Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. Advances in transportation and telecommunications infrastructure, including the rise of the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities.
Economic and financial globalization and the expansion of world trade have brought substantial benefits to countries around the world. But the current financial crisis has put globalization on hold, with capital flows reversing and global trade shrinking.
Globalization is pulling tens of millions of people out of poverty annually and creating worldwide wealth unimaginable a generation ago. But its benefits are being shared unequally, resulting in widespread public dissatisfaction that business leaders ignore at their peril.
Along with growing inequality, shortages of natural resources stand foremost among today’s challenges. As emerging economies like China and India catch up with the developed world, they, too, are devouring commodities like oil, steel, aluminum and copper and, in the process, putting a strain on supplies. Worldwide oil demand is expected to increase by 50% over the next two decades.
Besides creating shortages, a surging oil-based economy will continue to tax the atmosphere’s ability to absorb carbon dioxide and thus contribute to global warming. “Innovation, technology, regulation and resource utilization will be essential to creating a world that drives vast economic growth and sustains the environment.”
Solutions to many environmental problems exist already, although implementing them will entail political and personal sacrifice. But globalization’s image problem in the developed world may prove even tougher to address. The costs are easy for critics to depict — jobs moving abroad — while the benefits, including lower prices on all manner of goods and services, are less obvious. A recent poll of American college graduates, which found that less than 35% believed they were benefiting from globalization. We can only imagine the result if it had included people without college degrees.
To keep up, governments as well will have to streamline their operations and ramp up their efficiency. “In emerging markets, governments will have to decide what levels of services to provide. The public sector will have to rise to the level of efficiency [that exists in] the private sector.” If this acceleration of commerce sounds intimidating, it also creates opportunities that extend far beyond mere balance sheets and back accounts: With trade between nations and also exchanges of people and cultures,the risks of war go down.