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What is globalization and its importance

Updated: Jun 5, 2023

Globalization involves activities that collaborate in trade or business related activities between individuals, firms and governments worldwide.

Global population growth have made globalization increasingly important to meet the needs and wants of consumers. With globalization, countries can trade products and services, and share information and technology with each other, to enable specialization to produce more efficiently. This increases output and creates more competition.

As output increases, the economy grows, as more employment are created, increasing incomes, encouraging consumer spending that increases more demand for output. This is especially important to developing economies, as their living standards rises from economic growth.

Global trade has grown due to improved international communication and transportation from technology advances and internet access. This resulted to cheaper and faster global communication, enabling collaboration and easier decision-making. As more national economies open to trade with each other, exchange in trade, capital and labour increases.

Read "what are multinational firms and their roles" and "what are opportunities and threats of globalization" to find out what are the benefits and drawbacks of international business and "what are government policy instruments" to understand the role of governments in international trade.


  1. Dumping

  2. Export

  3. Foreign Direct Investment (FDI)

  4. Foreign Exchange

  5. Import

  6. International Trade

  7. Multinational Companies

  8. Specialization

  9. Trade Barriers

  10. Trade Protection



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