Maritime Trade and Transport - HWWI

Box 1
Advantages and disadvantages of globalization
In economics, the term globalization is understood to mean the process of increasing
international economic integration, in which national borders and geographical distances
play an increasingly less important role. This is evident, for example, in the expansion
of foreign trade, the increase in international capital movements, and the growing
importance of multinational enterprises. Increasing globalization should be viewed as
a fundamentally positive development, as this means an intensification of the interna -
tional division of labor and a realization of the associated benefits. The integration of
markets, however, also creates additional tension. A company’s competitive position in a
particular country is to a very great extent also determined by its stance in other countries.
Companies that only operate in their domestic markets can easily fall behind, as
the comparative advantages are to a diminishing degree the result of unalterable local
factors or deviating national factors. There is also a great deal of incertitude in regard to
the effects of the distribution of international trade. It cannot be ruled out, for example,
that increased imports from low-wage countries to industrialized countries will
squeeze domestic production out of the market. Less-skilled workers in the industria -
lized countries would have to accept lower wages or would become unemployed if
flexibility regarding wages were not forthcoming.
22 Berenberg Bank · HWWI: Strategy 2030 · No. 4