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What is Globalization? Globalization vs Internationalization

  • Neelam Tyagi
  • Sep 27, 2021
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We live in a world interconnected by an array of compact economical transactions, social and environment complications, global political collaborations and conflicts, we used to find these global economics in the news everyday. For example, 


  • The emergence of manufactured goods by China has affected the wages of both rich and poor countries.

  • As a huge association, including Microsoft, Intel, Toyota, etc have invested a huge part of their investment in affiliation with many countries globally. They have developed worldwide production networks and shared technological knowledge at different levels to build complex goods to be sold anywhere in the world.

  • Major cultural differences (Hollywood movies, jazz’s music brand) can be deployed for creative personnel groups along with fundamental components of the product either to be composed, combined or edited at different locations. 


Above mentioned instances are the perfect picture illustrating the ubiquitous glimpse of globalization. The theory of globalization has enormous explanations depending on the course of events being interpreted. Let’s initiate the concept with trade and finance;


“Trade, an engine of growth to create jobs, to curtail poverty, to extend economic growth and prosperity.” 


“Finance, a monetary management system incorporating activities such as investing, borrowing, lending, budgeting, saving, and forecasting. To allocate assets, liabilities, and funds over time, finance reaps out funds to best activity while controlling challenges and uncertainties.”


Trade and finances are two carriers propelling the process of globalization with ease. Various ways are prompted to conceptualize globalization and the same concept is the essence of discussion during the blog. 


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Understanding Globalization


Globalization can be stated as an interactive process and integrable process such as economic, social, technological and cultural expediting a secure association amidst individuals, firms, and governments across the globe that can be cherished by international trade and investment as well as supported by information and communication technology.


  • Facilitating free trade, free market and competition at international level, globalization promotes the expansion and enlargement of the economic system at a greater depth. 

  • Globalization provides an approach through which the field of trade, investment and technology could assist the global industry more to be effectively connected and interdependent and determine the factors making economic and social changes due to globalization.

  • Globalization escalates overall productivity and dispersion of goods and services at world level, and thereby ursurges economic practices in terms of geological borderlines without the interruption of the government of the respective countries.


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As explained by global economists, integration and interconnection of markets of different countries via economic transactions result in globalization. 


Intersecting the national boundaries, these transactions are the formation of merchandise, multiple variation of services, financial instruments, investing bodies, financing in local production activities by MNCs, temporary and permanent workforce movement, and exchange of technological information. Globalization includes individuals, business amidst unrelated firms, transactions within international corporations and governments. 


The term "globalisation" is used to describe a variety of economic, cultural, social, and political changes that have shaped the world over the past 50-odd years, from the much celebrated revolution in information technology to the diminishing of national and geo-political boundaries in an ever-expanding, transnational movement of goods, services, and capital. The increasing homogenisation of consumer tastes, the consolidation and expansion of corporate power, sharp increases in wealth and poverty, the "McDonaldization" of food and culture, and the growing ubiquity of liberal democratic ideas are all, in one way or another, attributed to globalisation. Shalmali Guttal


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Effects of Globalization


  • A steep climb in international trade,

  • Exorbitant approach to global market,

  • Extensive reliance across global economy,

  • Unrestricted operations of goods and services, and financing,

  • A high rise in multinational corporations, presently, thousands of companies have their subsidiaries in various countries, and

  • Standardizing cultural and social barriers across various parts of the world making the global market compatible.


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Simple case studies:


Various MNCs associations have made huge investment at different level that help countries to produce new jobs and skills for regional communities, but at the same time, the process has derived severe impacts by virtue of extending competition for local businesses and the evidence that the a huge section of profit from foreign-owned companies are withdrawn from the host country.


Besides, MNCs come up with wealth and foreign currencies to local businesses/economies for use in regional resources, products and services, and the additional amount originating from this investment can be deployed for improving health, education and infrastructure of the developing nations.


Many businesses, dealing in service sectors, have founded call centers/service centers in different territories that demand, for example, a high number of local-language speaking people. These companies can benefit from low-cost labour while providing 24*7 services provision, simply, phone lines and customer services can function globally at different time zones.


Promoting exchange of ideas, experience & learning and livelihood of society and cultures, people can know-how other’s culture, social interactions, products and services that were not available in their own country earlier. 


Globalization could increase consciousness among people about the global issues such as deforestation, global warming, ending poverty, human rights, international law and justice, peace and securities and many more and make them aware of the need for sustainable development.


(Also check: Impact of Coronavirus on the Global Economy)



Globalization vs Internationalization 


The difference between internationalization and globalization are discussed below;


  1. Internationalization is the method to produce adaptable products in a way that they can be examined, distributed, acquired and used up by people of different nations that could prompt global expansion. 


On the other side, globalization is the process that augments geographical exchanges of goods and services, money, knowledge, cultural values, etc across nations.


  1. Considering national and international organizations and businesses, the process of internationalization aims to provide them with appropriate approaches to enter the international market while becoming an integral part of other countries.


Globalization on the other hand is related to the global economy, it attempts to connect the economies worldwide to trade for free and coordinates with the guidelines and regulations of different countries.


  1. Variety of factors including nature, priorities, traditions, customs, cultures, religious values etc can impact the functioning of Internationalization.


Opposite to that, globalization can be affected by telecommunication networks, logistics, proper infrastructure development, availability of workforce, technological changes, economies of scale, difference in taxes, growth strategies of transnational companies and multinational corporations, and many more.


  1. Internationalization aims to expand business whereas globalization focuses on unrestricted movement of goods and services, people and capital in a systematic way.


  1. An active appearance of enterprises can increase tasks/tools/processes of internationalization that shifts the global economy towards the sphere of globalization. 


From deportation of trade barriers, evolution of open and free markets to an increase in the number of migration are the result of globalization. (Source)


Ending Notes


Interconnecting economies of different nations, globalization facilitates consumers to purchase products from other countries, the process of globalization is assisted through various factors including the expansion of trade across national borders, reduction of barriers to trade, simplified procedures,  and many more. 


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Globalization has both positive and negative consequences, for example, what product and services are better for consumers to offer, cost cutting for numerous companies, access to raw materials, etc, on the other hand, there are instances where globalization influences the economies of developing countries as well as inadequacy of the small scale companies to compete with larger scale, etc. 


We believe the dominant perspective on globalization must shift more from a narrow preoccupation with markets to a broader preoccupation with people. The social dimension of globalization is about jobs, health and education – but it goes far beyond these. It is the dimension of globalization which people experience in their daily life and work: the totality of their aspirations for democratic participation and material prosperity. A better globalization is the key to a better and secure life for people everywhere in the 21st century.-ILO, World Commission on the Social Dimension of Globalisation, a better globalization.


But, with increasing globalization in the international environment, for any company of any size, there are ample opportunities, challenges and also risks that can be managed via effective planning and strategies. 

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