W1 Assgn Globalization.docx MGT/448 Globalization MGT/448 Globalization Globalization

W1 Assgn Globalization.docx  MGT/448  Globalization MGT/448  Globalization  Globalization refers to the tendency of foreign trade, investment, information technology and outsourcing of manufacturing to weave the economies of different countries together. In business and finance, the term refers primarily to the economic integration of global markets, but it is also used to describe countries' socio-cultural integration. Overall, globalization has had the effect of increasing both international trade and cultural exchange significantly.  There are three of the traditional, international trade theories that support the concept of globalization: Adam Smith Theory, Free Trade and Theory of Comparative Advantage. The Adam Theory is the theory of absolute advantage. It states that if a nation is more effective than other nations in manufacturing products, then it should only export the commodity and exchange it with the rest of the world. Free Trade states that trade should take place with duties and taxes levied by every government to allow demand and supply and therefore prices to be determined  by the market. Comparative advantage communicates that if a nation can produce a good at a comparatively lower cost of opportunity than others, then it has a comparative advantage over others. The buyer's benefit in purchasing such items from an effective country would eventually outweigh the disadvantages.  There are two major drivers of globalization. One of the most striking trends over the past sixty years has be