Economic Globalization

 Commodity market integration-trade

The most important activity to connect global commodity markets is trade. In the past 50 years, the value of international trade has risen sharply by more than 16 times. Today, almost all countries in the world participate in international trade, and trade relations are getting closer. When the World Trade Organization (WTO) was established in 1997, there were 132 member states.

The globalization of the commodity market represents companies promoting and selling products and services on a global basis. Today, basically all successful companies all over the world operate in this mode, and consumers all over the world can also enjoy the products and services of different companies around the world.

Labor Market Integration-Multinational Corporation

Goods can flow freely, but the restrictions on the movement of people are much greater. It is actually multinational companies that promote the globalization of the labor market. Through direct investment, process outsourcing, strategic alliances, and other activities, multinational companies disperse different economic activities around the world. At the end of the 20th century, there were nearly 44,500 multinational companies with a total annual turnover of 7 trillion US dollars.

Now, basically companies can allocate different processes in response to costs and human resources in different places. In this global division of labor, different places are only responsible for certain parts of the entire production process. We often refer to global production networks, which means that multinational companies connect production bases around the world and focus on different projects. In some places, they only produce certain parts. In recent years, the trade in parts and components has increased more than manufactured Trade is also the result of this development.

China’s labor costs are low. In recent years, more and more labor-intensive industries and processes, such as toys, garments, and shoemaking, have been subcontracted to China to make it the world’s processing center. We often hear that China is the "world factory This teaching is also the result of this development.

Capital market integration-international investors

The flow of capital is faster than commodity trade. After the 1970s, the continuous innovation of financial instruments and the relaxation of capital controls greatly accelerated the process of financial globalization. Except for the financial market, banks' deposit and lending activities are carried out across borders.

Nowadays, international investors can assess the risks and returns of different places to make investment decisions and mobilize funds to different places at any time. Various financial products such as stocks, bonds, futures and options are traded on the basis of the global market. At the end of the 20th century, the annual foreign exchange transaction volume reached US$450 trillion, and the annual cross-border fund investment volume was US$60 trillion.