Understanding Globalization: A Historical Analysis

GLOBALIZATION

Introduction

Globalization refers to the process that deepens and broadens the relationship among countries and integrates them socially, economically and politically. Typically it means “a process driven by international trade and investment and aided by information technology”(Boudreaux, 2008:1). Historical evidence of Globalization is prominently found in the 19th century, when British pioneered the idea of “liberalism” that centred on the concept of trade unrestrained by political borders. Britain played the main role in spreading and popularizing the idea of free trade among other western countries that ultimately contributed to today’s globalization. Among the several dimensions of globalization only it’s economical aspect

Globalization is a driving force that accumulates all countries under a common network of economic and trading system. It can be referred as a set of social processes that transform a country’s individualistic identity to a global entity. Globalization refers to the interdependency among the countries in a way that incidents of foreign countries can have a footprint on local incidents or vice versa. Globalization widens the communication among countries, enlarge the market and countries undertake economical activities beyond their physical boundaries. In whatever way the term globalization is conceived, Steger(2003:12) stated that, globalization has four distinct characteristics. First, globalization creates new and multiply existing social network. Second, it expands social relation, activities and interdependencies. Third, it amplifies and accelerates the exchange of information, materials and activities. Fourth, it transforms people’s consciousness to global

Effect of globalization on business can be summarized as follows:

1. Transformation to Global Market: Chowdhury (2011:293) described that, globalization provokes the need to merge individual national markets into a huge global market. It eliminate local trade restriction imposed by government, cut taxes, ease up business activities over international boundaries. Globalization encourages various multinational companies to emerge and work under a common umbrella.

2. Expansion of Foreign Direct Investment: In free trade environment many of the local firms establish overseas firms. This entails the direct foreign investment in the overseas host countries. This investment can be in the form of capital, goods, lands, factories etc. 3. Expansion of Multinational Companies: In global market environment multinational companies emerge and invest to capture huge global market. For example, according to Chowdhury(2011:294), the share of USA in multinational companies has decreased to 28% in 2002 compared to 48.5% in 1973 because of establishment of more multinational companies by other