Globalization: Markets, Production, Institutions and Backlash

Posted on Jan 6, 2026 in Business Administration and Management (BAM)

Globalization: Concept and Market Trends

Globalization (Glob): Refers to the trend towards a more integrated global economic system.

Globalization in Markets

Glob in markets: The merging of historically distinct and separate national markets into one huge global marketplace. Tastes and preferences of consumers in different nations are converging toward some global norm (examples: Coca‑Cola, Starbucks, Sony PlayStation, and McDonald’s). However, most highly globalized markets are industrial goods and raw materials. Many factors mean that national markets and cultures are still very different; it is therefore often very hard in practice to standardize a product or service globally.

Global Production

Glob Prod: The sourcing of goods and services around the globe to take advantage of national differences in the cost and quality of factors of production. The goal is to lower overall cost structure or improve the quality or functionality of products. Between 1991 and 2013, China’s global share of manufactured exports rose from 2% to 20%, and the USA lost approximately 6 million manufacturing jobs.

Global Institutions

Global institutions manage, regulate, and police the global marketplace and promote the establishment of multinational treaties. Key institutions include:

  • World Trade Organization (WTO): Polices the world trading system. In 2010, its 154 members accounted for about 97% of world trade.
  • International Monetary Fund (IMF): Promotes stability and order in the international monetary system.
  • World Bank: Focuses on economic development and poverty reduction.
  • United Nations (UN): Aims to preserve international peace and security and to address global problems, including human rights.

Declining Trade and Investment Barriers

International trade occurs when a firm exports goods or services to consumers in another country. Foreign direct investment (FDI) is when a firm invests in business activities outside its home country. In the 1920s and 1930s many countries erected barriers to protect domestic industries. After World War II, policymakers began removing trade and investment barriers. Lower trade barriers help companies view the world as a single market; the 1980s saw an acceleration of world trade and investment.

Role of Technological Change

Since World War II there have been major advances in communications, information, and transportation technologies. Microprocessors and related innovations lowered communication costs and enabled new business models. For example, U.S. web‑based transactions totaled about $133 billion in 2008, and around 1.6 billion people were internet users in 2009.

Key questions:

  • What are the implications of technological change for the globalization of production? Lower transportation costs enable larger, more economical production systems and allow firms to better respond to international demand.
  • What are the implications of technological change for the globalization of markets? Low‑cost communication networks support electronic markets, increase the importance of innovation, reduce distribution costs, facilitate global markets, and make the movement of people and information easier.

Current Status: Political Backlash and Pressures

Globalization under attack today:

  1. Political backlash: Examples include Brexit and protectionist rhetoric (e.g., anti‑China positions).
  2. Free movement of people under pressure: Concerns about terrorism (e.g., in France and the UK) and the rise of anti‑establishment parties in countries such as France and Germany have led to calls for tighter border controls.
  3. Free movement of capital under pressure: There is backlash against globalized financial markets and changes in tax policy in the US and UK. Notable rulings include the European Union decision in 2016 that ordered Apple to pay €13 billion in back taxes to Ireland.

Immigration: Needed but Contested

Immigration (needed but not wanted): The EU and Japan, among others, face ageing populations; immigration is important for economic growth. Common public perceptions and issues include:

  • Britain: “Migrants overburden the welfare state.”
  • United States: “Migrants hold down the wages of American workers.”
  • The influx of different cultures poses integration challenges.
  • “Donor” countries worry about “brain drain.”
  • Some political arguments emphasize: “The state should look after its own first.”