What is the relation between economy and globalization? --WANG SIWEN

Globalization is not merely the exchange of goods across national borders, but a profound integration of ideas, capital, and lifestyles. Economics, as the science of human choice and resource allocation, is the key to understanding this transformation. In my view, economics and globalization are not simply causally related, but rather a continuous, two-way interaction—economic theory drives globalization, while the reality of globalization constantly reshapes the boundaries of economic thinking.

How did economics pave the way for globalization?

From David Ricardo's theory of comparative advantage to modern international trade models, economics has consistently provided the theoretical foundation for transnational exchange. These theories not only explain why open markets can lead to shared prosperity but also gave rise to international institutions such as the World Trade Organization. Multinational corporations deploy supply chains globally based on cost-benefit analysis, investors allocate assets across borders using international financial theory, and consumers make purchasing decisions based on global price differences—behind every globalization phenomenon, the logic of economics is quietly at work.

However, reality is far more complex than theory. In my research, I noticed an interesting phenomenon: economic models often assume that the free flow of resources will naturally lead to equilibrium, but in the practice of globalization, the distribution of "winners" and "losers" is unexpectedly uneven. Some regions have experienced rapid development due to integration into global value chains, while others face industrial hollowing out. This tension between theory and reality precisely reflects the need for economics to continuously update itself in the process of globalization.

How does the reality of globalization challenge traditional economics?

Traditional economics often uses the nation-state as the basic unit of analysis, but globalization has gradually made this framework seem cramped. Today, a supply chain may span more than a dozen countries, the market capitalization of a single technology company can exceed the GDP of many countries, and digital services almost disregard physical boundaries. These phenomena have forced economists to develop new tools and concepts, such as global value chain analysis and the measurement of cross-border spillover effects.

 More profoundly, globalization has exposed the limitations of a single economic perspective. When climate issues require global collaborative governance, when cultural differences affect transnational negotiations, and when geopolitical disturbances disrupt international markets, pure economic analysis often proves inadequate. In my observations, the most interesting research often emerges at the intersection of economics and sociology, political science, and environmental science—for example, how to quantify the impact of cultural trust on international trade? How to design a fair and effective global carbon pricing mechanism?

 Personal Experiences with Globalization: Between Mobility and Vulnerability

 As a learner from a cross-cultural background, I have personally experienced the duality of globalization. On the one hand, the flow of knowledge, opportunities, and ideas is richer than ever before; on the other hand, identity and a sense of belonging sometimes become blurred amidst diverse choices. This personal experience precisely reflects the macro-characteristics of the global economy: greater interconnectedness is accompanied by deeper interdependence, and increased opportunities also mean shared risks.

 I remember first realizing the "asymmetry" of globalization when comparing internship opportunities for classmates from different countries. Superficially, we are all in the same wave of globalization; in reality, passports, language, and cultural capital still invisibly divide the race. This made me think: can economics develop a more inclusive framework that not only explains efficiency but also delves deeper into fairness?

 Towards a More Responsible Globalization: The Role of Economics

 Faced with anti-globalization sentiment and geopolitical tensions, I believe that economics should not retreat into being a mere efficiency calculator, but should bravely participate in shaping a more sustainable global order. This includes:

  • Rethinking growth metrics to incorporate environmental and social well-being
  • Designing more resilient global supply chains that balance efficiency and security
  • Promoting reform of international rules to allow more voices to participate in global economic governance

 Globalization will not reverse, but its form can evolve. Economics is not only an important tool for understanding this process, but should also serve as a framework for guiding it towards greater justice. Ultimately, this dance between economics and globalization challenges us to answer a fundamental question: What kind of interconnected world do we want? The answer may lie in the ongoing dialogue between theory and reality, efficiency and fairness, and global and local perspectives.

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