One World

Our world is globalizing, or not? Economies are becoming more integrated but are they really as integrated as it’s said? There are debates whether globally integrating economies are good or bad? One positive aspect is a better division of labor and increased living standards. On the other hand some say it destroys jobs and pushes down wages in rich countries. This is not the first globalization, before WW 1 railways and steamships caused a large cross-border trade. But international trading didn’t boom again until after WW2. Governmental trade-controls were abolished to recover from WW2, it was the rebirth of the global capital market. There are to rebuilding forces: technology like communication development and liberalization which lowered barriers to foreign trade. The extend can be exaggerated. Product markets are still nowhere near as integrated across borders as they are within nations. Financial markets were more integrated at the beginning of this century and labor is not mobile enough to become more internationally integrated. But due to market-friendly reforms and steadily falling communication costs many countries are becoming more and more integrated. Globalization has its bad and good sides. It’s supposed to boost average incomes but those will be unevenly distributed. For some governments it will be harder for to keep their economy in a fair condition. Protectionist governments may even keep their economies from growing by setting up trade barriers and controls. But an economic backlash is less to expect because of today’s technology and the trade freedom.