Concerning international division of labor, it will specialize on the production and export of labor-intensive products. Such a country has an international competitive advantage in manufacturing labor-intensive products. If a certain economy has a large number of workers but only a small stock of physical capital, the country is labor-abundant and capital-poor. Demography: The size of the population of a country is important for factor endowment differences between countries.
In my opinion, there are three main drivers for economic globalization and its different characteristics such as trade (see figure 1), international capital markets, currency markets, migration and more: This interdependence relates both to the exchange of factors of production (labor, capital, technologies, know-how) and the exchange of products (material goods and services, finished and unfinished products, consumer and capital goods). Drivers of economic globalizationĮconomic globalization stands for the economic interconnectedness of countries with the global economy as a whole.
Political decisions and institutions are central adjustment screws. But as a matter of fact, the development of globalization is not determined by any laws of nature. Sometimes it seems that the increase of cross-border exchange of goods, services, capital and other factors of production is inevitable. This fact is due to technological progress and different levels of scarcity of resources in individual countries. During the last decades we saw a rapid increase of economic globalization.
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