The most American car is a Honda, product of a Japanese corporation. This is one example of the impact of globalization. Globalization is the process of increased interconnectedness among countries most notably in the areas of economics, politics, and culture.
The affects can be understood by looking at trends and specific examples of the process.
Social Environment – Economic
In the 70s America and many other western nations took their currencies off the gold standard thus ending a period of currency fixed to reserve currencies or precious metals. This allowed for floating currencies whose exchange rates are based upon supply and demand and created worldwide markets in currency. This action allowed countries to influence economic fluctuations via fiscal and monetary policies.
Commercial trade between countries significantly increased accelerating commercial interdependence. World trade increased nearly tenfold between 1973 and 1998, reaching 42% of world GDP.
It produced a shift in international division of labor; the biggest shift came from East Asia. Japan’s share of world trade doubled during that period and China’s almost tripled. A large percentage of manufacturing and its associated labor was moved from the West to Asia and South America. During this period the output of East Asia doubled.
This shift has had a devastating impact on America. Over the past 12 years, U.S. manufacturers have cut 31 percent of their workforce, or nearly 6 million workers. Their contribution to gross domestic product fell to 12.2 percent in 2011 from 22.7 percent in 1970.
The main financier of global loans was the International Monetary Fund (IMF). Their purpose is to enhance the economies of its member nations. A condition of their loans was that the recipients adopt more modern fiscal policies. Their financial help has aided many countries to grow their economies.
The European answer to this growing problem was to create a single European currency, the Euro. That currency is now the second largest reserve currency as well as the second most traded currency in the world after the United States dollar.
Social Environment - Technology
Technology acted as enabler to many global processes. The Internet, that became the backbone of online stock trading, integrated trading across the world.
The percentage of technical products in world trade has doubled while percentage of basic products decreased by 50%. Thus, countries with an educated workforce gained substantially while those that didn’t remained poor. This divided the world financially into countries that have knowledge workers and those who don’t.
Social Environment - Migration
Just as earlier migration resulted from people leaving an agrarian life to move to the industrialized city, globalization encouraged a large migration from poor countries to rich ones. The number of immigrants doubled during this period.
Because of the nationalism present in European countries, they did not readily accept these workers on a permanent basis, but as guest workers. As a result they were not easily integrated into these societies. Japan had the same issue, encouraging temporary workers, but having social policies that were very hostile leading to discrimination and exclusion.
Because of the history of immigration to their nation, Americans were more willing to allow immigrants to become citizens. By 2000 the percentage of immigrants in the country had doubled. However, the issue between residence and citizenship arose even there.
In summary, this great migration has been met with mixed reactions. Business was more than willing to accept competent employees who were willing to do work many natives wouldn’t and would accept lower wages. Conversely, many citizens attempted to exclude the immigrants from the mainstream culture. This has generally led to increased concerns over the ethnic makeup of local communities.
Social Environment - Culture
Historically, culture has been limited by geographical proximity. That is, people who lived and worked in a relatively close geographical area would have a common culture. Globalization would have a big impact in two ways. Existing local cultures would integrate components of the culture of the new immigrants, and local culture of many countries, especially America, would be transported to the rest of the world via the discovery of new media methods.
Thus, the introduction of both audio and video tape media allowed culture to spread globally. American music, films, and television shows would be seen in most countries of the world. Reggae, a Jamaican musical genre, became popular in England and Canada where West Indian people had moved in the sixties and seventies.
Sporting events, which are a component of culture, also became globalized in a similar manner. Local sports teams began to import sports stars from other countries, and local sports like American basketball become popular in many other countries.
The globalization of culture created a global stage viewable through new media by virtually all nations creating an increasing homogeneous world culture.
While economics, migration, and culture produced physical global networks, communication technology produced logical global networks. The combination of satellites and personal computers created in the 70s, along with the World Wide Web produced the Internet. This allowed for worldwide communication that made it easier than communicating with neighbors and cheaper. It also made available an immense amount of information to virtually anyone who was connected with the Internet.
Along with the growing commercialism of the richer countries came the increased consumption of natural resources. Water was required to meet the needs of increased food production and urban life. Energy consumption, especially fossil fuels, was necessary to fuel the commercial expansion, increased significantly in the richer countries.
This increased use of limited resources brought about problems of shortage, pollution and waste disposal. The greatest problem, global climate change, was brought about by the increased emission of carbon-based gases.
Thus, the effect of globalization had a very positive effect on the rich nations and little or negative effect on the poor nations. The result was a further widening of the gulf between the two socioeconomic classes. The result on the environment was catastrophic.