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What causes Globalization

The book I am reading now, Lexus and the Olive Tree by “Thomas L. Friedman”:http://www.nytimes.com/top/opinion/editorialsandoped/oped/columnists/thomaslfriedman/index.html explains three major factors for the spread of globalization


The Democratization of Technology

Now, due to developments in communication technology, you can communicate cheaply. Innovations in miniaturization have made computers, pagers and cell phones easy to carry and affordable. Due to this the potential for wealth creation has become more geographically dispersed. An example he gives for this is the call centers run in India. The back offices of various western companies are now located in India, resulting in more jobs.

The Democratization of Finance

After the cold war most international lending was done by big commercial banks and insurance companies. Now companies offer bonds directly to the customer which could be you and me investing through our 401(k) plans. As a result countries and companies are now dealing with people whom they don’t know located in various countries. If a country or company did not perform the bond holders would sell off their shares and invest money in countries and companies that performed.

The Democratization of Information

In the post cold war era, most Governments controlled the information that was distributed to the public. With the launch of many communication satellites, the number of information channels available increased dramatically and is available to anyone with a dish antenna or a cable subscription. With the advent of Internet, information is available anytime on-demand.

He says that due to all these factors you cannot supress information anymore or pretend that you did not see it. This was evident in the recent spread of SARS in China. From all the information we got, people in North America knew more about SARS in China than people in China. As a result many business opportunties were lost and many of them, mainly those related to textiles went to India, which was more open about the epidemic. All this forced the Chinese administration to take a more serious stand regarding the lives of its own citizens.

2 Responses to What causes Globalization

  1. Sridhar July 25, 2003 at 12:10 pm #

    Why promote american using the words “democratization”. There are many words from tricke down effort to technology development to ageing america

  2. Shon Lee December 8, 2003 at 1:16 pm #

    Love your site.

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