Capitalizing on Globalization

The world is growing smaller, as powerful forces, political and economic, speed the globalization of markets. On the economic side, technology is the driver: the relative cost of ocean, air, and road transportation continues to fall, removing an obstacle to cross-border merchandise transactions, while the revolution in information and communications has had, if anything, an even more dramatic impact on trade in services. The improved availability of information and declining transaction costs has further stimulated international flows of capital, labor, and technology. None of this would have been possible, of course, in the absence of political decisions to pursue policies consistent with globalization. Governments have removed overt and hidden barriers to trade. They have abolished exchange controls and liberalized capital account transactions. They have sought to promote domestic capacity to produce for foreign markets and to make their economies attractive destinations for foreign investment.