Globalization and the Environment: Trade, FDI and International Co-operation Issues

Globalization has been defined as “the growing economic interdependence of countries world-wide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology” (De Jonquières, 1997). Globalization can be thought of as a process involving two broad components. First, globalization causes the structure of markets to change. Markets will generally become both broader (more horizontal integration in production, more consumer access to a wider range of products and services) and deeper (more vertical integration in production, involving new forms of inter-firm co-operation). Second, globalization will cause the rate of technological change and diffusion to increase. These two components of the globalization process will also tend to reinforce each other, with a more rapid rate of change in market structure leading to more rapid technological development (and vice versa).