Contemporary World - Chapter II: Globalization

Contemporary World - Chapter II: The Structure of Globalization

• Globalization integrates national and regional economies, societies, and cultures through trade, communication, immigration, and transportation, leading to a global economy and improved domestic economies.
• A global economy involves interconnected global economic activities between multiple countries. This interaction can have both positive and negative impacts on each other.
• Key aspects of a global economy include globalization, international trade, international finance, and global investment.
• Globalization impacts international trade, enabling countries to exchange goods and services, specialize in areas with comparative advantages, and improve production efficiency with lower opportunity costs.
• International Finance includes currency exchange rates and monetary policy, facilitating faster money transfer between countries compared to the movement of goods, services, and people.
• Global investment transcends geographical boundaries, primarily through foreign direct investment (FDI).
• The global economy is important because it enhances development and connectivity between countries, facilitates the exchange of products, services, and ideas, and creates business and job opportunities worldwide.
• The global economy is not controlled by a single person or institution. Instead, it's governed by international organizations, governments, and major financial institutions, including the IMF, World Bank, WTO, and major economies such as the US, China, and the EU.
• The functioning of the global economy is explained by international transactions between major economies. These transactions encompass trade in various products, from fruits and foods to natural resources and weapons.
• Benefits of international transactions include encouraging competitiveness between countries, raising productivity, and aiding the development of underdeveloped countries by enabling them to import capital goods and export primary goods.
• Nearly every country is impacted by events in other countries due to the influence of the global economy, as illustrated by the economic impact of the Brexit vote.

Global Economy Effects

• The global economy has diverse effects on global governance.
• Growing interconnectedness through politics, trade, and communication necessitates shifts in national and local policies to incorporate international and global realities, as exemplified by the Montreal Protocol on Substances that Deplete the Ozone Layer

Market Integration

• Market integration connects different markets by removing trade barriers and allowing information flow. This allows goods, services, capital, and labor to move freely across borders, creating a unified and efficient market system.
• Before integration, market conditions may vary significantly. Integration unifies the market, converging prices and making resource flows more efficient.
• Key drivers of market integration include trade liberalization (reducing or eliminating tariffs and quotas), investment flows (encouraging foreign investment), technological advancements (improved communication and transportation), and harmonization of regulations (standardizing regulations to reduce complexity).
• Market integration types include Horizontal Integration (companies at the same level of production merge or collaborate), Vertical Integration (companies expanding operations to control different stages of the production process), and Conglomeration (companies acquiring or merging with businesses in unrelated industries).

Market Integration Impacts

• Positive impacts of market integration include economic growth from increased trade and investment, lower prices stemming from increased competition, and job creation in developing countries.
• Negative impacts include job losses in developed countries due to companies moving to cheaper locations, environmental damage from increased production and transportation, and income inequality.

Global Interstate System

• The global interstate system is an institutional arrangement for governance addressing regional or globalized issues beyond the scope of individual nation-states.
• The system is composed of inequally powerful competing states where no one state has control over all others, leading to interactions, shifting alliances, and wars. Changes in relative state power can restructure the balance of power.

Institutions Governing International Relations and Affairs

• Several institutions regulate and govern international relations, including the UN, World Bank, IMF, WTO, WHO, OECD, ILO, FAO, UNESCO, ICAO, IMO, ITU, and WIPO. These bodies address global issues like peace and security, economic development, public health, trade, technological standards, and cultural cooperation, amongst others.
• Key roles and responsibilities of these organizations differ, but often involve providing assistance or setting standards across borders.

Globalization vs Internationalism

• Globalization is an ideology believing in the free flow of people, goods, and information across international borders. The focus is largely on the economics aspects of this exchange.
• Internationalism is comprised of political, economic, and cultural cooperation between countries, often emphasizing diversity and multiculturalism.

Contemporary Global Governance

• Contemporary global governance refers to how domestic institutions and governments address large-scale problems and public policy issues on a global level.
• This approach involves various actors, including states, national and regional bodies that are eager to address these issues.

Sustainable Development Goals

• Sustainable Development Goals (SDGs) were created from the former Millennium Development Goals to promote sustainable development.

United Nations (UN)

• The UN has 192 member states and is seen as a facilitator for global governance and has regional commissions composed of officials from different countries charged with developing laws pertaining to economic and social development.
• The UN was designed to maintain international peace and security, foster friendly relations among nations, achieve international cooperation in solving global problems, and act as a center for harmonizing the actions of member states.