In this chapter I will analyse the impact of globalization on the dynamics of the audio-visual sector and art markets as representative of the cultural industries in general. In a way, globalization was the first great transformation of cultural markets in the 1980s, before the onset of digitization in the late twentieth century, and it has notably affected cultural industries in terms of both supply and demand.

Taken together, these two forces – globalization and digitization – have had such a lasting impact on economic and cultural activities because the two cross-fertilized each other, with digitization fuelling globalization. After all, the transmission of cultural goods and services, particularly the latter, was largely made possible through digital technology, as well as worldwide availability and access to information.

When we think of globalization, there are two aspects that come together in terms of the cultural industries. First, markets become more global and integrated, thus opening up opportunities for earning money with cultural products in an ever-expanding market. Second, cultural globalization might entail some convergence of tastes and preferences.

What is economic globalization?

Starting with the economics side of it, globalization is largely measured and understood as an increase of trade across the world. This entails high growth in traded goods and services as well as the mobility of capital and labour between countries. One of the key driving forces behind globalization is trade agreements, which have removed the many duties, taxes and tariffs that had previously been barriers to trade.

The European Union started from this very idea of economic integration, in its early days as the European Coal and Steel Community. In the late 1980s and early 1990s major trade deals were largely negotiated and facilitated by the World Trade Organization (WTO), which succeeded the General Agreement on Tariffs and Trade (GATT) in 1995. These supranational institutions provided the means to settle legal conflicts on trade between countries. In the later phase of globalization, many other smaller, regional trade agreements followed.

From a purely economic perspective, trade is beneficial for a country if it has a comparative advantage, in that it can produce a good or service at a lower opportunity cost than another country – that is to say, it has to give up less in terms of production than other countries to produce the good or service in question.