Module 1

Lesson 3: Factors Leading to the Rise of Globalization

1. Technological Advancements
Arguably, one of the most significant catalysts for globalization is the rapid pace of
technological innovation. Advancements in transportation, especially the development
of commercial air travel and shipping, reduced the cost and time it takes to move goods
and people across the world (Held et al., 1999). The digital revolution, encompassing the
rise of the internet, mobile devices, and social media platforms, has made instantaneous
global communication and data exchange possible, transforming how businesses
operate and how individuals interact.

1.a. Development of the Steam Engine and Railroads

The steam engine, invented in the 18th century, revolutionized transportation. It played
a pivotal role in powering locomotives and ships. The First Transcontinental Railroad in
the U.S., completed in 1869, connected the Atlantic and Pacific coasts. This dramatically
reduced travel time across the country, facilitating the movement of goods and people.
Similarly, steam-powered ships enhanced maritime trade by making voyages faster and
more efficient (Pomerance, 2000).

1.b. Advent of Commercial Air Travel

The first commercial passenger flight took off in 1914, traveling between St. Petersburg
and Tampa in Florida. Fast forward to the jet age, the Boeing 707 made its debut in
1958, heralding a new era for mass air travel (Taneja, 1976). This not only made
international travel more accessible to the common person but also transformed global
trade, with goods being transported more rapidly across continents.

1.c. Rise of the Internet and World Wide Web

The development of ARPANET in the late 1960s, funded by the U.S. Department of
Defense, laid the groundwork for what would become the internet. The 1991 launch of
the World Wide Web by British computer scientist Tim Berners-Lee democratized access
to information. It opened up a new realm of global communication, commerce, and data
sharing, fundamentally transforming society (Berners-Lee & Fischetti, 1999).

1.d. Evolution of Mobile Devices and Social Media

Example: The first mobile phone, the Motorola DynaTAC 8000X, was introduced in 1983.
Fast forward to the 21st century, and smartphones like the iPhone (launched in 2007)
have become ubiquitous. These devices, coupled with the rise of social media platforms
such as Facebook (2004), Twitter (2006), and WhatsApp (2009), have enabled
instantaneous communication, reshaping personal interactions, business, and even
political movements on a global scale (Castells, 2009).
 ❖ The Industrial Revolution and Technological Advancement

The Industrial Revolution is typically described in terms of four distinct stages, each
characterized by specific technological innovations and advancements:

▪ The First Industrial Revolution (late 18th to early 19th century)

Main Features: Introduction of mechanized production methods, especially in the textile

industry. Steam power started to replace human and animal power. The advent of
factories led to urbanization as many rural people moved to cities to get work.

Example: The textile industry in Britain shifted from home-based hand spinning and
weaving to factory-based using machines.

Key Technologies:

• Spinning Jenny: Invented by James Hargreaves in 1764, it allowed a single worker to spin
multiple threads at once.
• Water Frame: Invented by Richard Arkwright in 1769, this was a water-powered spinning
frame which was an evolution in textile production.
• Steam Engine: James Watt's improved version (1765) of the steam engine pioneered
industrial use, most notably in mines and later in railways.
▪ The Second Industrial Revolution (late 19th to early 20th century)

Main Features: Development of the steel industry, railroads, and large-scale

manufacturing. The use of electricity revolutionized many industries. Chemical synthesis
processes emerged, and the internal combustion engine was developed.

Example: The expansion of the railway systems in many countries facilitated trade and
the movement of people.

Key Technologies:

• Bessemer Process for Steel: Developed by Henry Bessemer in 1855, this process allowed
for the mass production of steel, leading to advancements in construction and
shipbuilding.
• Telegraph: Samuel Morse's invention in the 1830s and 1840s allowed for near-instant
communication over long distances.
• Telephone: Alexander Graham Bell's invention in 1876 revolutionized personal and
business communication.

▪ The Third Industrial Revolution (mid-20th century to late 20th century)

Main Features: Digital revolution with the introduction of computers, the Internet, and
information and communication technology. It marked a shift from analog and
mechanical devices to digital technology.
 Example: The introduction of the personal computer in households and offices changed
the way people worked and communicated.

Key Technologies:

• Personal Computers: The Apple I (1976) and IBM PC (1981) are examples of early
personal computers that became popular.
• Internet: While its origins trace back to the 1960s, widespread public adoption started in
the 1990s with the introduction of the World Wide Web.
• Digital Communication: Email, instant messaging, and early mobile phones reshaped
communication.
▪ The Fourth Industrial Revolution (21st century onwards) (Schwab, 2016)

Main Features: Blurring of lines between physical, digital, and biological spheres. It
includes breakthroughs in fields like artificial intelligence, robotics, the Internet of
Things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, and quantum
computing.

Example: The use of AI in healthcare for predictive analysis or the use of augmented
reality in retail for virtual try-ons.

Key Technologies:

• Artificial Intelligence (AI): Machine learning algorithms, like Google's DeepMind, are
utilized in various sectors, from finance to healthcare.
• Augmented Reality (AR) & Virtual Reality (VR): Applications range from gaming, as seen
with the Oculus Rift, to professional training and design.
• Internet of Things (IoT): Devices, from smart thermostats like the Nest to wearable
health monitors, are connected to the internet for real-time data exchange and analysis.

2. Economic Policies: Trade Liberalization and Deregulation.

The latter half of the 20th century witnessed a significant shift in economic policies of
many nations. This involved a move away from protectionism towards trade
liberalization. Organizations like the World Trade Organization (WTO) were instrumental
in promoting free trade policies. These policies, coupled with deregulation, facilitated
the expansion of global markets, international investment, and the operations of
multinational corporations (Rodrik, 2011).

2.a. Establishment of the General Agreement on Tariffs and Trade (GATT).

Post World War II, in 1947, the General Agreement on Tariffs and Trade (GATT) was
instituted as an initial effort to reduce global trade barriers. Through a series of rounds,
member countries committed to reduce tariffs and establish clearer trade regulations.
The GATT served as a precursor to the World Trade Organization (Irwin, 1995).
 2.b. Creation of the World Trade Organization (WTO).
The WTO was officially established in 1995, succeeding GATT. It aimed to regulate
international trade, address trade disputes, and provide a forum for negotiating further
trade liberalization. Its existence and subsequent rounds of negotiations have played a
pivotal role in shaping global economic policy, encouraging member nations to adopt
more open trade stances (Jackson, 1998).

2.c. The North American Free Trade Agreement (NAFTA).

Initiated in 1994, NAFTA is a tripartite agreement between the United States, Canada,
and Mexico. It aimed to eliminate tariffs on a vast majority of products traded between
these countries and liberalize trade in goods and services. By removing trade barriers,
NAFTA facilitated the growth of cross-border supply chains, increasing trade volumes
among member countries (Hufbauer & Schott, 1993)

2.d. Deregulation of Financial Markets in the 1980s and 1990s.

In the late 20th century, especially during the 1980s and 1990s, many countries
underwent financial deregulation. For instance, the U.S. witnessed significant
deregulation with policies like the Gramm-Leach-Bliley Act in 1999, which repealed parts
of the Glass-Steagall Act, allowing commercial banks, investment banks, and insurers to
integrate their services. Such deregulatory policies, although controversial, played a role
in promoting the globalization of finance (Kroszner & Rajan, 1994).

3. Political Drivers: Treaties and Alliances.

Political decisions, in the form of international treaties, agreements, and alliances,

played crucial roles in the acceleration of globalization. For instance, the establishment
of the European Union (EU) and the North American Free Trade Agreement (NAFTA)
fostered closer economic and political ties among member countries. Such alliances
often lead to the reduction or elimination of trade barriers, fostering increased
economic integration (Gilpin, 2001).

3.a. Formation of the European Union (EU).

Initially conceptualized after World War II as a method to foster peace and economic
cooperation in Europe, the European Coal and Steel Community was founded in 1951 by
six European countries. This initiative paved the way for the establishment of the
European Economic Community (EEC) in 1957, which further evolved into the European
Union in 1993 with the Maastricht Treaty. The EU has since grown to 27 member
countries, promoting not only economic integration but also political and social
collaboration across the continent (Dinan, 2005).

3.b. The North American Free Trade Agreement (NAFTA) and its Successor, USMCA.
As previously mentioned, NAFTA, initiated in 1994, was an economic alliance between
the U.S., Canada, and Mexico. Beyond its economic implications, NAFTA also symbolized
a deeper political commitment among the three countries to collaborate and address
 regional challenges. In 2020, NAFTA was replaced by the United States-Mexico-Canada
Agreement (USMCA), reflecting the evolving political and economic dynamics of North
America (Villarreal & Fergusson, 2017).

3.c. Establishment of the Association of Southeast Asian Nations (ASEAN).

Founded in 1967, ASEAN includes ten Southeast Asian countries aiming to promote
political stability, economic growth, and social progress in the region. While its inception
was more political, aiming to mitigate communist influence during the Cold War, it has
since evolved to also focus heavily on economic integration, notably with the launch of
the ASEAN Economic Community in 2015 (Severino, 2006).

3.d. The Bretton Woods Conference and Subsequent Institutions.

In 1944, the Bretton Woods Conference led to the establishment of the International
Monetary Fund (IMF) and the World Bank. These institutions aimed to stabilize the
international monetary system and facilitate post-war reconstruction, respectively. The
Bretton Woods system of fixed exchange rates (which lasted until the early 1970s) and
the creation of these global institutions highlighted a significant political commitment to
multilateral economic cooperation and global stability (Eichengreen, 2008).

4. Cultural Exchange and Migration.

Throughout history, human migration and the resultant cultural exchange have been
cornerstones of globalization. The modern era, with easier transportation and
communication, has seen an unprecedented exchange of ideas, art, cuisine, and values.
Mass media, particularly films, music, and television, have also contributed to this
cultural interchange by disseminating localized cultural products to a global audience
(Tomlinson, 1999).

4.a. The Great Migration (1916-1970).

This migration wave saw nearly six million African Americans move from the rural
Southern United States to the urban Northeast, Midwest, and West. While primarily
driven by economic reasons, this migration also facilitated the spread and evolution of
African American culture, particularly the Harlem Renaissance, which influenced music,
art, and literature on a broader scale (Wilkerson, 2010).

4.b. Bollywood's Global Appeal.

Bollywood, the Hindi-language film industry based in Mumbai, India, produces one of
the highest numbers of films globally. Its movies, characterized by song and dance
routines, intricate plots, and vibrant storytelling, have found audiences beyond India's
borders, influencing global fashion, music, and dance trends, especially in the Middle
East, Africa, and parts of Europe (Gokulsing & Dissanayake, 2004) .
 4.c. The Rise of International Cuisine.
With global migration patterns, cuisines from various parts of the world found new
homes and enthusiasts. For instance, the popularity of sushi soared outside Japan,
especially in the U.S. from the 1980s onward. Similarly, Italian, Mexican, Thai, and Indian
cuisines have become staples in many countries' food scenes, reflecting a true blend of
culinary cultures (Mintz & Du Bois, 2002).

4.d. Global Spread of Music Genres.

Reggae from Jamaica, K-pop from South Korea, and Afrobeat from West Africa are just a
few examples of localized music genres that gained international acclaim. The global
spread of such genres was facilitated by technological advancements in music
distribution and media, as well as international tours and festivals (Bennett, 1999) .

5. The Role of Multinational Corporations (MNCs).

MNCs, with their vast global operations, are key drivers of economic globalization. Their
cross-border activities, ranging from setting up manufacturing units to establishing sales
and distribution networks, have led to the deep integration of global economies.
Moreover, these corporations often command resources that rival those of nations,
allowing them to influence international economic policies and standards (Dicken, 2011).

5.a. Apple's Global Supply Chain.

Apple Inc., the tech behemoth, exemplifies how MNCs operate on a global scale. While
the company is headquartered in Cupertino, California, its products are manufactured in
various countries, primarily China. Components come from suppliers worldwide,
showcasing the intricacies of global supply chain management and economic
interdependence (Dedrick, Kraemer & Linden, 2010).

5.b. McDonald's Adaptation to Local Cultures.

McDonald's, a giant in the fast-food industry, operates in over 100 countries. Not only
has it established a significant global presence, but it also adapts its menu to suit local
tastes – the Teriyaki Burger in Japan or the McAloo Tikki in India, for instance. This blend
of global and local strategies showcases how MNCs can drive cultural exchange and
adaptation (Watson, (Ed.). 1997).

5.c. Toyota's Production System and Global Expansion.

Toyota's innovative lean production system, also known as the Toyota Production System
(TPS), has not only transformed the automobile industry but has also been adopted by
industries worldwide. Toyota's global expansion brought with it this efficient production
philosophy, further enhancing globalization's interconnectedness (Liker, 2004).

5.d. Nestlé's Worldwide Reach and Influence on Agriculture.

Nestlé, a Swiss multinational food and beverage company, sources raw materials (like
coffee and cocoa) from farmers around the world. By setting up agricultural training
centers in developing countries, Nestlé influences agricultural practices and standards,
directly impacting local economies and global food supply chains (Fold & Larsen, 2011).
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