The revolution in shipping and in computer technology has drastically
reduced communication and transportation costs. This reduction in costs
lies at the heart of globalization.
Mario Aguilar/Shutterstock
Though international trade dates back thousands of years, what is new in
the last several decades is the globalization of manufacturing. Assembly
of a product may take place in the most industrialized countries, but the
hundreds of component parts are manufactured in dozens of different
countries and delivered to the assembly plant “just in time” for assembly.
Two major causes of globalization are the rapid reduction in
transportation costs and the revolution in information technology that
have occurred in the past 50 years. The cost of moving products around
the world fell greatly over the last half of the twentieth century because of
containerization and the increasing size of ships. Our ability to transmit
and analyze data increased even more dramatically, while the costs of
doing so fell sharply. For example, today $1000 buys an ultra-slim tablet
or laptop computer that has the same computing power as a “mainframe”
computer that in 1970 cost $10 million and filled a large room. This
revolution in information and communication technology has made it