Globalization and liberalization are concepts closely related to one another, and both globalization and liberalization refer to relaxing social and economic policies which results in better integration with an economy and between nations. Globalization and liberalization both occur as a result of modernization and as economies develop and grow, more integration, flexibility, and interdependence result in economic benefits to all. The following article seeks to provide a clear understanding of these two concepts and shows how they are similar or different to each other.
Globalisation
Globalization as many of you have heard is the greater integration among countries and economies for trade, economic, social, and political benefits. Globalization in trade is also called ‘one global market place’ where a consumer does not have to restrict their purchases to one country/economy and can enjoy the benefits of the goods and services produced worldwide. For example, Macy is a popular department store in the United States, but does not have outlets in many Asian countries. Many years ago before globalization, an Asian consumer would not be able to purchase Macy’s products, however, nowadays due to globalization, any customer, in any part of the world, can purchase Macy’s products and have them delivered to their doorstep by making transactions online. Globalization also means that just like goods and services, people, capital, and investment will also be dispersed in global locations so as to offer products and services to a ‘global marketplace’. For example, Toyota, a Japanese car manufacturer, has many production facilities worldwide to cater to demands in each individual market place.
Liberalisation
Liberalization, though similar to globalization, is more focused on the local economy. Liberalization generally refers to the removal of restrictions; usually government rules and regulations imposed on social, economic, or political matters. Liberalization maybe trade, social, economic, or capital market related. Social liberalization, for example, maybe related to things like making abortion related laws less stringent. Trade liberalization maybe with regard to reducing restrictions on imports or exports and facilitating free trade. Economic liberalization generally refers to allowing more private entities participate in economic activity, and capital market liberalization refers to reducing restrictions imposed on debt and equity markets.
Liberalisation vs Globalisation
Globalization and liberalization are concepts that are closely related to one another. A country usually experiences liberalization of its economic and other policies, which is later on followed by globalization. There are, however, many differences between the two. Liberalization generally relates to activity within a certain country as a result of modernization and development. Globalization relates to activities among countries and results in interdependence and interaction among countries and facilitates the movement of goods and services, capital, individuals, knowledge, technology, etc.
Summary:
• Globalization and liberalization are concepts closely related to one another, and both globalization and liberalization refer to relaxing social and economic policies which results in better integration with an economy and between nations.
• Globalization is the greater integration among countries and economies for trade, economic, social and political benefits.
• Liberalization generally refers to removal of restrictions; usually government rules and regulations imposed on social, economic, or political matters.