Economic GLOBALIZATION - Economic Globalizations Effect on...

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Economic Globalization’s Effect on World Trade and Politics Economic globalization is the increasing world integration through trade, financial flow and knowledge. More precisely it means that factors of production are used on a world scale. There are also cultural, political and environmental dimensions of globalization(Hill, 67). The word globalization has really begun to be in common usage since the 1990s in connection with advances in electronic communications, and with a strong increase of private capital flows from developed to undeveloped countries (D. K. Brown, A. V. Deardorff and R. M. Stern). The Globalization of factors of production implies: -Capital: Direct foreign investment has increased mainly towards East Asia. Transnational corporates relocate their plants abroad in order to get the better allocation of factors. -Labor: Workers move from one country to another in order to get better wages. On the other hand, in many business, cheap labor force can be taped from anywhere in the world. For example, with internet you can order paperwork in Philippines and receive the output on your computer. Cost could be tenfold less than the same work ordered in your country.
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-Knowledge: Direct foreign investments bring technical innovations and better management. On the other hand, the World Wide Web brings the knowledge resource available for everybody at low costs. However, it is yet too soon to appreciate the real effect of globalization on growth and productivity on a world scale (S. Redding and A. J. Venables). The globalization of the world economy has moved inescapably forward. The economies of Asian countries such as China, India, Malaysia, and Thailand are booming. In the process, they are significantly increasing global demand for energy thus adding to
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This note was uploaded on 10/16/2011 for the course BUSINESS 421 taught by Professor ?? during the Spring '10 term at Thomas Edison State.

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Economic GLOBALIZATION - Economic Globalizations Effect on...

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