International Trade Exploration
The kind of process was named 'globalization'. Those who approved the predominance of economic liberalism, consider globalization as the possibility of unlimited growth and advancement, (not only developed countries but also developing ones that have enough courage to accept rather than resist the phenomenon in all its manifestations. The others perceive globalization as a new step to economic anarchy, rising inequality and a rejection of political control.
For understanding globalization in terms of its implications for economic governance and business, it is highly important to analyze the major interconnected drivers behind the phenomenon.
Modifying economic paradigm from demand management to neo-liberalism. A strong mutual dependence of economies has appeared because of the growing approval of economic liberalism as the privileged method of 'managing economies'. The expanding of competitive liberalism into domestic economic policy has heightened the complexity of mutual dependence and intensified the globalization that has taken place with essential consequences for corporate strategies and behavior.
The prevalence of international governance and regulation. As a result of wide acceptance economic liberal ideas and reducing barriers to international business, among the questions of current importance was the most favorable location of policies to regulate the international business environment. Actually, the policies were determined both at regional level (for instance, the EU) and at international level. At bottom of fact this development is a demonstration of the globalization trend appeared with the gradual reduction of tariff barriers among GATT partners and later among WTO members.
Finance and capital spread. The extra-trade and investment caused by globalization demands parallel movements of finance and capital. Liberalization, deregulation, and technological changes have actually combined in recent decades to transform the finance sector to keep up the increasing number of transnational transactions. Among the results of the trend is a weakening of the linkage between currencies and their traditional locations as well as the multiplication of the forms of money.
The diffusion of information and communication technology. Technological developments, the emergence of e-commerce in particular, also pose new challenges to generally accepted governance structures redefining and reorganizing economic and commercial space, contributing to reforming of the manufacturing system and transforming the shape of value-chains.
Social and cultural convergence. A consequence of continuous liberalization and the expansion of global ITs is a degree of social and cultural convergence, representing precondition for globalization process.
Global products are comparatively rare but where their existence is probable, they heighten the vital capacity and desirability of developing cross-national production systems and value-chains, with all the potential gains.
The concern about international economic integration is highly important as it shapes the business environment and forms corporate strategies. Though, globalization has appeared to be rather a controversial phenomenon. The friction centers on interpretation of the intensity and significance of the changes in the world economy. The most essential question concerns whether the economy is becoming really global or just more inter-national.
An international economy implies no fundamental shift in the underlying principles of economic organization but simply more cross-border transactions. Globalization causes basic implications for governance and political organization whereas internationalization, although posing governance challenges at national and international level, can be assimilated within the current governance frameworks.
Rather than describe globalization, Johnson and Turner refer to a shift towards a more 'international' economy'. Thus, they underline the meaning of the word 'international' - that is, 'between nations'. International events do not necessarily directly penetrate the national economy but have an indirect effect through national policy and processes or work 'automatically' through market forces. This has very different results for business: greater interdependence still intensifies competition and companies go on seeking entry to new markets through a great number of different modes but strategy is developed to take into consideration regional and national differences.
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