With the collapse of the Soviet Union in 1989 and the end of the Cold War in 1991, the world became more interconnected. This is because the communist bloc countries, which had previously been intentionally isolated from the capitalist West, began to integrate into the global market economy. Trade and investment increased, while barriers to migration and to cultural exchange were lowered.
A McDonald's restaurantr the fall of the Soviet Union, the former communist bloc nations began to integrate into the global economy. Photograph by Dirke Ingo Franke. Image courtesy Wikimedia Commons.
Technological advances, including mobile phones and especially the internet, have contributed to globalization by connecting people all over the globe. The World Wide Web links billions of people and devices, providing innumerable opportunities for the exchange of goods, services, cultural products, knowledge, and ideas.
Free trade agreements, such as the North American Free Trade Agreement (NAFTA), which the governments of the United States, Canada, and Mexico signed in 1992, removed barriers to the free flow of people, goods, and services, thereby facilitating greater trade, investment, and migration across national borders.
Though free trade and open markets have led to job losses in some sectors in certain countries, and have displaced workers in certain industries, they can also increase economic growth and prosperity.
cubed For instance, NAFTA has been criticized for moving almost three-quarters of a million manufacturing jobs out of the United States and into Mexico, but US trade with Mexico increased substantially as a direct result of the agreement.
The dark side of globalization
Although globalization has had many positive effects and has contributed to greater prosperity in many countries, it has a dark side as well. Global terrorist networks have used the conditions created by globalization to enhance their own influence and to promote a culture of intolerance and hate. For example, the al-Qaeda members who perpetrated the attack on September 11th used mobile phone technology and the internet to coordinate their plans. They were also easily able to move from one country to another because of lowered barriers to international travel and mobility.
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Moreover, the increasing interconnectedness of the world economy and international finance has heightened the risk of global economic catastrophe. This is because banking or financial failures in one country will lead to crises in other countries, and thus will become internationalized rather than remaining isolated. This was the case with the Great Recession of 2008-2009, during which the financial crisis in the US subprime mortgage market led to a global economic meltdown.
