Understanding Globalization

Globalization

• Refers to the time-space compression of the world
• Involves the intensification of global consciousness
• Is characterized by the accelerated movement and exchange of people, goods, services, capital, technologies, and cultural practices
• Operates as a complex, multi-layered phenomenon
• Represents an uneven process impacting populations in various ways

Time-Space Compression

• Denotes changes in the qualities and perceptions of space and time
• Implies the acceleration of life's pace
• Signifies the overcoming of spatial barriers

Globalization (WHO Definition)

• Defined as the increased interconnectedness and interdependence of peoples and countries

Economic Globalization

• Centers around the growth of trade systems through transnational entities like corporations and NGOs

Financial Globalization

• Is associated with the development of a global financial system
• Has international financial and monetary exchanges
• Stock market interconnectedness exemplifies the global financial world, where a decline in one market can negatively impact others

Cultural Globalization

• Involves cultures' interpenetration
• Leads to nations adopting other nations' principles, beliefs, and customs
• Can result in the loss of unique cultures to a globalized supra-culture

Political Globalization

• Is characterized by the increasing influence of international organizations like the UN and WHO
• Requires governmental actions at an international level
• Involves global operations by organizations such as Doctors without Borders and Oxfam

Sociological Globalization

• Is marked by the swift movement of information and the interconnectedness of events
• Results in the mixing and integrating of different societies through constant movement

Technological Globalization

• Is enabled by the power of digital platforms such as Facebook, Instagram, Skype, and YouTube
• Connects millions worldwide

Geographic Globalization

• Refers to the ever-changing organization and hierarchy of global regions
• Is facilitated by affordable transportation and air travel
• Allows travel to many countries without stringent visa requirements

Ecological Globalization

• Encompasses the concept of Earth as a single global entity
• Requires all societies to protect the planet
• Weather patterns affect everyone and the atmosphere protects all
• The poorest countries, often least responsible for pollution, may suffer the most from climate change

Manfred Steger's Definition of Globalization

• Describes globalization as "the expansion and intensification of social relations and consciousness across world-time and across world-space"

Expansion in Globalization

• Involves the creation of new social networks
• Multiplies existing connections across political, economic, cultural, and geographic boundaries

Globalism

• Is an Ideology differentiated from globalization
• Involves the belief among powerful people that global economic integration benefits everyone by spreading freedom and democracy

Arjun Appadurai's View on Globalization

• Different types of globalization occur across “scapes”
• Ethnoscape: global movement of people
• Mediascape: flow of culture
• Technoscape: circulation of mechanical goods and software
• Financescape: global circulation of money
• Ideoscape: movement of political ideas

Globalization of World Economics

• IMF sees economic globalization as a historical process from human innovation and technological progress

Silk Road

• The Silk Road was the oldest known international trade route
• It was a network of pathways connecting China to what is now the Middle East and Europe
• Silk was a highly prized and profitable product traded along this route

Start of Globalization (Dennis O. Flynn and Arturo Giraldez)

• According to historians Dennis O. Flynn and Arturo Giraldez, globalization started when all populated continents began continuous product exchange both directly and indirectly, leading to significant impacts on trading partners.

Galleon Trade (1571)

• The establishment of the Galleon Trade marked the first time the Americas were directly connected to Asian trading routes

Emergence of Open Trading System (1867)

• A more open trading system emerged when the United Kingdom, the United States, and other European nations adopted the gold standard at an international monetary conference in Paris
• This aimed to create a common system for more efficient trade

Barry Eichengreen's Argument

• Recovery of the United States began when the US government abandoned the gold standard

Fiat Currencies

• The global economy operates based on fiat currencies
• They are not backed by precious metals

Bretton Woods System (1944)

• Established in 1944 during the United Nations Monetary and Financial Conference
• Created to prevent the catastrophes of the early decades of the century
• A network of global financial institutions would promote economic interdependence and prosperity

Bretton Woods Institutions

• Two new institutions were agreed upon by 730 delegates
• International Monetary Fund: monitor exchange rates and lend reserve currencies to nations with balance-of-payments deficits
• International Bank for Reconstruction and Development (now World Bank Group): provide financial assistance for reconstruction after World War II and economic development of less developed countries

General Agreement on Tariffs and Trade (GATT) in 1947

• Shortly after Bretton Woods, various countries committed to global economic integration through GATT
• The main purpose of GATT was to reduce tariffs and other hindrances to free trade

Stock Market Crash (1973-1974)

• The stock market crashed in 1973-1974 after the United States stopped linking the dollar to gold, effectively ending the Bretton Woods System

Stagflation

• A phenomenon called stagflation was the result of Keynesian economics failing
• There was a decline in economic growth and employment (stagnation) with a sharp increase in prices (inflation)

Neoliberalism

• From the 1980s onward, neoliberalism became the codified strategy of the United States Treasury Department, the World Bank, the International Monetary Fund, and eventually the World Trade Organization
• The World Trade Organization was established in 1995 to continue tariff reduction under the GATT

Washington Consensus

• The Washington Consensus involved policies that advocated for minimal government spending to reduce government debt

Protectionism in Developed Countries

• First, developed countries are often protectionist, refusing to lift policies that safeguard primary products

Trade Imbalances

• Trade imbalances characterize economic relations between developed and developing countries

Beneficiaries of Global Commerce

• The main beneficiaries of global commerce have been mainly transnational policies (TNCs) and not governments

Transnational Policies (TNCs) Focus

• TNCs are concerned more with profits than with assisting with social programs of the governments hosting them

Race to the Bottom

• The term "race to the bottom" refers to countries lowering labor standards to attract foreign investors seeking high profit margins at the lowest cost possible