What is the difference between the phases of internationalization and of globalization? Internationalization and Globalization are two terms that are often assimilated and sometimes used as synonyms. This is a mistake because these terms have many differences, starting with the time they began to occur. Internationalization started as part if the Industrial Revolution between 1870 and 1914, whereas globalization is a post 1960’s phenomenon. Other differences between these two terms include their impact on firms, on global trade, and on society and culture.
First of all, while globalization is often used to describe the change in the world economy to a more liberal and interdependent system, internationalization refers more narrowly to the activity of firms on an international scale and the resulting impact of their decisions. Internationalization is, for example, a European firm trying to export its product overseas, and the causes and the consequences of this act. A firm trying to standardize its products on an international scale is also considered as internationalization. Secondly, many recent advances in technological fields such as communication and transportation have helped globalization increase worldwide trade and investment. The beginning of this ‘free-trade’ era started when the Soviet Union was defeated by the United States, and the end of the Cold War.
This helped many organizations such as the WTO (World Trade Organization) or the IMF (International Monetary Fund) support free markets, making the economy less state dependent. These organizations have helped to create a more globalized economy by the creations of TNCs (Transnational Corporations). This resulted in the rapid and successful industrialization of some nations (NICs) and on a different way of dividing production worldwide (NIDL). On another hand, internationalization did not really globalize the economy but rather promoted the activity of a nation and its companies internationally. A typical example would be signing a trade or investment contract with another country (or countries) to install good economic relations between them.