Saint Mary's University of Minnesota
Schools of Graduate & Professional Programs
GM635 Social Economics
September 20, 2013
Economic globalization is a permanent movement toward economic development in the world that is increasing interaction of world economies as a result of trade of commodities and services, flow of global capital and sharing of technologies. Mr. Gao Shangquan, president of the China Research Society of Enterprise Reform and Development, writes in a CDP background paper for United Nations Development Policy and Analysis Division (2000) how the express growth of science and technologies has led to the fast globalization of the world’s markets and has resulted in an environment in which a market economic system is increasing cross-border trade, labor, and investment. Gao goes on to explain how science and technology are the chief reason for advancements in practical globalization efforts while capitalization and market reform implemented around the world are the economic reasons. Evolution of economies from planned centralized to market economies has made world integration possible.
International finance is the fastest growing and most powerful feature of economic globalization. International trade and investment are key components to expanding the global economy. Worldwide economic and financial establishments are directed by World Trade Organization member countries which use the advantage to promote and dominate the expansion of globalization. These same countries reap the greatest rewards of economic globalization. The theory of economic globalization implies lesser developed countries (LDC) can profit from the globalization process through the introduction of advanced technologies, an influx of foreign capital and experience, and by strengthening market competition.
The way governments organize and manage economies has the greatest impact on the social well-being of the countries. Organizational arrangements within a country determine what is produced and who benefits from these decisions. The economic system employed determines to what extend the state is involved (Sharp, Register & Grimes). Economic systems vary in the level to which the state is involved from being entirely controlled by the state which is the case in a pure command economy to a pure market economy where trade and production decisions are coordinated through markets. Most economies in the present world economy exist with a mix of the two extreme systems. Private party control of a country’s resources and the level of independence to allocate those resources without government control determine where on the economic scale a country’s system falls.
Globalization affects the internal social structure of formerly closed economic systems by creating jobs and capital influx. Countries previously holding to a command economy such as China have improved the social and economic status by encouraging freedom of education and job market situations. As detailed in the film “Open Borders: Globalization-A-Real World