Module 2

In the preceding module, we explored the idea of globalization by differentiating it with the terms closely
related to it, namely: internationalization, liberalization, universalization, westernization, globalism, and

globality. Based on the definitions given by scholars we defined globalization as "a historical process
characterized of the compression of the world, enlargement of world communication and world market,
intensification of social relations, and intensification of the consciousness of the world.” We found out the
globalization is a multi-faceted process which cannot be reduced into simply an economic phenomenon.
This is the reason why we found it easy to answer the question posted by The Economist, “Has Covid-19
killed globalisation.” You rightly detected that the question presupposes a concept of globalization which
is economic in nature. The Economist should have asked: “Has Covid-19 killed economic globalisation?"
But whether or not Covid-19 has killed economic globalization is a totally different question, which this
module may attempt to answer.
Definition of Economic Globalization
“[E]conomic globalization,” according to the International Monetary Fund (IMF), “is a historical process,
the result of human innovation and technological progress. It refers to the increasing integration of
economies around the world, particularly through the movement of goods, services, and capital across
borders. The term sometimes also refers to the movement of people (labor) and knowledge (technology)
across international borders.” (in Benczes 2014, 134; emphasis supplied)
From the given definition, globalization is (a) a historical process (meaning, economic globalization is a
phenomenon that has roots in the past, that continues to happen at present, and will continue to happen in
the future—it is an on-going event) and (b) it is a product of human innovation and technological
progress. Note that the definition does not include the growth of capitalism as a precursor of
globalization, unless we consider the growth of capitalism as one of human innovations, broadly
speaking. The definition seems to imply that globalization is an inevitable, and perhaps unintended,
outcome of human innovations and technological progress as if telling us that there is no idea that directs
all these innovations and progress. Do you agree with this?
We can be critical about the definitions given about globalization. We may ask, for instance, who is
defining the term because definition sometimes depends on the interest of the one who is giving it.
Definitions may appear to be neutral at a glance but upon examination we may be able to uncover some
hidden agenda especially when they are given by powerful bodies like the IMF.
Aside from that, however, we can agree with the IMF’s definition of economic globalization, which is the
continuing integration of the economies of the world into one global economy through the worldwide
movement of goods, services, capitals, labors, and technologies. In other words, economic globalization is
the transformation of previously dispersed economic activities between and among countries to one of
worldwide integration through the removal of regional and national economic borders giving rise to the
unhampered worldwide flow of people, goods, and services ushered the developments in transportation
and information and communication technologies.
Economic globalization involves the following interrelated aspects:
“(1) the globalization of trade of goods and services;
(2) the globalization of financial and capital markets;
(3) the globalization of technology and communication; and
(4) the globalization of production.” (Benczes 2014, 134)
Globalization of goods refers to the worldwide movement of goods from and to different directions.
Globalization of services has been intensified because of the development in information and
communication technology. The rise of BPO industry is one example, wherein services previously given
by local workers can now be performed by qualified workers wherever they may be. COVID-19
pandemic has made the globalization of services even more intensified as work from home has seemingly
become the new normal.
Globalization of financial and capital markets refers to the movements of currencies through direct and
portfolio investments making the world market the playing ground of the Transnational Corporations.
Globalization of technology and communication means the availability of technologies all over the
world. Everyone in the world may have access to these technologies—computer most especially—thereby
intensifying more economic engagements of people all over the world.
Lastly, globalization of production refers to the system wherein the various parts of a certain product are
manufactured in different parts of the world taking into consideration the principle of competitive
advantage (David Ricardo's principle that states that a country should focus on a product in which it has
better edge than other countries). This also refers to the worldwide supply chains where a certain
company, for example, gets its products from different countries in the world.
These economic processes are interrelated in the sense that the operation of one dimension requires that
of the other. For example, global trade and global production cannot exist without the globalization of
transportation and information and communication, vice-versa.
Economic Globalization and Internationalization

Economic globalization is sometimes taken synonymously with internationalization. This is
wrong. Worldwide economic relation is a historical process which transforms from one stage to another.
In the case of internationalization and globalization, the latter may have developed from the former.
While internationalization refers to “the extension of economic activities of nation states across borders,”
globalization refers to the “functional integration between internationally dispersed activities” (Dicken in
Benczes 2014, 134). To internationalize the economic activities of a nation-state is to extend its
production and distribution to other nation-states. When two nation-states engage in internationalization,
they are governed by the terms and conditions they have mutually agreed upon. To internationalize, then,
is to reach out to borders outside ones own. That is, economic relation is happening between well-defined
economic borders. While internationalization operates respective of national economic borders,
globalization is the removal of these borders, thereby creating one global market. The role and importance
of the nation-states is, consequently, diminished as it makes private corporations and individuals as major
players in the global market. It is perhaps based on this understanding that Benczes (2014, 134) calls the
transformation in economic globalization as a qualitative change rather than a quantitative one.
Qualitative in the sense that the transformation is on the kind of economic relations and not simply on the
growth of economic activities. The change is essentially on the system not simply on the volume of
goods produced and distributed and on the number of economic players involved.

Szentes aptly captures the concept of economic globalization above when he defines globalization
as “nothing but a process making the world economy an “organic system” by extending transnational
economic processes and economic relations to more and more countries and by deepening the economic
interdependencies among them.” (in Benczes 2014, 134)

This definition does not discount the relevance of international, regional, and national economic
relations. It does not claim that only nation-state is “the only unit of analysis and that current trends in the
world economy are simply the redesign of the external relations of interacting nations. Instead, it claims
that economic activities and processes (production in particular) can be interpreted only in a global
context, i.e. in an integrated world economy.” (Benczes 2014, 134)

What this means is that globalization is not incompatible with the existence of international,
regional, and national economic relations. These economic relations may still exist in a globalized
economy. What economic globalization brings is the establishment of a free world market whose “rules
of the game” are not determined by international, regional, and national players. While these economic
relations may exist among nation-states, a bigger and freer market exists outside them.
As scholars differ in their definitions of globalization, according to Benczes, they also differ in their ideas
on when and how globalization began. However, if globalization refers to the “organic system of the
world economy,” according to him, we must look beyond the last three decades for its origin. But, how
far should we look back, he asks.
On one hand, Gills and Thompson (in Benczes 2014, 135), states that globalization started from the time
the Homo sapiens began to populate the world, impliedly claiming that migration is one of the drivers of
globalization. On the other hand, for Frank and Gills (in Benczes 2014, 135), globalization can be traced
back to the existence of the world-system which existed some 5, 000 years ago. They consider Silk Road,
the land routes that connected Asia, Africa and Europe as proof of the existence of this ancient
globalization. However, world-system analysts, according to Benczes, mark the 16th Century, the start of
the long distance trade, as the origin of modernity and globalization.
Adam Smith considers two historical events as mankind’s greatest achievements: “the discovery of
America by Christopher Columbus in 1492 and the discovery of the direct sea route to India by Vasco de
Gama in 1498.” (Benczes 20124, 135) These achievements, however, were overshadowed, according to
him, by the technological and methodological developments introduced by the British Industrial
Revolution, which spread to Continental Europe and North America in 1800s.
While international economic integration was slowed down by the adoption of economic nationalism and
monopoly in trade in the 16th and 17th centuries, it gained impetus during the 19th century when “[t]he
annual average compound growth rate of world trade saw a dramatic increase of 4.2 per cent between
1820 and 1870…”(Madison in Benczes 2014, 135) and the amount of international trade in 1913 was 16-
17 per cent of the world income (Held in Benzces 2014, 135). In fact, the period between the last quarter
of the 19th century and the first quarter of the 20th century, “characterized of relative peace, free trade,
and financial and economic stability” is considered as the “golden age” of globalization (O’Rourke and
Williamson in Benczes 2014, 135) . Even sceptics of globalization consider this era as the origin of
globalization. The 19th century world economy, according to them, was more integrated than the present
one (Benczes 2014, 135).
Thomas Friedman (2007) has a different take on the history of globalization. For him, globalization is a
historical process that evolved from one stage to another, namely: Globalization 1.0 (from 1492-1800);
Globalization 2.0 (1800-2000); and Globalization 3.0 (2000-onwards). While Friedman believes that
globalization is not a new phenomenon, the kind of globalization that we are experiencing today is
unprecedented in intensity. In his book poetically titled, The World is Flat, Friedman argues that
Globalization 3.0 has flattened the world. And he names ten forces that have flattened the world.
We shall discuss them in the next section.
Flattening the world means that “[the] global competitive playing field was being leveled” (Friedman
2007: 8), making it "possible for more people than ever to collaborate and compete in real time with more
other people on more different kinds of work from more different corners of the planet and on a more
equal footing than at any previous time in the history of the world—using computers, e-mail, fiber-optic
networks, teleconferencing, and dynamic new software.” (Friedman 2008: 8)
When the world is flattened, the barriers that separate people all over the world are removed thereby
giving them equal access to the resources of the world. The world is flattened when the ideological walls
that separate the world are removed so that that world has become ideologically one. The world is
flattened when all are given equal access to technology, information, and resources of the world. The
world is flattened when it becomes everyone's field irrespective of his/her nationalities.
Friedman enumerates ten (10) significant events that have flattened the world, which have, in turn,
intensified the globalization of goods and services, capitals, and production, namely:
(1) Fall of Berlin Wall
(2) Introduction of Netscape to the public
(3) Invention of Work Flow Software
(4) Outsourcing
(5) Offshoring
(6) Open-sourcing
(7) Insourcing
(8) Supply-chaining
(9) Informing
(10) Steroids
Listen to Friedman as he explains these 10 flatteners of the world.

The short film below describes the historical events that led to the establishment of the Berlin Wall that
divided Germany into two ideologically opposed nation-states: West Germany (capitalism) and East
Germany (communism). It also describes the event that triggered the fall of the said wall, which led to the
reunification of the Germany and, consequently, the ideological flattening of the world according to
Friedman.
Watch the film and try to discern how this historic event became a major flattener of the world.
In order to appreciate better the nine (9) other flatteners of the world, watch the short film below about
the revolution that happened in information and communication technology. The revolution that has
revolutionized how economic activities are done all over the world. The Revolution that has further
flattened the world.

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In the preceding module, we explored the idea of globalization by differentiating it with the terms closely

related to it, namely: internationalization, liberalization, universalization, westernization, globalism, and

Definition of Economic Globalization

Economic globalization involves the following interrelated aspects:

“(1) the globalization of trade of goods and services;

(2) the globalization of financial and capital markets;

(3) the globalization of technology and communication; and

(4) the globalization of production.” (Benczes 2014, 134)

Economic Globalization and Internationalization

We shall discuss them in the next section.

(1) Fall of Berlin Wall

(2) Introduction of Netscape to the public

(3) Invention of Work Flow Software

Listen to Friedman as he explains these 10 flatteners of the world.

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