Economic globalization can be defined as the process of increasing economic integration between two countries, leading to the emergence of a global marketplace or a single world market. Depending on the paradigm, globalization can be viewed as both a positive and a negative phenomenon.
Whilst economic globalization has been occurring for the last several thousand years (since the emergence o trans-national trade), it has begun to occur at an increased rate over the last 20-30 years. This recent boom has been largely accounted by developed econornies integrating with less developed economies, by means of foreign direct investment, the reduction of trade barriers, and the modernization of these developing cultures.
Economic Globalization encourages progress of free-market ideologies, when both commodities and services are provided and there is an unusual flow of capital. In fact, Economic Globalization aims at consolidating the world economies, enhancing connectivity and mutual dependence among them on international levels.
Globalization of the economy has a handful of different connotations. Economic Globalization with respect to a particular country is based on the role played by human immigration to that nation, its foreign trade, consolidation of the money markets and mobility of the capital.
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According to a survey made by the International Monetary Fund (IMF), Economic Globalization has led to the rise of mutual dependence among worldwide nations, on the grounds of speedy and widespread dispersion of technology, increasing international trade in terms of bulk and diversity, free flow of capitals on international level, etc.
In fact, economists like Theodore Levitt are in favor of using Globalization in the context of economy. In reality, the term “Globalization” in the context of economics was made popular by Levitt himself around 1983, though economists since 1981 were familiar with the term “Economic Globalization”. With passing time, however, this term has gained wider connotations. At present, Globalization of the economy can be measured on the basis of 4 principal economic flows which characterize the concept as well:
Commodities and Services: In this respect, both imports and exports are taken together as proportionate to per capita national income. Population or labors:
This helps in understanding inward or outward flow of immigrating people and the net immigration rates, in terms of the total population of a country. Capital: The inbound or outbound direct investments are proportionate to per capita income. Technology: Increase in research and development programs on an international level, whereby at least a part of the country’s population are benefited from such inventions.