Economic Globalization

Abstract

The globalization of the economy means that international trade and investment are rising in a world economy characterized by falling transportation and communication costs as well as a larger number of countries which are open to world markets. The economic opening up of the PR China in the 1980s and the former socialist eastern Europe, including the Soviet Union, has created a set of new players, which are gradually also becoming active members in international organizations. The larger number of open countries and rapid growth in foreign direct investment are leading to more intensive competition in world markets. In the face of declining profit margins in markets for standardized goods, firms in countries and NICs are turning towards more product differentiation and intensified process innovations. R&D expenditures are thus increasing worldwide. At the same time the end of the Cold War has led to a slight reduction in public R&D in the largest countries - mainly at the expense of military R&D.