Blog4：What is the relation between economy and globalization? —CUI ZAN

The relationship between economy and globalization is an intricate and dynamic tableau, shaped not merely by the global flow of capital, goods, and technology, but also through the continuous interplay and reshaping of power, systems, and local distinctiveness. At its core, globalization is not simply about “borderless” economic integration; rather, it represents a multilayered and multidimensional interaction that has profoundly transformed the structure of the contemporary economy.

Transnational corporations play a pivotal role in this process. By establishing highly complex production networks and investment chains, they reconnect dispersed resources, technologies, and markets, enabling economic activities to transcend national boundaries and penetrate diverse regions. However, this global integration does not occur uniformly; instead, it results in profound geographical restructuring. Regions such as East Asia, North America, and Europe, leveraging their advantages in technology, capital, and institutional frameworks, have emerged as central nodes in globalization, while developing countries, despite their participation, often occupy the lower end of the value chain, functioning as passive “peripheries” within the global system.

Notably, economic globalization has not diminished the significance of local factors. The operational logic of transnational corporations remains deeply influenced by the cultural, economic, and institutional contexts of their home countries, while the unique demands and regulations of local markets further shape their global strategies. This nested relationship between the global and the local demonstrates that globalization is not a one-way process of erasing diversity but rather an ongoing dialogue between global order and local characteristics.

The true complexity of globalization lies in the power dynamics behind it. Transnational corporations have gained unprecedented economic flexibility through resource integration and market reallocation, but this does not render their power absolute. States continue to play a crucial role in the globalization process. Through policy interventions, investment regulations, and regional cooperation mechanisms, they retain partial sovereignty in the flow of global capital. This tension in power is reflected not only in the interplay between corporations and states but also in the competition between different regions and nations.

Fundamentally, economic globalization is both a process that facilitates the transnational flow and optimal allocation of production factors and a profound rewriting of the existing socio-economic order. It is simultaneously a force for fostering cooperation and a mechanism for generating disparity. While globalization creates an interconnected economic system, it also reinforces regional inequalities and asymmetries of power. This inherent contradiction is one of globalization’s most defining features and a key to understanding its relationship with the economy.

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