Globalization is on the rise. From a financial perspective, globalization refers to the ways in which the economies of different countries have become more intertwined, creating a larger cross-national, global economy. There is a worldwide increase in international trade — the import and export of goods and services. For example, in the U.S., most years a growing percentage of the economy depends on exports and imports rather than domestically produced goods sold at home. And many U.S. companies are finding business opportunities abroad, which can translate to increased value for their shareholders. In fact, 35% of the returns on the S&P 500 Composite Index — which includes only U.S. companies — are from abroad.
The other side of globalization is international investment. It occurs when companies open business operations abroad or form joint partnerships with foreign companies. It also occurs when individual and institutional investors put their capital to work outside their home borders by buying securities issued by international companies and governments. One result is that returns in various equity markets around the world have become more correlated,
or similar, than ever before.
All these measures of globalization have been steadily on the rise for a number of reasons, including more open trade agreements between nations, technologies that make international trade and business easier and more efficient, and the cost efficiencies of moving certain business operations to parts of the world where costs are lower.
Jeffrey Rosensweig, Goizueta Business School, Emory University
There's an investment market open somewhere in the world 24 hours a day, 5 days a week. In fact, some markets in Asia are open on Saturday as well.
Jeffrey Rosensweig, Goizueta Business School, Emory University 