General Issues and Regional Groups
Edited by Miroslav N. Jovanović
Michele Fratianni and Francesco Marchionne 1 INTRODUCTION According to much of the academic, business and policy community, globalisation appears to best describe today’s economic environment in the world. In a loose sense, globalisation means that international trade is not choked by man-made restrictions and that most countries exploit and gain from cross-border transactions. In a strict sense, globalisation implies that transactions among residents of distant countries are just as likely and intense as transactions among residents of neighbouring countries or among residents of communities located inside a country. The facts are clearly more consistent with the loose concept of globalisation than with the strict one. International trade is far from being perfectly globalised. Consumption retains a strong domestic bias and multinational corporations, the big engine of much trade and foreign direct investment, do not have a global reach, but rather focus their activities within an area surrounding the home market; see, for example, Rugman (2005), Fratianni (2006) and Fratianni and Oh (2009). Using the looser perspective, it is better to characterise economic environments by degrees of globalisation. Even a cursory reading of history suggests that globalisation is not a constant but a time series with its ups and downs; see Findlay and O’Rourke (2007). Globalisation rises in times of relative peace, especially if peace is ‘enforced’ by a hegemonic power. During the Pax Romana of the first and second centuries ad trade in goods but also movements of factors – predominantly slaves – thrived in the territories controlled by Rome. The Mongol...
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