How does globalization make financial crises spread faster across countries?
Answer (1)
Globalization means that countries are connected through trade, investment, travel, and communication. This brings many benefits, such as more business opportunities and faster exchange of ideas. But during a financial crisis, globalization can also make problems spread more quickly across countries.Imagine a factory in the Philippines that exports electronic parts to a company in the United States. If the U.S. faces a financial crisis and stops buying as many products, the Philippine factory will get fewer orders. It may have to reduce production or even lay off workers. In the same way, if a bank in Europe collapses, other banks in Asia may also lose money if they are connected through loans or investments.This was seen during the 2008 Global Financial Crisis. The crisis began in the United States when banks failed due to subprime mortgage problems. But soon, banks and businesses in other countries, including those in Asia, felt the effects. Stock markets around the world dropped, and international trade slowed down.In the Philippines, the crisis led to lower exports, less foreign investment, and fewer job opportunities, especially in sectors connected to global markets. Even Filipino workers abroad were affected—some OFWs lost jobs as companies in the Middle East, Europe, or America downsized.The same thing happened during the COVID-19 pandemic. When travel and trade stopped, many global supply chains broke down. Even local businesses that depended on imported goods were affected.To manage these risks, countries need to diversify trade partners, build strong financial regulations, and prepare safety nets. Being part of regional groups like ASEAN also helps in sharing information and resources during crises.In short, globalization connects countries in both good and bad times. It spreads growth during success—but can also spread crisis. This is why cooperation and strong planning are important in a globalized world.
