What Drives Globalization?

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Globalization is driven by international trade and investment and aided by information technology. It is the process of interaction and integration among the people, companies and governments of different nations, states Globalization 101, a website of the Levin Institute.

Globalization affects the environment, culture, political systems and economic development and prosperity, as well as the physical well-being of human beings in the societies around the world, according to the State University of New York’s Levin Institute.

Four aspects of financial systems are particularly important to the process of globalization: the creation and supply of money, international trade imbalances, third-world debts and international flow of financial capital, according to Michael Rowbotham, author of “Good-bye America.” Money is supplied to national economies due to factors such as difficulty experienced with repayment of individual debt by private, commercial, government and third world sectors, Rowbotham says, as quoted on Sustainable Economics, a website of the Green Party of England and Wales.

International trade imbalances occur when nations with trade surpluses are not obligated to spend their revenues in countries with trade deficits, thereby not maintaining a balance of trade with other nations. Third world debts occur when multinational companies operate in a gap between poor and rich nations. The international flow of financial capital provides that international money markets operate at 5 percent trade-related exchanges and 95 percent financial speculative investments.

Proponents of globalization argue that globalization allows poor countries to develop economically and raise their standards of living, while opponents argue that it has benefited multinational corporations at the expense of local enterprises.