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The world is becoming more and more interconnected. Never before in human history has there existed such an intense relationship between international trade, communication, and politics. The term globalization is all around us. Sometimes as an opportunity, sometimes as a new challenge, but what exactly does globalization mean and what are its ramifications? Even though the term globalization is frequently used, it is not easy to define. One thing is clear: in today's world economic, environmental, social, and political issues and problems are no longer limited to the national level because the world has become so interdependent. Reasonable governance can only be realized within broader groups of stakeholders. For example state confederation such as the European Union, regional economic organizations like the OECD, or the whole world.
Today modern communication technology and mass media like radio, TV, phones, or internet are global standard. This means that information can be distributed worldwide, in real time at affordable prices. For instance, the average price of a telephone call from New York to London has decreased by 99 percent since 1930. International TV broadcasters deliver information, opinions, and cultural products to the most remote areas. The cost for transportation of products and persons dropped 65% since 1930 due to low fuel prices and the development of new means of transportation, in particular container shipping. Air freight costs dropped even more, 88%. The freight charges per ton of coffee delivered from Asia to Europe only counts for one percent of its price. Such developments are the result of technological advancements, but there are some aspects which were introduced purposefully as well. Since the 1980s, the richer more industrialized countries work towards removing trade barriers such as tariffs, import quotas, and fans worldwide. Thus new technologies decreasing transportation costs, and the liberalization of international trade has made it possible and profitable for major companies to produce and sell worldwide.
Let's take a glance at the three main areas of globalization. The economic sphere is a particular importance. It is a major catalyst for globalization and is at the same time the most affected area. International exports have increased 30-fold in the last 60 years. The foreign direct investment companies and governments has increased substantially. It's written from $13 billion dollars per year in 1970 to more than one point a trillion today. Many companies are searching for new markets and opportunities for cheap production in countries with low wages and soft environmental regulations. The number of such multinational corporations rose from 7000 to 65,000 since the 1990s. Similar to the world economy, international politics is also more interdependent today. Most important policy issues like climate change, the financial crisis, or terrorism do not care about borders. Such problems cannot be solved by a single state alone. Politics tries to react by attempting to make decisions in broader groups of countries like the EU, the G-20, or even the United Nations. At the same time, there are more and more international pressure groups which do not belong to a particular state. These so-called non-governmental organizations or NGOs are able to exert influence in politics related to their field of work. Examples include Greenpeace, Amnesty International, or attack. A global public forum evolves through the previously mentioned new possibilities of communication. NGOs use this in order to influence politics. International political problems and the emergence of new global actors like NGOs in multinational corporations lead to a decrease of the political latitude of single states, especially of small states.
The influence of globalization can be observed in our culture as well. One aspect is often referred to as McWorld. The term describes how Western culture, especially popular culture, becomes dominant and destroys cultural diversity. The global distribution of western music, news, products, and even the English language promotes this effect. To counter globalization, we can also see backlash. For example, people are increasingly returning to local and regional cultural customs. Globalization is a very complex development. Some countries benefit more others benefit less. Newly industrialized countries like Taiwan and South Korea, as well as the rapidly developing India, Brazil, and China, gain considerable advantage from their integration into the world economy. They can build up their factories with foreign direct investment in infrastructure and sell their products internationally. Due to the low wages in these countries, these products are very competitive on the world market. China represents a perfect example of how the broader population can benefit too. It's fast economic growth has enabled 500 million Chinese to leave extreme poverty. On the other hand, there are whole regions who are suffering more than they're benefiting from globalization. This is particularly true for most sub-Saharan African countries. Such countries are not prepared to sufficiently for tightened international competition. The cheap products produced by industrial newly industrialized countries flood the local markets and destroy local production facilities. Moreover, these countries are not attractive for foreign investors. Thus they cannot walk the same road as the newly industrialized countries.
Globalization is both threat and an opportunity for industrialized countries. On the one hand, they can acquire new markets for their industrial goods. On the other hand, they're facing the competition newly industrialized countries that can produce at lower costs. Specifically, the production of simple good is no longer profitable and very few products like textiles, toys, or white goods are still produced in industrialized countries.
It becomes clear that globalization takes place at many areas such as politics, culture, and the economy. Declining costs of transport and communication, and the global liberalization markets, have fueled this trend. While some countries benefit from globalization, it is exacerbated the problems of others. Thus, globalization presents both new opportunities and new challenges.