What is the relation between economics and globalization —— chen zhitong

 Summary：

Economics and globalization share a symbiotic and mutually reinforcing relationship. 

Economics is the engine: Economic motivations—such as the pursuit of efficiency, profit, and market expansion—constitute the core drivers of globalization. Economic theories and decisions, including comparative advantage, free capital flows, and multinational corporation strategies, have shaped the rules and frameworks of globalization, particularly in trade and finance. 

Globalization is the stage and the reshaper: The globalization process creates an interconnected world market, which in turn profoundly alters the reality of economic activity. It interlinks national economic policies, reshapes global industrial and labor divisions, creates new winners and losers, and compels economic theories themselves—such as development economics and international finance—to continually evolve to adapt to new realities. 

Tension exists in their interaction: While mainstream views hold that globalization promotes overall economic growth and poverty reduction, it has also sparked major debates about worsening inequality, economic instability, and the erosion of national sovereignty.

Interesting Points ：

Feedback loops rather than simple causality: The relationship is not a straightforward “one causes the other,” but rather a continuous feedback loop. Economic ideologies (such as neoliberalism) shaped the globalization model after the 1980s, while the consequences of this globalization (such as financial crises and supply chain disruptions) in turn gave rise to new economic ideologies and policy reflections.

Race to the Bottom: Globalization may trigger a “Race to the Bottom,” where nations compete to attract capital by lowering taxes and relaxing labor and environmental regulations, leading to declining standards. This highlights the fundamental tension between global economic integration and domestic social policies.

Globalization blurs the boundaries between “domestic” and ‘international’: Traditional economics often distinguishes between domestic policy and international trade. However, globalization—particularly global value chains—has deeply integrated these two spheres. The design, manufacturing, assembly, and sale of a single iPhone involve dozens of countries, necessitating a redefinition of traditional concepts like “domestic industry” and “trade deficit.”

The complexity of winners and losers: Outcomes are not merely between nations (e.g., China's rise vs. Western deindustrialization) but also within nations. Globalization often benefits domestic capital owners and highly skilled workers while subjecting low-skilled manufacturing workers to competitive pressures, exacerbating internal social divisions. This has become a significant economic root of rising populism.

My Personal Thoughts and Doubts：

Personal Reflections:

The relationship between globalization and economics reveals a core dilemma: the trade-off between economic efficiency and social equity, between global interconnectedness and national autonomy. We appear to have built a highly optimized global system (for the flow of capital and goods), yet this system seems powerless to govern “public problems” such as climate change, public health crises, financial risks, and social cohesion. The key to the future may not lie in reversing globalization, but in constructing “new rules” that better balance efficiency and resilience.

Questions and Reflections:

Limitations of Measurement: Economics often uses “total GDP growth” to measure the success of globalization, but does this truly capture its impact on community stability, cultural diversity, and environmental sustainability? Have these overlooked dimensions led to a systemic underestimation of globalization's costs?

The Ceiling of Momentum: Is the current globalization model, driven by profit-seeking capital and consumerism, sustainable when confronted with planetary ecological boundaries and resource constraints? Does the next phase of globalization require a fundamentally new economic logic centered on human well-being and ecological security?

The Dilemma of Democracy: Economic globalization decisions are often driven by technocrats, multinational corporations, and international organizations, leaving ordinary citizens feeling excluded. How can this “democratic deficit in global governance” be addressed? Can we design decision-making mechanisms that are both globally collaborative and sufficiently localized, empowering citizens to feel engaged?


Comments

  1. Ju yewonDecember 13, 2025 at 7:11 AM

    I enjoyed reading the good article. It was particularly impressive to explain the relationship between globalization and the economy through a feedback loop. The view that globalization is a product of economic ideology and at the same time a process of reorganizing that ideology seems to help us understand globalization as a process of historical change rather than a fixed structure. Through this, I believe that the problem of globalization can be extended to a question of what rules and values to redesign based on, not just a question of pros and cons.

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