Economic Globalization
UC Atlas of Global Inequality
Economic Globalization
Foreign Direct Investment
Trade

 

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Globalization can be described as ‘…a widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual’ (Held and McGrew 1999: 2).

In these pages we portray some aspects of economic globalization, meaning the greater global connectedness of livelihoods, and of the production of goods and services.

International trade is the cross-border trade in goods and services. On these pages, it is measured by the sum of imports and exports, divided by the GDP of a national economy. The growth of international trade is a straightforward indication of economic globalization. When US residents, for example, read labels on their clothes showing they are made in China, Malaysia or Mexico, or decide to purchase a car made in South Korea, their sense of global connectedness is immediate.

Investment is the conversion of money into some form of property from which an income or profit is expected to be derived. Foreign direct investments (FDI) are flows of money into a country that purchase a lasting stake in an enterprise for a foreign investor. These investments are direct in the sense that the investor purchases ownership rights in a specific company, rather than in a portfolio of stocks held by a broker, say. FDI does not include short-term investments, portfolio investments or currency flows.

Foreign Direct Investment is an indication of growing transnational ownership of production assets. It is a leading edge of economic globalization in the sense that increasing foreign ownership of productive may give direct influence over livelihoods and production. The implications of foreign ownership of production may include both positive and negative elements, depending on the perspective of the observer. Foreign investment has often been an important avenue for the transfer of skills and technology. At the same time, foreign investment puts workers under foreign control, and leads to foreign appropriation of profits.

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