Globalization involves increasing integration of economies around the world, from the national to the most local levels, thereby promoting international trade in goods and services and cross-border movement of information, technology, people, and investments.
Countries engage in international trade to obtain goods and services that some other countries can produce at relatively lower cost than it can in exchange for goods and services that they can produce at lower cost than the other countries can. If everything cost the same to make in every country, there would be no basis for international trade.
When a country engages in international trade, its households' real purchasing power rises. Their incomes stretch further because they can obtain at lower cost the goods and services they have been buying. The country as a whole benefits, too. When a country engages in international trade, it can produce more gross domestic product (GDP) from its land, labor, and capital because it is not using them to produce things that other countries can produce at lower resource cost. When a country opens its borders to free movement in and out of goods and services, the market then provides the incentive to move the country's resources in to their highest-value uses, thereby facilitating economic growth. Globalization has created the environment in which export-led economic growth can reduce poverty by bidding up wages in low-income countries. As poor people's incomes rise, they gain purchasing power and become better markets for the products that others produce more efficiently.