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Regional Integration in Promoing Global Business

Essay by review  •  February 12, 2011  •  Research Paper  •  1,000 Words (4 Pages)  •  958 Views

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Globalization Questionnaire

Globalization is a process of interaction and integration between the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well being in societies around the world Center for Strategic & International Studies (2002).

People around the globe are more connected to each other than ever before. Information and money flow more quickly than ever. Goods and services produced in one part of the world are increasingly available in all parts of the world. International travel is more frequent. International communication is commonplace. This phenomenon has been titled globalization. The Era of Globalization is fast becoming the preferred term for describing the current times. Just as the Depression, the Cold War Era, the Space Age, and the Roaring 20's are used to describe particular periods of history; globalization describes the political, economic, and cultural atmosphere of today. While some people think of globalization as primarily a synonym for global business, it is much more than that. The same forces that allow businesses to operate as if national borders did not exist also allow social activists, labor organizers, journalists, academics, and many others to work on a global stage About, Inc., The New York Times Company Porter, Keith (2006).

Although no one theory may explain the apparent pattern of international trade, taken together, the theory of comparative advantage, the Heckscher-Ohlin theory, the product life cycle theory, the new trade theory, and Porter's theory of national competitive advantage do suggest which factors are important. Comparative advantage tells us that productivity differences are important; Heckscher-Ohlin tells us that factor endowments matter; the product life-cycle theory tells us that where a new product is introduced is important; the new trade theory tells us that increasing returns to specialization and first-mover advantages matter; and Porter tells us that all these factors may be important insofar as they impact the four components of the national diamond McGraw-Hill Higher Education (2002).

A driver of globalization has made a rapid globalization of the marketplace, and is one of the most important developments one can observe in the world today. Some underlying factors contributing to the accelerating trend toward global market convergence factors and plays an important role in the globalization process: First, on the political side, we have witnessed the collapse of communism as political power and ideology. The collapse of communism as political power, most dramatically demonstrated by the implosion of the Soviet empire, has opened up a large part of the world to the global economy. Moreover, the collapse of communism as ideology means that even formally communist states like Vietnam and especially China have joined the global economy.

Second, we see rapidly falling trade barriers. Tariffs have been reduced from about 40 percent in 1947 to an average of less than 4 percent in developed countries today. Since the 1950s, world trade has continuously grown faster than GDPs, showing that national economies are becoming much more closely linked and interdependent through their exports and imports.

Last but not least, there is a very strong technology-driven push toward globalization. Transportation has become much cheaper and safer. Travel has increased tremendously. These days, more than 500 million people travel to other countries annually. This means that people can experience other countries, cultures and customs at first hand. The fax machine has been very important for business communication and the Internet is a major new force. Internet and globalization are nowadays closely related. By reducing the cost of information

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