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2018-10-30

The mechanisms of globalization

We are all aware that we are already living in a globalised world. But how it came to be? what are the actual mechanisms of globalization? And what does this mean for us personally?

From economic perspective, globalisation is to be seen as a reinforcement and intensification of the constant Attempts, the use of the factors of production to optimize, the less and less by national borders with the brakes, and, therefore, resistant to an increasing extent, on the global level. From an economic point of view, is globalization a collective term for the global expansion of all the economic activities now to be a global player in advanced companies. It is a global selling, promoted by global marketing and global sourcing, that is, through global procurement strategies, and supported by the use of the world’s best production facilities through relocation of production, outsourcing, i.e. the outsourcing of processes from the company, and offshoring, the relocation of businesses abroad, as well as through cross-border mergers and acquisitions (M&A) accelerate.

In this process, companies connect to the global or transnational business networks, which cooperate in turn with other business networks and part of other networks. This development, however, can only move so quickly, because of the investment activities of the company knows hardly any limits and cross-border investment, the rise in direct rates of investment (Foreign Direct Investments, FDI), and thus international capital flows and the overall global financial transactions, with some dramatic growth. The mobility of the factors of production – labor and capital – the factor mobility, especially that of the capital increases continuously, while the transaction costs continually decrease.

Economic globalization to describe a large part by the following developments:

  • The rapid growth of international trade led to the emergence of a world market for Goods and services. The internationalization of markets for goods and services, for example, the volume of world trade for goods and services in the last 50 years, about twice as fast to increase as the world production of goods and services.
  • The increasing use of lower-cost production opportunities abroad led to an internationalization of production in a rapid increase in cross-border investments (direct investments) and mergers of companies and thus the global production activities of transnational companies.
  • Unequal working conditions, the development of situations and conditions in various world regions and countries, led to very unequal work conditions: High unemployment and a shortage of labour on the other hand, to accelerate the international Migration and lead to the formation of international labour markets. However, the mobility of labour is Essentially limited to low-skilled workers from low-wage countries or from countries with low social standards, as well as highly qualified workers and specialists.
  • The internationalisation of financial markets finally, in the erratic growth of international financial transactions whose volume, in spite of a number of international financial crises over 4 trillion US dollars daily (!) and so on for well over a Billarde US dollars per year (p. a.) – a number with 15 zeros – is. The rates of increase of up to 14% p. a. and also the largest growth of all economic indicators.

Of particular importance is the intensification of the global competition, where increasingly, the countries benefit from this development, which are able to combine advanced technology and innovation ability with comparatively low wages and high product and service quality. Countries that have failed for various reasons, however, the economic momentum is active, such as by foreclosure, bureaucracy, or lack of requirements, are more likely to be found on the losing side.

On the other hand, the pressure of international competition is not eligible only to dismantle the privileges of the established industrial Nations, but also in political and social achievements of the previous economic development such as Social and environmental standards. This development has political as well as economic consequences: The international interdependence of the world economy participating countries leads to an increase in international politico-economic dependencies, including all international economic and financial crises, like the debt crises of emerging countries in the 1980s and 1990s, the world financial crises of 2001/2002 and 2008/2009 and the European debt crisis since 2010/2012 evident.

Globalization not only connects the individual economic actors but also the national economies is becoming stronger, so that the world economy integrates more and more and the individual States, the spatial condensations represent within a global economic network. The States are (temporary) location of the companies and divisions and represent on the other hand, parts of the markets on which the global products generated and services are traded. This Re-positioning speeds, the need for economic-social structure changes and influences the behaviour of the political actors to a considerable extent: National decisions, such as the voting behavior in international organizations, or the structure and development of national households and the associated public debt, on the one hand, in this way, global importance. On the other hand, the global players were against decisions of the national States are less sensitive; they are not decisions about a financial transaction to introduce a tax or raise environmental standards acceptable to, you can Dodge by shifting their activities easily, so that the effectiveness of national policy decisions is reduced. In short: globalization of companies and economies with new opportunities and faced with new risks.

These companies are subject to a significant socio-cultural transformation process. The once-tight bonds of Tradition, Religion and local community is lost under the influence of rapid economic development, the developments of information and communication technologies and the “modern” global communicated behaviors, values, and consumption ideas of their binding force and standard-setting effect for its members. The people were thus equally free and binding-free and therefore more open to influences that are used by global actors (be able to).

So the dual economic structures in developing countries, so the Juxtaposition of the traditional, mostly rural economy forms, and highly developed well-differentiated socio-economic structures – mostly in cities – to a progressive loosening of social bonds between the family and the descent region. Religious rules, traditional customs and norms are losing a growing part of the population to the “new” values of the modern sector and the associated forms of life in importance. These mostly Western values, such as individualism and rationalism go hand in hand with the processes of industrialization and later globalization, such as rationalization and Economization of all areas of life, mechanization, and occupational differentiation and specialization.

In the industrialized countries, however, the Trend towards a multi-cultural society. The ability to process the globalisation demands and influences of productive, seems to be the capacity for integration and, in particular, the integration readiness of these companies to hang out. Even if the companies appear with this task, often overwhelmed, and it comes here again and again to setbacks, so it seems as if the insight into the benefits of an integration strategy, and thus in the need to develop such a and constructively to implement the increases.

Overall, many companies are in the processes of Transformation from static to dynamic companies, or companies with less to companies with a higher degree of dynamics. Thus the approximation processes to strengthen, despite continuing cultural differences: National societies are part of a world society. Similarly, foreign countries are not as hostile worlds, but as additional markets, or as a part of the world are seen market. As a result, new sales, production and employment opportunities: The mobility of people in more and more countries. At the same time the possibilities of the people will increase, because of the importance of education and training is detected: The labour potential, in particular, the number of skilled workers is growing all the time.

Globalization also affects culture. They changed cultures, forces adjustments and new cultural Standards. However, due to cultural standardisation to penetrate by no means all of the cultural layers, but often limited to the “cultural surface” of companies or of certain, a “Western” lifestyle of practitioners of social groups. In spite of this “surface of harmonisation” remain cultural differences still largely intact cultures often seem more similar than they actually are, or are so different as they seem. At the same time, old cultural boundaries through Migration and new cross-border impetus to be more and more blurred, so that new and complex multi-cultural spaces.

Culture and cultural differences must be taken into account by the actors, and will remain, for the success of the global player of significance. The own cultural Standards and behaviour can be transmitted only to a very limited extent on the interaction partners beyond their own borders, these expected or even assumed. Thus, the importance of intercultural remains high competence, with the help of culturally-influenced behaviors, reactions, and mannerisms of interaction partners can be classified as detected, constant or increasing with the growth of economic transactions.

On the basis of these Considerations, globalization can be described as follows:

Globalization is a dynamic process that drives the economic interconnectedness of the world due to the increasing cross – border exchange of goods, services, property, and financial capital as well as labour forces, the economic significance of national borders decreases, and the international competition intensified; so that, through the cooperation of all major sub-markets to grow the opportunities for international division of labour more and more intense, the global use of resources improved continuously, constantly new opportunities as well as risks emerge and the national and international political actors are forced, changing roles, the increase in intercultural interactions and challenges, to take the lead in shaping globalisation.

Excerpt from the book of Professor Eckart Koch

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