According to Robert J. Carbaugh (2011), the high degree of economic interdependence among today’s economics reflects the historical evolution of the world’s economic and political order. At the end of World War II, the United States was economically and politically the most powerful nation in the world, a situation expressed in the saying, “When the United States sneezes, the economies of other nations catch a cold.” But with passage of time, the U.S. economy has become increasingly integrated into the economic activities of foreign countries.
Recognizing that world economic interdependence is complex and its effects uneven, the economic community has taken steps toward international cooperation. Conferences devoted to global economic issues have explored the avenues through which cooperation could be fostered between industrial and developing nations. The efforts of developing nations to reap larger gains from international trade and to participate more fully in international institutions have been hastened by the impact of the global recession, industrial inflation, and the burdens of high-priced energy.
In short, economic interdependence has become a complex issue in recent times, often resulting in strong and uneven impacts among nations and among sectors within a given nation. Business, labor, investors, and consumers all feel the repercussions of changing economic conditions and trade policies in the other nations.
Globalization is the ongoing process that deepens and broadens the relationships and interdependence among countries. Globalization is the process of greater interdependence among countries and their citizens. It consists of the increased interaction of product and resource market across nations via trade, immigration, and foreign investment that is via international flows of goods and services of people and of investments in equipment, factories, stocks, and bonds. It also includes non-economic elements such as culture and the environment.
Global integration is the production and distribution of products and services of a homogeneous type and quality on a worldwide basis. Global integration can be a problem for the international firm if it causes the firm to overlook important local or regional differences in things such as personnel practices or customer tastes.
For example, if an appliance maker used a pure globalization strategy, it might not recognize that some countries are very much accustomed to top loading washers, while others are more partial to front loaders. International business is a mechanism to bring about globalization. These are three types of globalization:
2.1 Cultural Globalization
Culture has increasingly become a commodity. Popular books and films have international markets.
For example, Murdoch has opened TV channels (STAR News, STAR Movies and STAR Plus) in India. Cultural globalization has been facilitated by the information revolution, the spread of...