We explain what the main causes and consequences of globalization are at an economic, political, technological, social and cultural level, with examples.
What are the causes and consequences of globalization?
Globalization is a process of world integration that gained strength at the end of the 20th century, in which a series of causes and consequences related to the economy, politics, technology, society and culture can be identified.
The main causes of globalization were:
- Acceleration of production and technological advances.
- Geopolitical reorganization.
- Trade liberalization.
- Development of international finance.
- Migratory movements and cultural exchanges.
For its part, The main consequences of globalization have been:
- Increase in exchanges and wealth.
- Economic inequality between countries.
- Improvements in the standard of living.
- Increase in the power of multinationals.
- Generalized access to information.
- Outbreak of global crises.
- Multipolarity: emergence of new economic powers.
- Relative cultural homogeneity.
All these causes and consequences respond to the fact that Globalization is a process that tends to overcome national borders for free trade and production, and promotes various forms of cultural or social exchange and political cooperation, all facilitated by information technology, the Internet, mobile telephony and the lowering of transportation costs.
- You may also be interested in: Globalization
Causes of globalization
The phenomenon of globalization was brought about by advances in information, communication and transportation technologies; the global geopolitical reorganization after the end of the Cold War; widespread trade liberalization; the development of the global financial system, and population movements accompanied by cultural exchanges.
1. Acceleration of production and technological advances
The Industrial Revolution of the 18th and 19th centuries transformed production, telecommunications and transportation, expanding the scale of exchanges. Later, technological advances in the 20th century accelerated this process and took it to a global scale thanks to the development of information and communication technologies (ICT), such as computing, the Internet and mobile telephony. Likewise, the digital economy made it possible to interconnect markets and finances worldwide, and improvements in air, land and maritime transportation made the flow of goods and people cheaper and easier.
2. Geopolitical reorganization
After World War II (1939-1945), the United States emerged as one of the world's two superpowers along with the Soviet Union, and Western Europe began a process of economic integration that led to the emergence of the European Economic Community (EEC).
When the Soviet Union fell in 1991 and the Cold War ended, the United States became the main world power and the market economy took hold globally. Furthermore, growing European integration led to the birth of the European Union in 1993, which also favored the growth of free trade on a global scale.
3. Trade liberalization
The reduction of trade barriers and the liberalization of trade through bilateral and multilateral agreements facilitated the exchange of goods and services between countries, especially after the end of the Cold War, when the market economy spread to almost the entire world and became They created institutions such as the World Trade Organization (WTO), dedicated to promoting free trade around the world.
4. Development of international finance
The internationalization of financial services, favored by economic liberalization and digital technologies, facilitated the movement of capital worldwide. This promoted international trade and capital investments in various countries.
Furthermore, some international organizations, such as the International Monetary Fund (IMF) and the World Bank (WB), have offered financial assistance to other countries since the mid-20th century, but in exchange they tend to impose fiscal balance requirements, which reinforces economic interdependence. world.
5. Migratory movements and cultural exchanges
Migrations and other forms of mobility between countries contributed to globalization, as they encouraged contact between people of diverse origins, which facilitated the exchange of knowledge and cultures.
The social and cultural aspects of globalization also benefited from new information and communication technologies (especially with social networks) and from the internationalization of production and consumption, due to the installation of factories and franchises of multinational companies. in different countries.
See also: Examples of globalization
Consequences of globalization
The main consequences of globalization are an increase in international economic exchanges and wealth; a pronounced inequality between the most and least developed countries; a higher overall standard of living due to greater access to goods and services; an increase in the power of multinational companies; widespread access to information through the Internet; a multipolar scenario in which some growing economic powers compete with the United States, and a certain tendency towards cultural homogeneity.
6. Increase in exchanges and wealth
The free flow of people, goods and capital favors the expansion of economic exchanges and the generation of wealth. This contributes to the growth of economically dominant countries and the economic advancement of less developed countries, which receive foreign investments and host multinational companies that provide jobs.
7. Economic inequality between countries
Globalization increases inequality between countries, since the most developed ones export highly valued goods and access new markets thanks to free trade. In this way, they grow at a faster rate than less developed countries, and their populations generally have a higher standard of living. The general increase in wealth derived from globalization, although it reduced the rate of extreme poverty, did not eliminate poverty in the world.
8. Improvements in living standards
Global interconnection promotes widespread access to goods and services from different parts of the world. The lowering of transportation costs and the facilities offered by digital technology (such as electronic commerce and virtual banks or wallets) expand supply and demand on a global scale.
In this way, the quality of life of many people increases in terms of the consumption of certain goods and services that in other times were reserved for a minority of the population, such as, for example, international tourism. Access to cultural products or new forms of education, such as careers and distance courses, is also becoming widespread.
9. Increase in the power of multinationals
The expansion of multinational companies, which operate with subsidiaries, production establishments and franchises on all continents, causes a concentration of wealth that sometimes motivates the closure of smaller local companies, which are unable to compete. Sometimes this leads to the formation of monopolies. The economic power of multinationals can even influence the political decisions of governments.
On the other hand, through practices such as offshoring (the installation of factories in countries other than their headquarters), companies can take advantage of the availability of cheaper labor in less developed countries, which generates employment in these countries. , but it can also cause unemployment in the country of origin and even promote different forms of precarious or poorly paid work.
10. Generalized access to information
New information and communication technologies allow, like never before in history, widespread access to information. In this way, people from different parts of the world and from practically any social class can access a large number of information sources through the Internet.
This can have political effects, since secret documents that compromise certain governments have been disclosed through the Internet (as was the case of the WikiLeaks medium) and massive social protests have been organized and spread through social networks (such as those of the Spring Arab between 2010 and 2012).
11. Outbreak of global crises
The global integration of markets and the financial system makes the economy susceptible to global recessions. This is because the outbreak of a crisis in a certain country can quickly affect other countries with which it is economically connected. For example, the crisis that began in the United States in 2008 generated a global effect of recession and slowdown of the economy, which was called the “great recession.”
Other global crises do not have to do with the economy, but with social factors, such as, for example, the global health crisis caused by the COVID-19 pandemic, whose rapid expansion is partly explained by the strong interconnection between countries and the massive mobilization of people.
12. Multipolarity: emergence of new economic powers
Although with the fall of the Soviet Union and the end of the Cold War the United States established itself as the great world power, globalized capitalism soon gave rise to the emergence or consolidation of other economic powers that today rival the American economy. In this multipolar system, China, the European Union, Japan and India stand out.
13. Relative cultural homogeneity
Global economic and technological integration promotes a certain tendency towards cultural homogeneity, at least in terms of consumption (fashion, gastronomy, entertainment, art) and customs linked to the use of social networks, mobile phones and other digital technologies.
English was also imposed as a lingua franca. Although some researchers see this as a loss of cultural diversity, others consider that exchange between populations enriches cultures, promoting greater mutual understanding and giving rise to hybrid cultural forms. Furthermore, this process is linked to the global expansion of values such as the defense of human rights, democracy and care for the environment.
- Features of globalization
- Advantages and disadvantages of globalization
- Cultural globalization
References
- Bauman, Z. (2001). Globalization. Human consequences. Economic Culture Fund.
- Hashemi-Pour, C and Lutkevich, B. (2023). Globalization. TechTarget. https://www.techtarget.com/
- Lechner, F.J. (2009). Globalization: The Making of World Society. Wiley-Blackwell.
- Osterhammel, J and Petersson, N. (2019). Brief history of globalization. From 1500 to the present day. 21st century.
- Steger, M. B. (2020). Globalization. A Very Short Introduction. Oxford University Press.
