Globalization

Globalization (or globalisationTemplate:Fn) refers to the worldwide phenomenon of technological, economic, political and cultural exchanges, brought about by modern communication, transportation and legal infrastructure as well as the political choice to consciously open cross-border links in international trade and finance. It is a term used to describe how human beings are becoming more intertwined with each other around the world economically, politically, and culturally. Although these links are not new, they are more pervasive than ever before.

Meaning & Debate

The International Monetary Fund (IMF) defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology”. Meanwhile, The International Forum on Globalization defines it as “the present worldwide drive toward a globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments.” [1] While notable critical theorists, such as Immanuel Wallerstein, emphasize that globalization cannot be understood separately from the historical development of the capitalist world-system [2] the different definitions highlight the ensuing debate of the roles and relationships of government, corporations, and the individual in maximizing social welfare within the globalization paradigms. Nonetheless, it is clear that globalization has economic, political, cultural, and technological aspects that may be closely intertwined. Given that these aspects are key to an individual's quality of life, the social benefits and costs brought upon them by globalization generates strong debate.

The economic aspects stressed in globalization are trade, investment and migration. The globalization of trade entails that human beings have greater access to a plethora of goods and services never seen before in human history. From German cars, to Colombian coffee, from Chinese clothing, to Egyptian cotton, from American music to Indian software, human beings may be able to purchase a wide range of goods and services. The globalization of investment takes place through Foreign Direct Investment, where multinational companies directly invest assets in a foreign country, or by indirect investment where individuals and institutions purchase and sell financial assets of other countries. Free migration allows individuals to find employment in jurisdictions where there are labor shortages.

Critics of free trade also contend that it may lead to the destruction of a country's native industry, environment and/or a loss of jobs. Critics of international investment contend that by accepting these financial schemes a country loses its economic sovereignty and may be forced to set policies that are contrary to its citizen's interests or desires. Moreover, multinational companies that invest in a country may also acquire too much political and economic power in relation to its citizens. Finally, migration may lead to the exploitation of workers from a migrant country and the displacement of workers from a host country. Critics of globalization also contend that different economic systems that either augment or supplant globalization may maximize social welfare more efficiently and equitably.

The political aspects of globalization are evidenced when governments create international rules and institutions to deal with issues such as trade, human rights, and the environment. Among the new institutions and rules that have come to fruition as a result of globalization are the World Trade Organization, the Euro currency, the North American Free Trade Agreement, to name a few. Whether a government is to consciously open itself to cross-border links, is the central question of this aspect.

Social activist and non-profit organizations are also becoming more global in scope. These include Amnesty International and Friends of the Earth to mention a couple. Some of these organizations take issue with the economic and political aspects of globalization as they fear that economic interests either subvert the nation state in its ability to protect its citizens from economic exploitation, or support governments that violate the human rights of its citizens.

Cultural global ties also grow through globalization as news ideas and fashions through trade, travel and media move around the globe at lightning speed. Global brands such as Coca-Cola, Puma & Sony serve as common reference to consumers all over the World. An individual in China enjoys the same soft-drink as an individual in Puerto Rico--at opposite ends of the globe. However, these ties may also cause strains: for example Western Ideas of freedom expression may clash with Islamic views on Religious tolerance. And if not strains, critics contend this is really an imposition of cultural imperialism in order to preserve economic interests.

The other aspect of globalization is the revolutionary changes in technology, particularly in transport and communications, which ostensibly creates a global village. In 1850 it took a nearly a year to sail around the World. Now you can fly around the world in a day, send an email anywhere almost instantly, or be part of the 1.5 billion viewers watching the final match of the World Cup. Transportation costs have come down as result of technological advances that make foreign markets more accessible to trade. Tuna caught in the North Atlantic may be served the next day at a Sushi restaurant in Japan. Finally, billions of dollars in assets and currencies are exchanged daily around the globe by electroninc means at virtually no cost.

History

Since the word has both technical and political meanings, different groups will have differing histories of "globalization". In general use within the field of economics and political economy, however, it is a history of increasing trade between nations based on stable institutions that allow firms in different nations to exchange goods and services with minimal friction.

The term "liberalization" came to mean the acceptance of the Neoclassical economic model which is based on the unimpeded flow of goods and services between economic jurisdictions. This led to specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade. The period of the gold standard and liberalization of the 19th century is often called "The First Era of Globalization". Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was David Ricardo's work on Comparative advantage and Say's Law of General equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the gold standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is contentiously debated.

The "First Era of Globalization" is said to have broken down in stages beginning with the first World War, and then collapsing with the crisis of the gold standard in the late 1920's and early 1930's. Countries that engaged in that era of globalization, including the European core, some of the European periphery and various European offshoots in the Americas and Oceania, prospered. Inequality between those states fell, as goods, capital and labour flowed remarkably freely between nations.

Globalization in the era since World War II has been driven by trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on "free trade". The Uruguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.

See History of globalization for more extensive historical background on this subject.

Nature and existence of globalization

There is much academic discussion about whether globalization is a real phenomenon or only an analytical artifact (a myth). Although the term is widespread, many authors argue that the characteristics attributed to globalization have already been seen at other moments in history. Also, many note that such features, including the increase in international trade and the greater role of multinational corporations, are not as deeply established as they may appear.

Some authors prefer the term internationalization rather than globalization. In internationalization, the role of the state and the importance of nations are greater, while globalization in its complete form eliminates nation states. So, they argue that the frontiers of countries, in a broad sense, are far from being dissolved, and therefore this globalization process is not happening, and probably will not happen (see Linda Weiss), considering that in world history, internationalization never turned into globalization (the European Union and NAFTA are yet to prove their case).

However, the world increasingly shares problems and challenges that do not obey nation-state borders, most notably pollution of the natural environment, and the movement previously known as anti-globalization has transformed into a movement of movements for globalization from below, seeking, through experimentation, forms of social organisation that transcend the nation-state and representative democracy. Whereas the original arguments that globalization is taking place can be refuted with stories of internationalisation, as above, the emergence of a global movement is indisputable and therefore we can speak of a real process towards a global human society of societies. Other authors have argued that we are in transition to a planetary phase of civilization; the exact form and character of the global society is contested and will be determined by the choices we make in the critical decades ahead. For example, the Global Scenario Group has outlined alternative visions of the global future, with "market forces" or economic globalization being just one option, contrasted with "policy reform," "fortress world," "breakdown," "eco-communalism" and a "new sustainability paradigm."

Some maintain that globalization is an imagined geography; that is, a political tool of ruling neo-liberlists, who are attempting to use certain images and discourses of world politics to justify their political agendas. Writers of books such as No Logo claim that by presenting a picture of a globalized world, the Bretton Woods institutions can demand that companies open up their economies to liberilzation] under Structural Adjustment Programmes that encourage governments to fund privatization programmes, ahead of welfare and public services [3].

Characteristics

Globalization/internationalisation has become identified with a number of trends, most of which may have developed since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. The actual existence of some of these trends is debated.

• Economically
  • Increase in international trade at a faster rate than the growth in the world economy
  • Increase in international flow of capital including foreign direct investment
  • Creation of international agreements leading to organizations like the WTO and OPEC
  • Development of global financial systems
  • Increase in the share of the world economy controlled by multinational corporations
  • Increased role of international organizations such as WTO, WIPO, IMF that deal with international transactions
  • Increase of economic practices like outsourcing, by multinational corporations
• Culturally
  • Greater international cultural exchange,
  • Spreading of multiculturalism, and better individual access to cultural diversity, for example through the export of Hollywood and Bollywood movies. However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures also takes place.
  • Greater international travel and tourism
  • Greater immigration, including illegal immigration
  • Spread of local foods such as pizza and Indian food to other countries (often adapted to local taste)
• Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites and telephones
• Increase in the number of standards applied globally; e.g. copyright laws and patents
• Formation or development of a set of universal values
• The push by many advocates for an international criminal court and international justice movements (see the International Criminal Court and International Court of Justice respectively).
• It is often argued that even terrorism has undergone globalization, with attacks in foreign countries that have no direct relation with the own country[4][5].

Barriers to international trade have been considerably lowered since World War II through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for which GATT is the foundation, have included:

• Promotion of free trade
  • Of goods:
    • Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs
    • Reduced transportation costs, especially from development of containerization for ocean shipping.
  • Of capital: reduction or elimination of capital controls
  • Reduction, elimination, or harmonization of subsidies for local businesses
• Intellectual Property Restrictions
  • Harmonization of intellectual property laws across nations (generally speaking, with more restrictions)
  • Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the US)

Anti-globalization

Critics of the economic aspects of globalization contend that it is not as its proponents tend to imply, an inexorable process that flows naturally from the economic needs of everyone. The critics typically emphasize that globalization is a process that is mediated according to elite imperatives, and typically raise the possibility of alternative global institutions and policies which they believe address the moral claims of poor and working classes throughout the globe, as well as environmental concerns in a more equitable way.[6]In terms of the controversial global migration issue, disputes revolve around both its causes, whether and to what extent it is voluntary or involuntary, necessary or unnecessary; and its effects, whether beneficial, or socially and environmentally costly. Proponents tend to see migration simply as a process whereby white and blue collar workers may go from one country to another to provide their services, while critics tend to emphasize negative causes such as economic, political and environmental insecurity, and cite as one notable effect, the link between migration and the enormous growth of urban slums in developing countries. According to "The Challenge of Slums," a 2003 UN-Habitat report, "the cyclical nature of capitalism, increased demand for skilled versus unskilled labour, and the negative effects of globalisation – in particular, global economic booms and busts that ratchet up inequality and distribute new wealth unevenly – contribute to the enormous growth of slums." [7]

File:Stocks and Stripes.jpg

Stocks and Stripes flag, the united stockholders of Amercia. A protest flag signifying the alleged corporate influence over the U.S.

Main article: "Anti-globalization".

Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. This movement has no unified name. "Anti-globalization" is the media's preferred term; it can lead to some confusion, as activists typically oppose certain aspects or forms of globalization, not globalization per se. Activists themselves, for example Noam Chomsky, have said that this name is meaningless as the aim of the movement is to globalize justice. Indeed, the global justice movement is a common name. Many activists also unite under the slogan "another world is possible", which has given rise to names such as altermondialisme in French.

There is a wide variety of kinds of "anti-globalization". In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations, the working class and the environment into account.

Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.

Many "anti-globalization" activists see globalization as the promotion of a corporatist agenda, which is intent on constricting the freedoms of individuals in the name of profit. They also claim that increasing autonomy and strength of corporate entities increasingly shape the political policy of nation-states.

Some "anti-globalization" groups argue that globalization is necessarily imperialistic, is one of the driving reasons behind the Iraq war and is forcing savings to flow into the United States rather than developing nations; it can therefore be said that "globalization" is another term for a form of Americanization.

Some argue that globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises.

The financial crises in Southeast Asia, that began in the relatively small debt-ridden economy of Thailand but quickly spread to Malaysia, Indonesia, South Korea and eventually was felt all around the world, demonstrated the new risks and volatility in rapidly changing globalized markets. The IMF's subsequent 'bailout' money came with conditions of political change (i.e. government spending limits) attached and came to be viewed by critics as undermining national sovereignty in neo-colonialist fashion. Anti-Globalization activists pointed to the meltdowns and the resulting poverty as proof of the high human cost of the indiscriminate global economy.

Increase in law and order with a decrease in state intervention at home in order to protect the wealth and businesses.

The main opposition is to unfettered globalization (neoliberal; laissez-faire capitalism), guided by governments and what are claimed to be quasi-governments (such as the International Monetary Fund and the World Bank) that are supposedly not held responsible to the populations that they govern and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of "corporate globalism".

Some "anti-globalization" activists object to the fact that the current "globalization" globalizes money and corporations, but not people and unions. This can be seen in the strict immigration controls in nearly all countries, and the lack of labour rights in many countries in the developing world.

Another more conservative camp opposed to globalization are state-centric nationalists who fear globalization is displacing the role of nations in global politics and point to NGOs as impeding upon the power of individual nations. Some advocates of this warrant for anti-globalization are Pat Buchanan and Jean-Marie Le Pen.

The movement is very broad, including church groups, national liberation factions, left-wing parties, environmentalists, peasant unionists, anti-racism groups, anarchists, and others. Most are reformist, (arguing for a more humane form of capitalism) while others are more revolutionary (arguing for a more humane system than capitalism). Many have decried the lack of unity and direction in the movement, but some such as Noam Chomsky have claimed that this lack of centralization may in fact be a strength.

Protests by the global justice movement have forced high-level international meetings away from the major cities where they used to be held, into remote locations where protest is impractical.

Pro-globalization (globalism)

Supporters of democratic globalization can be labelled pro-globalists. They consider that the first phase of globalization, which was market-oriented, should be completed by a phase of building global political institutions representing the will of world citizens. The difference with other globalists is that they do not define in advance any ideology to orient this will, which should be left to the free choice of those citizens via a democratic process.

Supporters of free trade point out that economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment and higher output.

Libertarians and other proponents of laissez-faire capitalism say higher degrees of political and economic freedom in the form of democracy and capitalism in the developed world produce higher levels of material wealth. They see globalization as the beneficial spread of liberty and capitalism.

Critics argue that the anti-globalization movement uses anecdotal evidence to support their view and that worldwide statistics instead strongly support globalization:

• the percentage of people in developing countries living below US$1 (adjusted for inflation and purchasing power) per day has halved in only twenty years [8], although some critics argue that more detailed variables measuring poverty should instead be studied [9].

• Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Child mortality has decreased in every developing region of the world [10]. Income inequality for the world as a whole is diminishing [11].

• Democracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000 [12].

• The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s.

• Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000.

• The percentage of children not in the labor force has also risen to over 90% in 2000 from 76% in 1960.

• There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water [13].

However, some of these improvements may not be due to globalization, or may be possible without the current form of globalization or its imagined negative consequences, to which the global justice movement objects.

Many pro-capitalists are also critical of the World Bank and the IMF, arguing that they are corrupt bureaucracies controlled and financed by states, not corporations. Many loans have been given to dictators who never carried out promised reforms, instead leaving the common people to pay the debts later. They thus see too little capitalism, not too much. They also note that some of the resistance to globalization comes from special interest groups with conflicting interests, like Western world unions.

Others, such as Senator Douglas Roche, O.C., simply view globalization as inevitable and advocate creating institutions such as a directly-elected United Nations Parliamentary Assembly to exercise oversight over unelected international bodies.

Other uses

"Globalization" can mean:

• Globalism, if the concept is reduced to its economic aspects, can be said to contrast with economic nationalism and protectionism. It is related to laissez-faire capitalism and neoliberalism.
• It shares a number of characteristics with internationalization and is often used interchangeably, although some prefer to use globalization to emphasize the erosion of the nation-state or national boundaries.
• Making connections between places on a global scale. Today, more and more places around the world are connected to each other in ways that were previously unimaginable. In geography, this process is known as complex connectivity, where more and more places are being connected in more and more ways. Arjun Appadurai identified five types of global connectivity:
  • Ethnoscapes: movements of people, including tourists, immigrants, refugees, and business travellers.
  • Financescapes: global flows of money, often driven by interconnected currency markets, stock exchanges, and commodity markets.
  • Ideoscapes: the global spread of ideas and political ideologies. For example, Green Peace has become a worldwide environmental movement.
  • Mediascapes: the global distribution of media images that appear on our computer screens, in newspapers, television, and radio.
  • Technoscapes: the movement of technologies around the globe. For example, the Green Revolution in rice cultivation introduced western farming practices into many developing countries.

Although Appadurai's taxonomy is highly contestable, it does serve to show that globalization is much more than economics on a global scale.

• In its cultural form, globalization has been a label used to identify attempts to erode the national cultures of Europe, and subsume them into a global culture whose members will be much easier to manipulate through mass media and controlled governments. In this context, massive legal or illegal immigration has been allowed, mainly in European countries.
• The formation of a global village — closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding and friendship between "world citizens", and creation of a global civilization.
• Economic globalization — there are four aspects to economic globalization, referring to four different flows across boundaries, namely flows of goods/services, i.e. 'free trade' (or at least freer trade), flows of people (migration), of capital, and of technology. A consequence of economic globalization is increasing relations among members of an industry in different parts of the world (globalization of an industry), with a corresponding erosion of national sovereignty in the economic sphere. The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology” (IMF, World Economic Outlook, May, 1997). The World Bank defines globalization as the "Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries".
• In the field of management, globalization is a marketing or strategy term that refers to the emergence of international markets for consumer goods characterized by similar customer needs and tastes enabling, for example, selling the same cars or soaps or foods with similar ad campaigns to people in different cultures. This usage is contrasted with internationalization which describes the activities of multinational companies dealing across borders in either financial instruments, commodities, or products that are extensively tailored to local markets. Globalization also means cross-border management activities or development processes to adapt to the emergence of a globalized market or to seek and realize benefit from economies of scale or scope or from cross-border learning among different country-based organizations.
• In the field of software, globalization is a technical term that combines the development processes of internationalization and localization.
• Many, such as participants in the World Social Forum, use the term "corporate globalization" or "global corporatization" to highlight the impact of multinational corporations and the use of legal and financial means to circumvent local laws and standards, in order to leverage the labor and services of unequally-developed regions against each other.
• The spread of capitalism from developed to developing nations.
• "The concept of globalisation refers both to the compression of the world and the intensification of consciousness of the world as a whole" - Benedikt Kiesenhofer

Measurement of Globalization

To what extent a nation-state or culture is globalized in a particular year has until most recently been measured employing simple proxies like flows of trade, migration, or foreign direct investment. A more sophisticated approach to measuring globalization is the recent index calculated by the Swiss think tank KOF. The index measures the three main dimensions of globalization: economic, social, and political. In addition to three indices measuring these dimensions, an overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated. Data are available on a yearly basis for 122 countries. According to the index, the world's most globalized country is the USA, followed by Canada, the United Kingdom, and France. The least globalized countries according to the KOF-index are Burundi, Belize, and Sierra Leone.[14]

Notes

Template:FnbGlobalisation is a British variant spelling. Globalization is the main variant, preferred by the Oxford English Dictionary.

See also

• Marketization
• Mundialization
• Westernization
• Walmarting
• Saskia Sassen
• Global Empire
• The Global Economy
• World Economy
• The World Is Flat

External links

• Douglas Roche's proposal for UN Parliamentary Reform, in PDF
• Index of Globalization
• Latin American Globalization Index
• Global Small Business Resource
• The Global Small Business Blog
• Globalisationguide
• Globalism/Antiglobalism A survey and a critical analysis