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The Effect of Globalization on the World Economy

Industrialization, Political Philosophy

Industrialization required raw materials and industrialized countries could not always supply all of those raw materials themselves. They therefore turned to other countries, including underdeveloped countries, for raw materials. This created a pattern of every increasing globalization. As globalization produced a world economy in the 18th, 19th, and 20th centuries, local economies around the world changed the way they produced and distributed raw materials. They specialized in the things they were best at, imported everything they needed to import, and shared ideas and technology.

Increased trade led to an ever increasing network interdependency in the countries of the world. When Britain looked to other countries to satisfy their demand for coal, those countries began to rely on the revenues they could gain by exporting coal. Those countries, in turn, could use those revenues to buy British goods or import raw materials that they need for their own industrialization. As countries traded with each other more regularly and more extensively, they stopped producing they things they could import more cheaply and concentrated on producing the things they made well. In time, individual countries lost their abilities to produce certain goods completely, relying on other countries exclusively to meet that demand.

That process of specialization also had an important effect on the raw materials were produced. As countries specialized, they found that they actually produced more value of goods than they had when they produced many different types of goods. Specialization also meant that countries known to be particularly skilled at producing one or two products became world leaders in the manufacture of those products. As other countries wanted to branch out into producing and producing those goods, they could use the technology and expertise developed by that country to help them. Even relatively underdeveloped countries often found at least one important commodity they could offer the world. This connected them to the world economy and pulled them away from subsistence agriculture.

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As trade between far-flung parts of the world produced a global economy, ideas and technology were exported just as easily as raw materials. As countries had more and more contact with each other, they shared their cultures including their political philosophy. This is how Smith and Marx came to be read all over the world. Globalization meant that people could no longer think only in terms of their local area, they had to consider the outside world as well. Some areas were more receptive to new ideas, but no area could shut out new ideas completely.

Because of globalization, most of the countries of the world no longer concentrated on local markets. Their focus became on regional or even world markets. It also changed the way they produced goods domesticity including which goods they produced at all. Just because a country might have the resources and ability to produce a particular commodity no longer meant that they would necessarily produce it. If someone else in the world could produce it more cheaply and with a higher quality, they might just concentrate on what they were better at producing.

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