Understanding Globalization in a World Perspective

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Understanding Globalization in a World Perspective The word “globalization” as defined by Merriam-Webster Dictionary is “the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets.” The global expansion extends goods and services to a worldwide market, via investments, services and trade. This global force is driven by economic investments in foreign markets. Factoring trade growth is pushed by financial institutions, governments and personal investors in the pursuit of profits. The growth of technology and globalization has been seen as both the cause and effect for exponential growth over the past decades. There has been a twenty-seven times increase in international trade beginning in 1950. The international trade in the 1950’s was approximately $100 billion and coming to a peak of $10+ trillion in 2007 (WTO, 2013). Following in the wake of 2008’s stock market collapse in the U.S., international trade has slid about $2 billion. However, international trade has been recovering by about 6% increase until 2011 where trade has been flat at approximately $11.5 billion (WTO, 2013). Within the last 2 years this issue has been compounded by struggles in European Union and China’s economic downturn. However international trade is still thriving and boosting under developed economies to new levels and supporting developed economies to maintain a balanced debt to GDP ratio. Capitalizing trade in a global market increases production levels and decreases cost associated with production. It allows countries and workforces to channel people and resources more effectively, thus allowing them to do things that are the most efficient given ... ... middle of paper ... ...ding of the goods now affects the exchange rates of money. How does trade affect the value of money? This is directly tied to the exchange rates. The exchange rate is the amount of currency that is equivalent to another countries currency. Typically when the exchange rate depreciates, there is an increase in the importation of the foreign countries goods. Conversely when the exchange rate appreciates there is a decrease in importation. The reason behind this is that if a product that once cost $1 USD and the product raises or lowers its price, the demand for the product fluctuates with the exchange rate of the dollar. This affects multiple currencies and economies, causing a fluctuation in the demands for imports and exports. We can now conclude that the need for trade is indeed mandatory to expand and grow economies worldwide. International trade is good for all.

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