Effects of Economic Globalization

Effects of Economic Globalization

Globalization has led to increases in standards of living around the world, but not all of its effects are positive for everyone.


3 - 12


Social Studies, Economics, World History


Bangladesh Garment Workers

The garment industry in Bangladesh makes clothes that are then shipped out across the world. It employs as many as four million people, but the average worker earns less in a month than a U.S. worker earns in a day.

Photograph by Mushfiqul Alam
The garment industry in Bangladesh makes clothes that are then shipped out across the world. It employs as many as four million people, but the average worker earns less in a month than a U.S. worker earns in a day.
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Globalization is how different parts of the world are connected. It helps people, ideas, knowledge and goods move more easily around the world. Globalization also relates to the economies of the world. An economy is the level of wealth and number of jobs in countries.

Globalization of economies is the way in which companies and countries trade around the world. In general, this has improved people's lives in developing countries. Developing countries are poorer countries that are still growing and developing. However, experts warn that globalization can sometimes have a painful effect on businesses and workers.

A Historical View

Globalization is not new. People have always traded goods with their neighbors. As cultures developed, people were able to travel to distant places. They traded their own goods for other products.

There are several examples of early globalization. One of them is the Silk Road. The Silk Road was an ancient network of trade routes used between Europe, North Africa, East Africa, Central Asia, South Asia, and East Asia. China is located in East Asia. For more than 1,500 years, Europeans traded products made from glass and other goods for Chinese silk and spices.

As Europeans started sailing to the Americas, globalization grew to a larger scale. Later on, trade—and the slave trade—developed between Europe, Africa and America. Ships carried products from Europe to Africa where they were traded for enslaved Africans, who were then forced to go to the Americas. From the Americas, the ships then carried raw materials like sugar, tobacco, and cotton back to Europe, where they were used to make various products. Then those products were brought back to Africa again, and the cycle started over. This cycle was called the Triangular Trade. The spread of slavery shows how globalization can also hurt people.

Globalization has increased in recent years because of improvements in communication, transportation, and computing. Companies can more easily expand to other countries. Money can more easily be transferred across borders. Improved laws within countries and agreements between countries also increase globalization.

Benefits of Globalization

Globalization gives large companies an advantage. Companies can go to developing countries and get raw materials, like oil, for less money. They can pay lower wages to workers in those countries. At the same time, companies use expertise and experience from workers in developed countries.

With globalization, different parts of a product may be made in different regions of the world. For example, different parts of a car may be made in different countries. This can be the case even for cotton T-shirts. Cotton could be grown in one country. Then the T-shirt is made in another. Globalization affects services too. Many companies located in the United States have customer support call centers in India.

The result is more jobs in countries where jobs are needed. More jobs can have a great effect on the level of wealth in the country and make people's lives more comfortable. China is a great example of a country that has benefited from globalization. Another example is Vietnam. Globalization led to an increase in the prices for rice. As a result, many poor rice farmers in Vietnam managed to get out of poverty. More children of poor families left work and attended school.

People who buy the products benefit, too. In general, globalization makes prices of goods lower. People can also enjoy a wider selection of goods.


Not everything about globalization is good. Any change has winners and losers. People whose jobs have been moved abroad often suffer. Workers may be unable to defend themselves against these changes.

The situation is more complicated in the developing world. The working conditions of people are often very difficult. In some countries, a worker earns less in a month than a U.S. worker earns in a day. Work opportunities may cause children of poor families to quit school. In general, critics claim that workers in developing countries are taken advantage of and do not get enough protection.

Into the Future

Regardless of the downsides, globalization is here to stay. The result is a more connected world. Globalization has enabled the exchange of ideas and cultures, sometimes helping create a world view in which people are more open and tolerant of one another.

Media Credits

The audio, illustrations, photos, and videos are credited beneath the media asset, except for promotional images, which generally link to another page that contains the media credit. The Rights Holder for media is the person or group credited.

Tyson Brown, National Geographic Society
National Geographic Society
Production Managers
Gina Borgia, National Geographic Society
Jeanna Sullivan, National Geographic Society
Program Specialists
Sarah Appleton, National Geographic Society, National Geographic Society
Margot Willis, National Geographic Society
Clint Parks
Last Updated

February 20, 2024

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