The term globalization refers to the process through which societies and economies are integrated through cross border flows of ideas, communication, technology, capital, people, finance, goods, services and information. Cross country Integration has several dimensions as it can be political, cultural, social and economic all which constitute globalization. Economic integration is however the most common of the four. Economic integration involves assimilating a nation’s economy into an international economy through capital flows, technology advancement and flow, foreign investment and migration. Globalization dates back to the period before the World War I, this was between 1870 and 1914. During this period there was rapid economic integration that was attributed to by migration, capital flow and trade flows.
In the earlier days there were fewer blockades to capital and trade flows between geographical borders and therefore people would move from one landmass to another. Contrary to the present day there were no visa necessities, passports and many non-tariff barriers and restrictions. After World Wars I and II the trends of globalization decreased as the many barriers were set up which restricted free movement of goods and services. Historical analysis of economic integration indicates that the World War I level took a long time to be reached; US for instance achieved this level in 1970. In the past few decades globalization has increased massively as many countries especially the developing ones are turning towards oriented policies of growth with the outside world. There have been a lot of technological advancements, outsourcing, capital flows and trade flows which have made the world a global village. As a result many economies have tremendously grown (Deaton, Angus & Dreze, 02).
Everything comes as a mixed blessing, globalization has its merits and de-merits. Globalization gains can be analyzed in three channels. Firstly in the trade of services and goods, international trade results into specialization which improves productivity when resources are consistently allocated comparatively this is according to the standard theory. As pertains to the trade the special and differentiated treatment has been accepted as it makes tariff reduction and lifts many barriers for developing economies. The second concept is the movement of capital which allows total world savings to be distributed among nations with high investment potential, through foreign capital inflow many economies have grown as it creates employment and exposes the country to production expansion capacity.