Changes in Globalization between Now and 2025

Posted: August 25th, 2021

Changes in Globalization between Now and 2025

Student’s Name

Institutional Affiliation

Changes in Globalization between Now and 2025

Globalization is not a recent process. In the nineteenth century, the global economy experienced the first cross-border influence following the advancement in technology-driven processes, mostly in the transport and communication sectors. Throughout this period, the international trade expanded steadily at an annual rate of close to four percent. Continuous innovation resulted in massive migration of people across continents, an aspect that led to increased capital flow. Today’s globalization is not entirely unmatched in terms of trade capacity; instead, it is qualitatively different from the previous years. Beyond the average growth in trade and investment, the production patterns have equally changed lately triggered by the emergence of multinational corporations. The current phase of globalization represents a more in-depth integration that revolves around transnational organizations which have createdvalue-addednetworks through the highly connected production process. Successful incorporation into value chains led to sustained social, economic, and political growth in many countries, a reason for the general progress in poverty management. However, the growing food, finance, and fuel crisis, the ever-increasing inequalities among states and boundary conflicts clearly show that the world might not achieve its desired development agenda by 2025.

Technological advancement in the post-World War Two period played an integral role in the second wave of trade globalization characterized by a significant reduction in transaction costs. The democratization of telephone as the leading communication channel, the growth of commercial civil aviation, and the overall improvement of marine transport effectiveness were some of the critical emerging trends (Ortiz-Ospina, Beltekian,& Roser, 2018). While this new development was beneficial for the world’s economy, it was aimed at developed countries with capacities to invest in mass production of profitable goods and services. Today, as the scope of specialization intensifies, most countries tend to participate more in exchange of intermediate products such as auto-parts while ignoring the finished goods (Ortiz-Ospina et al., 2018). This strategy can work for or against potential investors who do not understand the global dynamics. Thus, while considering global markets as a possible destination for investment, it would be essential to study the trends and forecast their future implications.

Many nations have gained a lot by participating in the global markets, but others have remained marginalized despite their quest for access to ideal knowledge and technology like the rest. Stronger links in investments, commercial activities, and financial engagements have increased over the past few decades and will intensify in years to come (United Nations, 2013). According to the United Nations’ World Economic and Social Survey 2013, the growing interdependence together with the aspect of financialization put various countries into a potential threat should crises erupt among them (United Nations, 2013). Besides, as the world economy improves, income inequality also spreads among the participating nations. This aspect can be understood through the evaluation of trade openness around the globe. It shows how much individual countries can invest when participating in the international trade based on their respective gross domestic product (Ortiz-Ospina et al., 2018). A multinational corporation from developed countries is more likely to dominate the market compared to local companies operating within the boundaries of their motherland.

Since most states have differentdemographic structures, urbanization rates, and population growth capacity, they experience the varying magnitude of stress on their infrastructure and other sectors. This difference makes some countries more vulnerable to poor investment strategies, thereby giving room for wealthier nations to control them internally and externally.Instead of dealing with the dangers of this inequality, the current generation has worsened it, putting both the developing and developed countries to a stalemate in the global standards (United Nations, 2013).  Nevertheless, through globalization, even the poorest countries are now able to produce an excess of what they used to deliver a decade ago (Ortiz-Ospina et al., 2018). Despite the United Nations’ concern over the economic disparity in the world, globalization is seemingly making it possible for countries to participate in the value addition interventions through the export of goods and services. No country can afford to operate independently. By 1990, the share of the value of global exports stood at 25% while today it stands at 30% (Ortiz-Ospina et al., 2018). A majority of investors find this data very essential as it helps them to focus on their prospects mainly to succeed.

Following a more intensified globalized world, a massive transfer of economic power and global wealth is looming, especially from the West to the East. Over the recent years, Russia and the Gulf States have accrued overwhelming profits from oil wells (Atlantic Council, 2008). Production and some service sectors were moved to Asian countries because of state policies and reduced expenditures there (Atlantic Council, 2008). Such adjustments have drawn the global attention to the Asian markets. For instance, by 2040, countries like Russia, China, Brazil, and India will be able to match the growth projections of GDP of the current G-7 nations (Atlantic Council, 2008). If the current trends continue, China will be the world’s second most influential economy with a durable military power (Atlantic Council, 2008). India’s influence will continue to persist, making it a country with the most rapid economic growth. Ideally, these new realignments make the current most prosperous nations like the United States and the United Kingdom to reconsider their liberal model that encourages self-development to a more robust approach of state capitalism. Unless the G-7 responds quickly, it is likely to lose its global clout to Russia, China, and India.

The growing world population has begun focusing on a different transnational agenda mostly to enhance food security. A report by the World Bank indicated that demand for food will increase by 50% by 2030 (Atlantic Council, 2008). As the focus on technology intensifies, the world is at threat of losing its water-catchment areas, which leads to an inadequate supply of fresh water to facilitate agriculture. Based on the increasing urbanization, more forest reserves are likely to lose their integrity as human beings encroach them for purposes of creating more space. According to the United Nations’ World Economic and Social Survey 2013, such deepening trends will result in tighter trade and investment connections involving a few countries with the same interests (United Nations, 2013). While this approach can result in skewed commercial engagements at its best, it can as well encourage geographicallyfragmented production of essential commodities at its worst. Therefore, for those companies planning to venture in other countries, it is crucial to strategize on how to mitigate the dangers of climate change and to deal with the looming resource scarcity with immediacy.

As the trading patterns in the middle-income countries keep changing, the United States is slowly but steadily losing its dominant power. Instead of being an exclusive actor, it will begin to experience competition not only in the military realm but in science and technology as well (Atlantic Council, 2008). Comparatively, there has been a severe decline in the relative demand for food exports from the 1960s due to changes in the export merchandise (Ortiz-Ospina et al., 2018). America is becoming less dominant but more constrained in addressing social, economic, and political challenges that it used to handle with ease (United Nations, 2013). Although this may seem a natural economic transition, it is likely to affect the quality of supplies to the United States and the countries depending on it, thereby raising prices for essential commodities.

Globalization process has several phases. Phase one occurred before the Second World War while the other one came after it. Since the beginning of the nineteenthcentury and until today, a lot of technological advancements have happened, creating a new global structure with a different approach to economic, social, and political disparities previously dominating the world. A projection of trends into 2025 captures an overwhelmingly decreasing transaction cost in favor of middle-east countries like China and Russia. For America and other members of the G-7, this change is detrimental for their military realm and power as most countries are changing their commercial engagements in favor of Asian countries.

References

Atlantic Council. (2008). Global trends 2025: A transformed world. Retrieved from https://www.atlanticcouncil.org/publications/reports/global-trends-2025-a-transformed-world

Ortiz-Ospina, E., Beltekian, D.,& Roser, M. (2018). Trade and globalization. Our World in Data. Retrieved from https://ourworldindata.org/trade-and-globalization

United Nations. (2013). Global trends and challenges to sustainable development post-2015. World economic and social survey (WESS), 1-22. Retrieved fromhttps://read.un-ilibrary.org/economic-and-social-development/world-economic-and-social-survey-2013_d30cb118-en#page8