Globalization Questionaire

a. What is globalization, and what are some of the traditional international trade theories that support the concept of globalization?

Globalization is the shift to a more integrated and independent world economy (Hill, 2004). It is the process of worldwide trade intended to increase capital and economic gain for all countries that partake, while increasing global citizenship. Globalization has both positive and negative effects. From a positive perspective, businesses are able to leverage their own economic strength by leveraging the strength of other businesses on a global level. There are those that have experienced a negative effect on jobs in some industries.

Some of the traditional theories that support the concept of globalization include Mercantilism, Adam Smith’s theory, Free Trade, and Comparative Advantage (Hill, 2004).

Mercantilism advocated that countries should harmoniously encourage exports and discourage imports. Adam Smith’s theory of absolute advantage occurs when a country is more efficient in producing a particular good than other countries and therefore, should specialize in that production for trade with other countries. Free Trade refers to the absence of government influence through quotas or duties and allows things to happen through natural influence. Comparative advantage is defined as productivity differences where two countries producing the same products could still benefit if the agreement is that both countries focus on the product with the highest yield from the respective country.

b. List the major drivers of globalization and give three examples of each.

The major drivers of globalization include declining trade and investment barriers, technology and communication, and social -demographic changes. Trade barriers have been reduced and are shifting towards an open end economy. "The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market," (Hill, 2004).

Some examples of technology and communication would be internet, cell phones, and transportation. These