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Globalization

Globalization. TU 124. Refers to: An economic phenomenon? A social phenomenon? A cultural phenomenon?.

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Globalization

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  1. Globalization TU 124

  2. Refers to:An economic phenomenon?A social phenomenon?A cultural phenomenon? • The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms. • In short: The shift toward a more integrated and interdependent among economic territories

  3. Aspects of Globalization • Economic globalization • Political globalization • Cultural globalization • Technological globalization and etc.

  4. Economic Globalization EARLY CAPITALIST IDEAS: 1. “Free Market Economy” (Adam Smith, Wealth of Nations, 1776) Market is “free” from State control 2. Division of labor 3. Competition

  5. Economic Globalization MULTI-NATIONAL CORPORATIONS • OLD: Dutch East India Company? • 1602 company of Dutch merchants & independent trading companies • Spice trade monopoly in East Asia • Power to colonize territories & enslave indigenous people • China or Africa countries

  6. Economic Globalization MULTI-NATIONAL CORPORATIONS • NEW: Royal/Dutch Shell, Toyota, Starbuck , Coca-cola, Ikea, McDonald, Nintendo, Apple, Samsung and etc. • Most of them rely on each other directly or indirectly => Integration of Economies

  7. Integration of Economies: Indicators • The increasing reliance of economies on each other • The opportunities to be able to buy and sell in any country in the world • The opportunities for labour and capital to locate anywhere in the world • The growth of global markets in finance

  8. Integration of Economies • Made possible by: Technology Progress • Communication networks • Internet access • Movement(old) to unmovement(new) of people (labor) and knowledge (techonology) across inter-border

  9. Integration of Economies • As a result of lower or no barriers: • Movement to free trade in goods and factor of productions • Growth of economic cooperation – trading blocs (EU, NAFTA, etc.) • Collapse of ‘communism’

  10. The Emergence of Global Institutions Notable global institutions include • theWorld Trade Organization (WTO) which is responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties • In 2008, 151 nations accounting for 97% of world trade were members of the WTO • the International Monetary Fund (IMF) which maintains order in the international monetary system

  11. The Changing Roles of Countriesin the Global Economy In the 1960s: • The U.S. dominated the world economy and the world trade picture • U.S. multinationals dominated the international business scene • About half the world-- the centrally planned economies of the communist world-- was off limits to Western international business Today, much of this has changed.

  12. The Changing Roles of Countriesin the Global Economy • In the early 1960s, the U.S. was the world's dominant industrial power accounting for about 40.3% of world manufacturing output • By 2007, the U.S. accounted for only 20.7% • Other developed nations experienced a similar decline

  13. Is economic globalization good? • “All boats rising” (for those who participate) but at different rates • Raised incomes, though not equal • More individual choice and freedom in the marketplace • Costs of goods and services go down

  14. Is economic globalization good?: contrary to belief • Increased trade globalization is associated with a decline in inequality • Raised incomes, per capita incomes have risen though not equal => indicating the poor are better off • Everyone benefits, but those with skills benefit more • Costs of goods and services go down

  15. Is economic globalization good? • The success stories or “new globalizers” include: China India Bangladesh Uganda Vietnam Why successful? more open trade, investment, technology

  16. Is economic globalization good? • Important Points: • China and India are important cases but they don’t represent “the world.” • Need to ask what life would be like in China, India and other globalizers without reforms. • Rich countries HAVE grown richer, and most of the VERY POOR countries HAVE stayed poor. Question is WHY.

  17. Is economic globalization good? • Globalization is necessary but not sufficient condition • Is it better off for everyone to be equally poor than for someone to become better off? • Main losers today are those who have been left out rather than those who are too much exposed to globalization( people in opened and closed economy) • 49 least developed countries account only 2% of inward FDI while developed world hosts 2/3 inward FDI

  18. Is there a Global Culture? • Globalists: Yes and No. • Decline of nationalism. • Growing universal language: English • Universal Market of popular culture: entertainment, the Internet, food, etc. • Globalization does not destroy local cultures, though it may influence them. • Likely growth of a democratic culture. Over 120 democracies today, including over ½ of the world’s population. Most of these encompass capitalist economies.

  19. Is there a Global Culture? • Skeptics: No. • Nationalism and ethnic nationalism are alive and well in many parts of the world. • Globalization = Americanization, a “McWorld” led by the U.S. Vast majority of products originate from the U.S. • Globalization undermines and destroys local cultures e.g. Guatemala and Mayan culture. • Globalization engenders a backlash and resistance.

  20. Has globalization reconfigured Political Power and National Interests? • Globalists: Yes • The power of governments has declined in the face of the market. • Downside: states are more vulnerable—economic pressures and non-state actors e.g. terrorists. • Societies are freer of government control; people are better able to “link up” for common purposes. • States are losing their sovereignty to the market and other multilateral organizations

  21. Has globalization reconfigured Political Power and National Interests? • Skeptics: No. • States are still powerful, some clearly more than others—US unilateralism. • National interest? Each state still defines its own if it can. • States ignore the goals and regulations of multilateral organizations when it benefits them.

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