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The following will elaborate on globalization, and some theories on traditional trade. AlsoGlobalization as defined by Charles Hill, of the University of Washington”… refers to the shift toward a more integrated and interdependent world economy. Globalization has several facets, including the globalization of markets and the globalization of production”. Free trade is an example of a situation where government makes no attempt to influence what its citizens can buy from other countries. Under the free trade system Smith, 2009 argued that “…the in visible hand of the market mechanism, rather then government policy, should determine what a country imports and what it exports”.
When looking at globalization there are two major factors. The first is the decline in barriers that could have impeded the free flow of goods, services, and capital. This decline in barriers has been on going since the end of World War II. The second factor is the changes in technology. Technology has in recent years has allowed dramatic developments in communication, information processing, and an easy in transportation, that past businesses did not have. (Hill, 2009)One example of a declining barrier to international trade that occurred after World War II was the General Agreement on Tariffs and Trade (GATT). The goal of GATT was to remove the barriers to the free flow of goods, services, and capital between nations.
Through eight rounds of negotiations among members of state this was accomplished. From GATT the World Trade Organization (WTO) was also founded. The WTO was established to police the international trading system. (Hill, 2009)”The lowering of trade barriers made globalization of markets and production a theoretical possibility” (Hill, 2009). Since the end of World War II the gains of technology have exploded. The world has seen major advances in communication, information processing, and transportation technology.
Telecommunication gives even the smallest companies the ability to gain a global audience. When the computer was first introduced, the computer could easily fill a room and was capable of only a few hundred computations per minute, with a cost the put even the thought of owning a computer in the hands of the government. With the invention of the microprocessor the cost of computing was significantly reduced while the power of the computer increased dramatically. As a result the lower costs of technology companies today can communicate with potential suppliers, retailers, consumers anywhere in the world at prices that were unheard up only 10 years ago. (Hill, 2009)Technological advances in the transportation have also improved rapidly. The commercial jet of today makes a trip from New York to Tokyo in less time then it would have taken someone to get from New York to Philadelphia in the Colonial days.
Other advances such as containerization have help to reduce the cost of transportation while increasing efficiency. (Hill, 2009)Some effects of globalization found locally are in almost any store, from food to auto parts and most things in between, many items we use are not make in the United States as a whole or in part. With out globalization supply of many of these items would be lower due to an increased cost of production. The city of Jacksonville, Fl also offers appeal to global companies. The location of Jacksonville in relation to: an international air and shipping port, major highways, and easy access to rail terminals makes the city an ideal location for global companies such as Bridgestone. Bridgestone is a global company based in Japan with manufacturing facilities in Central, South, and North America, as well as Japan and Africa. The ability of Bridgestone to acquire supplies for production of a wide range of products from around the world allows the company to supply a product of the highest qualities while allowing the price to remain competitive.
Globalization has become a reality for almost any company regardless of size.
Hill, Charles W.L. (2009). International Business. [University of Phoenix Custom Edition e-Text]. New York: McGraw-Hill Irwin. Retrieved April 2, 209, from University of Phoenix, Mgt 448.