Globalization can be defined as the connection of countries in terms of trade, politics, and cultural values. New inventions have been key drivers of globalization. When transport was very limited, people could only trade their goods locally, but after the invention of steam engines, people were able to travel long distances and trading costs dropped significantly, and this was an important step forward for globalization. The impact of technology on globalization has been enormous, but before we get into that, let's go back in time to understand what globalization is. In the early nineteenth century, the depreciation of trade costs ignited the trade cycle, production, and growth in several countries. Before this era, the economies that dominated the world were primarily located in Asia and the Middle East, but it only took a few decades for dominance to change hands.
In America and other Western countries, rapid economic growth began, and their initial claims to power were characterized by large-scale industrialization that took place in these few countries. Recently, the pace of industrialization has been declining to a greater extent due to the transition to the 4th industrial economy. Until the nineteenth century, trade was limited due to several factors such as the higher costs of moving goods, the difficulty in moving ideas, and the inability to move people. If a man wanted to transport goods to some remote location, he had to use animal power on land and wind power at sea, both of which were both inefficient and costly. The creation of steam engines was revolutionary in the transportation industry, but the transfer of ideas from one place to another was still limited. For example, if a factory in Japan wanted to open another branch in a country that is far away from them, such as Mexico, it would be difficult to manage and control the work of the branch.
The second development of globalization occurred in the last years of the twentieth century, with the advent of technology. Technology has made it possible to promote ideas effectively and efficiently at a lower cost. In the case of the example, a Japanese factory would be able to constantly monitor the work of its branch and track its deliveries. The creation of steam engines led to the development and industrialization of the northern countries, while the southern region did not even come close to experiencing what the north experienced, this was due to the limitation of moving ideas. The growth of technology was the key to the development of the southern countries, although the industrial divide is still evident to this day.
The help that the Nordic countries offered to the less developed countries was offered not because they were good-hearted, but because they were motivated by the profits that could be made from those countries and they would still retain ownership of the offshore companies which means that their assistance to poorer countries is also costly to poor countries. The export of information and industry was to somewhat poorer countries because the cost of transporting people to other countries was higher. After all, they were located in remote places. Thus, the offshoring of expertise was transferred to the poorer countries that were closer, except for commodity-producing countries. The population of the world is constantly increasing, and with it, the demand for goods is growing. Realizing this, the G7 countries were more attracted to countries rich in commodities.
For example, South Africa is the furthest country from the northern region, but it has received a lot of help and attention from wealthy countries, mainly because of its large mineral reserves and rich soil suitable for agricultural practices.
When goods are in high demand, the South African economy will perform very well compared to other developing countries, and this will benefit investors, most of whom are in the G7 countries. Although the cost of transporting people remains high, technological advances have given rise to telerobotics, which is a science in which a person can perform a task virtually using a robot. This is still an innovation in the industry and it will be interesting to see its huge impact on the future trajectory of globalization. The rise of telerobotics will allow workers in developing industries to perform tasks in developed industries and vice versa. At a time when globalization was dominated by rich countries, they traded with each other for services that were within their sphere of competence. For example, if the Italians specialized in the production of engine components, they would supply these components to their neighboring rich countries. The new globalization, rooted in communication and information technology, has allowed factories that used to produce goods and services in one building to produce a product made up of components that were produced in multiple locations, and this has created a new competitive environment.
Since countries have certain sectors in which they are competent, they will seek to further strengthen these sectors and will focus less on developing sectors in which they are less competent. This means that trade will become freer over time, making it easier to conduct large volumes of cross-border transactions. The development of technology in the 1990s changed the landscape of competition. For example, until the 1990s, nations had a comparative advantage over other nations, and there was no cooperation between them. After the 1990s, the comparative advantage was between global value chains. For example, suppose a factory in Ghana was well versed in the production of certain machine parts but was not good at running the business. On the other hand, a factory in Australia knows how to run a business.
Technological advances would allow both companies to share their comparative advantages. This will allow the composition of both factories to remain competitive with other global value chains. While most of the profits will go to the main company and not to the subcontractor, the subcontractor will be able to bring in other clients to maximize their profits. The second division has resulted in other countries gaining more and some losing more, and the more markets become competitive, the more we will see the gap between the haves and have-nots.
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