What Is Globalization? – Effects of Economic Globalization on International Relations
The effects of economic globalization are not well understood. While some countries have benefitted greatly from the process, others are suffering due to it. Globalization also presents new challenges for governments.
Globalization involves the movement of goods, services, and capital between nations. As a result, there is more interdependence among nations. This interdependence can lead to the development of economies. But the process also brings disadvantages, such as inequalities.
During the first globalization, the world was characterized by an increase in exchange of goods and technology. It led to the diffusion of economic growth and the convergence of prices. But this trend came to a halt with the start of World War II.
Since the early nineties, the growth of economic interdependence has increased. This has posed challenges to nations and pushed them to create better policies.
Among the positive aspects of economic globalization is the ability of nations to access cheaper capital goods. However, the financial crises of the nineties showed that globalization management was not adequate. In addition, a number of emerging countries have seen notable contributions to the democratic process after free trade policies were introduced.
Developing countries are also suffering from problems related to the international financial markets. If these countries were to fully participate in the process, they would have to establish strong institutions to manage it. Unfortunately, they do not have the institutions to do so.
One of the negative effects of economic globalization is that it debilitates national sovereignty. Moreover, it may cause income inequalities within and between countries.
