What does Globalization Mean? Part I

By | October 21, 2021

Fancy new pants? Rejoice! Clothes are getting cheaper and cheaper in Norway. Most of our clothes are sewn in Asia, by workers who earn little and work hard. Fancy a clementine? You get them almost for free at Rema 1000. Are you going to the South this year? Then you are not alone. More and more Norwegians go on holiday trips abroad, often by plane.

Norway was the third richest country in the world in 2005. Only the United States and Luxembourg were richer. The income per capita in Norway is 62 times the income in Malawi, which is the poorest country in the world for which we have available figures. The differences between the richest and the poorest countries are increasing, but at the same time many people in poor countries are getting better living conditions.

In recent years, it has become increasingly cheaper and easier to transport goods, services, capital and information between the countries of the world and over long distances. This development is often described as globalization.

  • What does globalization mean?
  • What are the causes of globalization?
  • What are the consequences of globalization?
  • Who loses and who wins on globalization?

According to psyknowhow, globalization – which contributes to making trade, economic cooperation and the transport of capital and information easier and cheaper – has been going on for a long time. It is the result of both technological progress and political choices .

Technological innovations have made transport and information exchange cheaper and easier. The steamships greatly streamlined sea transport at the end of the 19th century. The railway revolutionized the transport sector in many European countries at the same time. A telegraph cable was laid from Europe to the United States in 1866 which made it possible to send information quickly between the two continents. In 2008, we can get information about most things in the world in an instant via the internet.

Political decisions have in some periods accelerated and in other periods slowed down globalization. There are regulations on capital movements between countries. There are rules for how companies can invest in other countries. Taxes are levied on exports or on imports (customs). Immigration to many countries is strictly regulated. But as a general trend, political decisions have helped accelerate globalization.

In recent decades, governments in many countries have reduced barriers to trade in goods, services and capital. Countries liberalize trade both on their own initiative and in cooperation with other countries. This is done through agreements in international organizations – regional as well as global – or between groups of countries.

2: Similar financial systems

Extensive globalization has also taken place because the vast majority of countries in the world have introduced variants of capitalism and a market economy. Similar economic systems have reduced barriers. Up to approx. In 1990, a number of countries were ruled by communist regimes. There, the state had greater influence over economic development than in market economies. The state decided on investment, production and trade. In market economies, it is most often companies and individuals who drive investments and production, while the states make frameworks and rules for how this is to take place. In various ways, the communist countries were less integrated into the world economy than capitalist countries.

3: Customs duties on imports

Customs duties on imports have been common for a long time. Such customs duties are used for two main purposes:

  • to provide the state with revenue . Today, this is most important for poor countries since tax systems (both for individuals and companies) are poorly developed there.
  • to protect domestic production from competition from imported goods. Most countries in the world use tariffs to protect their own businesses.

Norway and several rich countries primarily have high tariffs on agricultural goods. Poor countries most often protect their industrial production; they usually have a weak industrial sector. To support and build up industrial production, duties are imposed on imported industrial goods.

To protect domestic agriculture, many rich countries (including Norway) impose high tariffs on food imports. The duty rate on imports of beef to Norway is NOK 115 per kilo. Today, this means that Norwegian farmers are guaranteed at least NOK 115 per kilo of beef without competition from foreign goods.

There are agreements between countries in the world on how and to what extent customs can be used. Norway is a member of the EEA co-operation that regulates the use of customs and other trade barriers between most countries in Europe. Norway is also a member of the World Trade Organization, WTO, which also works to reduce trade barriers between the countries.

Barriers to cross-border investment have also been reduced. It is now easier and cheaper to make investments in other countries. As for trade, both technological development and political conditions have contributed to this. Through a regular online bank, stock speculators can buy shares in most countries.

What does Globalization Mean 1