Globalization

Globalization

In the textbook, "globalization refers to the shift toward a more integrated and inter-dependent world economy. Globalization has several different facets including the globalization of markets and the globalization of production. (Hill, 2004)" Globalization is also the process of interaction among different governments and nations (globalization101.org, nd).

Some popular international trade theories are: the Mercantilist Theory, Theories of Trade the Absolute Advantage and the Comparative Advantage as well as Factor Endowments (witiger.com, 2005). The Mercantilist Theory points out the basics of trade, such as when you export you receive a payment and currency is based on the gold standard. The best thing to do is to export as much as possible to gain as much gold as possible. If you refuse to import items the population of your nation will have to do without certain consumer items (witiger.com, 2005).

In Theories of Trade there is the Absolute Advantage and the Comparative Advantage. The Absolute Advantage reflects on the idea that countries should specialize in producing what they are best at producing, i.e. things they have an advantage in. The Comparative Advantage focuses on the idea that there are benefits to trade even when one country is better in production (witiger.com, 2005). Factor Endowments focuses more on the material aspect of trading, where countries should export products which are made from materials that it has a lot of, and import products that are made from materials it doesn't have a lot of (witiger.com, 2005).

The major drivers of globalization are the costs, markets, competition, work force, technology innovations, and political organizations. Costs are going to refer to what are the costs of materials, labor, trade, and the cost of doing business itself along with the aspect of legal issues and taxes. Markets pertain to the open markets available. If one country has already started exporting to another country, what are other markets that it could penetrate to gain an advantage? Countries must also consider what competition they have. Are there other countries that may gain more profit due to political reasons, or their cost of trade? Work force is also an important part of identifying the drivers in globalization. Each company looking to set their business into an international