Globalization of the Economy and Increasing International Competition

Abstract

Economic globalization is a term referring to the fact that trade, investment and technology links are increasing worldwide as is the number of countries which are open to world markets. In addition to this the liberalization of telecommunications — and the rise of the internet which creates a truly global marketplace — has created new opportunities for the international exchange of information and services. Countries able to establish a technological and commercial lead in advanced telecommunications and computer technology are not only in a favorable position to exploit new opportunities, but they can also shape the global economic order. The USA has a clear lead in these fields, but Euroland also enjoys a strong position (e.g. in mobile telephony), while Japan is facing many problems in the wake of the sustained financial market crisis. Japan’s catching-up process in the 1960s, 1970s and 1980s was impressive when Japanese manufacturing industry captured increasing world market shares. However, with the accelerated growth of the modern service industry and the growth of OECD foreign direct investment, Japan’s weakness in service sector productivity became rather obvious as well as the relatively high barriers against foreign direct investment inflows — much in contrast to Japan’s high FDI outflows. As regards the rising number of countries open to the world market, one must take into account the impact of the economic opening-up of the PR of China in the 1980s which went along with rapid structural change and high growth rates of output and exports.