Globalization: Transformations and Impacts

Transformationalist Perspective

• Views globalization as a transformative process in human lives.
• Recognizes both positive effects (economic growth, cultural exchange) and negative effects (inequality, cultural homogenization).

Achieving Globalization

• Liberalization of Trading Policies enhances global trade.
• Foreign Direct Investment (FDI) promotes economic development through external capital.
• Privatization transfers state-owned enterprises to private ownership to improve efficiency.
• Multinational Companies (MNCs) play a significant role in the global economy through investment and employment.
• Contractualization refers to the use of contracts instead of full-time employment, impacting job security.

Global Economy

Historical Background

• WWII (1939-1945) involved the Allied Powers (USA, Britain, France, USSR) vs. Axis Powers (Germany, Italy, Japan).
• Post-war devastation led to developmental problems and the need for global cooperation.
• International Institutions were established to facilitate intensified interactions (e.g., World Bank, IMF).

Bretton Woods Conference

• Convened in 1944 with 44 delegates, aimed to create a stable global economic framework.
• Established the Gold Standard based on US Dollar and adjustable-peg exchange rates.
• Created the International Bank of Reconstruction and Development (World Bank) and International Monetary Fund (IMF).
• Efforts to establish an International Trade Organization (ITO) were vetoed; led to the formation of GATT, which later became the WTO.

Problems Post-Bretton Woods

• Cold War tensions affected international cooperation and economic stability.
• The Gold Standard was abandoned in 1971, leading to the Triffin Dilemma regarding international liquidity and dollar convertibility.
• Economic strain from the Vietnam and Korean Wars, US deficits, and oil crises grew.

Global Financial Institutions

• The World Bank consists of five key institutions aimed at reducing poverty and fostering sustainable economic growth.
• Key organizations include:
  • International Bank for Reconstruction and Development (IBRD) provides loans for middle and low-income countries.
  • International Finance Corporation (IFC) lends to the private sector.
  • International Development Association (IDA) offers interest-free loans to the poorest countries.

International Liquidity

• Refers to the supply of financial assets holding calculable purchasing power across different currencies in the global market.

Privatization

• The process of transferring public services or assets to the private sector, aiming to increase operational efficiency.
• Involves selling state assets or lifting restrictions on competition between private and public entities.
• Has varying impacts on government revenue.

Configuration of World Power

Bipolarity

• Post-WWII era characterized by the dominance of two superpowers: the USA and USSR during the Cold War.

Unipolarity

• Emergence of the USA as the sole superpower following the USSR's dissolution.

Multipolarity

• Present-day scenario defined by multiple influential powers, with power primarily measured by economic strength.

International Law

• Comprises treaties and agreements among states, based on consent and sovereignty.
• Lacks guaranteed compliance, especially from powerful nations.

United Nations

• Established in 1945 following the League of Nations; headquartered in New York.
• Consists of 193 member states and led by António Guterres.
• Mandate includes preventing wars and promoting development and humanitarian values.

UN Operations

• Acts when diplomatic efforts fail, employing military resources for crisis management.

Asia-Pacific Economic Cooperation (APEC)

• Aims to foster sustainable economic growth and cooperation among member states.
• Focuses on free trade, economic integration, and human security.

Organization of Petroleum Exporting Countries (OPEC)

• Formed to coordinate petroleum policies and stabilize oil markets.
• Founded by major oil-producing countries to ensure a regular petroleum supply and fair pricing.

North American Free Trade Agreement (NAFTA)

• Provided comprehensive coverage for services (excluding aviation and basic telecommunications).
• Established protections for intellectual property rights and equal treatment for investors.

Group of Eight (G8)

• Functioned as a forum for the world's major advanced economies to address global challenges.
• Member countries include France, Germany, Italy, the United Kingdom, Japan, the USA, Canada, and previously Russia.