What Is Globalization?
Why is globalization happening at a faster rate today?
Many different factors contribute to the increased rate of globalization, including ease of travel, eased trade regulations, and improved communications technology.
Today, you can wear clothes made in Asia, eat Mexican food at a local restaurant, and watch a movie made in Italy, all while living in the United States. Centuries ago, that would not have been possible. Globalization allows you to live in a world with many connections to other countries and cultures. But what exactly does that mean? And how does globalization affect people around the world?
In its simplest form, globalization is a process of integrating communication, culture, and economies all around the world into a global system. Countries no longer operate as independent islands. Instead, people, companies, and governments of different nations work together.
Goods, services, people, culture, and ideas flow across borders throughout the world. As a result, the world is more closely connected. In a way, it is becoming a much smaller place.
Advances in technology mean that people are no longer restricted by national borders or distance. New communications technology, such as cell phones and the internet, allow people to instantly communicate and do business with people on the other side of the globe. They can use cell phones, fax machines, email, text messaging, and social media to communicate.
Jet airplanes fly people around the world in less than 24 hours. Planes, vehicles, and ships carry goods and services more easily across borders. Because of these advances, the exchange of ideas and goods over vast distances has become more common and faster than ever.
GLOBALIZATION IN HISTORY
Globalization is not new—it has happened throughout history. Globalization occurred when people traveled from one nation to another and exchanged goods, ideas, and culture. More than 2,000 years ago, Alexander the Great was the king of the ancient Greek kingdom of Macedon. As he conquered new lands, his armies spread ancient Greek culture to many places in southwestern Asia, northern Africa, and southern Europe.
During the Middle Ages, the famous Silk Road stretched across Central Asia and connected China and Europe. The trading route passed the northern borders of China, India, and Persia (now Iran) to Eastern Europe, near modern-day Turkey and the Mediterranean Sea. Merchants and tradesmen traveled in large caravans along the route. They carried silk cloth, tea, salt, sugar, porcelain, and spices from China and the East. In Europe, they exchanged these items for goods such as cotton, ivory, wool, gold, and silver.
Theodore Levitt, a marketing professor at the Harvard Business School, is credited with first using the term “globalization” in a 1983 article for the Harvard Business Review.
The Trans-Saharan Trade Route played an important role in spreading the religion of Islam.
In the early twentieth century, wealthy people were more affected by globalization than the average citizen. Why do you think this was?
The Silk Road generated trade among several kingdoms and empires. Along with the exchange of goods, it also provided a way for ideas, culture, knowledge, technology, art, and religion to spread across the settled world. Many trading centers along the route, including Aleppo, in modern-day Syria, and Mosul, in modern-day Iraq, became important cultural centers.
In Africa, the Trans-Saharan Trade Route linked North Africa to West Africa. A number of paths spread across the Sahara Desert, first appearing in the fourth century CE. Caravans with more than a thousand camels carried goods such as gold, salt, cloth, and slaves.
Arabic knowledge, education, and language, expanded from the Berber people in North Africa to people living in West Africa. When European countries established colonies in Australia, Africa, North America, and South America, they exchanged goods, ideas, and culture with the native peoples they encountered.
The Silk Road
In recent years, the pace and scope of globalization has increased. There are many reasons for this, including an increase in the number of people, countries, and industries. The pace of globalization had been limited by two factors: transportation and technology. Most people remained in their birth town or village for their entire lives. Globalization was a slow process.
SPEEDING UP
While globalization has existed for centuries, the pace of it quickened in the nineteenth century. During this time, world trade increased in what is called the “first wave of globalization.” Technological advances such as factory machines, steam engines, combustion engines, and railroads reduced manufacturing and trade costs, allowing companies to sell their products faster and farther afield. International trade grew steadily every year until World War I.
Between World War I and World War II, the Great Depression hit the United States and the rest of the world. Globalization slowed as several countries passed measures to restrict free trade in order to improve their own economies.
After World War II, international trade increased again. Improvements in communications and transportation made it possible for companies to more easily expand their operations into foreign countries. Transnational corporations emerged. These corporations have a base or headquarters in one country, but have operations in several other countries. During the late twentieth century and early twenty-first century, the rate of globalization has increased tremendously. Since 1950, the volume of world trade has increased 20 times.
Travel across great distances was long and hard in the past. Only a limited number of people, such as merchants and adventurers, made these kinds of journeys before modern transportation.
SHRINKING BARRIERS TO TRADE
What has caused globalization to speed up so quickly? One explanation is the reduction in barriers to trade. In the years since World War II, many governments have removed barriers that regulated trade between countries and embraced free-market economic systems.
In a free market, the prices of goods and services are determined by supply and demand, or by how much someone is willing to pay for something. This changes according to how hard that thing is to get. Neither the government nor any other organization interferes with restrictions, regulations, or price-setting.
In addition, governments created international agreements to promote trade. They negotiated with other governments to further reduce barriers to international trade. In this trade-friendly environment, companies are able to increase their own production of goods and services. Governments have also taken advantage of new opportunities in foreign countries. They have built foreign factories, raised capital from foreign investors, and distributed and sold more products to customers worldwide.
WHAT ABOUT TECHNOLOGY?
Advances in technology have helped to connect the world and speed up the pace of globalization. In recent years, computers, cell phones, and mobile devices have become smaller, more efficient, and more affordable. They have changed the way we live.
Imagine what life was like before cell phones, computers, and the internet. How would you talk to someone who lived far away from you? You’d probably have to write a letter, then wait for a reply.
Today, you can use a cell phone to call anyone around the world and talk to them instantly. If they are not available, you can leave a voice mail or send a text message.
It wasn’t always like this! Until the mid-1950s, communication across the Atlantic and Pacific Oceans was slow and difficult. Commercial telephone service using high-frequency radio opened between London, England, and New York in 1927. This radio telephone service was noisy, unreliable, and very expensive. It cost $75 for the first three minutes of a phone call!1
In 1956, American Telephone and Telegraph Co. (AT&T) introduced the first transatlantic telephone cable, called TAT-1. The cable could carry 36 calls at a time at a cost of $12 per call for the first three minutes. The TAT-1 cable produced higher-quality service, more capacity, better-quality phone calls, and greater security. The number of transatlantic telephone calls skyrocketed, from about 10,000 in 1927 to more than 4 million in 1961. Soon, large corporations used the telephone cable to communicate and coordinate overseas operations.
Engineers at AT&T make plans to run a cable across the Atlantic Ocean in 1922.
credit: American Telephone and Telegraph Co.
You can listen to the first telephone call across the transatlantic telephone cable, between New York, Ottawa, Canada, and London, at this website. What must it have felt like to talk with people on the other side of the ocean for the first time?
TAT-1 mp3
In 1991, British computer scientist Tim Berners-Lee (1955–) designed the World Wide Web, a new system for creating, organizing, and linking documents and web pages so that people could easily read them on the internet. While the internet was a system of networks to connect people, the Web provided a way for people to use that connectivity. What might today’s world be like without the internet? You can listen to his TED talk at this website.
Tim Berners-Lee TED
While telephone cables opened up communication for many, large areas of the world were still not connected. Beginning in the 1980s, satellite communication systems opened up communication to remote locations, including the edges of Antarctica and Greenland.
INVENTING THE INTERNET
A key driver of globalization, the internet evolved through the efforts of several government agencies and university scientists. It was initially developed to ease communications between computers at universities. The internet provided a way for computers on different networks to communicate with one another. As the internet grew, it connected millions of computers around the world and formed a communication network.
It provides a common platform where people and businesses can communicate and share information. Most importantly, it has changed how people communicate, do business, shop, get their news, and conduct a variety of other tasks.
With the internet, people and companies can instantly communicate through email, chat programs, and video phone calls, no matter how far away they are located. And whether you live Beijing, China, or Atlanta, Georgia, you can download the same music and movies from the internet, sharing the same cultural experience.
Images from the 2004 tsunami in Thailand could be seen around the world almost immediately after the event.
credit: David Rydevik
The internet has also changed the way people get the news. In earlier decades, most people only had access to news from local networks and a few national networks in their own country. Only a few companies, such as CNN, broadcast in multiple countries. Today, global media networks bring news and information about current events to people worldwide. On the internet, people can read about events in Russia and Pakistan. They can see live footage of a natural disaster in Peru or a terrorist attack in London.
It’s not just facts that are so much easier to access now. People are also able to read and see the news from different perspectives and discover what people in other countries consider important. It might not be what people in their own country find interesting!
Even people who do not know each other can connect and make new friends through online communities and social networking sites.
In the 1930s, few people could afford to fly. A roundtrip ticket from the East Coast to the West Coast of America cost about $260, which was about half the price of the average car!2
ZOOM AROUND THE WORLD
If you were going to travel to another country 100 years ago, how would you go? How long would it take? Much longer than it does now! Advances in technology have improved transportation, making it easier for people and goods to travel by road, rail, sea, and air. In all these modes of transportation, vehicles have become larger, faster, cheaper to operate, and more environmentally friendly.
On the road, cars are faster, safer, and more fuel-efficient. They are cheaper to operate and less expensive to buy. These improvements allow more people to travel greater distances.
This plane can fly straight from London to Singapore without stopping.
credit: Adrian Pingstone
In the air, jet airplanes have expanded the tourism industry and trade across countries and continents. Passenger planes have become cheaper and faster, allowing more people to travel and experience different countries and cultures. In 1934, a flight from London to Singapore took eight days to complete, with 22 layovers to refuel. That means the plane had to stop in places such as Athens, Gaza, Baghdad, Calcutta, and Bangkok to refill the gas tank! Today, that same flight takes only 12 hours.
Advances in ships and railroads have also changed the way companies do business. Supertankers are massive container ships that can carry enormous quantities of goods. Using supertankers, companies can ship more goods to customers in other countries. As a result, international trade has increased.
THE DARK SIDE
Some people oppose globalization. While globalization does a lot of good, it also can be harmful. Some people argue that an international free market has benefitted only multinational corporations in the West, while harming local companies, cultures, and poorer people.
One claim is that globalization widens the gap between the wealthy and the poor. While citizens who belong to wealthier countries, such as the United States, benefit the most from globalization, poor people and citizens from developing nations are at a disadvantage. They are sometimes exploited as cheap labor for international corporations. Many people in developing countries do not have access to technology or speak English, an increasingly important language in the global world.
In the year 2000, emerging economies accounted for 12 percent of global wealth, but by 2016 had contributed nearly 25 percent toward global growth.3
Globalization has also created more transnational corporations (TNCs) that do business in multiple countries. TNCs that use cheap foreign labor can sell goods and services at lower prices. As a result, many smaller, local companies, which must pay higher prices for labor and raw materials, cannot compete and are being forced out of business.
In response, some industries have started campaigns to promote local markets and locally produced goods and services. Have you heard the phrase, “buy local?”
Pop culture from the United States and other Western countries has replaced local customs and traditions in some places. Cities around the world have Western fast food chains, such as McDonald’s or Kentucky Fried Chicken (KFC). As English has become the dominant global language, many smaller local languages are being lost.
Globalization can be a positive force around the world, promoting economic growth, prosperity, and democratic freedom. Yet for billions of people, globalization threatens their livelihoods and cultures and is changing traditional ways of life.
Citizens of all countries are affected by globalization. The choices we make now will shape how globalization develops in the years to come. By understanding how globalization works, along with the issues and controversies related to it, we can find the right balance of globalization to improve life for all people on Earth.
•How do you think human behavior has changed since the rate of globalization has sped up during the past century?
•Do you think it’s a good thing that businesses such as McDonald’s and KFC can be found all around the world? Would you visit one of those businesses if you were traveling in a foreign country? Why or why not?
SHOW THE CONNECTIONS
Globalization is the great connector, bringing together people, ideas, and more from all around the world. You can learn about these connections simply by studying something from your everyday life. Pick three items that you use on a daily basis. They could be music you listen to, a T-shirt you wear, the bed you sleep in, the toothpaste you use, or the apple you eat.
VOCAB LAB 
Write down what you think each word means. What root words can you find to help you? What does the context of the word tell you?
caravan, controversy, copyright, exploit, free market, globalization, tariffs, trade barrier, trade prosperity, and transnational corporation.
Compare your definitions with those of your friends or classmates. Did you all come up with the same meanings? Turn to the text and glossary if you need help.
•For each item, think about the following.
•Is your item affected by globalization?
•Where is it made or grown?
•Where is it shipped to?
•How is it transported?
•What laws affect it?
•Who benefits from it and why?
•Who suffers from it and why?
•Create a map on poster board or in PowerPoint to illustrate the global connections you have found for each object. Present the map and findings to your class.
•How are the journey and connections for each item similar?
•How are they different?
To investigate more, pick a country to research. Write an essay on how globalization has impacted the country, both positively and negatively.
