Overview

Your phone was designed in California, assembled in China, with chips from Taiwan and gold from Peru. You are reading this on the World Wide Web. Globalization is the shrinking of the world. It connects economies, cultures, and people into one giant system.

Core Idea

The core idea is Interdependence. What happens in one country affects every other country. A virus in Wuhan shuts down factories in Detroit. A war in Ukraine causes hunger in Egypt.

Formal Definition

The process of interaction and integration among people, companies, and governments worldwide. Drivers: Container Ships (cheap transport) and Internet (instant communication).

Intuition

  • The Village: 500 years ago, you lived and died in the same village. You ate what you grew.
  • The Global Village: Today, you eat sushi (Japan) while watching Squid Game (Korea) and wearing Nikes (Vietnam). The world is one big marketplace.

Examples

  • Supply Chains: An iPhone has parts from 43 countries. It travels 500,000 miles before it reaches your pocket.
  • Cultural Globalization: McDonald’s is in every country. K-Pop is popular in Brazil. English is the global language.
  • Financial Contagion: When the US housing market crashed in 2008, banks in Iceland went bankrupt. Money flows instantly across borders.

Common Misconceptions

  • It makes everyone rich: It makes the world richer on average, but it creates losers. Factory workers in Ohio lost their jobs to workers in Mexico. This creates political anger (Populism).
  • Offshoring: Moving a factory to a cheaper country.
  • Neoliberalism: The political ideology that supports free trade and open borders.

Applications

  • Peace: The “Golden Arches Theory.” No two countries that both have a McDonald’s have ever fought a war against each other. (Mostly true). Trade makes war too expensive.

Criticism / Limitations

  • Race to the Bottom: Countries compete to have the lowest taxes and worst labor laws to attract corporations.
  • Homogenization: Everywhere starts to look the same. A Starbucks in Tokyo looks exactly like a Starbucks in New York.

Further Reading

  • Friedman, Thomas. The World Is Flat.
  • Stiglitz, Joseph. Globalization and Its Discontents.