ECONOMIC

GLOBALIZATI
ON and global
trade
prepared by: Jesica S. De
According to the United Nations (as cited in Shangquan,
2000), “Economic globalization refers to the increasing
interdependence of world economies as a result of
growing scale of cross-border trade of commodities and
services, flow of international capital, and wide and rapid
spread of technologies. It reflects the continuing expansion
and mutual integration of market frontiers, and is an
irreversible trend for the economic development in the
whole world at the turn of the millennium.”

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GLOBAL TRADE, also known as international trade, is simply the import and
export of goods and services across international boundaries.

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 THERE ARE TWO DIFFERENT
TYPES OF ECONOMIES
ASSOCIATED WITH ECONOMIC
GLOBALIZATION:

• PROTECTIONISM
• TRADE LIBERALIZATION
Protectionism means “a policy of systematic government intervention in foreign trade with the
objective of encouraging domestic production. This encouragement involves giving
preferential treatment to domestic producers discriminating against competitors” (McAleese,
2007 as cited in Ritzer, 2015).

Trade Protectionism usually comes in forms of qouttas and tarrifs. Tarrifs are required fees on
imports or exports. This policy was practiced during mercantilist era, from sixteenth to
seventeenth centuries until the early years of the Industrial Revolution (Chorev, 2007)

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The Great Depression of 1929 marked the peaked of protectionism. Until today, protectionism
exists in the world economy despite the growth of trade liberalization. Countries such as China,
Japan, and the United States are being accused of practicing protectionism (Ritzer, 2015).

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World War II heavily influenced the shifting of the dominant economic policy from protectionism
to trade liberalization or free trade. Free trade agreements and technological advances in
transportation and communication means goods and services move around the world more
easily than ever. We are talking about everything from shoes and bananas to innovations and
ideas. Let us take mobiles phone as an example. Mobile phones seem to have good
consequences for everything including reducing poverty. According to economists Jeffrey
Sachs, mobile phones are the “single most trasformative technology” when it comes to
developing the world.

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Installing cellphone towers is also a lot cheaper than running thousands of kilometers of
telephones lines. Economists call this leapfrogging, the idea that countries can skip straight to
more efficient and cost-effective technologies that were not able in the past. International trade
has also created a new opportunities for people to sell their products and labor in a global
marketplace .

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Globalization made some countries, especially the developing ones, to gain more in the global
economy at the expense of the other nations. There are various ways, however, the country can
make trade easier with other countries while lessening the inequities in the global world. One of
them is “fair trade” (Nicholls and Opal, 2005). Fair trade, as defined by the International Fair
Trade Association, is the “concern for the social, economic, and environmental wellbeing of
marginalized small producers” (Downie, 2007, pp. C1-C5). Products like coffee, bananas, cotton,
wine, tea, and chocolate have been exchanged in light of Fair Trade.

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A concrete example of the growth of fair trade is the case of American coffee chains
such as Starbucks and Dunkin’ Donuts. In 2006, there are $2.2 billion dollars spent on
certified products, which is 42% greater than the preceding year (Ritzer, 2015). In turn
coffeee growers such as those in Brazil “get at least $1.29 per pound of coffee beans
compared to the current market price of $1.25” (p. 296).

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Thank You!

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