The Globalization of Production - Essay Example

The last century has seen a tremendous growth of interaction and participation of the world in terms of economics, society, culture, and politics. In fact globalization, in the sense of participation of the world communities in exchange of culture, thoughts, theory, and trade has been there for several centuries. Yet the concept of globalization has undergone radical changes in the past century. Now it stands for something more than just the diffusion and osmosis of the economic, social, and political theories, practices, and technologies. Now every country is as much part of globalization as globalization has become a part of every country.

Globalization is as much a universal phenomenon as it is an internal phenomenon. It is not only the exchange of knowledge or the adoption of better technologies. The meaning of globalization is not only limited to the idea of modernization or imitating a certain culture or practice. Globalization in itself has become a culture in its rights and it has managed to bring the world closer. Now events happening in distant geography are part of the local affair of the people. The development of technology has paved the way for this massive spread of cultural and economic activity.

The amount and nature of the interaction have changed fundamentally in the past century due to the rapid technological advancement that the world has seen. There has been immense development in the world of technologies. Transport and logistics have developed substantially. The modes of communication have become extremely complex yet the diversity and speed that have been achieved were beyond imagination for the past generations. The entire world has come under a single network, which has facilitated social and cultural exchange, political interaction, and economic participation to a large extent (Globalization, n.d.).

Free trade as a mode of development has gained wide popularity in the context of globalization and the volume of trade in the world is huge. The global market has become a very important force for the economic development of any country and all the countries in the world are exposed to a certain extent or the other to the climate of the global market. The global markets have a tremendous influence on the financial status and the economic policies of a country. Therefore the sovereign states have to consider the global scenario during the construction of their economic plans.

The emergence of advanced transport and communication system has revolutionized the factor markets. The factors of production are now able to transcend the geographical and political borders of a country at ease. This has made the nations follow the terms of the global markets and the supremacy of the nation-states has given way to the domination of a handful of enterprises called transnational corporations. Globalization has also led to the transformation of multinational corporations into transnational corporations.

These transnational corporations have become the major players in the global economy. They control a large chunk of the global markets. However, their management and capital are not tied to any country. They are managed internationally, from various parts of the world wherever they have a location advantage. Similarly, they can also shift their capital and other factors to places where they can have a factor market advantage. Therefore their production and marketing strategies adopt a global perspective.

Transnational corporations, therefore, cater to the global market by operating globally.