Globalization and Its Key Drivers

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Globalization is the status of the current modern world where there is a growing interdependence between the world’s economies, cultures, populations that is generated by the flow of goods and services, technologies, investment, and people across borders. Globalization is driven by several factors, which can be categorized into four categories of government and international relations, market, cost, and competition (Hill, 2020). The external drivers create and affect conditions in which globalization occurs and develops across various industries, and largely no one firm or government can control this process.

The news articles examine the issue of globalization drivers through the lens of the recent shock to the global economy with Russia’s invasion of Ukraine and the subsequent political, economic, and social consequences from global players and the market. The article by Lynch (2022) discusses how soaring oil prices are affecting economic growth and perspectives in the major markets. As discussed, one of the drivers of globalization is cost, and oil and natural gas, as being the two primary energy sources in modern industry and production, are utilized virtually everywhere. Therefore, a shock to the oil prices due to the sanctions on Russia, a major global producer and distributor of natural resources, is resulting in a tremendous increase in prices across the board, ranging from production processes to modern materials, many of which are made from petroleum. In turn, the cost falls heavily on industrialized governments and firms within those countries which are forced to slow globalization participation and production.

The above logic is largely confirmed by Swanson (2022), whose article discusses the political fallout where Russia is being isolated from the global economy, both by businesses under pressure and governments such as the US removing preferential trade status. The government being a driver of globalization creates policies that impact global trade by stimulating it in some cases via lower tariffs and preferential trade statuses or limiting it via sanctions such as currently. Given the tremendous size of Russia in both regional and global economies, the globalization of trade is severely disrupted currently, even if the US and Russia share very little direct trade.

Finally, the article by Yglesias (2022) discusses how globalization was meant to be so unifying, closely tying global markets together (with market forces being the major driver) that any large military or power conflict would be unthinkable. That is largely because the interconnections are so aligned, and there are so many foreign investments in between the industrialized economies that any conflict would disrupt these “threads” so severely that the impact would be felt across the world. The author argues that even without Russia, global markets will continue, but this conflict may signal a decline of globalization since markets, governments, and firms will be weary in the future to form such interdependencies.

An examination of political theory and globalization by Torres and Bosio (2020) indicates that nation-states must put peace over self-interests at times, and a global order should use soft power and detent to preclude major conflicts, particularly that can result in the use of nuclear weapons. Globalization can only exist in a state of interconnected capitalism and critical consciousness to maintain peace and stability. The article by Foot and Goh (2018) similarly supports the notion that growing levels of economic interdependence in globalization cannot coexist with regional heightened security tensions such as those coming from Russia or China. Both articles suggest that the drivers of globalization are inherently destroyed and disrupted, even if the conflict is regional because of the geopolitical interconnections of the modern world and economy, and it is likely to see a decline of globalization as more regional conflicts such as the one in Ukraine ensue.

The two questions that arise are:

With the rise of autocracy and authoritarianism around the world, is globalization fundamentally endangered due to the geopolitical instability of such regimes?
Is the globalization market response (including in the context of cost and competition) towards regional conflicts truly reflect the reality of the situation, or is it simply being driven by political hysteria?

These questions are based on political theory. The first question can potentially be answered by examining political science resources which focus on the study of autocratic regimes in modernity and determining if they can balance that form of governance with a market-based economy which is the foundation of globalization. The second question is more nuanced, it can be investigated by looking at previous conflicts and their effect on the economy since the beginning of the 21^st century and the rise of globalization, but this conflict is also unprecedented and has its own potential to impact history.