Seminar Paper, 2013
17 Pages, Grade: 2,0
List of abbreviations
Register of illustrations
2. What is globalization ?
2.2. Characteristics of globalization
3. Globalization of the economy
3.1. Globalization of goods and capital movement
3.2. Globalization of transportation
3.3. Globalization of communication and internet
4. Consequences of globalization
4.1. Major advantages of globalization
4.2. Major disadvantages of globalization
Abbildung in dieser Leseprobe nicht enthalten
Illustration 1: Expected world air cargo traffic
Globalization is one of the major topics and challenges of our time. It describes the process of the worldwide increasing interconnection of economy, politics, culture and environment. This compression affects individuals, society and institutions as well as countries. It can help to increase prosperity, social justice and global networking in order to make the world more equal. In the following seminar paper, the prime importance will be the look at the effects of globalization on the world economy in general.
Despite the advantages of globalization, the negative side with all the disadvantages should not be neglected. Therefore, it is essential to look at the advantages and disadvantages that are created by globalization. The question is to ask, if globalization really has the force to make the world more equal and who are the winners or the losers of it ? The available seminar paper tries to answer that question with a critical analysis of the topic.
Chapter two pays attention to the fact what globalization really is and tries to identify the major characteristics of globalization. Chapter three concentrates on the consequences and effects of globalization on the world economy. The fourth chapter tries to identify the advantages and disadvantages. The seminar paper ends with a short result in chapter five, providing a short summary of the whole theme.
In literature, a huge uncertainty about the beginning of globalization is existing. For this reason an exact definition is not possible. To give a short overview, this seminar paper covers only three starting points of globalization.
The first evidence can be found in the fifteen century, when in the aftermath of the European conquest Chistoph Kolumbus tried to find the sea way from Europe to India in 1492 and Vasco da Gama finally found it in 1498. The consequence of that special discovery resulted in the first worldwide contract in history, by name the contract of Tordesillas in 1494.1 After Ferdinand Magellan sailed around the world the contract of Tordesillas developed further into the contract of Zaragossa.2
Another definition says that globalization started with the industrial revolution between the 18th and the 19th century when mechanical mass production developed and the demand for raw material raised. Especially the rising demand for cotton contributed to the expansion of the industrial revolution throughout Europe and not only England, where the industrial revolution once had started. Furthermore, higher amounts of coal and iron were needed in order to satisfy the higher demand for cotton. Therefore, small inventions were indispensable to improve production and transportation systems.3
More modern views say that globalization started in the middle of 1980. The leading world economies agreed for a reassessment of the rates of exchange. The reassessment was recorded in the Plaza-Accord of 1985. The goal of that change was to achieve a revaluation of the YEN and the Deutsche Mark towards the US-Dollar and the British Pound, in order to correct dissimilarities in the trade balances of those countries. But the actual effect were major financial transactions worldwide. The intended effect was not be reached.4
The previous chapter reveals that an exact definition of a starting point of globalization is not possible. To find an exact definition about globalization is also hard. Therefore, it is important to identify the important characteristics of globalization.
Globalization can be seen as a process of changes that intensifies global relationships in numerous levels. Thereby, a global interdependence arises in areas such as economics, politics, culture and environment. It is possible to divide the changes into four different types. First of all globalization means an expansion of various activities in social life, politics and economics throughout countries and continents. As a second point that characterizes globalization, the expansion of worldwide interconnection of trade and financial transactions, together with an assimilation of different cultures, can be considered. This mentioned interconnection has also effects on global collaboration and processes and it helps to improve systems of communication and transportation, so that ideas, information, capital of investors and all different kind of goods can spread out into the world more easily. Last but not least, this global connection involves that events taking place in one country are able to have effects on many other countries. This means that the frontiers between global and domestic matters are fluently.
Summarized, globalization has a massive impact on the world and of the interconnection between all parts of the world and all areas of life.5
Globalization has a great influence on the world economy. This influence finds expression especially in the areas of capital and goods movement. Other areas that are influenced by globalization are transportation, communication and internet and last but not least in the mobility of people around the world.
In the period of 1960 to 2008 the statistically documented exports of goods increased by more than 15 times, while the statistically documented production of goods increased by only 5,4 times.6 The number of foreign direct investments increased from 1970 to 2007 from 13 to more than 1,800 billion USD. From 1980 to 2007, the volume of worldwide trade increased from 2,4 to 17,0 trillion dollars. In 2007, goods and services that were worth about 13,600 billion USD were exported worldwide in the amount of about 3,300 billion USD.7 The data shows that globalization has influenced worldwide investments, services and good exports in a positive way. Also the possibility of Free Trade Agreements can have a wide effect on international trade activities.
1 http://www.thenagain.info/webchron/americas/tordesillas.html, retrieved 05.01.2013.
2 http://www.bpb.de/veranstaltungen/dokumentation/130248/globalisierung-geschichte-und-dimensionen- eines-begriffs, translated, retrieved 05.01.2013.
3 http://www.bpb.de/veranstaltungen/dokumentation/130248/globalisierung-geschichte-und-dimensionen- eines-begriffs, translated, retrieved 05.05.2013; http://narvellstrickland1.tripod.com/cottonmillhistory2/index1.html, retrieved 05.05.2013.
4 http://www.bpb.de/veranstaltungen/dokumentation/130248/globalisierung-geschichte-und-dimensionen- eines-begriffs translated, retrieved 05.05.2013; Fed of St. Louis, http://research.stlouisfed.org/publications/review/92/05/Intervention_May_Jun1992.pdf, retrieved 05.05.2013.
5 http://www.polity.co.uk/global/whatisglobalization.asp, retrieved 05.06.2013.
6 http://www.bpb.de/nachschlagen/zahlen-und-fakten/globalisierung/52543/entwicklung-des- warenhandels, translated, retrieved 05.08.2013.
7 http://www.bpb.de/nachschlagen/zahlen-und-fakten/globalisierung/52575/auslaendische- direktinvestitionen-pro-jahr, translated, retrieved 05.08.2013; http://www.zeit.de/2006/47/Grafik-1, translated, retrieved 05.08.2013; http://www.bpb.de/nachschlagen/zahlen-und- fakten/globalisierung/52543/entwicklung-des-warenhandels, translated, retrieved 05.08.2013.
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