The concept of globalization is widely set and as such encompasses a number of disciplines analyzed from different perspectives.
For the purposes of this study, the focus will be on how globalization reaches every aspect of economic and social life. This cause-and-effect relationship is often articulated without empirical evidence, which leaves a correlation between globalization and its effect without any measure. However, without measuring the effects of globalization, valid conclusions cannot be drawn, but they remain at the level of arbitrariness of interpretation.
The economic aspect of the KOF globalization index measures the flow of goods, capital and services over long distances as perceptions that accompany market exchanges. In addition to actual trade flows and foreign investment, it also covers the extent to which a country restricts capital and trade flows. On the other hand, the social dimension of globalization measures the spread of ideas and information.
Given the large number of theories related to the phenomenon of globalization, they need to be systematized into theories that come from the views of classical scholars and those of contemporary thinkers. The difference between the two approaches is that classical scholars have discussed cultural and sociological views, whereas contemporary scholars have emphasized the economic and political aspects of the phenomenon of globalization (Table 1.1).
1.2.1 Globophilia and Globophobia
Globalization is one of the most widely debated issues of the present age. Generally speaking, the debate involves those who are supporters of globalization or ‘globophiles’, as opposed to those who do not support global processes or ‘globophobes’. Namely, on the one hand, there are ‘globophiles’ who believe that globalization connects the world and brings many economic benefits to countries that are well integrated into international business flows. For them, globalization is a continuation of modernization and a driver of progress, increased wealth, freedom, democracy and happiness. Further, it encourages more trade and increased capital inflows among nations. For example, businesses may seek their financing from foreign banks offering the most competitive interest rate (Bhagvati, 2005).
Our recent research has shown that the effect of economic globalization depends on the GDP level of a country, regardless of its size (Radović-Marković and Tomaš, 2019). The relationship between economic globalization and economic growth is important especially for economic policies (Samimi and Jenatabadi, 2014). Specifically, the impact of globalization on the economic growth of countries could be altered by a series of complementary policies such as improving human capital and the financial system. The effect of complementary policies is very important, as it helps countries be successful in the globalization process. Although Nobel laureate Krugman (1993) agrees that improving the financial system can contribute to the success of the globalization process, he emphasized that international financial integration is not a major engine of economic development.
By increasing market size through globalization, countries can benefit from economies of scale, lower costs of exploration and knowledge dissemination. In addition, some researchers argue that the effects of the impact of globalization on economic growth depend on the economic structure of countries during the globalization process.
The greatest ‘globophobes’ believe that globalization is a means for developed nations to colonize developing countries through economic control and that these countries are helpless victims of globalization. In support of this claim, they argue that globalization enables developed countries to exploit the natural resources of developing countries and deplete nonrenewable resources. Many have identified globalization as a major contributor to inequality among countries, and seen as particularly responsible are multinational corporations, which are in constant search for cheap labor and high profits (Ritzer, 2007). Specifically, global companies build mutual benefit relationships that cross national boundaries (Armstrong, 2020).
Some economists have singled out an increase in poverty, increase in the fiscal deficit and, above all, more pronounced regional differences in the world as a consequence of global processes (Kalyan, 2000). The worsening of economic inequality has called into question the ability of economic globalization to develop lagging regions (Feffer, 2020). Particularly, according to a number of scholars, globalization has a detrimental effect on economic growth in countries with weak institutions and political instability (Borensztein, De Gregorio, and Lee, 1998).
Complementing the negative view of global processes, ‘globophobes’ claim that globalization produces the undermining of democracy, cultural homogenization and increased destruction of natural species and the environment (Appadurai, 1990).
Bello (2007), one of the leading critics of globalization, suggested that countries place emphasis on trade at national rather than global levels to protect local economies, improve quality of life and support regional rather than global institutions.
The economic crisis of 2008 showed a close link between the crisis and the decline in the level of economic globalization in the world. Accordingly, the question arises whether the new economic crisis of 2020 caused by the coronavirus will again slow down the processes of economic globalization or even lead to the end of globalization, as some predictions have emerged. Such statements are corroborated by the fact that when the world is faced with a pandemic and the threat of financial collapse in 2020, each country for itself has been forced to seek a solution to closing their national borders. Further, as it moves around the world, the corona...
