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What Is the Connection between Economic Growth and Globalization?

Esther Ejim
By Esther Ejim
Updated May 17, 2024
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The link between economic growth and globalization is derived from the benefits associated with the increased rate of globalization in relation to its effect on various economies. Countries may benefit from globalization in many ways, including expansion in the international market for locally produced goods, benefits derived from the human capital in people from other countries, and ability of the various countries to benefit from the raw materials from other countries. In other words, the link between economic growth and globalization flows from the ease of communication and transportation that fosters an interdependency and other forms of economically beneficial and social relationship between countries.

Perhaps the most apparent relationship between economic growth and globalization is the role of globalization as a facilitator of international trade. With the advent of globalization trade between various countries is no longer hindered by distance, customs and language. Most people do not even have to leave their own county in order to conduct business with parties in other countries, because globalization has made it possible for economic transactions to be conducted over long distances. One of the ways in which the link between economic growth and globalization can be measured is by assessing the impact of international trade on some economies. Such economies are dependent to a large extent on exporting local resources or locally produced goods to other countries.

Another parameter for the measurement of the connection between economic growth and globalization is related to the benefit derived from the mobility of human capital, which cannot be separated from the individual. For example, an experienced engineer will carry his or her wealth of knowledge to any country or territory he or she may live. Consequently, one of the links between economic growth and globalization is the fact that it has made it possible for different countries to benefit from human capital in a manner that was not possible before the advent of globalization.

A country with an abundance of crude oil can only capitalize on the value of the oil on the international market to make economic progress due to globalization. Such a product will not benefit the country economically to the full extent that is possible without the opportunities afforded by globalization. Indeed, the structure that has been established in the international market serves as a vehicle for the economic growth of various economies. This relationship between economic growth and globalization is most evident in the area of tourism. The industry is a direct offshoot of globalization, which has made it possible for cheaper transportation and intercommunication between both near and distant nations.

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Discussion Comments

By turquoise — On Nov 16, 2014

Businesses and educational institutions are benefiting greatly from globalization. If a business needs an expert on something but that expert is in another country, that's not a barrier anymore. People can easily work in other countries now as the need arises. This means that innovation is more likely. Institutions have access to the experts they need, with the knowledge and experience they need.

By SarahGen — On Nov 16, 2014

I used to think that globalization and trade were extremely important for countries to be well off. But then I look at countries that have literally shut themselves off from globalization like Iran and North Korea. Obviously, they're not experiencing amazing economic growth. But they survive, they are doing okay. The fact that both have extremely repressive regimes is a different story.

By fify — On Nov 15, 2014

China is a great role model for nations who want to grow and flourish economically. The global economy is such that if one doesn't participate in it, many opportunities will be missed. Through trade, countries get the resources and goods they need at the lowest prices and also export their goods. Trade follows the rule of comparative advantage. The country with the biggest comparative advantage in a good produces it and sells it to everyone else. All other countries do the same. So everyone has access to the goods and technologies cheaply, that they would not have access to otherwise.

It's actually a brilliant system. Trade is a significant portion of the budget of many developing nations now and giving them that opportunity to improve their infrastructure and standards of living.

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