a case study on globalization

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A Closer Look: Cases of Globalization

Globalization expands and accelerates the movement and exchange of ideas and commodities over vast distances. It is common to discuss the phenomenon from an abstract, global perspective, but in fact globalization's most important impacts are often highly localized. This page explores the various manifestations of interconnectedness in the world, noting how globalization affects real people and places.

Articles and Documents

Chinese imports and contraband make bolivia's textile trade a casualty of globalization (july 6, 2012).

Domestic manufacturing in Bolivia has been crushed by the influx of cheap foreign goods, mainly from China. Bolivian products cannot compete in the global market because of the small scale production, the strict labor law which keeps labor cost high, and the frequent political unrest which hurt competitiveness by raising costs. The Bolivian economy is reliant on raw material extraction, and its trade deficit keeps widening. Although the government is making an effort to raise tariffs and create state-owned companies to save jobs, globalization seems to have caused more bad than good in Bolivia. (Associated Press)

Is France on Course to Bid Adieu to Globalization? (July 21, 2011)

Many in France are blaming globalization for causing high youth unemployment and a stagnated, post recessionary economy. With the 2012 presidential election approaching, the theme of “deglobalization” appears to be growing in popularity due to its nationalistic appeal. Left-wing candidates, including member of Parliament Arnaud Montebourg, are advocating European-based protectionism, and saying that “globalization” has caused France’s high rates of youth unemployment, destroyed natural resources, and made France vulnerable to the fluctuations of interconnected financial markets. While Montebourg is not a likely front-runner for the presidency, his surprising popularity has highlighted the French peoples’ disillusionment and has prompted a discussion of globalization. Ideally, this will “force politicians to work harder on their answers”, and they will work to improve France’s economic recovery plans and their role in a globalized system. (YaleGlobal Online)

350 Movement Video from Bolivia's Climate Summit (April 22, 2010)

Immigrants now see better prospects back home (december 8, 2009), the human effect of globalization (august 30, 2009), following the trail of toxic trash (august 17, 2009), will the crisis reverse global migration (july 17, 2009), in many business schools, the bottom line is in english (april 10, 2007), globalization and child labor: the cause can also be a cure (march 13, 2007), landless workers movement: the difficult construction of a new world (september 29, 2006), for african cotton farmers, more crops equal less pay (august 15, 2006), meet the losers of globalization (march 8, 2006), thanks to corporations instead of democracy we get baywatch (september 13, 2005), global health priorities – priorities of the wealthy (april 22, 2005), guatemala: supermarket giants crush farmers (december 28, 2004).

This article looks at the effects of economic liberalization in Latin America's food retailing system and identifies small scale farmers as the "losers of globalization." Corporate transformations of the regional food sector and its failed trickle-down economics have not generated wealth but rather increased the social inequalities in the region, forcing smaller growers to migrate. ( New York Times )

Campesinos vs Oil Industry: Bolivia Takes On Goliath of Globalization (December 5, 2004)

Privatizations: the end of a cycle of plundering (november 1, 2004), globalization: europe's wary embrace (november 1, 2004), latin american indigenous movements in the context of globalization (october 11, 2004), mixed blessings of the megacities (september 24, 2004), dominican republic: us trade pact fails pregnant women - cafta fails to protect against rampant job discrimination (april 22, 2004), workers face uphill battle on road to globalization (january 27, 2004), money for nothing and calls for free (february 17, 2004), the next great wall (january 19, 2004).

This article examines the growth of geographical, physical and, increasingly, digital immigration barriers to the free movement of people between rich and poor countries. ( TomDispatch.com )

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Xiaomi’s Globalization Strategy and Challenges

Xiaomi, the Chinese smartphone company founded in 2010, had quickly become an industry leader in the Chinese market. By 2016 it had started to expand internationally, and this case lays out the company’s globalization strategies and challenges moving forward. Hugo Barra, a top Android executive, had left Google a few years earlier to lead Xiaomi’s international growth. Xiaomi’s founder and CEO, Lei Jun, said the company’s ultimate goal was “making good but cheap things,” a low pricing strategy that had succeeded in China. The company sold over 70 million mobile phones in 2015—while aggressively building out a robust ecosystem. However, Xiaomi had expected to sell 80 to 100 million units that year; it was facing a declining domestic market and increased competition. Therefore, international expansion had become an important part of the company’s overall strategy.

But expanding to other countries would be a challenging road. For one, it would take considerable time and effort to tailor the company’s Android-based MIUI operating system for diversified markets—and obtain market-access qualifications. Xiaomi’s patent portfolio was thin compared to those of large competitors, and it ran the risk of lawsuits from companies that held patent rights in the countries it wanted to enter. Other challenges included building out sales channels, output capacity, and cross-culture management development. Xiaomi’s international plan included ten countries in Asia, Europe, and Latin America. The next year or two would be critical for Xiaomi—and it needed to make the right strategic decisions to succeed in its globalization efforts. 

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McDonald's: A Case Study in Glocalization

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The purpose of this research report was to assess McDonald's globalization strategy. We examined McDonald's strategy across six dimensions: menu, promotion, trademarks, restaurants, employees, and service. We also compared the company's performance across these six dimensions in 10 different countries: Saudi Arabia, France, the United Kingdom, Greece, Brazil, Indonesia, India, China, Japan, and New Zealand to measure McDonald's success in capitalizing on globalization and localization. As discussed in this report, McDonald's is a global brand through its worldwide standards and training operations, but the company is also local, with its franchising to local entrepreneurs, locally sourcing food, and targeting specific local consumer market demands. McDonald's is an excellent example of blending global with local - an organization that has glocalized very successfully.

Introduction and Purpose

McDonald's has been serving fast food to America since 1955 and has grown into one of the world's leading fast food giants. Today, McDonald's is the leading global foodservice retailer with 1.7 million employees and more than 34,000 restaurants in 119 countries serving nearly 69 million people each day (McDonald's, Annual Report, 2012).

Not too long ago people believed McDonald's would become "a lumbering cash cow in a mature market" (Serwer & Wyatt, 1994). However, its success abroad has offset the maturing market in America. In fact, 65% of McDonald's sales came from international revenues (McDonald's, Annual Report, 2012.) Its worldwide operation concentrates its global strategy, "Plan to Win," and on customer experience, which includes people, products, place, price, and promotion.

This paper will compare McDonald's marketing strategy to determine how well it capitalizes on both globalization and localization. It will look at this strategy by examining ten different countries: Saudi Arabia, France, the United Kingdom, Greece, Brazil, Indonesia, India, China, Japan, and New Zealand, across six different dimensions: menu, promotion, trademarks, restaurants, employees, and service.

McDonald's: The American Standard

The McDonald's American model focuses on fast and convenient service with high purchasing turnover. Its recognizable bright red and yellow colors with the iconic golden arches reaching into the sky offer Americans a piece of the familiar in a foreign country. "Our goal is to become customers' favorite place and way to eat and drink by serving core favorites such as our World Famous Fries, Big Mac,...

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Globalization: Case Studies

Learning objectives.

• Students will analyze how technological advancements have led to increased globalization.
• Students will create presentations that inform about ways in which globalization impacts daily life.
• Students will complete Parts 1 and 2 of the guided reading handout.
• (5 Minutes) Debrief Homework: Ask students to share key takeaways from homework. Highlight that 1) technological advances have increased globalization and 2) globalization has a direct impact on their daily lives in the food they eat. This sets the stage for a deeper look at the impact of globalization through case studies.
• Group 1: A Global Semiconductor Shortage 
• Group 2: Big in China: The Global Market for Hollywood Movies 
• Group 3: Human Trafficking in the Global Era
• A Global Semiconductor Shortage = data related to backorders, map of supply chain, chips used in a car visual, bullet points of what CHIPS Act does
• Big in China = data on box office sales, images related to censored movies, etc.
• Human Trafficking = data about numbers of people affected, visuals of common industries where trafficking is common, visuals about products tied to human trafficking.

Students should complete the Impact of Globalization Infographic/ Presentation. They will share at the beginning of the next class meeting. If possible, their infographics should be displayed or shared with the larger school audience (i.e: submitted to the school newspaper).

withholding of information, typically by a government or an authoritative body.

cable, made out of strands of glass as thin as hair, used to quickly transmit large volumes of internet traffic between locations all over the globe.

disease outbreak that has reached at least several countries, affecting a large group of people.

supreme or absolute authority over a territory.

a network—consisting of individual producers, companies, transportation, information, and more—that extracts a raw material, transforms it into a finished product, and delivers it to a consumer.

an international institution created in 1995 that regulates trade between nations. A replacement for the 1947 General Agreement on Tariffs and Trade (GATT), the WTO manages the rules of international trade and attempts to ensure fair and equitable treatment for its 164 members. It does this by conducting negotiations, lowering trade barriers, and settling disputes. As of 2018, the WTO had 164 members.

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‘Containerization in Globalization’: A Case Study of How Maersk Line Became a Transnational Company

• Open Access
• First Online: 30 October 2019

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• Henrik Sornn-Friese 7  

Part of the book series: Palgrave Studies in Maritime Economics ((PSME))

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This chapter is a historical case study of Maersk Line, the world’s leading container carrier. Maersk Line’s global leadership was achieved within a relatively short time period and was the result of Mærsk Mc-Kinney Møllers decision in 1973 to enter container shipping—the biggest investment in the history of the AP Moller companies. When Maersk Line managed to achieve global leadership in a period of just about 25 years, the company’s own country offices were particularly important. They allowed the interconnection of three types of networks: The physical network of ships and routes, the digital network of information and communication systems and the human network of Maersk employees. The interaction between the vessels, the systems and the people is still at the core of the company today and central to its continued development.

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This chapter is generally based on and extends an earlier article, written in Danish, Sornn-Friese ( 2017 ).

Studies on the role of containerization in globalization have centred either broadly on the history of the liner shipping industry, Footnote 1 or more narrowly on strategic alliances Footnote 2 and global maritime networks. Footnote 3 Most of these studies in addition have been carried out at the industry level and have largely neglected the strategic dynamics associated with identifying business opportunities at home and abroad, the mobilization of resources, and efforts to continually adjust company strategy and organization. This chapter adds to the literature in two ways. Firstly, by shifting the unit of analysis from that of industry to that of the firm and, secondly, by focusing on the process of a company’s transnationalization, which entails the establishment of a global network of subsidiaries orchestrated by a central corporate headquarters. Footnote 4

The chapter uses a historical case study of Maersk Line, the world’s leading container carrier. Maersk Line’s global leadership was achieved within a relatively short time period and was the result of Mærsk Mc-Kinney Møllers decision in 1973 to enter container shipping—the biggest investment in the history of the AP Moller companies. Maersk Line has since grown into the world’s largest container ship operator with almost 33,000 employees in 130 countries, a fleet of 639 container ships serving 59,000 customers around the globe, more than 300 own company offices in 121 countries, global service centres in Denmark, the Philippines, India and China, and access to 343 port terminals and inland transport facilities in 61 countries, partly through its sister company APM terminals.

Why did Maersk Line decide to become a global company, and how did it manage so quickly to achieve leadership in an industry dominated by a small number of consortia organized in cartel-like liner conferences? The major features in the company’s development are well documented, but the story of how Maersk Line became a transnational corporation is an overlooked chapter. Footnote 5 The replacement of long-established third-party agency agreements with own offices after 1974 was a decision of great importance that enabled superior services globally. The motto ‘service all the way’ was the hallmark and a major driving force for the company. In a rare interview, the person in charge of the new container initiative, Mr Ib Kruse, explained how the company’s competitiveness rested on a service ‘second to none’, realized through the combination of modern and effective company-owned ships with sophisticated equipment developed in-house, a global network of own company offices and high-level communication, and sophisticated documentation and control systems. Footnote 6 This chapter examines the development of these elements.

Through interviews with current and former employees of the AP Moller-Maersk Group, documents from the company’s private archives and various secondary sources, the transnationalization of Maersk Line is studied as an ‘extended era’, limited in time and focusing on the substitution of third-party agents abroad with own country offices. With inspiration from the theory of dynamic capabilities the chapter seeks to explain how Maersk Line created an efficient global organization while adapting its services to local market needs in the countries where it operates. Footnote 7 The chapter demonstrates strategic change by examining the company’s ability to capture and understand new business opportunities, seize them and change the company’s core competencies. The study of such dynamic capabilities provides new perspectives for the understanding of transnational corporations. Footnote 8

The analysis focuses largely on the period from 1974 to 1999, during which the establishment of the company’s global network of own overseas offices was particularly pronounced. In this period, the company’s many country managers had, as ‘entrepreneurs and kings’, the responsibility to create profits in their own country, and there were many local investments in container shipping and related services. Footnote 9 The Copenhagen headquarters decided on the overall strategy for Maersk Line and had a direct role in local development, but country offices were run as profit centres. Towards the end of the period, culminating in the acquisition of Safmarine and Sea-Land in 1999, the organization changed gradually, with the multifarious activities increasingly organized into independent product lines.

A Transnational Company

Unlike the global companies of the eighteenth and nineteenth centuries, primarily plantation, mining and international trade, which were typically state-supported monopolies on specific trades within the European colonies, modern transnational companies such as Maersk Line are characterized by their involvement in direct business activities abroad and their ability to profit from cooperation and international division of labour. Footnote 10

The decision in 1973 to enter into container shipping was the start of Maersk Line’s deep internationalization, developing as a genuine transnational corporation. Not only is Maersk Line today a huge and diverse company that serves customers around the globe with different needs and expectations, its activities are also managed so as to provide economies of scale through a global organization while the company can concurrently handle various conditions in different regions of the world and differentiate its services to local needs.

Several factors differentiate the transnational company from other international companies. Footnote 11 Transnational companies are able to plan, organize, coordinate and control their business activities across countries—typically from a central headquarters and through the setting of common goals and strategies. Characteristically, they promote multiple internal management perspectives, through which they can decode and respond to the diversity of external demands and opportunities; their interdependent physical assets and management capabilities are distributed internationally; and they have a strong unifying management approach. Footnote 12 The latter is characterized by top management’s ability to synchronously manage context, processes and content. Context management is the task of providing a structure for delegated decision-making based on clear goals and priorities, career development for leaders with a global mindset, and established decision-making procedures. Top management’s direct intervention in organizational processes may include minor modifications, typically handled through continuous monitoring and additional decision support, as well as major interventions (such as establishing temporary working groups and task forces) in larger or more complex situations. Through content management, top management intervenes directly in local decision-making situations, if an issue remains unresolved, or if a previously selected solution proves unsatisfactory.

Soon after World War II Maersk Line had established a handful of offices abroad, and these became important for the subsequent container endeavour and for the building of the company’s transnational organization from the middle of the 1970s. The latter followed the expansion of the trade network, where new regions were gradually added. In each region, Maersk Line established key country offices, while in individual ports and certain mainland hubs it opened up small branch offices. In the few locations that did not offer enough business volume to form a true profit centre, the company continued to be represented by third party agents.

Only Taiwan’s Evergreen matched Maersk Line’s approach in scope and dedication, and the two became the first real transnational companies in international container shipping. Although there was strategic awareness of the importance of strong representation locally, Maersk Line’s global organization was not the result of a conscious transnational strategy, but rather of a long process of change in which the company reacted to business opportunities as they arose and dismissed the elements it found not to work. It is true, however, that container shipping, at least initially, required proximity to the customers, that certain economies of scale to some extent justified strong local country offices, and that the strength of the company’s distinct entrepreneurial culture, where it ‘was better to get forgiveness than to get permission’, made it desirable to have a functioning internal sharing of knowledge and information. Footnote 13 All this contributed to the transnationalization of Maersk Line through a period when container shipping—driven by the transition from general cargo traffic to standard containers and the relocation of production from the West to low-wage countries in Southeast Asia—was a high-growth market.

The Establishment of the First Maersk Line Offices Abroad

Shortly after World War I Arnold Peter Møller started tramp shipping services in the US freight market, from where he soon also served the Far East. In 1919 he and his cousin, Hans Isbrandtsen, who had immigrated to the United States in 1915, together founded the Isbrandtsen-Moller Company (ISMOLCO) in New York. The international activities of the AP Moller-companies thus early on included ownership and strategic management control across borders. In 1928 ISMOLCO went into the liner business of shipping cargo from the US East Coast via the Panama Canal to the Far East, and hence Maersk Line was born. The Panama line was successful, and in 1931 Maersk Line had three ships in regular services on the route.

Like most liner companies Maersk Line employed local agents in the ports where the company’s ships were calling. ISMOLCO was an agent for Maersk Line in the United States, and a few years after the establishment of the Panama line Mr Møller had built a network of third-party agents in Asia. The network comprised of the shipping departments of large industrial companies, such as Mitsubishi of Japan and Compañía General de Tabacos de Filipinas (‘Tabacalera’) in the Philippines, Footnote 14 and international trading houses specialized in liner shipping, such as, Melchers & Co in Shanghai (1931–1946), Jebsen & Co in Hong Kong (1946–1975) and in Shanghai (1946–1969), and Tait & Co in Taiwan. Footnote 15 The latter were typically larger companies each with their portfolio of agencies and with their own teams dedicated to each customer. During 1973–1976 Chris Jephson was employed by Tait & Co in Taiwan and responsible for their Maersk Line team, a group of 15–16 people focused exclusively on servicing Maersk Line. Tait & Co was agent for more than 70 shipping companies from around the world, several of which were Maersk Line’s direct competitors. Footnote 16

WWII put a temporary halt to Maersk Lines’ activities, but from 1946 the Panama line was reopened. In the post-war years, Maersk Line established country offices in Thailand, Indonesia, the United States and Japan. The four offices proved important for the development of Maersk Line’s global organization after 1974. Moreover, in 1951 Maersk Company Limited was established in London as an independent company that could operate the AP Moller fleet under the British flag in the event of a new war in Europe. Similarly, during the Cold War, Maersk Inc. in New York (see below) developed as a separate shadow headquarters that could take over the Maersk Line fleet in the event of a new war in Europe.

The first country office had been established in New York, where Mærsk Mc-Kinney Møller stayed during WWII. Along with Thorkil Høst, the former head of the AP Moller liner department in Copenhagen, he founded the Interseas Shipping Company. The new company, which in 1943 changed its name to Moller Steamship Company, was set to replace ISMOLCO as agent for Maersk Line in the United States, as A. P. Møller had decided to break with his cousin. When Mærsk Mc-Kinney Møller in 1947 moved back to Denmark, the Moller Steamship Company was fully staffed and operational and busy rebuilding the Panama line. Under Høst’s leadership from 1947 to 1967, the Moller Steamship Company grew into a large and successful company with autonomous top management and Board of Directors. In 1955 the company established its own office in Los Angeles and in 1973 extended with an office in San Francisco. After the containerization of Maersk Line the company quickly built an extensive network of own offices in the United States and Canada.

From early spring 1946 the ships were once again fully loaded travelling from the United States to the Far East, and many of the customers from before the war returned to Maersk Line. Footnote 17 It was, however, difficult to generate backhaul from the Far East to the United States, and Maersk Line was working keenly to adapt its agent network in Asia to generate home-going cargoes. Cooperation with the agents in Hong Kong, Manila and Taiwan were strengthened, but to access the lucrative Japan traffic, which in the post-war years was reserved for American tonnage, the company had to make a detour. Footnote 18 In 1947, Mærsk Mc-Kinney Møller therefore established Maersk Line Ltd (MLL) in Delaware, which gave access to the Asian countries managed by the Americans under General Douglas MacArthur, the Supreme Commander of the Allied Powers. In 1948, MLL opened up its own country office in Yokohama south of Tokyo and branch offices in Kobe and Osaka, and in 1958 it expanded with a branch office in Jakarta, replacing the existing agency agreement with Harrisons & Crosfield in Indonesia. MLL was mainly an administrative unit and it played no direct commercial role for Maersk Line until 1983 when it got a contract with the US Defense Department.

The branches in Japan and Indonesia developed in a short time to become important country offices for Maersk Line in the Far East, and Japan became a bridgehead to Thailand. In September 1949, the first Maersk Line ship called on Bangkok with the supply of railway equipment from Japan to the Thai State Railways. The new Japan-Thailand route, which in the following year was extended to the Persian Gulf, provided safe and regular cargo, and already in 1951 Maersk Line established an office in Bangkok, which soon was as important as the country offices in Japan and Indonesia.

Maersk Line expanded dramatically during the post-war period with the establishment of new routes. In addition to Japan-Thailand and Japan-Persian Gulf, it established a transatlantic line in 1947 (which was closed down again in 1954), a Suez line in 1949, a Japan-Indonesia line in 1952, a Gulf of Mexico-West Africa line in 1958 and a Japan-West Africa line in 1959.

Table  5.1 shows Maersk Line’s coverage through third-party agents and own offices in 1958. With continuous network expansion, the company’s agent network grew significantly in the post-war years, and there was an increased need for coordination and information exchange. From 1956 there would be regular meetings between the Principal Agents and the liner department in Copenhagen. The first Principal Agents’ Meeting was held North of Copenhagen and lasted two days, and the meetings were then repeated at 2–3 year intervals. Footnote 19 When Maersk Line almost two decades later went into container shipping, the agent meetings had become weeklong events with executives from Copenhagen and the principal agents from around the world. Although they were indeed autonomous and legally independent companies, the principal agents were considered an integral part of Maersk Line, as made apparent by A. P. Møller in his welcoming speech during the second Principal Agents’ Meeting in 1958: ‘You are now all in the Maersk family, and we are happy to have you as members thereof. You have all done a good job to serve as a member of that family, and I hope that you will all continue to make the Maersk name honoured, respected, and still growing. I thank you, Gentlemen!’. Footnote 20

Developments 1974–1999

Maersk Line’s international organization proved to be an important prerequisite for the company’s success in container shipping. The country managers in the United States, Japan, Thailand and Indonesia (so-called ‘Maersk Top’) were part of the ‘crash committee’ established by Mærsk Mc-Kinney Møller in early 1970 with the task to investigate whether the Panama line should be containerized. Footnote 21 Prior to this there had been a cautious attempt to initiate a containerized service between Asia and Europe in cooperation with Japanese ‘K’ Line, but the Japanese had terminated the partnership and Maersk Line’s first container ship had instead been chartered out. The four-country managers were deeply involved in the decision to containerize the line and their country offices were important building blocks in the unfolding of this new venture globally. Footnote 22 Local presence along the Panama line was crucial for success as the ultimate goal was a worldwide door-to-door service in which the company would control the customer’s transport task from supplier to final destination. Footnote 23 The country managers contributed international knowledge and experience as well as an organizational platform for the containerization of the line.

‘Maersk Container Line’ was initially shielded from AP Moller’s conventional liner business and was a small unit in Copenhagen with only five employees: Ib Kruse (managing director), Flemming Jacobs (marketing and sales), Niels Jørgen Iversen (ship operations), Birger Riisager (finance and IT) and Erik Holtegaard (conference matters). Globally the unit had only about 30 employees. The recommendations from the crash committee to the organization were: ‘Develop the essential management organization, taking account of both the new skills that will be necessary and the quality of staff required in each location’. Footnote 24 In 1974 it was decided to establish country offices in Hong Kong and Singapore, and from that time onwards there was rapid establishment of offices in Asia, Europe and North America and later in the rest of the world, as illustrated in Fig.  5.1 .

( Source AP Moller-Maersk, Main Archive, various boxes)

The establishment of Maersk Line country offices

The establishment of country offices were each international episodes of great importance and can be described as revolutionary steps towards the transnationalization of Maersk Line, whereas the creation of smaller, local offices were gradual extensions in an ongoing, evolutionary internationalization process. Footnote 25 Each country office was established as a profit centre—an independent, and in the country legally domiciled, company with its own board and management. Each establishment had thus a long-term perspective; they were ‘good citizens’ locally and not temporary structures aimed at ‘looting’. Footnote 26 Country managers were typically expat Danes sent from the Copenhagen headquarters, while the other employees in the offices were well-qualified locals recruited from the shipping and freight forwarding industry. The focus on own country offices was on building a global agency network, with emphasis on the word ‘network’: although the offices were established as profit centres, there was a strong central management from Copenhagen in the form of advanced IT systems and behavioural incentives, and effective socialization mechanisms worked to interconnect the organization across countries and companies.

Employees were carefully selected and tested. Already in the 1960s McKinney-Møller had introduced a so-called Predictive Index (PI) system for staff assessment, where employees were measured on intellect and personality. From this system was drawn a global inventory of talents that could be called upon whenever the organization lacked ‘the right person at the right time and place’.

Employees were stationed in a country for a number of years and then either sent on to another country for an additional time period or back to the head office in Copenhagen. In that way, employees developed actual country experience and international perspective, and they forged strong ties to other Maersk people, essentially forming a ‘Maersk-blue brotherhood’.

Marketing and Sales was a primary management philosophy. A comprehensive and detailed marketing manual had been developed for use in the conventional liner business in 1974, the distribution of which was restricted to Maersk Line personnel and agencies. The manual specified the Maersk Line logo, which consisted of two elements: ‘a Maersk blue square with rounded corners containing a white seven-pointed star (“standing on two points”), and the name Maersk Line’. Footnote 27 It also specified in great detail how the logo should be applied in communication (e.g., transportation documents, cover letters, envelopes, name badges, and business cards), on the company’s ships and vehicles, and in other advertisement (match boxes, playing cards, pencils and pens, memo pads, calculators, alarm clocks, LEGO ship models, and more). All overseas offices would use the manual to ensure that sales and marketing was handled properly.

Similarly, there was a written manual for the design of Maersk Line offices, narrowly specifying the choice of colours, furniture and office wall art (the offices should always have pictures of A. P. Møller and Mærsk Mc-Kinney Møller as well as the Danish Royal family). The manual also promoted a strict dress code, however allowing for smaller deviations to accommodate to local customs in the different countries.

There was outspoken focus on training and education, particularly in sales. The company’s global sales training program was managed from Copenhagen, but performed and adapted locally. With the rapidly expanding global organization the company’s training efforts were vigorously developed, and from 1993 firmly established in the M.I.S.E. program (‘Maersk International Shipping Education’), which annually attracted more than 85,000 applicants worldwide to around 500 trainees positions. Footnote 28

In 1967, Poul Rasmussen replaced Thorkil Høst as country manager in the United States, and after the decision to containerize the Panama line in 1973 he replaced the company’s third-party agents in the United States with own offices in the most important ports. These typically focused on sales and customer services, but in major ports such as Baltimore and Charleston they would also carry out ship operations. In 1978, Alfred B. (‘Ted’) Ruhly took over after Rasmussen. Among many other initiatives, Ruhly introduced quality circles in the organization, based on the principle that ‘what gets measured, gets done’. Quality Control subsequently spread to Maersk Line globally as a key underpinning in being ‘second to none’.

When Moller Steamship Company in 1988 changed its name to Maersk Inc. and moved to larger premises in New Jersey, it had more than 30 own offices in the United States and Canada. The name change was a result of increased marketing of the Maersk brand, but the company’s function was unchanged. Maersk Inc. had a high degree of autonomy from Copenhagen, partly due to the business volume based on the remarkable Post-WWII expansion of the US economy and the importance of the Panama service to Maersk Line, and partly due to the role the organization got with Mc-Kinney Møller’s residence in the United States during WWII. In the 1990s, the culture to some extent was a reflection of the culture in Copenhagen but mixed with strong elements of American leadership. Footnote 29 When Maersk Line acquired Sea-Land in 1999 Maersk Inc. played a major role, both in the dialogue with the US authorities and in the work to get the two companies integrated. With the acquisition of Sea-Land, Maersk Inc. more than doubled in size and was now by far the largest shipping company in the Americas with more than 100 offices in the United States, Canada, South America, Central America, and the Caribbean. Footnote 30

Until the mid-1990s the establishment of new country offices followed in a steady stream and anchored Maersk Line in Eastern Europe as well as in Africa, China and the Middle East. In the locations where Maersk Line, due to local institutional conditions, could not be established with wholly-owned subsidiaries, the company would set up exclusive Maersk Line units in the organizations of its third-party agents. Having own employees stationed was considered as a key issue, partly with the aim to inject the right dose of ‘Maersk blue blood’ in the organization and partly to provide own people with specific country experiences and an international outlook.

In 1993, Maersk Line went into nine new countries and 24 overseas Maersk Line offices were added to the organization. Particularly interesting was the establishment in Australia and the continuation of containerization of routes within Asia. These included the acquisition of EAC’s Far East Line and certain of their offices in the area. This all happened before the intra-Asia container market became the world’s largest. Included in the acquisition of EAC’s Far East Line was an Eastern Australian service between Melbourne, Sydney, Brisbane and two ports in Japan and Korea, as well as a Western Australian service between Fremantle, Singapore, Malaysia, Hong Kong and Taiwan. The EAC’s intra-Asia services were also included in the deal and were continued from Singapore through Maersk Line’s new subsidiary MCC Transport.

Containerization of the Europe/Asia Route

In the late 1970s it was decided to containerize the important Suez line running between Europe and Asia. The Suez line had originally been established in 1946, when the company experimentally let the ships that had sailed out on the Panama line return to the United States via South and Southeast Asia and the Red Sea. Footnote 31 With the decision to start a weekly independent container service between Asia and Europe ten new large container ships were ordered, and the organization in Western Europe was considerably strengthened. Long-held agency agreements were replaced with own country offices: Dublin in 1976, Paris in 1978 and Hamburg, Rotterdam and Antwerp in 1979. In addition, the company established its own local branch offices in Bremen, Düsseldorf, Nürnberg, Stuttgart, Frankfurt, Munich and Amsterdam. The European focus was gradually extended first to Scandinavia in 1985 with an owned office, Maersk Line (Sverige) AB, in Gothenburg and smaller, local branch offices in Stockholm and Helsingborg and then to Eastern Europe. With the continued expansion of Maersk Line in Europe new agency agreements were made with third-party providers in new countries, only to be replaced with own Maersk Line offices later on. In Helsinki, for example, an agreement was entered with OY Jacobsen Shipping Ltd in 1976 and replaced with an owned office in 1990. This stepping-stone approach was a means for Maersk Line to build up country experience in new markets that would later be used as lever for an own establishment.

Various documents related to the company’s Europe Project show that Belgium, The Netherlands and Germany formed the core of containerization of the Suez line. Footnote 32 Experienced Maersk employees were installed as Board of Directors and together with the newly appointed country managers were directly involved in hiring high-calibre senior people to lead the main functions of the three offices. The offices were also linked to the company’s new electronic systems that Maersk Data had developed in collaboration with Cable & Wireless in London for container management and documentation on the Panama line.

On Saturday, 28 June 1980, the country managers and senior people from the Europe offices together with the third-party agents in Switzerland, Denmark, Norway and Sweden were invited to a full-day information session in Copenhagen. Senior managers from Copenhagen and top officials from the advertising company Young & Rubicam also joined the meeting. On the program were the key elements in Maersk Line’s management philosophy: ships and operations, marketing and sales, financial management and the unique IT systems. Sales philosophy was a significant strategic directive for the company: Maersk Line should offer a superior service and be known as the prime alternative to the three large container consortia Trio, Scan Dutch and ACE Group, which controlled more than 90% of container shipping on Asia-Europe through the cartel-like Far Eastern Freight Conference (FEFC). Maersk Line’s partnership with Young & Rubicam was important and close. It was an integral part of getting the new container concept rolled out and marketed. Young & Rubicam had its own team of employees living and breathing for Maersk Line.

The World’s Most Profitable Container Shipping Line

In 1985, it was decided that Maersk Line should become ‘the most profitable international container transportation company in the world’. Footnote 33 This objective was to be achieved through first-class services, global coverage, and door-to-door services—three elements that from the beginning were captured in the motto ‘service all the way’. To achieve the objective required outstanding ships and equipment, well-trained and highly motivated employees, maximum cost-effectiveness, tailor-made customer services, and investments in specialized tonnage and equipment for niche markets. With the objective followed a genuine growth strategy to be pursued through a combination of increased transport frequency in existing markets and entry into new geographic markets. The growth would be based on the experiences with the containerization of the Panama line, and should preferably be organic.

The establishment of own offices in key locations were formalized in the company’s new growth strategy: ‘Maersk Line must have as an objective to be represented by their own agencies, where this is feasible’. The strategy included detailed plans for the establishment of new offices in Europe, Asia and Africa, and for each country a short comment was attached. Footnote 34 For Italy it was noted, for example, that the previously used agent was ‘owned and managed by aging Italians with no apparent dynamic crown princes’. For West Africa the note was more comprehensive: ‘The ongoing study by the Line Department is expected to lead to a positive conclusion on the establishment of own companies in Ivory Coast, Togo and maybe Senegal to achieve overall control and undertake direct sales, customer service, documentation and container control—possibly leaving vessels’ operations sub-contracted to existing agencies’.

In 1986, the remaining conventional liner services were merged with the container business in Maersk Line as a separate business unit and expanded with a new container line between Europe, the Middle East and West Africa. It was also somewhat of a stroke of genius to build a private container terminal in what had hitherto been a fishing port in Algeciras in southern Spain. The project was simply called CPS—to keep it secret, which Maersk Line had the habit of, also regarding the current capacity of its container vessels. Footnote 35 CPS stood for ‘Connecting Point Spain’. The basic idea of the concept included serving main lines by large container vessels avoiding ‘convoy sailings’, serving feeder legs by a flexible fleet easily adjustable in time with even short-term market fluctuations, and the availability of efficient berthing and operation facilities at the connecting point. Footnote 36 This involved replacing the 10–12 general cargo vessels on the existing conventional route from Asia to West Africa with only four major feeder ships of the line between Algeciras and West African ports. This hit two birds with one stone: first, utilizing capacity on ships from Asia to North Europe by stopping in Algeciras, and second, delivering the goods in West Africa much faster than had been the case on the longer way with general cargo vessels, and thus provide even better customer service. It would also save Maersk Line huge shipping costs.

A Deeper Reflection: The Establishment in Southeast Asia in 1975

Press releases brought in a number of Hong Kong, Singapore and Malaysian newspapers in the second half of 1974 showed that Maersk Line, with effect from 1 January 1975, would end the longstanding collaborations with third-party agents in Hong Kong and Singapore and set up its own offices. Footnote 37 As reasons were stated the company’s new and large exposures in the container era. Strategically the decision was founded in the desire to establish Maersk Line as a strong brand and provide ‘service all the way’, but the timing was prompted by inadequate services from the existing agents. Maersk Line had already opened an own office in Taipei the year before. Even at the commencement of containerization in 1975 Taiwan was a very important market for Maersk Line, so a smoothly functioning and tightly controlled local operation was deemed crucial.

With the containerization of the Panama line the company decided to relinquish its ‘serving Japan first’ approach and instead focus on Southeast Asia, and there were careful considerations behind this choice. Footnote 38 Importers in Southeast Asia had begun to avoid lines that passed via Japan, and while Japan’s imports from the United States were expected to considerably increase at the time, such increase would be in value rather than in tonnage. Moreover, Japan was the area in the Far East with the toughest liner competition and consequent over-tonnage. Tariff rates between the United States and Japan on general cargo were also lower than to Southeast Asia, and rebating more prevalent.

Even more important, however, was the decision to continue serving the markets that Maersk Line had built up long before the container era—mainly niche exports from the United States to Southeast Asia, where especially Hong Kong, Singapore and Taiwan were important destinations. Footnote 39 A major customer was Caterpillar, one of the world’s leading manufacturers of construction machinery, but Maersk Line also carried frozen food, fresh fruit and much more. Not only did the dedication to existing customers imply that Maersk Line had to be strongly represented locally in Southeast Asia, but also that the bet on containerization required investments in flexible vessels and equipment. For example, with specially-built ‘artificial tween-decks’, which were portable ‘three container cells wide’ platforms that could be inserted into the stow of mainline container vessels as well as feeder vessels at any depth and in any hold, Footnote 40 Maersk Line could continue transporting heavy loads of non-standard size and shape. The tween-decks enabled heavy loads to be handled by shore container cranes without interrupting the flow of units. Containers were furthermore developed for niche requirements. With the transport of fresh fruit and frozen chicken it was important that the temperature in the containers could be adjusted as needed, and hence Maersk Line developed the refrigerated container with the cooling unit located on the container.

During that period, the major ports in Southeast Asia were gradually switching to container shipping. Footnote 41 In 1966 the authorities in Hong Kong and Singapore had independently appointed committees to assess the implications of containerization and make recommendations on the establishment of container terminals, and in 1967 Malaysia had also initiated a major investigation. Through private investments, Hong Kong had opened its first container terminals between 1970 and 1973, and Singapore, which had achieved independence from first the United Kingdom in 1963 and subsequently from Malaysia in 1965, had also moved quickly to maintain its importance as a regional hub and inaugurated its first container terminal in 1972. Footnote 42 Finally, in 1973 the container activities had developed in Malaysia’s main port, Port Klang. The changing requirements of containerization were formidable and eventually would completely transform the ports in Southeast Asia. In the middle of the 1990s a walk around the Hong Kong container terminals was a ‘walk around a ghost town populated only by tall machines’ as containerization had ‘moved the traditional godown and warehouse away from its historic home at the edge of the sea’ and moved depots and freight stations to ‘the hinterland away from dock thieves, salt water, and sometimes maritime expertise’. Footnote 43

Maersk Line’s competitors provided shuttles between Northeast Asia and the United States, but Maersk Line’s focus on existing customers led to a different business model. Rather than concentrate traffic to the Pacific mainline the company chose to continue to serve destinations, which at that time did not even have container facilities in their ports nor a well-functioning inland transport infrastructure. In some of the places the transport conditions on land were very simple and land transportation was by truck only. This meant that Maersk Line’s containerization objectives required the development of extensive areas for storing containers and suitable transport infrastructure in the countries, another good reason for being strongly established with own offices locally.

For the containerization of its Panama line the company therefore chose a weekly service from the United States directly and deeply into Southeast Asia and then returning to the United States via Japan, as evident from Maersk Line’s Master Plan shown in Table  5.2 . At a speed of 25 knots per hour a reliable weekly service could be maintained with the company’s nine newly built 1200 TEU mainline vessels in the A-series (the vessels were given names starting with the letter A), which was crucial for the new business model. As a novelty in international container shipping at the time, Maersk Line established a fixed schedule with port calls at certain weekdays. None of Maersk Line’s competitors were geared for such an operation. Footnote 44 The new advertising slogan ‘You can set your watch by Maersk’ served to visualize the business model. Footnote 45

The venture into containerization was essentially different from conventional liner shipping, and especially Maersk Line’s business model put great demands on service and customer experience. It was vital to provide consistent service to all shippers and receivers anywhere on the planet, and the company could not build a successful business if it had to rely on the various routines and systems of its many third-party agents. A strong local presence in the Southeast Asian countries was therefore considered crucial to the new business model.

Minor adjustments were made to the containerization master plan. The Master Plan had stipulated a direct service to Kaohsiung in the south of Taiwan to commence in 1975. The Port of Kaohsiung had expanded greatly in the period after WWII culminating in 1975 with the completion of ‘the Second Harbour’, built to accommodate modern container vessels. During the following decades, the Port of Kaohsiung would develop into a regional hub port, or ‘load centre’ on a par with Hong Kong and Singapore. Footnote 46 The Master Plan however was implemented with the big ships calling from Hong Kong directly to Keelung in the north of Taiwan and then onwards to Japan, and at least initially Maersk Line would instead serve Kaohsiung by feeder. In the mid-1970s, nearly all the high-value exports from Taiwan were concentrated in the north of Taiwan, in the area around Taipei, with some along a corridor towards Taichung in the centre West Coast of Taiwan, the latter of which was also the area for high-value imports (e.g., machinery, weaving equipment). Because the transport infrastructure on land was quite primitive at the time, Maersk Line decided to maintain its longstanding focus on the much closer Keelung, and while the main competitors, particularly Sea-Land and American President Lines, did call Kaohsiung directly, this decision gave Maersk Line a 1–2 days competitive advantage on top of its fast transit to the United States’ West Coast. Footnote 47 Only years later did Maersk Line’s big ships call directly at Kaohsiung.

Frictions in the relationship with the existing agents also provided an occasion to move fast in Hong Kong, Singapore and Malaysia. Maersk Line’s principal agent for Hong Kong and Macao through 43 years was Jebsen & Company, a respected Danish-owned company domiciled in Hong Kong. In Jebsen’s shipping department 25 employees worked exclusively for Maersk Line, and they had always provided a quality service for Maersk Line’s conventional liner traffic. In the early 1970s, the Head of the AP Moller liner department in Copenhagen, Christian Lund, however, noted challenges with Jebsen & Company and after having vainly tried to place one of his own people at Jebsen’s offices Maersk Line decided to terminate the agency agreement and instead establish its own office. Footnote 48

In Singapore and West Malaysia there was also an experience of inadequate service from the Anglo-American Corporation, Maersk Line’s principal agent for the two countries since 1953, and again it was decided to terminate the agreement and establish own offices. In a letter to Ib Kruse the recently appointed owner-representative of Maersk Line in the area, Niels Lillelund Jørgensen, claimed ‘the urgent need of a solution’, and to Christian Lund he stressed the need to establish a strong own organization in the area: ‘with the start of the new container line Singapore will become so important that it will be necessary to have a strong organization. (…) An own office will also be able to develop business opportunities in Maersk Supply Service, Maersk Air, Sales & Purchasing, Chartering and Brokerage, Financial operations (incl. Asian Dollar), Industry, Maersk Drilling (incl. Aquadril), and so on’. Footnote 49

After the decision was made to establish own offices in Hong Kong and Singapore the company moved fast with the registration of the new companies, obtaining work and residence permits, staffing, preparation of internal manuals and furnishing office space. The latter was considered important for cultivating employees and maintaining a strong corporate culture. Footnote 50 Country managers were appointed among experienced Maersk people who would hit the ground running, while senior staff and other employees were recruited locally, most of them directly from Jebsen and Anglo-American, respectively. Half a year later, Maersk Line also established its own organization in Malaysia with a large office in Port Klang and small offices in Kuala Lumpur and Penang, with ‘Danish supervision as needed from Singapore’. Footnote 51

The new offices were given the important task to organize port facilities throughout Southeast Asia and to secure Maersk Line vessels reliable access to the terminals. They were also involved in the roll-out of new advanced IT systems developed by Maersk Data. It was particularly important to get a handle on documentation so that customers at any time could track their cargo, and so that the conclusion of tasks could proceed smoothly. The new A-series of container vessels sailed so fast that it was not possible for the necessary documents to keep up with the normal way of transfer, but with the new IT systems the necessary information could quickly be transmitted from one end of the world to the other and printed locally. This was something that greatly differentiated Maersk Line from its competitors in Southeast Asia. Finally, the two offices were heavily involved in launching the company’s first global sales training programme with the aim to professionalize the sales function in Maersk Line and ensure that the company could deliver consistent service globally.

The new country offices were hugely important for subsequent developments. They were crucial for the ability to detect and respond to unexpected changes in the market, and they established Maersk Line as an important name in Asia and founded the network to the major shippers and other important players. Local presence enabled not only superior and consistent service and the establishment of the necessary infrastructure and complementary assets locally, but also a good feel for the market and its development. It was thus Maersk Line offices locally in Asia and North America, which put the company in a position soon to perceive and quickly respond to the significant growth and development of the Asian economies, which really took off with ‘exports in the opposite direction’ in the late 1970s and helped making the Panama line profitable. Footnote 52

The offices’ local status and the strong network later proved crucial for getting access to Vietnam, the Bay of Bengal and China, among others. In 1984 the Hong Kong office established its first representation in Guangzhou in Mainland China, and from here the number of Maersk employees in the People’s Republic of China over ten years increased to more than 100 people across 12 offices. Since the Chinese authorities would only allow foreign companies to operate in China via local agents, the offices were in the beginning run in joint venture with Chinese interests, but in 1994 Maersk Line was the first foreign shipping company authorized to establish a private, wholly-owned company with business activities everywhere in China. With this development the number of Maersk Line employees in China quadrupled in just one year. Footnote 53

Maersk Line has always been an international company, but with the transition to container shipping in the early 1970s the company chose to focus globally in the sense that its many work processes were spread to locations across the globe, often with a high degree of autonomy locally but integrated in a way that accommodated Maersk Line’s overall goals. The goal was to deliver a worldwide, door-to-door container transport based on superior and consistent service. This chapter has shown how Maersk Line approached the task, including how the company established a global organization with strong local representation.

The internationalization of Maersk Line was a learning process in which the company reacted to business opportunities as they arose. Although there was a desire to have local representation in profitable markets, the transnationalization of the company can best be described as emergent rather than following a strategic plan. The initiative to own overseas offices, which were established as independent companies with their own management and board of directors, as a rule came from the head office in Copenhagen, but the further strategic development for individual countries were then left largely to the ‘Maersk Top’ in each country. The process was guided by some more or less well-defined management tools including explicit ‘fundamental company objectives’, a logic of operational independence, value-based decision heuristics, a focus on the importance of ‘Maersk-blue blood’ that resulted in a special ‘man on the ground’ philosophy, and customized training programs overseen by the Copenhagen headquarter; as well as special global information and communication systems developed specifically for Maersk Line.

When considering how Maersk Line managed to achieve global leadership in a period of just about 25 years, the chapter has pointed to the importance of the company’s own country offices that allowed the interconnection of three types of networks: The physical network of ships and routes, the digital network of information and communication systems, and the human network of Maersk employees. The interaction between the vessels, the systems and the people is still at the core of the company today and central to its continued development.

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Sornn-Friese, H. (2019). ‘Containerization in Globalization’: A Case Study of How Maersk Line Became a Transnational Company. In: Petersson, N., Tenold, S., White, N. (eds) Shipping and Globalization in the Post-War Era. Palgrave Studies in Maritime Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-26002-6_5

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Introduction

The Green Economic is a shift in thinking about development and growth that can enhance people’s lives and the environment while also promoting environmental and economic sustainability. The green economy is a broad notion that has sparked debate among economists and environmentalists ( Guo et al., 2021 ; Zhao et al., 2022a ). The green economy uses energy resources regularly to improve environmental performance while lowering climate risk ( Maclean and Plascencia, 2012 ). Due to climatic pressure and brain drain, posing long-term growth and economic stability challenges. The Green Economy is a strategy for attaining long-term development ( World Bank, 2007 ). A green economic plan should encourage innovation and the use of cutting-edge technologies.

Globalization has had a huge impact on our way of life. It has increased communication, faster access to technology, and more innovation ( Xia et al., 2022 ; Zhao et al., 2022b ). It has ushered in a new age of economic prosperity, created massive development channels, and played an essential role in bringing people of different cultures together. On the other hand, globalization has given rise to several issues, the most prominent of which is the effects on the environment ( Song et al., 2020 ). Globalization has been a major subject in environmental discussions, with environmentalists highlighting its far-reaching consequences. However, as affluence rises, ecological consciousness rises with it, making it the primary rationale for lowering environmental damage in later phases of economic growth ( Chen et al., 2020 ).

Due to globalization and industrialization, various chemicals have been put into the soil, resulting in many noxious weeds and plants. By messing with plants’ genetic composition, this toxic waste has caused significant damage ( Shahzad et al., 2022 ; Song et al., 2022a ). This one has put a strain on the land and water resources that are easily available. In many places, mountains are being chiseled away to create room for a passing tunnel or motorway. Huge swaths of desolate land have been infringed upon to make new structures ( Guo et al., 2021 ). These developments may attract individuals, even having harsh environmental consequences. Plastic, a non-biodegradable substance, has been identified as one of the most harmful pollutants in several studies ( Sharma et al., 2021 ; Song et al., 2022b ).

On the other hand, plastic is extremely useful for packing and preserving products for export. As a result, plastic usage has skyrocketed, resulting in widespread contamination. New gauges and measurements are welcome in this field, e.g., see the Can and Gozgor (2017) and Gozgor (2018) for economic complexity; Apergis et al. (2018) for economic growth; ( Gozgor and Can 2016 ); for export diversification; Gozgor and Can (2017) and Fang et al. (2019) for export quality; Gozgor (2017) for trade. Researchers can’t agree on the best way to quantify globalization and its influence on environmental deterioration in developing nations.

This study provides that managing climatic and environmental problems necessitates a deep understanding of science and technical skills in terms of the numerous technological solutions that may be used to minimize negative consequences (for example, carbon technologies). On the other hand, sustainable technological growth is a cultural, institutional, political, and economic endeavor that faces various non-technical problems. According to the so-called transitions literature, many domains, such as energy generation water supply, may be classed as socio-technical and innovative systems ( Geels, 2004 ; Markard et al., 2012 ). A complex system consists of participants’ relationships (persons, corporations, research centers, government bodies, etc.), their expertise, and the institutions that support them (legal rules, codes of conduct, etc.). To put it another way, the introduction of innovative carbon-free technologies, for example, may necessarily require the establishment of the new entire value chain that includes cast members who have never interacted before; this requires a comparatively lengthy process that can alter society in a range of methods, which include legislative changes, changing consumer preferences, possible implications, infrastructure improvement, and completely new business models. To put it differently, in addition to technological development, economic and societal changes are necessary to achieve long-term technical transformation.

Global warming and other environmental issues are becoming exceedingly valuable, and globalization and the rise of global consumer goods trade are exacerbating the situation. While the environmental difficulties have been more focused on reducing various forms of diffuse emissions from various places, including road, sea, aviation, and agriculture, diffuse pollution spreads over broad regions. On the other hand, it may not be a major source of pollution in and of itself, it can have a significant overall impact when combined with other diffuse sources dealing with these difficulties frequently necessitates international negotiations and burden-sharing agreements, both of which have proven difficult to achieve ( Ciscar et al., 2013 ). This challenge is shown by the difficulty of obtaining a sufficiently rigorous global climate accordHumans cannot afford to overlook the repercussions of our actions since the future of the human species on this planet is so dependent on the environment. To maintain the ecological balance, humans must make certain efforts. In the present study, there is a lot of debate and discussion about this topic, and the most important thing is to have solid policies in place and put them into effect.

The following is how the rest of the article is organized: Interconnected Literature Review explores the interconnected literature review and relationship between globalization, climate change, and the green economy; Historical Impacts of Globalization examines the effects of globalization on various aspects of life; Environmental Challenges and Environmental Reforms assesses environmental challenges and reforms, and Repercussions of Global Warming concludes with a discussion of the ambiguous role of the green economy. Lastly, Discussion reports clear implications to address environmental issues.

Interconnected Literature Review

Globalization has resulted in the extinction of animal species. Animals live in forests, and when these forests are destroyed, the animals are displaced from their natural habitat, putting them in jeopardy. This frequently results in widespread mortality. There are numerous natural resources on the planet, ranging from coal and forests to oxygen and other gases. However, excessive use of fossil fuels, combined with other factors such as deforestation, adds to global warming or the Earth’s warming ( Farooq et al., 2019 ). The more pollution blasted into the atmosphere due to globalization has an irreversible influence on the Earth, significantly impacting the ecosystem. While globalization was formed in the name of trade to increase profits and unity across countries and ethnicities, it has harmed the environment in many ways. Deforestation is one way that globalization contributes to the degradation of forests. In the process, it contributes to the degradation of animal habitats. It has swiftly turned into a source of global warming ( Waheed et al., 2019 ; Sarwar et al., 2019 ).

Environmental efficiency industrial and carbon transfer zones can impact the quality of the environment. This paper examines the relationship between green economy, environmental problems, the effect of globalization such as carbon transfer and industrial transfer demonstration zones. Environmental problems include extreme weather phenomena, unprecedented global warming, and environmental disasters caused by increasing levels of CO 2 and other toxic emissions. To meet sustainable global development, there is a need to make clean environment policies and rapidly increase economic development and energy consumption. For example, China’s amount of carbon transfer is growing year by year. Energy-intensive areas and heavy industry bases are transporting carbon from the eastern coastal regions ( Akbar et al., 2021 ). In contrast,e other studies show that Brazil and Russia have the highest values of the Environmental Performance Index, which range between 67.44 and 60.70, respectively ( Baloch et al., 2020 ). India has a minimum value of 30.57 of the environmental index ( Anser et al., 2020 ). Another study result shows that the energy efficiency of Australia, China, Japan, Saudi Arabia, and Poland are the best performing countries. In contrast, Mexico, Indonesia, Russia, and Brazil are the least efficient among all 20 countries ( Iqbal et al., 2019 ).

On the other hand, some researchers demonstrated that most countries exhibit higher performance in economic efficiency than environmental efficiency. For example, Russia’s economic intensity has a maximum score while Poland has a minimum score ( Iqbal et al., 2019 ). Additionally, in the case of CO 2 emission efficiency, Brazil, France, and Saudi Arabia are considered efficient while other countries’ comes less ( Iqbal et al., 2019 ). Another study’s results reveal that Bhutan is a more secure country. Pakistan showed a decreasing trend, while Sri Lanka and India performed satisfactorily based on GDP productivity and energy self-sufficiency ratio ( Hou et al., 2019 ). Through the Energy Development Index development, Norway was determined as the highest performing country among the top ten countries. This does not coincide with 2015’s ETI, which regarded Switzerland as the best-performing country. Hence, the ranks are arguable. Further results reveal considerable differences in the values of indicators among all countries ( Asbahi, 2019 ).

Due to growing global warming concerns, reducing carbon emissions has become one of the major tasks for developing countries to meet the national demand for energy policies. Does the current study mainly explore how the economic system has impacted climate change caused several health and environmental repercussions, e.g., ecological degradation? Further, the study analyzes the role of the green economy to achieve sustainable development goals to combat and adapt to climate change and its myriad repercussions. This would imply a transition to a green economy from the existing unsustainable economic structures. Table 1 shows the existing literature summary on economic growth and environmental problems.

TABLE 1 . Literature summary on economic growth, environmental issues, and energy consumption.

Globalization, Climate Change, and the Green Economy

Globalization is the phrase used to describe the profit-driven merger of many cultures and nationalities of people from various countries and sections of the world ( Figure 1 ). Globalization works by incorporating positive features of one culture into another, breaking down language and communication barriers, and allowing for commerce and cooperation between two very different areas. It opens the door to profit-driven international trade and business. While globalization has certain advantages, it has also had negative consequences for the environment ( Xia et al., 2022 ). Globalization has aided deforestation and the huge consumption of non-renewable fossil fuels and natural resources. Globalization places a strong focus on commerce, including import and export. If the demand exceeds the supply, exporting might lead to deforestation. Wood, for example, is used all around the world for home furniture, construction, and paper, among other things. Everyone needs paper at some point in their lives, yet demand exceeds supply because of the time it takes for trees to develop. This adds to profiteering through deforestation ( Waheed et al., 2019 ).

FIGURE 1 . The impact of globalization on the environment, economy, and society.

The green economy is essential for promoting inclusive environmental sustainability and global climate adaptation into our domestic and global economic structures while ensuring a good prospect for people and the environment ( Guo et al., 2021 ). The green economy recognizes that long-term economic growth and development are dependent on the effective and responsible use and conservation of natural ecosystems to continue to provide the resources, services, environment, and climate essential to our well-being and economy. A green economy emits as few greenhouse gases as feasible, utilizes resources effectively, and reduces or eliminates waste; it is socially inclusive; it combats climate change while adjusting to existing and impending repercussions; and is based on green economic growth.

Historical Impacts of Globalization

Increased transportation cost.

The influence of globalization on the environment, economy, and society is depicted in Figure 1 . One of the initial effects of globalization is that it expands the number of markets where companies may sell their goods and source labor, raw materials, and products. Both of these facts imply that final items would then go further than it has ever been, possibly halfway around the globe. Throughout the past, products were much more likely to be produced, purchased, and usually consumed. Increased commodity transportation can have a lot of negative environmental implications, including:

• Increased greenhouse gases: As goods travel longer, it utilizes more fuel and emits more greenhouse gases. Carbon gases significantly affect biodiversity while somehow increasing pollution, global warming, and acidification of the oceans throughout the world.

• Deforestation: Mobility necessitates infrastructure like roads and bridges, especially land-based transportation. Two issues that might occur because of such infrastructural development are habitat loss and contamination. It's important to remember that ships convey almost 70% of all material, as shown in a survey conducted by the International Move Forum. Therefore, the more ships that go by sea, the further likely there will be large oil spills or leaks, harming the delicate marine habitat.

• Invasive species: Every shipping container and vehicle is a potential home for a living organism. Such as a plant, animal, or fungus, to hitch a trip to a new site where it can become invasive and develop without the checks and balances that exist in its normal ecosystem.

Economic Strength

Among the most frequent advantages of globalization is that it allows nations and regions worldwide to focus on their best ways to generate, secure in the knowledge where they can rely on trade relations for goods they don’t produce. In many circumstances, economic expertise boosts production efficiency. On the other hand, up to the value may result in serious environmental issues such as habitat destruction, deforestation, and resource misuse. Listed below are a few examples:

• Overfishing in coastal areas such as Southeast Asia has considerably contributed to diminished fish populations and marine pollution, owing to an expansion in the country’s cow ranching activities, which need large acreage for grazing.

• Increased dependence on cash crops such as sugarcane, chocolate, and fruits and vegetables has aided habitat destruction, especially in tropical climates.

It is important to mention that globalization has enabled certain nations to pay attention to the quality of various energy products, such as oil, natural gas, and timber. The principal result of these energy sources is greenhouse gasses, which significantly influence climate change and global warming. Governments that rely significantly on energy revenues to fund their government finances and place a high priority on “energy independence” are more likely to cause problems in the industry through subsidizing or regulations that make the transition to sustainable energy more challenging.

Decreased Biodiversity

Increased carbon dioxide levels, ocean acidification, destruction (and other types of habitat loss or destruction), global warming, and endangered flora contribute to world biodiversity loss. According to the World Wildlife Fund’s newest Living Planet Report, the population sizes of all species, including mammals, birds, fish, amphibians, and reptiles, have plummeted by 68 percent since 1970. Biodiversity loss has been disproportionately large in Latin America and Africa, two fast-growing regions that were vital to global trade, particularly among environmentally fragile fish, reptiles, and amphibians. While numerous factors contribute to the decline of biodiversity, it is largely assumed that the challenges outlined above have had a role.

Increased Awareness

Even though many of globalization’s environmental effects have always been negative, its growth has increased global environmental consciousness. Thanks to increased connectivity and rising interest rates in global tourism, people can now perceive the consequences of natural disasters, habitat loss, and environmental degradation on the ecosystem more readily than ever before. New laws, rules, and procedures have averted negative repercussions.

Environmental Challenges and Environmental Reforms

Currently, the environment is troubled by many challenges, many of which appear to be getting worse with time, putting us on the verge of a full-fledged ecological calamity. As a result, it is becoming increasingly important to raise awareness of these issues and what can be done to mitigate their detrimental implications. Some important environmental issues are “Environmental degradation, global warming, overpopulation, waste disposal, ocean acidification, habitat destruction, forest deforestation, ozone depletion, acid rain, and human health risks.” Figure 2 shows different parameters of life that are affected due to environmental issues.

FIGURE 2 . Effect of environment on different parameters of life.

Climate change jeopardizes the green economy and long-term development. Climate change is no longer a looming menace on the horizon. Due to Global warming (2007): Synthesis Report is already here, and it is possibly the biggest problem of current times. International economic stability and security are threatened by climate change, ranging from rising global temperatures to glacier melt and rising sea levels. Figure 2 depicts the impact of the environment on several aspects of life. Climate change also thwarts the U. N’s sustainable development agenda, particularly the Millennium Development Goals (MDGs) (United Nations Millennium Development Goals (MDGs), which were set in (2000). The environmental sustainability targets were met using modern technology for green economic development ( Abbas et al., 2020 ).

If companies and society continue to operate as they do today, climate change will harm economic and social progress, threatening health, safety, and livelihoods. Drought and severe weather have an indirect impact on the industry, jobs, and agricultural production; extreme temperatures and higher temperature waves affect human life, and fewer frost days have a consequence on the seasonal fruit sector. For example, Cape Town has experienced several disastrous droughts across its history; University of Cape Town (UCT) authors reported that drought risk has dramatically increased due to climate change. For example, the drought in Cape Town and the Western Cape from 2015 to 2018 was extraordinary, with both receiving the minimum rainfall since data became available. The provinces’ tourist, gastronomy, and agricultural industries were severely damaged, with the tourism, hotel management, and agricultural sectors taking the brunt of the damage.

According to the NOAA’s Annual Climate Report (2020), total land and ocean temperatures had already risen at an average rate of 0.13°F (0.08°C) every 10 years since 1880; moreover, the mean rate of change since 1981 (0.18°C/0.32°F) has become much more than twice that amount rate. Even though anthropogenic climate change is not consistent, the growing mean temperature trend indicates that more places are warming than cooling. Climatologist Ed Hawkins created the “warming stripes” depicted in Figure 3 to depict global climate warming 1 throughout time.

FIGURE 3 . Change in temperature of world climate from 1850 to 2021.

Global climate change, described as the current warming of the planet’s surface and Earth’s atmosphere, is assumed to be the result of the greenhouse effect becoming stronger due to more than just the increased concentrations of greenhouse gases produced by man. The greenhouse effect is greenhouse gases absorb a process in which radioactive energy is emitted from a planet’s surface in the atmosphere ( Farooq et al., 2019 ). They carry this energy to other parts of the atmosphere, re-radiated throughout all directions, including back down to the ground. As a result of the energy transfer, the temperature at the surface and lower atmosphere are greater than it would be if direct solar radiation were the only warming source. The primary cause of the impact is this procedure. The primary cause of the impact is this procedure. Water vapors, carbon dioxide, methane, nitrous oxide, and ozone are the main cause of global warming gases in the stratosphere ( Shahzad et al., 2021 ).

Repercussions of Global Warming

1) Global temperature rise: If greenhouse gas emissions continue to climb at their current rate, the Earth’s mean temperature is expected to rise by 1.5–5.5°C by 2050. Even if the lesser figure were used, the world would be warmer than in 10,000 years.

2) Rising sea level: Seawater expands as the global temperature rises. According to current projections, 3°C increase in average air temperature will raise global sea level by 0.2–1.5 m during the next 50–100 years. The melting of polar ice sheets and glaciers due to warming will cause a further rise in sea level. This will also disrupt several commercially significant spawning areas and likely increase storm frequency damage to lagoons, estuaries, and coral reefs. The Lakshadweep Islands may be vulnerable in India, with a maximum of 4 m above sea level.

3) Human health effects: Global warming would alter rainfall patterns in many places, influencing the spread of vector-borne illnesses such as malaria, filariasis, and elephantiasis, among others. Areas devoid of malaria, schistosomiasis, and others may become breeding grounds for disease vectors. Ethiopia, Kenya, and Indonesia are expected to be affected in this way. Warmer temperatures and more stagnant water would encourage the reproduction of mosquitoes, snails, and other insects, which serve as disease vectors. Respiratory and skin problems will be worsened or exacerbated by higher temperatures and humidity.

4) Agriculture Effects: There are a variety of viewpoints on the impact of global warming on agriculture. It might have a beneficial or negative impact on various crops in different parts of the world. Because the average temperature in these regions is already high, tropical and subtropical regions will be more affected. Even a 2°C increase might be disastrous for crops. Soil moisture will drop as evapotranspiration rises, posing a serious threat to wheat and maize output. Increases in warmth and humidity will encourage insect proliferation and the growth of disease vectors. Pests will be able to adapt to these changes faster than crops. Drought-resistant, heat-resistant, and pest-resistant types of plants have been developed to cope with the changing environment.

Control Measure of Global Warming

There are numerous ways to stop the consequences of global warming:

1) Stop contributing to deforestation and plant more trees: This is by far the simplest way to protect the world from the dangers of global warming. The large-scale accumulation of atmospheric carbon dioxide is to blame for global warming. On the other hand, planting trees can help absorb this toxic gas, regulate its quantity in the atmosphere, and reduce global warming by reducing the greenhouse effect.

2) Re-use and recycle commodities: Re-using and recycling numerous products that humans use daily may also help to contribute to the fight against global warming. For example, recycling paper will ensure that large-scale tree felling for paper production is halted, and these trees will, in turn, absorb the carbon dioxide in the atmosphere and reduce global warming.

3) Encourage the use of organic foods: One of the most effective strategies to combat global warming is to encourage organic foods. Organic soils have a far higher capacity to absorb carbon dioxide than conventionally farmed soils. According to estimates, switching to sustainable agriculture for food production might save us 580 billion pounds of CO 2 emissions.

4) Make efficient use of vehicles: Vehicles emit a significant quantity of carbon dioxide into the atmosphere, making them one of the primary sources of pollution. Humans can strive to reduce pollution significantly if there is the adaption of modern technologies such as less automobiles. However, it would be best to use public transit or other environmentally beneficial means of transportation, such as cycling, wherever possible.

5) Use of alternative energy sources: Switching to renewable energy such as solar and wind power is one of the most discussed global warming solutions. These natural resources may simply provide energy and replace fossil fuels. Simply eliminating fossil fuels would assist in reducing the massive quantity of carbon dioxide released into the sky every day.

Economic sustainability aims to improve manufacturing processes and useful ways of reducing resource consumption, pollution, and greenhouse gas emissions across the life cycle of products and processes, so even though economic growth relates to how resources have been used to produce a benefit to the community and attempt to decrease the global economic decline. Based on prior studies, Table 1 demonstrates the relationship between green economy development, environmental challenges, and energy usage.

The constructive framework promotes sustainable development techniques, including passive mobilization, crisis management analysis, collaboration, participation, and resolution. Considering the essential demands of local community development, the above framework can achieve social transformation ( Baig et al., 2021 ). This also stresses the critical need to address and explain the systemic obstacles these individuals experience ( Ramsbotham et al., 2011 ). The multidisciplinary mechanism explains the main five figures, and each plays an important part in the peaceful evolution of society. The functional analysis of the sources of economic growth, catastrophe approach, calamity relevancy, mitigation, and transformational processes are all depicted in these five figures ( Crocker et al., 2005 ; Rome, 2010 ; Rahi, 2011 ; Orakzai, 2011 ).

The three primary areas of contemporary green economy effort are:

1) At the regional, sub-regional, and national levels, support a macroeconomic perspective to long-term economic progress.

2) Promote green economic strength, particularly in the areas of green finance, advanced technologies, and investments.

3) Support countries in mainstreaming production and economic growth to facilitate the clean energy future.

The green economy is a new strategy for development and advancement that strives to encourage economic growth and improvements in people’s daily lives and environmental and long-term well-being. A sustainable resource plan should encourage the development and application of sustainable technologies. Society is impacted by the shift to a green economy, including technological transformation. As a result, it is vital to maximizing new technologies’ performance, establish effective strategies, and comprehend and solve technological change’s most fundamental distributional effects. All cultural changes have positives and negatives, and unless this is acknowledged and addressed, the desired green revolution may lack credibility among many critical groups. Incremental breakthroughs, such as increased energy and resource efficiency in current industrial processes, are crucial for the transition to a green economy. Finally, research that includes various effect assessments and methodological advancement in evaluation research should help accelerate the green economic revolution. This refers to analyses of the effects of major starting point trends, such as digitalization and automation, globalization versus state ownership, and so on, on environmental and distributional outcomes, as well as the prospects for green innovation collaboration and circular economy-inspired business practices.

The breadth and character of the social difficulties posed by climate and environmental threats are vast and varied. Diffuse emissions are notoriously difficult to track and regulate. Environmental authorities, for example, may aim to penalize inappropriate waste disposal for limiting chemical dangers. Nonetheless, such activity is usually undetectable. To address these sporadic environmental effects, society must develop new, more indirect methods of monitoring and regulation. This might result in efforts to end material cycles and promote a circular economy. The value of goods, materials, and resources is preserved to the greatest feasible European Commission Report (2015) . This means a greater emphasis on virgin material reduction, recycling, and re-use ( Heshmati, 2017 ). While promoting energy and material efficiency methods can help with the problem of widespread environmental implications, it can also be a mixed blessing. Such policies indicate that the economy can produce the same quantity of goods and services while using fewer materials and energy inputs, resulting in a rebound effect ( Greening et al., 2000 ).

Resources are freed up due to increased productivity, allowing for more production and distribution of other items. To put it another way, efficiency improvements might be partially offset by increased consumption elsewhere in the economy. For example, suppose consumers choose fuel-efficient vehicles. In that case, they will travel more or spend more money to save by lower fuel use on other products, exploiting resources and leading to emissions.

Despite offering a thorough assessment and novel results, the current study has a few flaws worth mentioning. The conclusions of this article link creative activities to pollution management; however, the cost of new technology and laws are not considered. This essay does not investigate the ideal number of environmental concerns and creative activities for society. This study paves the path for further research on the impact of the green economy and environmental issues in reducing the ecological footprint and boosting economies. In the future, the influence of environmental concerns on many sectors of the economy, such as transportation, industry, automobiles, and so on, can be investigated.

Implications for Sustainable Growth and Environmental Issues

Lastly, the authors attempt to highlight productive suggestions for environmental concerns to improve the economy based on a complete assessment and evaluation of current material. First, the government and industry may take the necessary steps to replace non-renewable energy sources in the energy mix and industrial processing with renewable energy sources. Several emerging nations, like India, China, Saudi Arabia, Pakistan, and OPEC countries, have relied on fossil fuels (coal and oil) for energy generation. Second, governments in poor and developed nations can rewrite environmental legislation to allow carbon treatment facilities. Industries should replace outdated and inefficient technology with more environmentally friendly alternatives. As a result, there may be a large reduction in energy usage, lowering manufacturing costs even more and helping to maintain the green economy. Countries can accomplish their economic and development goals without compromising the environment’s quality by enacting such measures ( Soytas et al., 2007 ; Waheed et al., 2018 , 2019 ; Hashmi and Alam, 2019 ; Mardani et al., 2019 ).

Third, emerging and developed nations should establish strategic goals for addressing environmental issues and implementing green technology. Depending on the industry, nations may standardize green and clean manufacturing criteria and establish rules to encourage green technology. Countries may stimulate the adoption of green technology in the renewable energy industry by creating environmental policies for a low-carbon energy system. Using this strategy, nations may implement industry-level policies that give incentives and subsidies to adopt environmentally friendly technology, resulting in sector-specific innovations to address climate change challenges. Fourth, governments dealing with climate change should recognize the need to balance greener growth and economic gain. Developing and growing economies should similarly increase government efficiency for industrial structures and economic development initiatives. Governments in developing and developed nations can improve regulatory efficiency by attaining pollution reduction targets. Countries with higher pollutant emissions can also establish targets to improve climate change policy efficiency. The OECD nations and China have recently implemented pollution trading schemes, and the results are expected to be beneficial. Lastly, the relevant government authorities can raise funds for a cleaner environment by introducing new policies not to harm social life and economic development.

This study draws novel findings and fruitful implications to combat environmental challenges based on a large body of material review. It is important to mention that this poll is based on elements for country environmental protection (revenue, renewable and non-renewable energy, economic growth, urbanization, and commerce). Other elements, such as forests, technical breakthroughs, energy efficiency, industrial growth, economic openness, etc., may impact climate change. International commerce, technical development, and industrialization are all considered factors of energy-related greenhouse gas emissions in general. A future study might focus on these aspects to see how they affect environmental quality.

Data Availability Statement

The original contributions presented in the study are included in the article/Supplementary Material, further inquiries can be directed to the corresponding authors.

Author Contributions

MX and LZ contributed equally to this work and should be considered as co-first authors; Huangxin Chen and Lin Zhang are co-correspondence authors. Conceptualization, LZ; methodology, LZ; software, HC; validation, LZ; formal analysis and language edit, YL and SC; investigation, MX; resources, LZ; writing—original draft preparation, MX; writing—review and editing, LZ, MX, and HC; supervision, LZ and HC; project administration, LZ and HC; funding acquisition, HC and LZ. All authors have read and agreed to the published version of the manuscript.

This research was funded by National Social Science Fund General Project (No.19BGL092), Innovation Strategy Research Project of Fujian Province (No. 2021R0156), GF Securities Social Welfare Foundation Teaching and Research Fund for National Finance and Mesoeconomics.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

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Keywords: globalization, green economy, environmental issues, resource efficiency, innovation

Citation: Zhang L, Xu M, Chen H, Li Y and Chen S (2022) Globalization, Green Economy and Environmental Challenges: State of the Art Review for Practical Implications. Front. Environ. Sci. 10:870271. doi: 10.3389/fenvs.2022.870271

Received: 06 February 2022; Accepted: 16 February 2022; Published: 15 March 2022.

Reviewed by:

Copyright © 2022 Zhang, Xu, Chen, Li and Chen. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Lin Zhang, [email protected] ; Huangxin Chen, [email protected]

This article is part of the Research Topic

Financial and Trade Globalization, Greener Technologies and Energy Transition

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The Case for Globalization

May 05, 2022

By Li Wei, Professor of Economics at Cheung Kong Graduate School of Business

The First Wave of Globalization

According to the American economist Frederic Mishkin, the period from 1870 to 1914 was the first wave of globalization. At that time, global trade grew at an average annual rate of 4%, and its share of global GDP increased from 10% in 1870 to 20% in 1914. International capital flows increased at an average annual rate of 4.8%, rising from 7% of global GDP in 1870 to 20% of GDP in 1914. In his famous book published in 1919, The Economic Consequences of Peace, John Maynard Keynes wrote fondly of this era:

“What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914!…An inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend.”

This first wave of globalization was accompanied by unprecedented economy prosperity. From 1870 to 1914, global GDP per capita grew at an annual rate of 1.3%; While from 1820 to 1870, it only grew by 0.53%.

Another benefit of globalization is that it accelerates the development of poorer countries. Japan is a prime example – since the 17 th century, Japan was closed to the outside world, but after the Perry Expedition arrived at the Tokugawa Shogunate in 1853 with their “black ships”, Japan had no choice but to trade with the United States, which led to Japan opening its border. This eventually led to the Meiji Restoration of 1868 and Japan’s full integration of the Japanese economy into the global economy. In 1870, Japan’s per capita income was less than 25% of Britain’s. But from 1870 to 1913, the gap between the two countries narrowed – Japan’s per capita income grew by 1.5%, while Britain’s only grew by 1.0%.

The opposite case happened in China. After the Opium War, although China gradually opened its doors, reform was slow. Unlike Japan, China was not fully integrated into the global economy – this caused the gap between China and more advanced countries to widen. In 1870, for example, China’s per capita income was equivalent to 24% of Britain’s, and by 1914, that had fallen to 13%.

The End of the First Wave of Globalization

Along with the economic prosperity brought by the first wave of globalization came the awakening of national consciousness in many countries, which ultimately contributed to the outbreak of World War I. As violence spread across the world, normal trade and investment activities were greatly disrupted, thus ending the first wave of globalization. Unfortunately, the postwar years were also full of turmoil – from 1914 to 1929, the average international trade-to-GDP ratio fell from 22% to 16%, and capital flows fell from 20% to 8%.

The worst was still yet to come. In 1929, the United States fell into an economic crisis, which soon spread to other countries and placed the global economy under enormous pressure. Unemployment in America was at 25%, and per capita income fell 30% by 1933, and was only slightly higher in 1939 than in 1929. To protect themselves, countries adopted beggar-thy-neighbor economic policies, such as the Smoot-Hawley Tariff Act in the United States in 1930, which sharply increased tariffs on imported goods. Britain withdrew from the gold standard in 1931, causing the pound to fall, and thus winning more market share for its products globally. It also raised tariffs on imported goods. As some countries abandoned the gold standard and devalued their currencies, those countries that were still tied to the gold standard felt they were “getting the short end of the stick” and followed suit, devaluing their currencies and imposing import taxes. As a result, no one won in this zero-sum game. There was a period of breakdown in international trade and finance which was later described as a “currency war”. Towering tariffs caused the trade volume to plummet worldwide.

The economic crisis brought years of economic decline in the United States, historically known as the Great Depression. However, the situation was far worse in Germany and Italy. As their economy collapsed and social tensions intensified, democratic governments could not control the situation, which led to fascist governments rising to power. As soon as they came to power, they adopted a “guns before butter” model, vastly expanding military spending and preparing for war. Within a few years, World War II broke out, which was the largest war ever fought by mankind. Losses were also the greatest with at least 50 million people losing their lives from 1939 to 1945, more than half of them civilians.

Mishkin believed that the end of the first wave of globalization and the outbreak of two world wars taught us two lessons: one is that globalization is not an irreversible process; the second is that the consequences of rejecting globalization could be catastrophic.

China in the Globalized World

After World War II, in order to prevent another world war, capitalist countries led by the United States established the Bretton Woods system. The system was characterized by its “dual peg”, whereby the dollar was pegged to the gold (at the time the U.S set the price of gold at USD $35 an ounce), and other currencies were pegged to the dollar. The three institutions – the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) – were established at this time. Following this period was the development of a new wave of globalization.

In this new wave, Japan developed first, followed by the Four Asian Tigers (i.e. South Korea, Taiwan, Singapore, and Hong Kong), and finally China. Before 1978, the atmosphere of the Cold War was still very apparent, and China’s top leaders were focused on war and revolution at the cost of economic development. However, after 1978, with Deng Xiaoping at the helm of a new generation of leaders, peace and economic development were brought to the forefront of policy in China. Fortunately, the leaders at that time did not adopt a closed-door policy, but chose to integrate into the global financial system, similar to the way Japan and the Four Asian Tigers had done. Since then, foreign investment flooded into China, bringing not only capital but advanced technology and ideas, which greatly boosted China’s economy. At the same time, China also joined global supply chains through foreign trade, and continually increased its production capabilities and market size.

After reform and opening up in 1978, China was lucky to catch on to a period when globalization was in full swing. Since China’s economy is deeply integrated into the global economy, it could be said that without globalization, China’s economy would not be where it is today.

It is clear from these examples that solitary development cannot exist in a modern economy. The modern economy is interconnected, and only by embracing globalization can a country achieve economic growth. Isolation from the global economic system will only lead to impoverishment and the weakening of an economy. Today, Russia is facing a very difficult situation because not only is it facing economic sanctions from governments in Western countries but is also facing a backlash from Western companies. Western corporations, such as Visa and Mastercard, have announced their withdrawal from the Russian market. Russia’s relations with the western world are now under a high state of uncertainty, and this poses a serious threat to globalization.

Globalization is China’s lifeline. Maintaining it will mean making difficult decisions. What China does next to preserve the global order will have implications that go beyond our lifetime.

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• DOI: 10.54254/2754-1169/87/20240873
• Corpus ID: 270354648

Globalization of Investment Banks Based on Comparative Case Studies: The Case of CITIC Securities and Goldman Sachs

• Published in Advances in Economics… 7 June 2024
• Business, Economics

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13 References

Regulatory convergence in the financial periphery: how interdependence shapes regulators’ decisions, boom and bust, chinese style: multi-task regulatory dilemma and china’s stock market crisis in 2015, mergers and acquisitions: cases, materials, and problems, exploring financial centre networks through inter-urban collaboration in high-end financial transactions in china, the fintech book: the financial technology handbook for investors, entrepreneurs and visionaries, (a joint stock limited company incorporated in the people's republic of china with limited liability).

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