Globalization – (noun) the tendency of having greater and greater connection and integration between separate countries, particularly when it comes to trade, culture, world views, goods, and services.
2016 has brought globalization to the forefront of many people’s lives in ways that it never was before. Whether it was Brexit or Trump, whether you support it or are against it, globalization is currently in the air and needs to be discussed. To use our first example of today, The Week magazine has a nice description of globalization in 2017, especially pertaining to the recent WannaCry computer virus:
Whether globalization is good or bad for Americans is a hot topic in politics these days. What’s less discussed is that globalization rests on a world that’s deeply interconnected by telecommunications. And that world, in turn, is what makes attacks like this possible.
As you can see, globalization is about “connections,” whether that is through trade or ideas. Globalization works by connecting the world through our smartphones, computers, and the internet.
Globalization is used to describe the process or anything related to bringing countries closer through exchange, whether for better or for worse. If you would like to hear an example of it in a positive light, here is an article from The Moniter, the largest newspaper in South Texas:
Little wonder that Trump has found antiglobalization an irresistible pitch. So have many others. Yet, this has created a dilemma for trade policy: What’s good politics is bad economics, and vice versa.
It is not that the United States has no legitimate trade gripes. China is the biggest, and Trump — like his predecessors — has yet to find a way to discipline its trade abuses. But this frustration should not indict the entire trading system. The fact that we have chronic trade deficits reflects the dollar’s role as the main global currency. The demand for dollars props up its exchange rate, making U.S. exports costlier and U.S. imports cheaper.
It is important to note here that you can be either “pro-globalization,” meaning you strongly favor greater connection between countries, or favor a more “antiglobalization” approach for the sake of protecting local jobs or industries. Regardless, the dollar is an important part of globalization: the value and strength of the dollar helps nations trade wons to pesos, schillings to rupees, and so on.
The concept of globalization, is not new. Globalization is arguably a concept that has been around for a while; you could talk about the great Columbian Exchange, when many plants from North and South America was spread to Asia, Europe, and Africa, and many domesticated animals and items made its way to the New World. For many people of a certain age (myself included) globalization has seemed like an ever-present concept that governed everything from our US-Cotton sourced, Bangladesh-assembled clothing to the cup of coffee I am drinking in my Korean office writing about business English (funny how the world works).
All that being said, however, what does globalization mean? And why is this important to understand in the context for business English? What are the pros? And what are the cons? I am not here to talk about the politics of it all or to give an in depth analysis about the term, but rather what this term means and how to use it in English. Let’s talk a bit about the history of the term “globalization”.
The term “globalization” comes from the noun action form of the word “globalize,” which was first starting to be used to refer to the global economic system in 1959 (although it seems like the term has been referenced in other ways before). Globalization as we know it today is very much linked to the post-World War II world order. The idea was that greater trade could lead to greater peace. A lot of this can be tied to the thinking of Cordell Hull, who helped start the General Agreement on Tariffs and Trade or “GATT,” which has become the World Trade Organization.
Hull’s thinking was that World War II could be related to the period of immense protectionism, or the practice of protecting your country from foreign imports by heavily taxing it, during the 1930s. It made it harder to sell things to more people around the world, and if you had less money coming in from selling stuff to Germany or France, it made it much easier to start a conflict with Germany or France.
Especially since the early 1990s and the fall of the Berlin Wall, Globalization has picked up in part due to greater communication between countries through the internet, and organizations like NAFTA in 1994, the introduction of the Euro to the Eurozone in January 1999, and and the Lisbon Treaty in December 2007.
So, what are the pros for globalization?
Well, we have previously talked about one pro: greater trade = greater peace. It can also lead to more jobs. The North American Free Trade Agreement, or NAFTA, is a free trade agreement between the US, Mexico, and Canada that credited with $800 million worth of trade and investment between the US and Mexico, and has created 5 million jobs for the United States. However, this has translated into modest gains for most American workers; the total trade produced about $400 more per American due to NAFTA, which really isn’t a lot.
And there are possible side benefits to globalization that we should mention: it makes it easier to travel to countries because of cheap flights that don’t have to worry about trade barriers, greater access to higher education for many people, and eases the ability of people to meet and marry people from other countries.
What are the bad sides to globalization?
We just covered a few positives about globalization. Well, who does it hurt?
Well, it often hurts working class people in Advanced countries; while the US has created 5 million new jobs due to NAFTA, it seems to have negatively impacted manufactoring jobs. However, depending on who you look at, that number could be as little as 15,000 jobs lost per year to nearly 700,000 jobs.
Of course, while it might be easier to visit exotic places like Ibiza or Costa Rica, people may be less inclined to visit and spend their money in places like Brighton in the UK or Atlantic City in the US, which leads to job loss in those areas.
It also exposes the world to greater amounts of potential instability; I don’t think I need to mention the 2007-2008 Financial Crisis do I? There are still lots of anger and frustration in many countries related to how the crisis was handled, and has affected the political choices of many in those countries.
If you want to learn more about free trade, I could not recommend “Planet Money” MORE from NPR. More than anyone else out there, they are excellent at explaining all sorts of things about economics. I don’t think they need me to promote them, but regardless they are an excellent source in understanding money matters and all around tell some really interesting stories. And while this article is a bit short, you might want to dig deeper on the subjects talked about in this episode and listen to the following episodes:
“The Dollar At the Center of the World” (the history behind why the US Dollar is the main currency of international trade).
“If Economists Controlled the Borders” (about what economists would do – or not do – if they could change immigration policy. There are certainly a wide range of opinions here).
“The Chicken Tax” (a bit of history of countries imposing tariffs on each other and making global competition harder, or why the US truck industry accidentally dominates the truck market).
“50 Ways to Leave Your Union” (about Article 50, which allows the UK or any other European Union member to leave the EU).
And lastly, a short little program on the 240 history of trade in 20+ minutes.