International Business: GlobalizationIntroduction The world today has become a global village as economies of different countries and regions and cultures of different communities all over the world have become integrated. However, the term globalization has been widely used to refer to linking of economies of individual nations into an international economy through such activities as technology advancement, migration of people, foreign investment, trade or business, capital flows and military missions. Globalization involves exchange of ideas, languages, socio-cultural practices and technology advancement among other things. Most people have acknowledged the term as the greater exchange of ideas, people, capital, goods and services, and labour as a result of international economic linkage (Milward, 2003, p. 37).
This paper seeks to compare and contrast the current era of globalization with the first age of globalization. The paper will also examine the advantages and disadvantages of globalization in its current context. The First and Second Eras of GlobalizationThe first era of globalization begun when Columbus opened trade between the old and the new world by setting sail, and lasted between 1492 and 1800s. The first era of globalization was primarily about individual countries and their muscles.
The second era of globalization lasted from 1800 to around 2000. This era was characterized by multinational companies as the dynamic forces facilitating global integration. These companies went global in search of markets, as well as labor. It is believed that industrial revolution played an essential role during this era of globalization. The influence of technology for example steamships and engineering telegraph also played crucial roles. The steam engines together with the railroad ensured falling costs of transportation in the first half of this era.
The engineering of telegraph in conjunction to the telephones, satellites, the PC, as well as the early versions of the world wide web were crucial in the second half of this era because they ensured the cost of telecommunications were manageable to most multinational companies (Lib. utk. edu, 2006). The First and Second World War had significant effects on both the first and second eras of globalization. According to Ritzer (2010, p. 173), these world wars had adverse effects on both political and economic globalization. Countries such as Germany and Italy moved in the direction of autarky with the view of becoming economically self-sufficient.
This movement of many countries in the direction of autarky negatively affected how various countries related to and dealt with other countries. This adversely affected both globalization and international business in both the first and the second eras of globalization. The US on its part, had a tendency towards isolationism as a result of the world wars. Even though isolationism was more political than economical in nature, it still had adverse effects on globalization and international business.
Colonialism, Globalization and International Business (The Case of Indonesia)Colonialism is a form of international relation between two or more countries. Colonialism encourages both globalization and international business between countries, and globalization facilitates international business. Globalization of the Indonesian economy started with Dutch colonialism. However, with the end of Dutch colonialism in Indonesia and subsequently the end of cold war, analysts have argued that the country is headed to disintegration (Suryadinata, 2000, p. 38). This is not conducive for both international business and globalization. Suryadinata argues that Dutch colonialism played a significant role in fostering the globalization of Indonesia.
For instance, during this period many Indonesians received western education, lived under the Dutch administration and economic system. As such it is argued that the modern Indonesia is primarily a product of the nationalist effects of the country’s reaction to Dutch colonialism. Therefore, although cultural globalization had taken place, Dutch colonialism in Indonesia enhanced both political and economic globalization (Suryadinata, 2000, p. 39).