As a result of globalization, competition has greatly increased. Domestic producers now compete with producers from across the globe in both their pricing and products. The impact of globalization can be realized from the fact that share of trade in US national GDP has more than doubled over the past two decades.
The plastic and hair of the Barbie dolls come from Japan and Taiwan. The assembly of the dolls is done in low cost manufacturing countries like Indonesia, Malaysia and China. The molds of the dolls come from United States, and also the paints used in decorating. China supplies the labor and the cotton cloth used for the dresses.
The dolls sell for around $ 10, of which around 35 cents covers Chinese labor, 65 cents covers foreign materials, $ 1 covers Hong Kong profits and transportation , and the rest goes as marketing and transportation expenses and the profit of Mattel in United States ( Samuelson, Nordhaus, 2003).
The slicing up of the production through increased outsourcing is one of the most prominent aspects of globalization. A second major aspect of globalization is the increased integration of the financial markets of the different countries (Samuelson, Nordhaus, 2000).
This financial integration is apparent from the increased speed of lending and borrowing among different countries of the world. These increased financial flows among different nations have been caused by dismantling of restrictions on capital flows among nations, cost reductions and innovations in the financial markets of the world ( Samuelson, Nordhaus, 2000).
This financial integration has greatly contributed to development because nations with more productive uses of capital can borrow from nations with excess savings. For instance, during the last two decades, Japan with its excess capital has lent to nations around the world who have more productive uses of capital.
The freer movement of goods and services