Globalisation and International Trade

Nowadays, we can purchase products made by different countries easily and we are becoming more difficult to find a local good from the market. This is an phenomenon that here is an increasing trend of  international
trade and globalization. Now, let me explain what is globalization and how the international trade take place. According to Kiely, globalization refers to a world in which societies, cultures, politics and economies have, in some sense come closer together. Globalization affect the whole world but it causes positive and negative influences to different countries. In my own opinion, I think that international trade is one of the main reasons causing globalization. The capital, goods and services from different countries exchange across international borders. In this post, i will investigate why there is an increase in international trade, how countries can get benefit from international trade and how international trade affects different countries.

I believe that the advancement of technology transport, internet, multinational corporations, outsourcing are the main reasons why there is a increasing number of international trade in the world. For example, international electronic commerce companies have been more popular for customer shopping. Using Amazon as an example, its headquarter is located in Seattle, Washington, United States. It set up a lot of software development centers in different countries like Canada, UK, Ireland, Netherlands, Romania, India, Japan, China, South Africa allowing the products of company can be sold in these countries. The goods of Amazon can be delivered all over the world due to cheap shipping costs. Some of the products like kindle will be outsourced to the factory in China for manufacturing due to the cheaper labor cost and resource.  The reasons why Amazon sets up factory in China is that Amazon can enjoy competitive advantages and absolute advantages of  China. With reference to Adam Smith's model, China can produce more of a good than competitors , using the same amount of resources. Therefore, the products of China are more willing to export to other countries which have not absolute advantage in order to gain maximum benefits. This leads to an increase in international trade.

International trade can also lead to the benefits for many countries. Because of the limitation of resources and technologies and high labor costs, many countries are more prefer to import goods instead of making goods. For example, oil and energy are only rich in Middle East. Other countries may need to spend high cost and times to explore the oilfield. Therefore, countries are more likely to buy oil and energy from Middle East
instead of extract by themselves. Another example is that US and European companies own a lot of industrial technologies which can help to produce high quality products with lower cost. Mass production of the factories leads to economies of scale which allows them having competitive advantages. So, people will buy the foreign products from US and European companies because of the cheaper prices than the domestic products.

Here I will share some of my personal experience about the effect of international trade. I live in city which is dangerously dependent on imports, with more than 90% of food supply from foreign countries. First half 20 century, we enjoy benefits from importing goods with cheaper price from China. However, due to the economic growth of China, the goods from China has been increased sharply. Nowadays, we need to buy foods with very high price. On the other hands, I am one of the HongKongeses who prefer to buy foreign goods due to the good quality and good services. Leading to an increase inflow of foreign brands, these companies are more willing to pay a high rent for a shop located in city center. This leads to an increase in the rent of the whole city and the tradition shop like restaurants, clothes shop collapse due to high rents. Nowadays, near 80% of shops are occupied by western companies. Hong Kong starts to be westernized and lost it special cultures.

News about High rents in Hong Kong leading to collapsion of local shops:
http://www.scmp.com/comment/letters/article/1299097/high-rents-not-minimum-wage-are-main-reason-rising-prices

I realize that globalization is an unstopped trend due to the increase in convenience of international trade. Recently, the rapid growth in China's economy will lead to a new trend of chinization. Many Chinese brands appear in the world stage.  However, I hope countries should set up policies to protect itself from westernization and chinization otherwise in the future, there will only exist two or three dominant language and few local cultures.

Here is a video discussing whether globalization is good or bad.