What are the drivers of globalization?



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There are a number of factors that drive globalization.  Let us look at a few of the most important categories of these drivers.

  • Market drivers.  This is the degree to which the tastes of people around the world are similar.  The more similarity, the more globalization.
  • Cost drivers.  There are times when it is cheaper to be globalized in one's business.  There are economies of scale available to large firms.  As shipping costs are reduced, it becomes more possible to globalize to realize these economies.
  • Government drivers.  The more that government policies such as free trade allow for globalization, the more globalization occurs.
  • Competitive drivers.  The more competitive a market is, the greater the need to globalize.

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