"Globalization" is a very broad term that refers to increased mobility of goods, services, people, technology, capital, information and ideas around the world. It is not a new phenomenon, but its pace has accelerated over the past couple of decades. Its impacts are political, social, cultural and environmental, as well as economic.

Economic globalization is driven mainly by businesses looking for new markets and competitive advantage. The main impact is that markets and businesses in different parts of the world are becoming increasingly interconnected, integrated and interdependent. Globalization is also creating more intense competition, which means that products, prices, wages, interest rates, business practices and profitability are converging toward international standards. Impacts on local economies and labour markets vary, depending on how local areas are positioned to compete on a global scale.

Some impacts of globalization are fairly easy to see and understand. Others are more subtle. We tend to look at them mainly in recent personal and local terms, but the present situation has evolved in different stages.

Countries and businesses have engaged in international trade for a very long time. In general, it has been based on the economic principle of comparative advantage. According to that principle, all trading partners can enjoy a better standard of living if each specializes in producing the items in which it has a comparative advantage relative to the others, and they trade to share what they produce. Specialization allows goods and services to be produced more cheaply and, therefore, to become more affordable for a larger number of people.

Access to international markets has been important to Canada's standard of living. For a long time, most of our exports were in the form of raw or semi-processed natural resources. Like other countries, we used artificial trade barriers to protect various sectors, including agriculture, manufacturing, financial services and cultural industries.

Over the past century, trade barriers have been falling continually, first within regions and more recently on a broader scale. Steady improvements in world peace, transportation and communications have made the practical aspects of trade much simpler and increased the distances over which it is economical.

Governments have tried to control the flow, but domestic and international pressure has increasingly forced them to lower their artificial barriers. For the most part, they have entered into international trading arrangements – such as NAFTA, the European Union and agreements facilitated by the World Trade Organization – to help their exporters gain access to larger markets on favourable terms, while allowing greater access to their own markets in return.

In many respects, globalization has been a gradual process. But several significant events have caused it to accelerate over the past 20 years:

• The collapse of the former Soviet Union and the control it exerted over its satellite countries
• The increasing openness of China and India to foreign investment and participation in international trade
• Pressure to allow greater participation in trade by underdeveloped countries
• Improvements in information technology

As trade barriers have fallen, the effects have been felt in waves. Production has been redistributed around the world according to the principle of comparative advantage, creating opportunities for some countries and problems for others. Forty years ago, globalization allowed Canada to produce automobiles and Japan to manufacture electronic products for the U.S. market. Ten years ago, it allowed call centres located in Canada to serve customers throughout North America and even beyond.

Other countries and regions have risen to prominence. We now import much more of our agricultural products from Latin America. A lot of manufacturing has been moving from North America to South Korea, China, Vietnam and other countries in Asia, to take advantage of their low labour costs. And a lot of services are now being delivered from India by a pool of well-educated people willing to work for wages lower than those in more developed countries.

Impacts of these changes on local economies and labour markets have been uneven, depending on industry, location and occupation. Some jobs have disappeared, notably in agriculture, manufacturing and services that can be delivered from afar. But others have been created. In particular, demand has continued to be strong for Canada's energy and mineral resources, some high-value manufactured products and some services. The national unemployment rate is at the lowest range in decades.

Globalization is a long-term trend. Arguments against it are more political than economic. As long as the world is a relatively peaceful place, businesses continue to search for competitive advantage. Transportation and communications will continue to improve as globalization spreads. Wherever we live, we have to learn to compete in that environment.