Globalization

Globalization • is the process of making, transformation of some things or phenomena into global ones. It can be described as a process by which the people of the world are unified into a single society and function together. • means erasure of national boundaries for economic purposes; international trade (governed by comparative advantage) becomes inter-regional trade (governed by absolute advantage). • An increasing interconnectedness of different parts of the world through common processes of economic, environmental, political and cultural change.

History •

The word "globalization" has been used by economists since the 1980s; however, its concepts did not become popular until the latter half of the 1980s and 1990s. The earliest written theoretical concepts of globalization were penned by an American entrepreneur-turned-minister Charles Taze Russell who coined the term 'corporate giants' in 1897

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In the 16th century , Globalization in its largest extent began in Portugal. Portugal's global explorations in the 16th century linked continents, economies and cultures as never before.

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In the 17th century, globalization became a business phenomenon when the Dutch East India Company, which is often described as the first multinational corporation, was established. Because of the high risks involved with international trade, the Dutch East India Company became the first company in the world to share risk and enable joint ownership of companies through the issuance of shares of stock: an important driver for globalization

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The 19th century is sometimes called "The First Era of Globalization." It was a period characterized by rapid growth in international trade and investment between the European imperial powers, their colonies, and, later, the United States. It was in this period that areas of sub-saharan Africa and the Island Pacific were incorporated into the world system.

MODERN GLOBALIZATION •

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Since World War II, barriers to international trade have been considerably lowered through international agreements - General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, have included: Promotion of free trade: Reduction or elimination of tariffs; creation of free trade zones with small or no tariffs Reduced transportation costs, especially resulting from development of containerization for ocean shipping. Reduction or elimination of capital controls Reduction, elimination, or harmonization of subsidies for local businesses

• Restriction of free trade: o Harmonization of intellectual property laws across the majority of states, with more restrictions. • Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States)

MEASURING GLOBALIZATION Looking specifically at economic globalization, it can be measured in different ways. These center around the four main economic flows that characterize globalization: • Goods and services, e.g. exports plus imports as a proportion of national income or per capita of population • Labor/people, e.g. net migration rates; inward or outward migration flows, weighted by population • Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population • Technology, e.g. international research & development flows; proportion of populations (and rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances such as the telephone, motorcar, broadband)

EFFECTS OF GLOBALIZATION •

Globalization has various aspects which affect the world in several different ways such as:

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Industrial (alias trans nationalization) - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within transnational corporations, and access to goods by wealthier nations and individuals at the expense of poorer nations and individuals who supply the labour.

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Financial - emergence of worldwide financial markets and better access to external financing for corporate, national and subnational borrowers. Simultaneous though not necessarily purely globalist is the emergence of under or un-regulated foreign exchange and speculative markets leading to inflated wealth of investors and artificial inflation of commodities, goods, and in some instances entire nations as with the Asian economic boom-bust that was brought on externally by "free" trade.

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Economic - realization of a global common market, based on the freedom of exchange of goods and capital.

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Political - political globalization is the creation of a world government which regulates the relationships among nations and guarantees the rights arising from social and economic globalization.

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Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fibre optic communications, satellites, and increased availability of telephony and Internet, possibly ancillary or unrelated to the globalist ideology.

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Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities such as Globalism - which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture"; loss of languages (and corresponding loss of ideas), also see Transformation of culture

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Ecological- the advent of global environmental challenges that can not be solved without international cooperation, such as climate change, crossboundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Many factories are built in developing countries where they can pollute freely. Globalism and free trade interplay to increase pollution and accelerate it in the name of an ever expanding capitalist growth economy in a non-expanding world. The detriment is again to the poorer nations while the benefit is allocated to the wealthier nations.

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Social - increased circulation by people of all nations with fewer restrictions. Provided that the people of those nations are wealthy enough to afford international travel, which the majority of the world's population is not. An illusory 'benefit' recognized by the elite and wealthy, and increasingly so as fuel and transport costs rise.

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Transportation - fewer and fewer European cars on European roads each year (the same can also be said about American cars on American roads) and the death of distance through the incorporation of technology to decrease travel time. This would appear to be a technological advancement recognized by those who work in information, rather than labour intensive markets, accessible to the few rather than the many, and if it is indeed an effect of globalism, reflects the disproportionate inequitable allocation of resources rather than a benefit to humanity overall.

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International cultural exchange Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood and Bollywood movies). Greater international travel and tourism for the few who can afford international travel and tourism Greater immigration, including illegal immigration, who have in 2008 accelerated removal of illegal migrants and modified laws to increase the ease of removing those who have entered the country illegally while ensuring that immigration policies allow those more favourable to the stimulation of economy to enter, primarily focusing on the capital that immigrants can move into a country with them. Spread of local consumer products (e.g. food) to other countries (often adapted to their culture) including genetically modified organisms. World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to those who have Internet or Television, leaving out a substantial segment of the Earth's population. World-wide sporting events such as FIFA World Cup and the Olympic Games. Formation or development of a set of universal values - Homogenization of Culture

• Technical o Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones • Increase in the number of standards applied globally; e.g. copyright laws, patents and world trade agreements • Legal/Ethical o The creation of the international criminal court, which the United States has refused to sign on to, and international justice movements. o Crime importation and raising awareness of global crime-fighting efforts and cooperation. • Sexual awareness – It is often easy to only focus on the economic aspects of Globalization. Globalization may also have social effects such changes in sexual inequality, and to this issue brought about a greater awareness of the different (often more brutal) types of gender discrimination throughout the world. • Increasing concentration of wealth in fewer and fewer hands. . Media and other multinational mergers leading to fewer corporations controlling vaster segments of society and production.

PRO-GLOBALIZATION (globalism) •

Globalization advocates such as Jeffrey Sachs point to the above average drop in poverty rates in countries, such as China, where globalization has taken a strong foothold, compared to areas less affected by globalization, such as Sub-Saharan Africa, where poverty rates have remained stagnant.

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Generally, support of Free Trade, Capitalism, and Democracy - systems which are widely believed to facilitate Globalization. Supporters of free trade claim that it increases economic prosperity as well as opportunity, especially among developing nations, enhances civil liberties and leads to a more efficient allocation of resources.

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

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Supporters of democratic globalization are sometimes called pro-globalists. They believe that the first phase of globalization, which was market-oriented, should be followed by a phase of building global political institutions representing the will of world citizens

PRO-GLOBALIZATION (globalism) •

Supporters of globalization argue that the anti-globalization movement uses anecdotal evidence to support their protectionist view, whereas worldwide statistics strongly support globalization:

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From 1981 to 2001, according to World Bank figures, the number of people living on $1 a day or less declined from 1.5 billion to 1.1 billion in absolute terms. At the same time, the world population increased, so in percentage terms the number of such people in developing nations declined from 40% to 20% of the population. with the greatest improvements occurring in economies rapidly reducing barriers to trade and investment; yet, some critics argue that more detailed variables measuring poverty should be studied instead.

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The percentage of people living on less than $2 a day has decreased greatly in areas effected by globalization, whereas poverty rates in other areas have remained largely stagnant. In East-Asia, including China, the percentage has decreased by 50.1% compared to a 2.2% increase in Sub-Saharan Africa.

1 981

1 984

1 987

1 990

1 993

1 996

1 999

2 002

5 Less than $1 7.7 a day % East Asia and Pacific 8 Less than $2 4.8 a day %

3 8.9 % 7 6.6 % 1 1.8 % 3 0.4 % 4 6.3 % 7 6.1 %

2 8.0 % 6 7.7 % 1 0.9 % 2 7.8 % 4 6.8 % 7 6.1 %

2 9.6 % 6 9.9 % 1 1.3 % 2 8.4 % 4 4.6 % 7 5.0 %

2 4.9 % 6 4.8 % 1 1.3 % 2 9.5 % 4 4.0 % 7 4.6 %

1 6.6 % 5 3.3 % 1 0.7 % 2 4.1 % 4 5.6 % 7 5.1 %

1 5.7 % 5 0.3 % 1 0.5 % 2 5.1 % 4 5.7 % 7 6.1 %

1 1.1 % 4 0.7 %

Area

Demograph ic

Less than $1 9 a day .7% Latin America

Sub-Saharan Africa

2 Less than $2 9.6 a day % 4 Less than $1 1.6 a day % 7 Less than $2 3.3 a day %

8 .9% 2 3.4 % 4 4.0 % 7 4.9 %

Percentage Change 1981-2002 -80.76%

-52.00%

-8.25%

-29.94%

+5.77%

+2.18%

'SOURCE: World Bank, Poverty Estimates, 2002

ANTI-GLOBALIZATION (mundialism) •Anti-globalization is a pejorative term used to describe the political stance of people and groups who oppose the neoliberal version of globalization. •“Anti-globalization" may involve the process or actions taken by a state in order to demonstrate its sovereignty and practice democratic decision-making. Anti-globalization may occur in order to put brakes on the international transfer of people, goods and ideology, particularly those determined by the organizations such as the IMF or the WTO in imposing the radical deregulation program of free market fundamentalism on local governments and populations. •Joseph Stiglitz and Andrew Charlton write: “The anti-globalization movement developed in opposition to the perceived negative aspects of globalization. The term 'anti-globalization' is in many ways a misnomer, since the group represents a wide range of interests and issues and many of the people involved in the anti-globalization movement do support closer ties between the various peoples and cultures of the world through, for example, aid, assistance for refugees, and global environmental issues.”

ANTI-GLOBALIZATION (mundialism) Critics argue that: oPoorer countries are sometimes at disadvantage: While it is true that globalization encourages free trade among countries on an international level, there are also negative consequences because some countries try to save their national markets. The main export of poorer countries is usually agricultural goods. It is difficult for these countries to compete with stronger countries that subsidize their own farmers. Because the farmers in the poorer countries cannot compete, they are forced to sell their crops at much lower price than what the market is paying. oExploitation of foreign impoverished workers: The deterioration of protections for weaker nations by stronger industrialized powers has resulted in the exploitation of the people in those nations to become cheap labor. Due to the lack of protections, companies from powerful industrialized nations are able to offer workers enough salary to entice them to endure extremely long hours and unsafe working conditions.

ANTI-GLOBALIZATION (mundialism) • The shift to service work: The low cost of offshore workers have enticed corporations to move production to foreign countries. The laid off unskilled workers are forced into the service sector where wages and benefits are low, but turnover is high. This has contributed to the widening economic gap between skilled and unskilled workers. This also means that people in the lower class have a much harder time climbing out of poverty because of the absence of the middle class as a stepping stone. •Weak labor unions: The surplus in cheap labor coupled with an ever growing number of companies in transition has caused a weakening of labor unions in the United States. Unions lose their effectiveness when their membership begins to decline. As a result unions hold less power over corporations that are able to easily replace workers, often for lower wages, and have the option to not offer unionized jobs anymore. •The critics of globalization typically emphasize that globalization is a process that is mediated according to corporate interests, 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.

ANTI-GLOBALIZATION (mundialism) One of the key points made by critics of recent economic globalization is that income inequality, both between and within nations, is increasing as a result of these processes. A chart that gave the inequality a very visible and comprehensible form, the socalled 'champagne glass' effect, was contained in the 1992 United Nations Development Program Report, which showed the distribution of global income to be very uneven, with the richest 20% of the world's population controlling 82.7% of the world's income. + Distribution of world GDP, 1989 Quintile of Population

Income

Richest 20%

82.7%

Second 20%

11.7%

Third 20%

2.3%

Fourth 20%

1.4%

SOURCE: United Nations Development Program. 1992 Poorest 20% Human Development Report

1.2%

ANTI-GLOBALIZATION (mundialism) SOCIAL (International Social Forums) European Social Forum, the Asian Social Forum, World Social Forum (WSF). Recently there has been some discussion behind the movement about the role of the social forums. Some see them as a "popular university", an occasion to make many people aware of the problems of globalization. Others would prefer that delegates concentrate their efforts on the coordination and organization of the movement and on the planning of new campaigns. However it has often been argued that in the dominated countries (most of the world) the WSF is little more than an 'NGO fair' driven by Northern NGOs and donors most of which are hostile to popular movements of the poor.

REVERSION • Rising petroleum prices can reverse globalization and are leading to world inflation crisis. Higher energy prices are impacting transport costs at an unprecedented rate. So much so, that the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today. • In fact, in tariff-equivalent terms, the explosion in global transport costs has effectively offset all the trade liberalization efforts of the last three decades.

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