The Cause of Globalization

Garrett / CAUSES OF GLOBALIZATION
COMPARATIVE POLITICAL STUDIES / August-September 2000

The most important causes of globalization differ among the three major components of international market integration: trade, multinational production, and international finance. The information technology revolution has made it very difficult for governments to control cross-border capital movements, even if they have political incentives to do so. Governments can still restrict the multinationalization of production, but they have increasingly chosen to liberalize because of the macroeconomic benefits. Although the one-time Ricardian gains from freer trade are clear, whether trade is good for growth in the medium term is less certain. In the case of trade, the increasing interest of exporters in opening up domestic markets has had a powerful impact on the trend to liberalization. Cross-national variations in market integration still endure, but these are more the product of basic economic characteristics (such as country size and level of development) than political factors (such as regime type or the left-right balance of power).

THE CAUSES OF GLOBALIZATION
GEOFFREY GARRETT
Yale University

T

here is little disagreement these days that globalization is changing the world rapidly, radically, and in ways that may be profoundly disequilibrating. But beyond this already trite cliché, almost everything else concerning the phenomenon is subject to intense debate—in the context of an explosion of interest in and research on the subject.1 This article explores what we know about the causes of globalization. In a follow-up article, I will address globalization’s consequences for domestic societies (in terms of inequality and economic insecurity), national autonomy (with respect to regulation, spending and taxation, exchange rate regimes, etc.), and international governance (International Monetary Fund [IMF], World Trade Organization
[WTO], etc.). Throughout, I define globalization

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