The Globalization Reader, 5th Edition

Introduction

Since World War II, economic globalization has been far-reaching and intensive. The value of world trade has increased more than a thousand-fold, growing considerably faster than the overall economy. Foreign investment has soared far beyond earlier levels, as companies have established plants in other countries and investors have added foreign stocks to their portfolios. Corporations with global reach have become dominant in many economic sectors, from oil to computers, from automobiles to retail. The financial world has also grown smaller, as new technologies have enabled traders to track information globally and to shift assets instantaneously. While cross-border transactions are by no means friction-free, barriers of all sorts, especially tariffs on goods and services, have come down. In contrast with the initial decades after World War II, when many countries still pursued inwardly oriented growth strategies, almost all parts of the world are highly integrated into a single world economy in which several “developing” countries, notably the “BRIC” group of Brazil, Russia, India, and China, now play a much more significant role.

In this more integrated system, events in one place can quickly ripple through the rest of the world, as was dramatically demonstrated in the global economic crisis that hammered the world economy starting in 2007. The initial blow was the bursting of the unsustainable price bubble in the US housing market, which had ballooned during years ...