In recent years, the global trade in goods and services has expanded much faster than the expansion of the sum of the economies of all the countries of the world put together and the trend still continues, there being no sign of slow down.

The reason is the rapid integration of the economies of individual counties in an international, global system. Included in this integration are foreign investment, movement of short-term portfolio funds and technological diffusions. With the exception of movement of short-term portfolio funds, which, in smaller economies, can in
time create disturbing financial crises, the other aspects of globalization, have positive effects on the functioning of advanced industrial economies as well as on developing nations.

In the case of the second group, the effect of globalization in some countries has been profound notably in China and more recently India. The dynamism inherent in the functioning of the economies built on the free market model, pushes the producers of goods and services to look for cheaper goods and more reliable sources
of supply, wherever they may be, in order to expand and satisfy the ever evolving preferences of consumers in their own countries and in other markets that they serve. Such a force has expanded the horizon for the economic activity from a local scale to a countrywide scale and now to the worldwide. The advancement of technology, and specifically information technology, which offers instant communication with increasing velocity, makes possible such achievements in the control and management of activities in distant lands.

Consumers all over the world have access to a much wider range of products and services with affordable
prices in comparison with a few years ago. For developed countries the expansion of choice is by no means the only blessing. By keeping the prices in check, those economies have been better equipped to combat inflation. The more or less stable prices, in turn, caused interest rates to be lower than otherwise would have been. Lower interest rates are conducive to higher investments and hence lower potential rate of unemployment which is becoming to be a main economic concern all over the world. The advance in technology translates into higher labor productivity. Higher labor productivity, if not checked through higher investment, has a tendency to raise
unemployment. Lower interest rates, in turn, invite both short and long-term investments.

Globalization has been a blessing to developing countries, which choose trade and outward expansion as means of economic growth instead of expanding imports and protectionist policies. The second half of the 20th century has shown that countries that have had the courage to open their economies to more rigorous competition, including competition from foreign sources, have had fewer encounters with obstacles to growth, such as rise of monopolies, investment restrictions, price rigidity and so forth. Since their industry has to compete in the much larger international arena, instead of just local ones, the export-oriented sectors have
achieved the necessary size and sophistication to enable them enjoy the economies of scale. Due to foreign investment, these economies have enjoyed higher rates of employment than otherwise possible. With the
passage of time as they obtain a higher level of education and labor productivity, the industries that are active in the export sector move to more sophisticated products. Such a process, has a positive effect on pushing the mode of production in other industries to higher levels. At the same time, due to the lower tariff rate and a more
open market, their consumers enjoy more affordable prices and a larger variety. A higher purchasing power resulting from lower prices diminishes social tensions. It should be noted that tariffs have their effects on lower income groups, since they consume a higher portion of their income in comparison to high-income groups.

Removal of tariffs has an egalitarian effect on society and increases consumption, investment, employment and thus income. At the present time, no country illustrates the benefits of globalization more than China. A country of 1.3 billion people, that only 25 years ago was plagued with profound poverty, social tension and chaos, now has a vibrant, outward looking economy as a result of reforms. Famine, which was a part of life in China, has been virtually wiped out. China has been able to attract $ 500 billion in foreign direct investment. Its exports during 1990-2003 has been increased eightfold to $ 380 billion and its imports amount to 370 billions. The foreign currency earned from exports enabled China to have such high imports. The imports of consumer goods made the Chinese life much more pleasant.

The total import included capital goods, and technology that China requires. All of this means that China will have a higher capital base, better education and larger integration into the world economy which, in turn, means that in future China will be an even more formidable player in the global arena. India, another country with a
population of more than one billion, is also opening to the world economy. Although the Indian economy implemented its reforms somewhat later than China and with less vigor, the positive results can already be seen. Indian economy is showing robust as well as high rates of growth. India is fast assuming the leading role of providing workforce for high-tech service industries worldwide.

An ever increasing volume of software is moving to India and foreign firms are opening shops locally. Technical support for many industries in the West is being provided by Indians right from their own homeland. As an example, technical support provided by phone to customers in the US by such leading firms as Microsoft is handled form India. Search for lost luggage in airports around the Western countries are again managed from the India soil. Indian software engineers working in other countries, send their excess incomes back home.

India is also opening to the outside world in all other areas of economic activity. Globalization is well and alive
and the future looks promising. Day by day new players try to get in the bandwagon in order to improve the living conditions of their own people.

In the meantime, Iran, with its substantial potentials, is missing opportunities one after another. Both human and natural resources of the country are attractive enough to absorb considerable foreign investment and trade opportunities. With the implementation of the right economic reforms that are outward-looking and lead to
international integration, the vast resources of the country would be better utilized.

Presently foreign investment in Iran is limited to the oil and gas sector, and remains on a small scale. Opportunities could be transformed into vibrant international investments in diverse industries including
energy. The human resources of the country in the form of products and services could be successfully marketed around the world. The meager non-oil and non-gas exports of a few billion USD per year can be
considerably expanded. There is even the potential for explosive growth. To improve the economic performance of the country, Iran has no choice but to open to the world economy and embrace globalization.