What is the relation between economy and globalization? | Jeong Jinseo

1.Summary

 Globalization is the process of increasing the interdependence among economic entities like companies, individuals, and governments across national borders. Globalization is a core concept for understanding the modern economy, and from an economic perspective, globalization is mainly characterized by the liberalization of trade, the increase in capital movement, the diffusion of technology, and the international division of production activities.

The effect of this globalization on the economy is two-sided. The positive points are that according to the principle of international division of labor and comparative advantage, overall economic growth is promoted as global production efficiency is increased across the whole world. Consumer welfare is enhanced as consumers are able to use more affordable and diverse goods thanks to intensified competition and access to low-cost production sites. Also, there is the effect of technology and knowledge diffusion that helps the growth of developing countries as advanced technology and management techniques rapidly spread. However, the negative effects include the point that income inequality can be deepened as low-skilled workers' jobs in developed countries move to low-wage countries, and the danger that the transmission of economic instability to the global economy is heightened as a financial crisis in one country rapidly spreads through the global financial market, which is something. The 2008 Global Financial Crisis is an example of that. Furthermore, the economic policy sovereignty of individual national governments may be weakened as the influence of international organizations such as the WTO or IMF or multinational corporations increases. As such, globalization is causing widespread changes that cover not only economic phenomena but also social, cultural, and political aspects.

2. Interesting Point

 The most interesting point of globalization is the effect of global supply chain vulnerability on the economy. In the past, companies sought out the cheapest places around the world to minimize production costs, dispersed production factories, and established a system to minimize inventory. This contributed to increasing efficiency and profitability, but it has a vulnerability where the entire system can be paralyzed when a pandemic or political conflict occurs. Due to this, many companies and nations now have come to know the point that they consider stability to be important, not just efficiency, and phenomena like Reshoring or Friend-shoring, which bring production facilities back to their own country or close allied nations, are appearing. I think this shows that the direction of globalization is fundamentally changing from 'cost reduction' to 'risk management'.

3. Discussion

 Globalization has been a powerful engine that maximizes global production efficiency and drives economic growth through borderless trade and capital movement. Also, this international division of labor and intensified competition had a positive effect where consumers gain satisfaction and benefit by providing them with more affordable and diverse goods. However, it created the side effect of deepening income inequality in developed nations as low-skilled jobs moved overseas. Furthermore, the interdependence of financial markets became high, increasing economic instability where a crisis in one country rapidly spreads across the whole world. In conclusion, the global economy will have to find an answer to the question of seeking a balanced globalization that manages inequality and financial risks while preserving the benefits of growth.


Comments

  1. Kim GaeunDecember 11, 2025 at 8:50 PM

    The summary and analysis of globalization you presented are clear and easy to understand. The insight you provided—that risk management is becoming more important than 'cost reduction' due to supply chain vulnerabilities—is particularly fascinating.

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  2. seenzeDecember 12, 2025 at 2:36 AM

    I enjoyed the good article. Your discussion section effectively highlights how to manage deepening inequality and systemic risks while maintaining the benefits of efficiency, growth, and consumer welfare, which are the key dilemmas of globalization. It can now be clearly seen that the global economy faces structural challenges of maintaining interconnectivity while not allowing financial contagion or social division. Particularly well added is the demand for "balanced globalization," which translates from the good or bad to the debate about how to responsibly control globalization. Overall, your discussion demonstrates a strong perception of the economic logic and the vulnerability of the real world that shape globalization today.

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  3. Ju yewonDecember 13, 2025 at 7:03 AM

    The comments on the vulnerability of the global supply chain were impressive. In particular, I think this is an example of how the relationship between companies and countries is changing from the logic of efficiency to the negotiation relationship that includes political and security considerations. I felt that this was a meaningful discussion in that globalization was being readjusted to manage risks and uncertainties rather than weakening.

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