Why Globalization

Globalization is a historical process that began with the first movements of people from Africa to other parts of the world. Traveling first short, then long-distance migrants, traders and others always brought their ideas, customs, and products to other countries. In the 15th century originated in European countries such economic doctrine, economic policy called mercantilism. The aim of mercantilism was to accelerate the accumulation of wealth and income in financial terms but also in the form of precious metals. Mercantilism had at that time to solve the proper working of its economy and market in the state. In the early mercantilism followers considered as the main source of wealth money from foreign trade, while exports of own precious metals was strictly prohibited. As time passed, however, the trade began to export and import precious metals from and to foreign countries. Mercantilism argued that the state's wealth consists of precious metals and the only way to increase your wealth, is to import precious metals from abroad either by directly import from colonies or with exporting goods. Thus, in late mercantilism people understand money and precious metals such as capital and thus began promoting foreign trade and the associated production manufacturing. Mercantilism considers the active trade balance and all economic policy measures are aimed to support it. People bought and sold goods over long distances, for example Silk Road across Central Asia that connected China and Europe during the Middle Ages. For centuries later people and corporations have invested in enterprises in other countries, so it is not surprising that many features of globalization today are very similar to those prevailing before the outbreak of World War I in 1914th. Since 1950, the volume of world trade has increased 20-times, and since 1997, foreign investment nearly doubled. This wave of globalization has been driven by policies that have opened up the economy in domestic and foreign countries. After World War II, many governments have adopted economic systems focused on the free market, thus enhancing international trade and investment. Another major driving force of globalization is technology. Breakthrough in information technology greatly affects the economic life of the country, because information technologies have given all sorts of economic opportunities to individual operators - investors and consumers. Foreign trade gained momentum in the global understanding fully by the middle of the twentieth century. It was conditioned by natural effect recovery and supply. In the early nineties has been opened Eastern Bloc, which resulted in a positive trend and a large territorial diversification towards the east, which meant opening transport routes in the world. During the second half of the 20th century it became the unification of geographically close countries into a common unit through a very significant phenomenon this time. The unification process, however, will not affect only the area of economic movement, but is also accompanied by internal linking, or mutually conflicting geostrategic shifts, which are based on complex technological, ecological, cultural and social change. International trade is an area in which these processes exhibit the most obvious. Globalization is thus phase in which international trade is creative, develops and integrates into the world economy and consists of these points, which incorporates: A new organization of production on an international scale allows companies to present themselves in foreign markets, leading to increased profits and gaining competitive products for the domestic market.Globalization also allows possibilities to acquire inputs and support service of the global economy.Another aim is to build up entrepreneurial communities irrespective of national borders and mixed businesses, enabling companies to combine assets, share costs and enter new markets.

Previously realized impact of the globalization process on the development of international trade allows to identify several factors that promote globalization. Two of those factors are decisive. They are:

Technology. Advances in technology can be considered very rich and promising source of finance. New products and services forming technologies create space for international business. Development of new technologies leads to high costs and risks associated with financing and these conditions lead companies to cooperate and trade their products. Advanced skills in information technology enables businesses to organize and manage its operations internationally.Permanent widely diversified trend towards economic liberalization and the reduction of restrictions on foreign investment and trade to the smaller pressure on the movement of capital and regulatory requirements in many areas of business. This development is backed by principle and greatly facilitates the globalization of trade.

Tremendous growth in international trade in recent decades was the main reason for expansion of globalization. According to the analysis of the WTO (World Trade Organization), world trade volumes grew in 50 years twenty-seven times. But what exactly is meant by globalization? Globalization could be defined as a process of rapprochement of cultures, economies of different nations and states. From early seventies globalization become mostly economic process, as information technology greatly speed up trading on world stock exchanges and financial markets. The globalization of markets linking different countries through trade in goods, services, capital and information, and can boost international trade on a global level. But its not just about trade in goods and services. Nowadays globalization occupies a much larger place in the market - gradually increasing the difference between the real economy and the symbolic economy of financial transactions. Real economy is based on manufacturing, trade in goods and services. On the other hand, a symbolic economy implies a casino economy, international trading currencies, shares, equities. This includes a greater volume than the fair exchange of goods between countries and is much more dangerous financially when trading currencies because it creates so called speculative capital, whose essence rests in the fact that the amount of profit depends on the fluctuations of world currencies. An important feature of globalization is the rise of national corporations, as many of them have an annual turnover greater than the economies of many small states. These companies share a basic feature and that is the fact that, in principle, offering customers the same goods. This is especially true in the food companies or products of sports clothing. Logos and signs of these companies promise the same product regardless of whether you will buy it in Kiev, Paris or London. Owning such goods anywhere in the world is a sign of the success of marketing triumph that brings huge profits to multinational companies. Globalization is deeply controversial. Its proponents argue that it allows poor countries and their citizens economic development of the country and increase their standard of living, while opponents of globalization, on the other hand, argue that an international free-market advantages of multinational corporations in the Western world to the detriment of local businesses and the local culture of ordinary people. Opponents of globalization protests, especially against multinational corporations and point out that their wealth gives them the power to influence economic and political decisions of governments, especially trade restrictions.However, whatever is the view of the globalization in world economy, commentators and critics agree that the world under its influence has changed and is changing constantly. No one knows what the consequences will bring on world affairs and the economy in the future but truth is that over the past 25 years, globalization has had a much greater impact on poverty reduction than the entire foreign aid of rich countries since World War II. Over a billion people have evolved from poverty in the meantime, and it is estimated that the number of the poor in the future should be the lowest in history. Despite the positive contribution of globalization, there are still around two billion people in 58 countries trapped in extreme poverty. These people do not have access to resources and fight for each and every piece of property. Aid from developed countries had little effect on improving the situation of local people, as financial subsidies were quickly missed. In addition to the moral obligation to help these two billion poor, there is also an important reason why we must fight poverty which is a necessary migration of refugees from politically and economically unstable countries to the west.