Globalization: History, Market Globalism & Global Economy

• The module covers the history of globalization, market globalism and the global economy
• It aims to categorize periods in globalization history, compare key periods, differentiate globalism from globalization, analyze news in a global context, define economic globalization and enable a stance on global economic integration

History of Globalization

• Technology is always evolving, providing efficiency to perform tasks faster
• Globalization is not entirely new; it has deep historical roots
• Globalization can been interpreted as powerful political, economic, cultural, and historical responses across various eras

Trade

• Trade started cross-border relationships among nations
• This process involves the exchange of goods and services across borders

Silk Roads

• These are ancient trade routes connecting the East and the West
• Goods and services were carried out through these routes
• Silk, a fiber obtained from silkworms for textile production, was a common trading product
• In the 1st century BC, Chinese luxury goods became available in Rome via the Silk Road
• Trades transitioned from local or regional to global
• Silk and spices drove intercontinental trade between Asia and Europe
• While the value of these exports was small relative to the total economy, many middlemen were involved
• The Silk Road facilitated the movement of people and opened doors for trans-border relations
• Kuzmina (2008) highlighted the road's significance for centuries in facilitating the movement of people, objects, and ideas

16th Century

• Europeans established global recognition by building trade connections, spreading their culture and defining interactions with other people
• Spices, traded mainly by sea, were the focus of the Islamic trade in the Middle Age, unlike silk
• By the Medieval Era, spices became central to international trade
• Mace, nutmeg, and cloves (from the Maluku Islands) were leading spices
• Spices were highly expensive and in high demand in Indonesia and Europe

Globalization & Colonization

• This period did not see globalization fully take off, but the original Belt (sea route) and Road (Silk Road) of trade between East and West existed
• Colonization occurred, leading to European expeditions searching for spices, considered popular and valuable trade goods
• Spices also served as medicine and food preservatives

First Wave of Globalization (19th Century)

• This wave was a period of intense globalization with migration increased, expanded trade, and the creation of new global norms
• By the late 18th century, Great Britain dominated the world geographically through the British Empire and technologically through the steam engine and industrial weaving machine
• Known as the First Industrial Revolution, this era saw the rise of machine and manufacturing industries
• Cities expanded as people moved from agriculture to industry

Industrial Revolution

• According to Allen (2017), it created significant societal transformation in Britain between the mid-18th and mid-19th centuries
• It led to the invention of machines for spinning and weaving cloth
• Steam engines were used as a power source
• Coal was used for smelting and refining iron
• Railways were constructed
• Resulted in job losses, pollution, limited education, and poor worker housing
• Trains and steamships enabled goods transport within and across countries

Industrialization

• The process authorized Britain to mass produce goods like manufactured goods, textiles, and iron which were demanded globally
• Trade grew on average 3% per year for about a century
• Export growth rose from 6% in the early 19th century to 14% by World War I
• Economist John Maynard Keynes described London's ability to order goods and services via telephone while relaxing
• Britain gained the most as it possessed high tech and capital
• Uruguay and Argentina entered a golden age by exporting mass quantities of meat raised on their vast lands
• Countries started specializing production in fields where in which they were most competitive
• It implies industrialization meaning the absolute and relative growth of industry versus agriculture and services
• However, it also included negative events, and many people in industrialized nations did not benefit

Industrial Revolutions

• The provided image showed how the industrial revolution lead to rapid changes in the world

First Industrial Revolution

• Occurred from 1760 to 1840
• Triggered by steam engine inventions and railroad construction

Second Industrial Revolution

• Began in the late 19th century and early 20th century
• Enabled mass production through electricity and the assembly line

Third Industrial Revolution

• Started in the 1960s
• The computer or digital revolution, driven by semiconductors, mainframe computing, and the internet

Fourth Industrial Revolution

• The beginning of it, known as Globalization 4.0
• Characterized by mobile internet, powerful sensors, cheaper tech and AI/machine learning

Globalization 4.0 (20th Century)

• This period is considered the golden age of globalization
• There was a free and substantial movement across borders
• China and the US dominate the cyberworld
• The digital economy became strong through 3D printing, digital services, and e-commerce, empowered by AI
• Threats to globalization include cybercrimes
• Climate change is increased
• Pollution causes extreme weather events that devastate biodiversity and reduce the world's capacity to handle GHG emissions

Market Globalism

• Manfred Steger (2005) identified market globalism as a rising political system reflecting globalization concepts
• It promotes free market norms and neoliberalism
• Six core claims help to better understand its meanings and play semantic/political roles
• Steger suggests that these claims integrate pieces of established ideologies to create new meaning

Claim 1

• Globalization focuses on global integration and market liberalization
• Aims to influence global attitudes without threats, representing soft power
• Activates ideas that self-regulating markets form the basis for future global order
• Believes that globalization means the victory of markets vs governments

Claim 2

• Globalization is irreversible/inevitable
• Claimed by globalists agreeing that globalization is irreversible, irresistible and inevitable
• Attributed to tech innovations making it unstoppable

Claim 3

• No one is in charge of globalization
• This emphasizes a leaderless process
• Robert Hormats (1998) emphasized that no individual, institution, or government controls it
• Thomas Friedman (2000) stated that no one is responsible for what occurs

Claim 4

• Globalization benefits everyone in the long run
• Claim rests in market globalism, and gives a crucial answer
• Todays economic progress and growth bounce because of globalization
• Creates opportunities for countries in the future

Claim 5

• Globalization furthers democracy
• Freedom, free markets, free trades, and democracy are synonymous terms
• Francis Fukuyama linked democracy to success in economic development
• Globalizations and capital development did not automatically create democracies, but globalization contributes to complex civil societies with powerful middle classes

Claim 6

• Globalization requires a war on terror
• Terrorism stalls global free trade and economic growth
• The 9/11 attacks (2001), executed by al-Qaeda, killed nearly 3,000 people
• Damaged the global economy, reduced international travels, and increased fear of terrorism

Economic Globalization

• According to the IMF (2008), it's a process that demonstrates technological progress and human innovation
• Distinguished by increasing integration of global economies through movement of goods, services and capital
• Benczes (2014) suggests that the definition of IMF is not substantive as it only reflects change
• Creating a functional integration among activities
• Stiglitz (2008) states globalization aids nations in selling products, invites investment, which facilitates new products with lower prices and opens work and build businesses

Globalization & the Economy

• Globalization is greatly sped up by reducing communication/transport costs, and it was this that defined process
• According to Stiglitz (2003), growth in cross-border economic activities takes five elements: international trade, foreign direct investment, capital market flows, migration and diffusion of technology

International Trade

• These are economic transactions between countries
• They include both goods and services
• Sourced, assembled, packaged and sold in different areas of the world

Protectionism vs Free Trade

• Protectionism protects one's economy by creating trade barriers
• A tariff is a a tax levied on imports
• An import quota limits products that get imported
• Bans forbid particular imported products
• Free trade reduces trade barriers

Foreign Direct Investment (FDI)

• OECD defines FDI as a cross-border investment through which an investor establishes lasting interest in a foreign enterprise
• FDI creates stable connections between economics
• FDI helps stimulate international trade through to foreign markets

Capital Market Flows

• Term for money leaving a country
• Money that flows between countries
• Refers to money flowing into and out across the world such as stock and bond, as well as factors such as real estate and cross-border mergers and acquisitions

Migration (Movement of Labor)

• Migration is the movement of people from one country to another
• Helps economies when migrants gain knowledge abroad and bring these home
• Can also hurt as educated workers move to other countries

Diffusion of Technology

• Technology leads to globalization
• Tech improvements help companies rapidly globalize
• Speeded tech globalization is spread across countries

The effect of Tech

• There has been rapid advancement in the spread of technology to semi-peripheral and peripheral nations for the past two decades
• Technological helps economic progress and the poor
• Due to technological progress, costs of transportation and communication have decreased strongly during the last decades

Conclusion

• Economic globalization is possible because of five elements
• The transformation for the world economy occurs
• Countries are struggling to increase growth and productivity
• Can also reduce inequality and creating jobs
• Drawbacks will always be part of the picture.
• Turning back the clock cannot restore the old frameworks, and the challenge is to build new ones that work.

Explore the history of globalization, market globalism, and the global economy. Categorize key periods in globalization history and differentiate globalism from globalization. Analyze news in a global context and define economic globalization.