a disadvantage of this process.

Read too: Globalization — details about the phenomenon of integration of the world's geographic space

Topics in this article

  • 1 - Summary of economic globalization
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  • 2 - What is economic globalization?
  • 3 - Characteristics of economic globalization
    • → Examples of economic globalization
  • 4 - Economic globalization and neoliberalism
  • 5 - Advantages of economic globalization
  • 6 - Disadvantages of economic globalization
    • → Economic globalization and exclusion
  • 7 - Origin of economic globalization
  • 8 - Cultural globalization
  • 9 - Solved exercises on economic globalization

Summary on economic globalization

  • Economic globalization is defined by the integration of the world economy, with the emergence of new economic agents, new forms of production and a new phase of capitalism.

  • Its main characteristics are the multiplication of transnational companies, the emergence of production chains global markets, the greatest flow of capital, services and goods across the world, and the advent of capitalism financial.

  • The financial market and large companies are, therefore, two of the main agents of economic globalization.

  • With it, the activity of economic blocs (such as Mercosur, the European Union and NAFTA) and intergovernmental entities (such as the World Bank and IMF) is expanded.

  • It is directly related to the greater diffusion of neoliberal theory, which defends, among other points, less State participation in the economy.

  • The greater integration of the economy, the circulation of goods and services on a larger scale and the dynamization of production are some of its advantages.

  • The increase in socioeconomic inequalities and the degradation of the environment are some of its disadvantages.

  • Economic globalization is one of the types of globalization, and can also be understood based on its cultural aspect.

What is economic globalization?

Economic globalization is one of the faces of the phenomenon of globalization, which intensified from the second half of the 20th century. It can also be understood as a type of globalization.

Economic globalization is defined by economic integration global. This is a process that is constantly carried out on and based on an increasingly globalized geographic space through new information and communication technologies. communication, which result in the emergence of new production models, new economic agents and, mainly, a new phase of the current form of accumulation capitalist. With economic globalization, there is, therefore, financial capitalism, also called monopoly capitalism.

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Features of economic globalization

The integration of the international economy, the basis of economic globalization, a process that goes hand in hand with the integration of the world space, One of its main characteristics is the modernization of production systems It is the way capital accumulation happens. Such transformations are the result of the technical and scientific improvement that characterizes the current phase of globalization. This improvement mainly affected the communication and transport sectors.

This facilitated what we call the vertical disintegration of local production chains, as well as the consequent formation of global production chains, with the territorial deconcentration of production stages and their horizontal expansion to other states and countries. In this context, there are also those that we can consider one of, if not the main agent of economic globalization: transnational companies.

Financial specialist operating in the financial market, a reality linked to economic globalization.
The financialization of the economy is one of the aspects of economic globalization.

Other fundamental characteristics to understand what economic globalization consists of are the following:

  • Reordering of the world economic space, with the advent of a new international division of labor (DIT).

  • Flexibility in the transit of goods and services between different territories.

  • Acceleration of production on a global scale, which occurs in conjunction with the increase in demand for goods and services.

  • Intensification of the flow of capital, in the form of investments or directly, and of goods in global scale, which denotes a greater number of connections between economic agents and between territories.

  • Expansion of the presence of transnational companies throughout the world.

  • Emergence of another important economic agent: the financial market, which marks the advent of financial (or monopoly) capitalism.

  • Multiplication of economic blocs and increase in the scale of operations of those that already exist, promoting greater integration between different national economies through trade, economic partnerships or alliances and investments direct.

  • Greater international presence of multilateral organizations and financial institutions in mediating economic relations between States, such as the World Bank, the International Monetary Fund (IMF) It is the World Trade Organization (WTO).

  • Standardization of merchandise and consumer goods, which also regulates production. Therefore, what is called mass consumption occurs.

Examples of economic globalization

There are numerous aspects of the international economy that constitute reflections of economic globalization. One of the most present, and which is not always mentioned as such, is the use of the dollar in the main economic transactions carried out between countries and between economic agents. Currently, this is the currency of the world economic system, used in buying and selling shares, trading and trading commodities on stock exchanges, establishing reserve funds, and investing direct foreigners.

The production of a single cell phone, carried out in different stages, which take place in different territories, is another example of economic globalization. In this case, the raw material needed to manufacture the battery is obtained from a certain country, generally underdeveloped or emerging; while the screens are produced in a second country; the semiconductors, which go inside the devices' chips, are made in a third party, and so on.

Cell phone screen, whose parts are produced in different places, being produced, reality of economic globalization.
The cell phone production chain is an example of how economic globalization is present in today's world.

The negotiation of the prices of raw materials, which are called commodities, on stock exchanges based on the dollar is also a result of economic globalization, as well as the expansion of multinationals and the multiplication of holdings.

Also access: Fourth Industrial Revolution — the current phase of the Industrial Revolution

Economic globalization and neoliberalism

Neoliberalism is a socioeconomic theory that emerged in the first half of the 20th century, when the phenomenon of globalization was still moving at a slow pace, in accordance with technology and the demands of era. However, with technological modernization and the advent of new means of communication and transportation, economic globalization intensified, and togetherdshe the ideals and practices defended by theorists and economists neoliberals.

In economic globalization, the market is one of the main entities operating in the world, many sometimes overlapping the role of the State, or making it dependent on the choices and actions marketing. Large multinational companies have made the scenario much more competitive, at the same time that the products and services to be enjoyed are up to the individual.

Furthermore, these companies and their respective goods or products, as well as capital, began to move through a space with fewer restrictions, thus expanding its scope of action to almost the world whole. However, it is always important to remember that This junction between globalization and neoliberalism resulted in both positive and negative aspects, especially when analyzed from the point of view of underdeveloped countries. To learn more about neoliberalism, click here.

Advantages of economic globalization

  • Possibility of access to a greater number of services and goods by the population.

  • Expansion of the consumer market, which acquires an international scale.

  • The scale of action of economic agents also becomes global.

  • Greater circulation of capital and goods in the global economic space.

  • Boosting production and greater use of technology in the production process, increasing the effectiveness of production chains.

  • Multiplication of global production chains and also of multinational companies.

  • Modernization of financial and banking services that are used by the general population and economic agents, facilitating transactions.

  • Creation of new jobs in sectors such as information and communication technology and the financial sector.

Disadvantages of economic globalization

  • Massification and standardization of consumption in different countries.

  • Increase in unemployment due to the automation of functions and the need for a workforce with a higher level of qualification to work in the new positions created.

  • Few companies exert dominance over different areas of production, making competition increasingly complex.

  • The dimensions that economic and financial crises reach are greater, given the greater integration of the international economy.

  • Environmental degradation occurs at a faster pace, especially when considering the exploitation of natural resources to be used as raw materials.

  • Deepening socioeconomic inequalities between the population and between different territories, with the exclusion of underdeveloped countries from the main international markets and from investment in capitals.

Economic globalization and exclusion

One of the main disadvantages of economic globalization lies in the accentuation of socioeconomic inequalities and the exclusion of part of society from this process. While the accumulation of wealth gains one ever wider scale, the differences between the richest and poorest part of the population deepen.

The impoverished portion of the population remains on the margins of the process of economic globalization, both for structural reasons and for factors specific to the phenomenon, such as the elimination of jobs, the exploitation of labor and the increase in living costs, which includes basic services, essential goods and leisure.

Thinking about national economies, underdeveloped countries also end up excluded from the gains that economic globalization represented for mainly developed nations. In the international division of labor, underdeveloped countries are seen as areas that offer advantages locational in the sense of providing raw materials and cheaper labor for the extraction of these resources. However, they are not included in the main circuits of the global economy, and operate on the margins of globalization.

Origin of economic globalization

Economic globalization ariseiu together with the phenomenon of globalization, as these are inseparable processes. In reality, economic globalization is one of the faces of globalization, which originated in the 15th century, with the Great Navigations, and became a phenomenon truly global through the advancement of science and technology experienced from the second half of the 20th century, with the advent of the technical-scientific-informational.

The expansion of multinationals and the financialization of the economy date from this same period, which materialize the phenomenon of economic globalization.

Cultural globalization

Poster for the film “Avengers: Endgame” in China, an example of cultural globalization, which differs from economic globalization.
Hollywood movie poster Avengers: uultimatum in cinema from Shenzhen, China, as an example of cultural globalization.[1]

Cultural globalization is the process of cultural integration of space through of cultural signs, which happens due to the greater dissemination of information thanks to new technologies and, also, the increase in the movement of people between different territories. As a result, there is greater exchange between individuals, at the same time that they begin to acquire increasingly similar consumption and cultural habits.

Due to the hegemonic role of some nations, however, cultural globalization also represents the massification of cultural products and the standardization of consumption. This aspect is most noticeable in the field of entertainment, such as through films, series and music that are consumed globally.

See too:Cultural industry — commercial mechanism that encourages mass consumption of artistic and cultural goods in general

Solved exercises on economic globalization

Question 1

(Uece) The new technical systems for communication and transport of people and goods, as well as the New Communication and Information Technologies (NTCIs) and the new articulations in Increasingly dynamic networks have profoundly changed the face of 'economic geography' at the end of the 20th and beginning of the 21st centuries, making the global economy more articulated and more fluid.

Regarding this discussion, it is true to state that:

A) the geographic configuration of networked companies, fluid and dynamic, stands as a representation of the applicability of new technologies to organizational changes in production and consumption.

B) the flexible teleworking regime has not contributed to the new economic dynamics of financialized and informational capitalism at the end of the 20th century and beginning of the 21st century.

C) due to the financial dominance of the new regime of capitalist accumulation, the rigidity of technical-informational systems has slowed down economic exchanges between capitalist nations.

D) new systems of regulation between territory, politics and economy encourage the concentration and centralization of banking, industrial and commercial capital in closed national markets.

Resolution:

Alternative A

Due to the new technologies that emerged from the second half of the 20th century, and which provided the emergence of financial and informational capitalism, companies began to organize themselves into global chains of production. In other words, enormous dynamic networks have been formed through which there is an intense flow of capital, services and goods, which are the result of technical innovations of globalization.

Question 2

(Uema)

Sociologist Zygmunt Bauman, in his book Globalization: the human consequences, states that “globalization” has been presented as the irremediable destiny of the world, but that, in the phenomenon of globalization, there are more things than meets the eye, as the phenomenon of globalization both divides and unites.

Source: BAUMAN, Zygmunt. Globalization: the human consequences. Rio de Janeiro: Jorge Zahar, 1999. (adapted)

This criticism by the author is also expressed in other languages, such as in the cartoon below.

Cartoon in a Uema issue on economic globalization.

Based on the cartoon and the ideas of Zygmunt Bauman, it can be stated that the phenomenon of globalization:

A) selects people, countries and sectors that will be included in the process, determining the form of insertion.

B) standardizes all countries and affects everyone in the same way, without distinction of ethnicity, creed or ideology.

C) distributes equally among people and countries the products arising from economic and technological development.

D) transforms nations into one, creating a true global village, in which all people are equal.

E) standardizes the world socially, culturally, politically and economically, reducing inequalities between nations.

Resolution:

Alternative A

The cartoon and the ideas of Zygmunt Bauman (1925-2017) highlight the exclusionary nature of globalization, especially when we consider economic globalization. As a result, a portion of the population and underdeveloped countries receive different treatment in this process.

Image credit

[1]Sorbis/Shutterstock

Sources

HABESBAERT, Rogério; PORTO-GONÇALVES, Carlos Walter. The new world order. São Paulo: UNESP, 2006, 160p.

IANNI, Octavio. Globalization and neoliberalism. São Paulo Magazine in Perspective, v. 12, no. 2, Apr.-Jun. 1998. Available in: http://produtos.seade.gov.br/produtos/spp/index.php.

LUCCI, Elian Alabi. Territory and society in the globalized world, 2: secondary education. São Paulo: Saraiva, 2016, 3 ed. 289p.

SANTOS, Milton. For another globalization: from single thought to universal consciousness. Rio de Janeiro: Record, 2011. 20th ed. 174p.

SANTOS, Milton. Technique, Space, Time: Globalization and Technical-scientific-informational Environment. São Paulo: Editora da Universidade de São Paulo, 2013. 5 ed., 1 reprint. 176p.

Would you like to reference this text in a school or academic work? Look:

GUITARRARA, Paloma. "Economic globalization"; Brazil School. Available in: https://brasilescola.uol.com.br/geografia/globalizacao-economica.htm. Accessed on December 7, 2023.

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