Globalization of Economic Activity: International Production & Trade

Globalization of economic activity describes the process of merging between domestic economies, businesses and societies. The phrase relates to economic activity that indicates that globalization involves the participation of companies and corporations actively contributing to the integration of international businesses. The features of the globalization of economic activity include an international development of trade, production, investments and flow of workforce.

International trade relates to the exchange of capital and goods in the global market. It is an essential component of the globalization of economic activity as business acts on an international level mainly to ensure benefiting from participation in the global trade system. Imports and exports are the aspects of international trade -- countries and corporations producing more than they can consume focus on exporting goods to countries which demand production. For example, a report by the European Central Bank indicates that through the satisfaction of foreign demand, countries like China and India have massively expanded their economies. These destinations are now a major focus for businesses looking to buy goods and import them in countries that require production, such as the U.S. and the E.U.

International production in the global economy -- or exported production as many economic scholars refer the term to -- is the occurrence where businesses start producing their goods in countries with cheaper labor and more relaxed tax systems. This allows big companies to produce more and pay less for the labor and the country housing their production facilities and activities. For example, the German car industry giants, as indicated by Turkish economist Lale Duruiz, have already exported their production in Turkey, benefiting from the economic treaty of the country with the E.U. for free movement of goods. Thus, the German producers pay no import fees when delivering their production in Europe and save up from labor costs and taxation.

Investing on an international level allows companies and financial organizations to participate in projects in different areas in the world depending on profitability and market situation. For example, where financial organizations from the developed world seek to expand their influence on an international level, they would offer to invest in the developing economies to either have a share in the production or to receive a fixed interest upon the investment they have made. This has happened in the relationships between United Arab Emirates and the United States as described by the U.A.E - U.S. Business Council. When first started investing in the developing Arab Union in the late 1990s, the U.S. input $540 million in investments. Seven years later, the U.S. investments had already grown by 724 percent, thus turning the Emirates into one of the most successful destinations American financial institutions have ever participated in. This increase in the investment value has contributed to the development of stronger ties between the countries and stable trade relations between businesses from both sides.

The globalization of economic activity includes the integration of people willing to work in foreign economies. The most advanced example of such integration is the European Union -- every citizen of the Union is allowed to participate and exercise a profession in all the member states of the organization through a freedom of movement legislation.