CWO - The Contemporary World PDF

A Self-regulated Learning Module 1  TABLE OF CONTENTS Content​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Page Cover Page................................................

A Self-regulated Learning Module 1  TABLE OF CONTENTS Content​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Page Cover Page.................................................... ​ i Table of Contents...............................................​ ii Introduction of the Module.......................................​ iii Lessons 1: Introduction to the Study of Globalization...................​​ 1 ​ ​ A. Approaches to the Study of Globalization............​​ 3​ ​ B. Market Globalism.................................​ 8​ 2: The Global Economy.................................... ​ 13 3: Market Integration......................................​ 24 4: The Global Inter-State System.............................​ 31 5: Contemporary Global Governance........................​​ 41 6: Global Divides: The North and the South....................​ 48 7: Asian Regionalism.......................................​ 54 8: Global Media Cultures...................................​ 60 9: The Globalization of Religion..............................​ 68 10: The Global City........................................​ 86 11: Global Demography (Mandated Topic)...................​ ​ 95 12: Global Migration.......................................​ 111 13: Sustainable Development...............................​ 124 14: Global Food Security....................................​ 140 15: Global Citizenship...................................... ​ 147 Evaluation of the Course.........................................​ 154 References.....................................................​ 155 A Self-regulated Learning Module 2  INTRODUCTION OF THE MODULE Course Code: CWORLD1 Course Title: The Contemporary World Credit: Three (3) Units Course Description: This course introduces students to the contemporary world by examining the multifaceted phenomenon of globalization. Using the various disciplines of the social sciences, it examines the economic, social, political, technological, and other transformations that have created an increasing awareness of the interconnectedness of peoples and places around the globe. To this end, the course provides an overview of the various debates in global governance, development, and sustainability. Beyond exposing the student to the world outside the Philippines, it seeks to inculcate a sense of global citizenship and global ethical responsibility. Requirements of the Course: 1.​ Three (3) Major Examinations 2.​ Regular Attendance 3.​ Scheduled Quizzes, Seat-works, Home-works/ Assignments, Classroom-Based Recitations 4.​ Critique Papers, Synthesis Papers, Essay Writing 5.​ Group Power-Point Presentations, Video Presentations 6.​ Research Paper Writing Learning Competencies: As the course progresses, the students are expected to: 1. be proficient and effective in communication skills through writing, speaking, listening, reading, viewing, and the use of new platforms of technology; 2. apply critical, analytical, and creative thinking skills (i.e., quantitative, qualitative, artistic, scientific, textual, visual, experimental, and observational) in tackling local, national, and global problems methodically; 3. exhibit personal and civic responsibilities as a global citizen in viewing the contemporary world from both the Philippine and global perspectives; 4. demonstrate the ability to reflect on moral norms or ethical standards as they affect individuals and the global society; 5. exhibit understanding and respect for human rights as they contribute personally and meaningfully to the country’s development; 6. possess and display practical skills through working effectively in a group; 7. demonstrate application of computing and information technology skills to assist and facilitate research-related activities; and 8. display practical problem-solving skills in addressing real-world problems. A Self-regulated Learning Module 3 Learning Objectives: 1.​ To differentiate the competing approaches to the study of globalization 2.​ To understand the varying processes of globalization 3.​ To explain the different ideological dimensions of globalization 4.​ To appreciate the core claims of market globalism 5.​ To agree on a working definition of globalization for the course A Self-regulated Learning Module 4  LESSON 1 INTRODUCTION TO THE STUDY OF GLOBALIZATION The first part of this lesson discusses the summary of the “Approaches to the Study of Globalization” as presented by Manfred B. Steger (2014) which was adopted from the “SAGE Handbook of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014). The succeeding discussion presents the work of Manfred B. Steger (2014) entitled “Market Globalism” which was also adopted from the “SAGE Handbook of Globalization”. A. Approaches to the Study of Globalization There are many different approaches to the study of globalization. The purpose of this chapter is to provide a general overview of the various approaches to the concept as espoused by several scholars since the 1990s. Various scholars have advanced the concept of globalization by analyzing the changing economic, political, and cultural processes that happened since the 1970s. Some of the accepted definitions of globalization include the following: “increasing global inter-connectedness”; “the expansion and intensification of social relations across world-time and world-space”; “the compression of time and space”; “distant proximities”; “a complex range of processes, driven by a mixture of political and economic influences”; and “the swift and relatively unimpeded flow of capital, people, and ideas across national borders” (Giddens, 1990; Harvey, 1989; Held & McGrew, 2007; Lechner & Boli, 2011; Robertson, 1992; Steger, 2013; Waters, 2001). Globalization as “Globaloney”. Three groups of scholars argue that the existing accounts of globalization are incorrect and imprecise. Their arguments fall into three differing categories. The first group disagrees with the usefulness of globalization as a precise analytical concept. The second group contends that the world is not really integrated as many proponents believe. The last cluster disputes the novelty of the process while acknowledging the presence of moderate globalizing tendencies. Rejectionists. These scholars believe that the term “globalization” is an example of a vague word employed in academic discourses. Just like the term “nationalism”, “globalization” is a complex and ambiguous phenomenon, thus both are hard concepts to define (Calhoun, 1993). Sceptics. This group stresses the limited nature of current globalizing processes. According to Hirst and Thompson (2009), our international economy is not really a global phenomenon, since it only centered on Europe, Eastern Asia, and North America. They also emphasized that most of the economic activities are still national in terms of origin and scope. ​ Modifiers. They entail that “globalization” has often been applied in a historically inaccurate manner. Gilpin (2000) argues that our international economy in the late 1990s was even less incorporated before the outbreak of World War I. According to the neo-Marxist proponents of World-System Theory (Wallerstein, 1979; Frank, 1998), the modern capitalist economy today has been global five centuries ago. Thus globalization can be drawn back to the political and cultural relations that developed the ancient empires of Persia (Iran), China, and Rome. Globalization as an Economic Process The evolution of global markets and international corporations led to global economic interdependence among nation-states. The development of international economic institutions such as the European Union, the North American Free Trade Association, and other regional trading blocs are some of the examples (Keohane & Nye, 2000). This only shows that economic globalization increases the linkage of national economies A Self-regulated Learning Module 5 through trade, financial flows, and foreign direct investment (FDI) by multinational or trans-national corporations (MNCs/TNCs) (Gilpin, 2000). ​ The emergence and evolution of the post-World War I global economy was attributed to the establishment of the 1944 Bretton Woods Conference (Schaeffer, 2005). Its operation for almost thirty years contributed to the formation of the “golden age of controlled capitalism” (Luttwak, 1999). The collapse of the Bretton Woods System in the early 1970s was followed by the intensification of neo-liberalist ideas in the 1980s coupled with the collapse from 1989 to 1991 of the command-type economies in Eastern Europe. Aside from the issue on free trade, the advent of a transnational financial system made possible the deregulation of interest rates, the removal of credit controls, and the privatization of government-owned banks and other financial institutions. Globalization as a Political Process Political globalization includes the discussion and analysis of political processes and institutions. Thus two questions are asked: (1) what are the political grounds for the immense flows of capital, money, and technology across territorial boundaries?; (2) do these flows create a serious test to the power of the nation-state? These dilemmas imply that economic globalization might lead to the reduced control of national governments over restrictive policies and economic regulations. ​ According to Ohmae (1990, 1995, 2005), the rise of a “borderless world” was the consequence of the irresistible forces of capitalism. Thus, the nation-state has already lost its function as a significant entity in the global economy vis-à-vis the decline of territory as a meaningful framework for understanding political and social change. Regional economies will be linked together and operate based on free-market principles. In terms of global governance, political globalization might enable the emergence of democratic ideals promoting a “global civil society” that promote human rights in the international level (Brysk, 2002). ​ Globalization as a Cultural Process ​ Two focal questions are raised by scholars of cultural globalization. First, does globalization intensify cultural homogeneity, or does it lead to more diversity and heterogeneity? Second, what could be the impact of the culture of consumerism on our natural environment?​ According to Tomlinson (1999), cultural globalization signifies a growing linkage of intricate cultural interconnections and interdependencies that define our modern social life. These can be made possible through the emergence of powerful global media corporations that develop new communication technologies which promote the Anglo-American value system. This global dissemination of American values (Americanization), consumer goods, and lifestyles promote the objectives of American “cultural imperialism” which is also termed by Ritzer (1993) as “McDonaldization” which describes the ideals of the fast-food business that dominate the American society and the rest of the globe. According to Barber (1996), a type of cultural imperialism that was assembled in the 1950s and 1960s promoted an American culture of popular consumerism which he termed as “McWorld”. This was driven by expansionist commercial interests which was evident in its choice of music, video, theater, books, and theme parks which create exports that center around common logos, advertising slogans, stars, songs, brand names, jingles, trademarks, and the like. As argued by Robertson (1995) global cultural flows also take place in local contexts which result to “glocalization”. This refers to an intricate collaboration of the global and local cultures characterized by cultural borrowing. These interactions lead to a complex mixture of both cultures often referred to as “hybridization” or “creolization” which signifies processes of cultural mixing that are replicated in music, film, fashion, language, and other types of social expression. A Self-regulated Learning Module 6  Appadurai (1996) classifies five dimensions or “landscapes” that are instituted by global cultural flows: (a) ethnoscapes (shifting populations due to influx of tourists, immigrants, refugees, and exiles); (b) technoscapes (improvement of technologies that assists the rise of MNCs); (c) finanscapes (movement of all forms of global capital); (d) mediascapes (electronic know-hows that produce and spread information), and (e) ideoscapes (principles advanced by states and social movements). Sad to say, there are ecological dilemmas that are connected with this consumerist culture that promote an infinite accumulation of material possessions. These include and are not limited to the following: (a) human-induced global climate change; and (b) worldwide destruction of biodiversity. Data suggest that further increase in global temperature could lead to a partial melt-down of the polar ice caps, causing global sea levels to rise up to three feet by 2100 which could threaten many coastal regions of the world. By the end of this century, there would be a great possibility that 50 per cent of all plant and animal species (most of them in the global south) might disappear (Broswimmer, 2002). A Self-regulated Learning Module 7  Activity 1.A.i (Matching Type) Name: Score: Course/Year/Section: Date: Direction: Match the items under Column A with those items under Column B. Write your answer on the space provided before each of the items below. Use CAPITAL LETTERS and erasures of any kind will NOT be credited. Column A Column B ___1. They reject the idea that globalization is a recent A. Ethnoscapes Phenomenon ___2. Its establishment contributed to the formation of the B. Regional Training “golden age of controlled capitalism” Blocs ___3. This refers to an intricate collaboration of the global C. Sceptics and local cultures characterized by cultural borrowing ___4. This refers to the improvement of technologies that D. Mediascapes assists the rise of MNCs ___5. The swift and relatively unimpeded flow of capital, E. Rejectionists people, and ideas across national borders ___6. This denotes electronic know-hows that produce and F. Political spread information Globalization ___7. It refers to principles advanced by states and social G. Globalization Movements ___8. They believe that globalization is an example of a H. Finanscapes vague word employed in academic discourses ___9. This type of globalization enables the emergence of I. The 1944 Bretton democratic ideals promoting a “global civil society” Woods Conference ___10. This type of globalization refers to the evolution of J. Ideoscapes global markets and international corporations ___11. This denotes movement of all forms of global K. Cultural Capital Globalization ___12. They argue that international economy is not really L. Glocalization a global phenomenon ___13. This refers to shifting populations due to influx of M. Modifiers tourists, immigrants, refugees, and exiles ___14. This type of globalization promotes the N. Technoscapes dissemination of Anglo-American values system ___15. The European Union (EU), the North American Free O. Economic Trade Association (NAFTA), ASEAN, etc. Globalization A Self-regulated Learning Module 8  Activity 1.A.ii (Essay Type) Name: Score: Course/Year/Section: Date: Essay Question: In not more than (five) 5 sentences, explain/justify how the prevailing values and beliefs of consumerism are interconnected with the most threatening ecological problems dealing with human-induced global climate change. A Self-regulated Learning Module 9  B. Market Globalism The Ideological Dimension of Globalization During the early 1990s, the emphasis of globalization was dominated by the economic and technological features of globalization. Later, the role of incorporating markets and new information know-hows became part of understanding the process of globalization. This section incorporates the ideological aspect of globalization and the roles and purposes of political ideologies. It also integrates ideas on the six central claims of market globalism. ​ Political Ideologies and the Global Imaginary According to Steger (2014), “ideology” is a structure of broadly shared ideas or philosophies, patterned beliefs, guiding norms, values, and ideals recognized as fact by some collections of people. Every ideology is organized around core claims which differentiates it from other contrasting ideologies. The concept “ideology” was first introduced by Antoine Destutt de Tracy in the 18th century. For this Enlightenment thinker, the term means a positivistic “science of ideas” using the empirical tools borrowed from the natural sciences. According to Paul Ricoeur (1986), the first functional level of ideology (Ideology as Distortion) refers to the construction of contorted descriptions of social truth. This process obscures the difference between things as they are perceived in theory and things as they are viewed in reality. Ricoeur (1986) acknowledged “Ideology as Legitimation” to be the second functional stage of ideology. There are two central elements to be considered here: (a) the right to legitimacy claimed by the ruling authority; and (b) the trust in the ruler’s legitimacy granted by its followers. ​ The third functional level of ideology according to Ricoeur (1986) is “Ideology as Integration”. In this case, ideology offers humanity with permanence as it constructs, conserves, and safeguards the social identity of individuals and collections of people. This means that this constructive role of ideology provides the symbols, norms, and images that holds together the identity of individuals and collectivities. Therefore, ideology here is seen as having a conservative role as it preserves and conserves peoples’ existing identities. This section now defines “market globalism” as a hegemonic structure of philosophies that provides normative assertions about a set of social procedures called “globalization”. Political Ideologies and the “Social Imaginary” According to Charles Taylor (2004), “social imaginaries” are neither theories nor ideologies, but are implied “background understandings” of a group’s shared customs. The social imaginary explains how a group of people fit as one and their expectations of every member within the community. Each ideology organized its core concepts based on liberty, progress, race, class, rationality, tradition, community, welfare, security, and others. The ideologies of liberalism, conservatism, socialism, communism, and Nazism/fascism are all “nationalist” in character and are promoted by the elites within the group which are evident in their political goals through the concept of “national imaginary”. In the middle era of the 1990s, globalization elites advanced their political agenda with the introduction of a single international free market and the promotion of a consumerist values system worldwide. They converted this social imaginary into their own economistic assertions. Thus the ideas on international trade and financial markets; global flows of goods, services, and all possible forms of capital; multinational corporations, offshore financial markets, and the like were popularized.​ ​ The Core Claims of Market Globalism A Self-regulated Learning Module 10  With the downfall of Soviet-style command economy in Eastern Europe, power elites from the global north (i.e., corporate managers, CEOs of multinational corporations, corporate lobbyists, high-ranking military officials, remarkable journalists, public-relations experts, scholars writing to a large public audience, state administrators and leading politicians) introduced their idea of market globalism. For them, market globalism means an advocacy that advances the deregulation of markets, trade liberalization, the privatization of government-owned and controlled corporations, and the upkeep of the global “War on Terror” spearheaded by US (Steger, 2014). Claim 1: Globalization is about the Liberalization and Global Integration of Markets This claim is buttressed in the neo-liberal philosophy of the laissez faire self-regulating market economy as the foundation for a global market economy. According to Steger (2014), the focal roles of the free market in order to foster more societal integration and material advancement are only possible in a democratic society that values and protects individual rights and freedoms.​ This claim argues that the vital assets of market globalism are the liberalization and integration of worldwide markets and the lessening of government intervention in the national and global economies. Thus, privatization, free trade, and unconstrained capital flows are seen as the paramount ways for attaining personal liberty and material advancement in the world. Claim 2: Globalization is Inevitable and Irreversible This claim contends that globalization promotes the expansion of unalterable market forces motivated by technological improvements that facilitate the unavoidable worldwide integration of state economies. Nation-states, political parties, and civil society organizations have no option but to adapt to the inevitable forces of globalization. This neo-liberal depiction of globalization is synonymous to a natural force that forces people to adjust to these market forces if they want to survive and succeed. These neo-liberal rules are over and above state politics, thus they call for the abolition of all forms of state control. Claim 3: Nobody is in Charge of Globalization This argues that globalization is manifested through a “self-regulating market”. According to Hormats (1998), what is attractive with globalization is that nobody is in control of the process. Thus it is not regulated by any individual, any nation-state, or any organization. In addition, Friedman (1999) contends that the international market is an Electronic Herd of anonymous stock, bond and money traders and transnational foreign investors, integrated by global screens and networks. Claim 4: Globalization Benefits Everyone (... in the Long Run) The benefits for all relate to material aspects such as “economic growth” and “prosperity”. These benefits were according to the participating heads of state of the 1996 G-7 Summit in Lyons, France, consisting of the world's seven most influential highly-developed countries that issued a joint Economic Communique (1996) that exemplified the implications of this claim. These affirmative benefits include an unmatched increase in investment and trade; the incorporation to global trade of the globe's most densely inhabited regions; more chances for the less developed countries (LDCs) to develop their standards of living; faster dissemination of information; technological innovation; and the rise of skilled jobs.​ ​ Claim 5: Globalization Furthers the Spread of Democracy in the World A Self-regulated Learning Module 11  This claim links the concepts on globalization and market with that of democracy which provides individuals with economic choices. According to Freeden (1996), globalists treat freedom, free markets, free trade and democracy as identical concepts. As Fukuyama (2000) asserted, there is a clear connection between a nation’s level of economic progress and successful democracy. The stage of economic advancement as a consequence of globalization is beneficial to the formation of multifaceted civil societies with a powerful middle class which facilitates the spread of democracy.​ ​ Claim 6: Globalization Requires a War on Terror The neo-conservatives who are committed to the American values of freedom, security, and free markets added this sixth claim of market globalism. According to Kaplan (2003), you need to possess both military and economic supremacy in order to spread your ideas worldwide. This claim integrates idea of market globalism with militaristic and nationalistic ideas linked with the American-headed global “War on Terror”. As asserted by Barnett (2004), the globe is divided into three diverse regions: The Functioning Core or Core. This is categorized by global network connectivity, financial transactions, liberal media, cooperative security, nations having stable democratic governments, practice of transparency, increasing standards of living, and more deaths by suicide than by killings (i.e., North America, most of Europe, Australia, New Zealand, and a small part of Latin America). The Non-Integrating Gap or Gap. This refers to regions where globalization is thinning or if not, absent. These regions are plagued by authoritarian political regimes, government regulated markets, mass killings, prevalent poverty and diseases, and the breeding ground of global terrorists (i.e., the Caribbean Rim, almost all of the African continent, the Balkans, the Caucasus, Central Asia, China, the Middle East, and much of Southeast Asia). Seam States. These states lie along the Gap's bloody borders (i.e., Mexico, Brazil, South Africa, Morocco, Algeria, Greece, Turkey, Pakistan, Thailand, Malaysia, the Philippines, and Indonesia). A Self-regulated Learning Module 12  Activity 1.B.i (Matching Type) Name: Score: Course/Year/Section: Date: Direction: Match the items under Column A with those items under Column B. Write your answer on the space provided before each of the items below. Use CAPITAL LETTERS and erasures of any kind will NOT be credited. Column A Column B ___1. A functional stage of ideology which refers to the A. Ideology as right of the ruling authority and the trust granted by Integration its followers ___2. It refers to a hegemonic structure of philosophies that B. Democratic provides normative assertions about a set of social processes called “globalization” ___3. A free market which fosters societal integration and C. Social Imaginary material advancement that protects individual rights and freedoms will only be possible in this type of society ___4. This refers to a group’s shared ideas or philosophies, D. Ideology as patterned beliefs, guiding norms, values, and ideals Distortion ___5. These regions are plagued by authoritarian political E. Ideology as regimes, government regulated markets, the Legitimation breeding ground of global terrorists, etc. ___6. A functional level of ideology that aims to preserve and F. Power Elites conserve a group’s existing identity ___7. They refer to CEOs of multinational corporations, high- G. Market ranking military officials, remarkable journalists, state Globalism administrators, and leading politicians, etc. ___8. These regions are categorized by global network H. Gap connectivity, financial transactions, and stable democratic governments, etc. ___9. A functional level of ideology which constructs contorted I. Ideology descriptions of the social reality ___10. This explains how a group of people fit as one and the J. Core expectations of every member within the community A Self-regulated Learning Module 13  Activity 1.B.ii (Essay Type) Name: Score: Course/Year/Section: Date: Explain/expound the following statement in not more than five (5) sentences: “You also have to have military and economic power behind it, or else your ideas cannot spread.” A Self-regulated Learning Module 14 Learning Objectives: 1.​ To define economic globalization 2.​ To identify the actors that facilitate the international monetary system 3.​ To understand international trade issues and trade policies 4.​ To articulate a stance on global economic integration LESSON 2 THE GLOBAL ECONOMY This chapter discusses the summary of “The Globalization of Economic Relations” as presented by Istvan Benczes (2014) which was adopted from the “SAGE Handbook of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014). Introduction This chapter discusses the definition, foundation, and effects of economic globalization. While the second section tackles on the development of the key global monetary regimes that include the gold standard, the Bretton Woods System, and European Monetary Integration. The last segment talks about trade rules and relations, which will focus on the unilateral trade system of the late 19th and early 20th centuries and the multilateral trade agreements of the post-World War II period (Benczes, 2014). According to Held et al. (1999), globalization may be claimed as the broadening, deepening, and rapid global interconnectedness in all facets (political, technological, cultural, and economic) of modern-day social life (Giddens, 1999). Thus globalization is a multidisciplinary course. What is Economic Globalization? ​ According to the International Monetary Fund (2008), this refers to a historical progression, which is the consequence of humanity’s modernization and technological development. It may also denote a growing interconnection of global economies via the mobility of goods, services, knowledge, and all forms of capital around the world. ​ The following are the various interrelated scopes of economic globalization: (a) the globalization of goods and services in trade; (b) the globalization of monetary and capital markets; (c) the globalization of know-how and communication; and (d) the globalization of production. Economic globalization differs from internalization since the former refers to functional interconnectedness between globally isolated activities while internationalization speaks of the extension of economic activities of one country to another (Dicken, 2004). For hyperglobalists, nation-states are no longer the key economic institutions in the global market. Humanity is now consuming extremely standardized international products and services created by multinational corporations (Ohmae, 1995). According to Reich (1991), globalization converts the local economy into an international one, thus products, technologies, corporations, and industries are no longer treated as national.​ ​ A Self-regulated Learning Module 15  The new actors of political and cultural globalization today refer to the United Nations (UN) and non-governmental organizations (NGOs) or civil society organizations (CSOs). While the key actors of this modern-day global market economy are the multinational corporations (MNCs) or transnational corporations (TNCs). This MNCs or TNCs are the key motivating powers of economic globalization for the last 100 years, and they account for about 67% of world exports (Gereffi, 2005). For realists, they argue that these MNCs/TNCs still represent national interests (Gilpin, 2001). However, for the pioneers of the Dependency School, they assert that these are the vehicles through which the rich can exploit the underprivileged majority (Feenstra, 1998). On the other hand, Gereffi (1999) introduced the idea on the “global commodity chains” which emphasizes on the growing significance of international buyers in a global market of dispersed production. Is Economic Globalization a New Phenomenon? Gills and Thompson (2006) assert that the process of globalization began since Homo sapiens started moving from the African continent to the rest of the globe. Frank and Gills (1993) argued that the foundation of globalization dates back about 5,000 years ago as manifested by the Silk Road which linked Asia, Africa and Europe. When Adam Smith wrote his book “An Inquiry into the Nature and Causes of the Wealth of Nations in 1776, he regarded the rediscovery of the Americas by Christopher Columbus in 1492 and the rediscovery of the direct maritime route to India by Vasco de Gama in 1498 as the two ultimate accomplishments in humanity’s historical accounts. Other significant accomplishments were the technological developments of the British Industrial Revolution after the Napoleonic Wars which spread to European and North American continents. Monopolized trade during this period were controlled by the first transnational corporations, the British East India Company (1600) and the Dutch East India Company (1602). However, these TNCs did not favor global economic integration due to their idea of nationalism (Gereffi, 2005). The real global economic break-through came in the 19th century due to the transport innovations via the use of steamships and railroads which decreased transaction expenses and boosted both local and global economic exchanges (Held et al., 1999). The relatively short period from 1870 to 1913 before World War I (1914 to 1919) is often regarded to as the “Golden Age of Globalization”. This period is characterized by the presence of peace, free trade, and financial and economic permanence (O'Rourke & Williamson, 1999). The Neoclassical Solow Growth Model Bairoch (1993) argues that the industrial revolution and global trade relations strengthened economic growth and development among developed parts of the globe, the rest of the world did not achieve such accomplishments. Thus, the industrialization of the developed regions led to the de-industrialization of the poorer regions. Structuralism Structuralism is a set of models which emerged from the 1950s to the 1970s and affirm the notion that the North and South regions are in a structural association (Brown, 2001). The most recognized critical theory to the prevalent social partition of labor and global inequities is presented by the “World-Systems Analysis”, which argues that capitalism under globalization strengthens the structural arrangements of unequal change. According to Wallerstein (1983), capitalism produced the differing historical level of wages in the global economic stage of the global system. Thus, rising disparity, coupled with economic and political dependency, are not independent from economic globalization. For Rostow (1960), underdevelopment (i.e. the absence of economic growth and development, coupled with poverty and malnourishment) is not the primary phase of a historical and evolutionary uni-linear progress, A Self-regulated Learning Module 16 rather the effect of colonialism and imperialism. Wallerstein (1983) acknowledged imperialism as the product of the global capitalist structure which propagated imbalanced exchange. The present capitalist structure produced political systems that ensure an infinite appropriation and amassing of surplus products from less developed countries (the periphery) to the industrializing countries (the semi-periphery) and the highly industrialized or highly developed countries (the core or metropole) (Arrighi, 2005). The International Monetary Systems ​ An international monetary system or regime (IMS) denotes the policies, practices, tools, services, and institutions for carrying out global payments (Salvatore, 2007). In the liberal custom, the key responsibility of an IMS is to assist international transactions on trade and investment. An IMS is more than just money or currencies it also mirrors economic supremacy since money is essentially political and is also considered as a vital aspect of “high politics” of diplomacy (Cohen, 2000). The Gold Standard The foundations of the first IMS dates back to 19th century, when Britain assumed gold mono-metallism in 1821. In 1867, the European countries, including United States, shifted to gold at the International Monetary Conference in Paris. Gold was viewed to ensure a non-inflationary, constant economic atmosphere, and a vehicle for hastening global trade (Einaudi, 2001). When Prussia won over France in 1872, Germany joined the global system. France decided to join six years later. The gold standard developed to be the global monetary regime by 1880 when United States joined in 1879. In 1894, Italy decided to participate and Russia followed in 1897. About 70% of the countries took part in the gold standard prior to the eruption of World War I (Meissner, 2005). ​ The gold standard operated as a fixed exchange rate system, which made gold as the lone global reserve. Member countries ascertained the gold content of their national currencies which defined fixed exchange rates (or mint parities). Monetary authorities were mandated to exchange their national currencies for gold at the authorized exchange rate without restrictions on global markets (Bordo & Rockoff, 1996). Due to the outburst of World War I, the gold standard came to an end. Member countries gave up convertibility and stopped gold export in order to halt the exhaustion of their national gold reserves. The 1930s turn out to be the gloomiest era of modern economic history (Eichengreen & Irwin, 2009). ​ The Bretton Woods System and its Dissolution ​ According to Destler and Henning (1989), the allied nations started to negotiate on a new global monetary regime under the structure of the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire (US), in July 1944. Forty-four countries decided to adopt the gold-exchange standard. At that time, the US dollar was the lone exchangeable currency of the time. Thus, United States devoted itself to trade and buy gold without limitations at US$35 per ounce. All participating countries having non-convertible currencies were pegged to the US dollar. The participating countries also established two global monetary institutions: (a) The International Banks for Reconstruction and Development (IBRD) which was responsible for post-war reconstruction and development; and (b) The International Monetary Fund (IMF) which encouraged global financial collaboration and international trade. The IMF also provided short-term monetary assistance to countries in cases of transitory balance of payments difficulties. During the middle part of the 1960s, the US dollar became overvalued along with other major currencies. As a reaction, foreign nations started to exhaust the US gold reserves. This forced the United States to abandon the gold-exchange standard on August 15, 1971. In 1973, developed countries agreed to float their currencies (prices of currencies were determined by demand and supply forces). This arrangement in the exchange rate policy was mandated by the Jamaica Accords in 1976 (Destler & Henning, 1989). A Self-regulated Learning Module 17 The Plaza Accord In 1985, the G7 countries decided to devaluate the US dollar as a consequence of the heightening pressure of local US manufacturers and farmers to reinstate their global competitiveness in the world market. The Louvre Accord In 1987, the Louvre Accord was agreed upon in order to protect the US dollar from further devaluation in the world market. The United States might have profited from these internationally, however, one of the main losers was Japan. The appreciation of the Japanese yen proved to be devastating for the Japanese local economy (Destler & Henning, 1989). The Washington Consensus The neoliberal, pro-market Washington Consensus became successful in the 1990s. Its agenda were promoted and disseminated by the IMF as part of its conditionalities in exchange for financial assistance. The IMF and the Washington Consensus (and its free-market ideology) have been blamed for the unsuccessful progress of the periphery. For Wallerstein (2005), the way for the periphery to develop is not to “import-substitute” but to export orient productive activities. The Morgenthau Plan After World War II, the United States sought to carry out the Morgenthau Plan. The idea was to downscale Germany’s economy to become a pastoral and agricultural one. This was a reaction to USSR's (specifically, Russia) thrust for communism in the East European region coupled with the growth of socialist and communist parties in the West. However, the plan did not materialize and was abandoned by US. In contrary, United States shifted its plans and promoted an economically and militarily powerful Germany and Western Europe. The Marshall Plan and the European Monetary Integration This was United States’ post-war reconstruction and development program in 1948 for Western Europe, which was managed by the Organization for European Economic Cooperation, the forerunner of the Organization for Economic Cooperation and Development (OECD). The astonishing growth and development of Western Europe encouraged a closer collaboration of Western European countries which consequently gave birth to the European Coal and Steel Community in 1951. The ECSC was followed by the signing of the Rome Treaty in 1957, which founded the European Economic Community (EEC) which consequently became the European Union (EU). The six founding member-countries (West Germany, France, Italy, Netherlands, Belgium and Luxembourg) aimed at the formation of a common market for the freer movement of goods, services, capital and labor. The downfall of the Bretton Woods System pressured the member-countries in 1979 to establish their own regional monetary regime (the European Monetary System, EMS). Here, neither the US dollar, nor gold can function in the stabilization process of exchange rates. Instead, the European Exchange Rate Mechanism (EERM) was created (Gros & Thygesen, 1998).​ In 1992, with the help of the late French President Francois Mitterrand and German Chancellor Helmut Kohl, the foundations of a new European Economic and Monetary Union (EMU) were established under the Maastricht Treaty. As early as 1999, member-countries of the EMU replaced their national currencies and deputized monetary policies to a supranational stage, managed by the European Central Bank (ECB). Consequently, trade and capital transactions increased; local economies became more interconnected; A Self-regulated Learning Module 18 macroeconomic stability was reestablished, and the euro grew to become the second most globally used currency (European Commission, 2008). David Ricardo’s Comparative Advantage Theory According to Ricardo (1817) as cited in Samuelson (1995), a country such as Britain could profit from a voluntary trade with Portugal even if Portugal is more effective in producing both wine and clothing. For Britain, it should concentrate in the production of the product with less disadvantage and let Portugal produce the other product. The theory argues that every country must possess a comparative (relative) advantage in the production of something irrespective of its original situation. International Trade and Trade Policies Reformist and radical (new left and neo-Marxian) theorists, such as Emmanuel (1972) or Amin (1976), argued that the social partition of labor adds to the economic development of the highly developed countries (HDCs or core) and hampers progress of the less developed countries (LDCs or periphery). The economies of HDCs have the finest of two worlds (as buyers of cheap primary commodities and as sellers of costly manufactured products. On the other hand, LDCs have the worst of both worlds, as buyers of expensive industrial products and as producers of cheap raw materials (Singer, 1964). According to Amin (1993), if this global economy only benefits the HDCs at the loss of the LDCs, then the periphery countries must implement a protectionist policy in its extreme form of de-linking (i.e. to cut their ties with the HDCS or core countries).​ ​ Unilateral Trade Order During the 17th to 18th century, global trade in Europe concentrated more on the accumulation of gold reserves which encouraged nation-states to export and limit imports. This mercantilist or protectionist policy was branded as a zero-sum game in global trade. Hence, trade and trade policies only furthered the interest of the monarchs (royal family) from Portugal to Great Britain (now UK), which utilized their accumulated bullions (gold) to support battles and consolidate power over their domestic supporters (Dunham, 1930). Bilateral Trade Agreements Bilateral Trade Agreements also succeeded in Europe, one example of these is the most-favored nation (MFN) policy. This policy demonstrates the principle which stated that any negotiated mutual tariff cutbacks between two parties must benefit all other trading partners without conditions (Lampe, 2008). The United States adopted a protectionist policy (import substitution industrialization) which imposed tariffs on manufactured goods with an average of 45%. Even France, the Scandinavian countries, and UK from the 1860s onwards, imposed protectionist measures due to the entry of low-cost agricultural commodities from their foreign territories, Germany, and US. UK persisted to be hegemonic economically and militarily. It also depended on the massive reserves of its territories, especially India (Arrighi & Silver, 2003). After World War I (1914-1919), the two World Economic Conferences in 1927 and 1933 did not succeed in reducing tariffs due to the refusal of US to take the lead as the hegemonic descendant of a declining United Kingdom. In 1930, the Hawley Act in US amplified tariffs in the country. As a consequence, trading partners of US retaliated which lessened international trade by an average of 33 to 66 percent. To address the issue, US enacted the Reciprocal Trade Agreements Act in 1934 which halted the further decline in global trade. This Law gave the US president the power to decide on trade policies and lessened the burden put on the Congress for determining protectionist trade policies. This trade policy was a return to the original notion of MFN policy prior to the eruption of World War II (Irwin, 1998). ​ Multilateralism: From the GATT to the WTO In 1950, the US dollar became an international currency, supported by 67% of the world's gold reserve (Green, 1999). US was also the leading aid donor (i.e., the Marshall Plan). Owing to the downfall of the European and Japanese manufacturing industries after World War II, USA’s manufacturing industry amplified which accounted for about 60% of the world's total in 1950, and its export amounted to about 33% of the world's total (Branson et al., 1980). A Self-regulated Learning Module 19  At that time, the latest international trade regime must have been driven by the International Trade Organization (ITO) agreement, which was one of the three pillars of the Bretton Woods System, aside from the IMF and the IBRD, however, a series of rejections in the US Congress obstructed its creation. In place of the ITO, nation-states dedicated to lower down tariffs agreed to create the General Agreement on Tariffs and Trade (GATT) (Branson et al., 1980). ​ The GATT encouraged international trade through a sequence of multilateral trade negotiations called “rounds”. The first five rounds concentrated on tariff cuts: (1) 1947 Geneva Tariffs; (2) 1949 Annecy Tariffs; (3) 1951 Torquay Tariffs; (4) 1956 Geneva Tariffs; (5) 1960 Dillon Round Tariffs; (6) 1964 Kennedy Round Tariffs and anti-dumping measures; (7) 1973 Tokyo Round Tariffs, non-tariff barriers, and “framework agreements”; and (8) 1986 Uruguay Round Tariffs, non-tariff barriers, rules, services, intellectual, property, dispute settlement, textiles, agriculture, and creation of the WTO (WTO, 2012). The establishment of the European Economic Community (EEC) in 1957 forced US to implement the Trade Expansion Act of 1962 and demanded for a new round, the Kennedy Round. Its consequence was an across-the-board cutting (which replaced the practice of item-by-item cuts) and reduction of non-tariff barriers (i.e., anti-dumping measures) (Evans, 1971). During the 1970s, the Tokyo Round besides tariff cuts, also approved a series of codes of conduct (i.e., the “subsidies code” or the “government procurement code” (Deardorff & Stern, 1983). The most popular multilateral trade negotiations occurred under the Uruguay Round from 1986 to 1994. While previous trade arrangements were successful in reducing tariffs, a series of other corrective measures (i.e., non-tariff barriers) were also implemented by nation-states. The Uruguay Round stretched multilateral policies to current concerns and areas, such as agriculture which concluded in a harsh dispute between the US and the EU. According to Walter and Sen (2009), the foremost results of the trade arrangements were the agreements on trade-related investment measures (TRIMs); trade in services (GATS) and trade-related features of intellectual property rights (TRIPs). These agreements were promoted by highly developed countries (HDCs) and targeted less developed countries (LDCs) with massive service market potentials in finance and telecommunications. After 50 years of trade negotiations, the Uruguay Round came up with a genuine global trade institution, the World Trade Organization (WTO). The WTO was established on January 1, 1995 and become a formal forum for trade dialogs. Unlike the GATT, it is a formally constituted association with legal personality. However, in 1999, the developing nations epitomized a united movement for a new round of trade negotiations in Seattle. This event revealed the power of NGOs/CSOs and anti-globalization movements. These movements objected in favor of the LDCs and were against the current status quo of international trade affairs; the hegemony of the US economy; the personal interests of MNCs/TNCs; and the discriminatory mechanisms of the WTO in favor of HDCs (Narlikar & Tussie, 2004). In 2001, the quasi-official Doha Round must have become a round on economic development, however, it failed due to the interests of the opposing parties (HDCs vs. LDCs). LDCs asserted on the proper and full execution of the Uruguay Agreement (especially in the area of agriculture), however, US promoted to keep labor and environmental issues on the agenda. The deadlock between the two opposing sides, motivated LDCs to cooperate and strengthen their leverage within the WTO by creating a pressure group called the Group of 20 (G20). This conglomeration of countries accounts for almost 67% of the world's inhabitants and 25% of world-wide agricultural export (Narlikar & Tussie, 2004). Developing Countries and International Trade ​ Developing (third world) countries did not partake aggressively in multilateral trade agreements for quite a long period of time. The so-called East Asian newly industrializing countries (NICs) embraced an outward-oriented development approach. However, a majority of these developing nations were not able to integrate successfully into this trading scheme. Rather, they promoted an inward-looking, import-substitution industrialization policy, which did not encourage trade liberalization (Findlay & O'Rourke, 2007). Meanwhile, the A Self-regulated Learning Module 20 HDCs were also hesitant to open their markets to products (i.e., textile or agricultural) in which developing countries have a comparative advantage. ​ The key transformation in this economic affairs occurred in 1964 when the United Nations Conference on Trade and Development (UNCTAD) was institutionalized with the collaborative stance of the developing countries. The objective of UNCTAD was to encourage trade and mutual aid between and among the HDCs and LDCs (Salvatore, 2007). However, due to the two oil crises dilemma which affected the economic activities of the HDCs, these countries adopted highly protectionist measures (both tariff and non-tariff) in order to address the damaging effects of the economic stagnation in the 1980s. Developing countries started to aggressively participate in trade with the advent of the Uruguay Round. This round was a grand bargain between the HDCs and LDCs (Ostry, 2002). The HDCs were projected to open their markets to agricultural and textile products, while the LDCs must accept the new rules on intellectual property rights and services. LDCS opened up their service markets, however, their export of agricultural commodities is still blocked by the HDCs. Agricultural products have a share of about 33% to 50% of the total economic production among HDCs. Without trade liberalization in agriculture, it is difficult for LDCs to entirely assimilate themselves into the international economy. ​ For Khor (1995), he saw the WTO as a medium by the HDCs to gain entry to the markets of LDCs. While Wade (2003) criticized the three major trade agreements (i.e. TRIMS, GATS, and TRIPS) saying that they constrained the set of industrial policies to achieve development for the LDCS. A Self-regulated Learning Module 21  Activity 2.A (Matching Type) Name: Score: Course/Year/Section: Date: Direction: Match the items under Column A with those items under Column B. Write your answer on the space provided before each of the items below. Use CAPITAL LETTERS and erasures of any kind will NOT be credited. Column A Column B ___1. The first transnational corporation founded in 1600 A. The Marshall Plan ___2. The highly industrialized or highly developed B. British East India countries (HICs/HDCs) Company ___3. This was agreed upon in 1987 in order to protect the C. Christopher US dollar from further devaluation in the world market Columbus ___4. A global monetary institution responsible for post-war D. GATT reconstruction and development ___5. The new actors of political and cultural globalization E. IMF ___6. This was USA’s post-war reconstruction and F. Periphery Development program in 1948 for Western Europe ___7. Rediscovery of the Americas in 1492 G. Vasco de Gama ___8. A global trade institution created by the Uruguay Round H. The Morgenthau and became a formal forum for trade dialogs with a Plan formally constituted association with legal personality ___9. The less developed countries (LDCs) I. IBRD/WB ___10. Rediscovery of the direct maritime route to India in J. WTO 1498 ___11. It replaced the ITO and was dedicated to lower down K. Core/Metropole tariffs and encouraged international trade through a series of multilateral trade negotiations called “rounds” ___12. An agreement in 1985 which decided to devaluate the L. Louvre Accord US dollar as a consequence of the heightening pressure of local US manufacturers and farmers ___13. A global monetary institution which provides short-term M. Semi-Periphery monetary assistance to countries in cases of transitory balance of payments difficulties ___14. The idea was to downscale Germany’s economy to N. UN and become a pastoral and agricultural one NGOs/CSOs ___15. The newly-industrialized countries (NICs) O. Plaza Accord A Self-regulated Learning Module 22  Activity 2.B (Essay Type) Name: Score: Course/Year/Section: Date: Essay Question: Explain your answer in not more than five (5 sentences). What are the advantages and disadvantages of free trade? Do these arguments fully hold in relation to both developed and developing countries? A Self-regulated Learning Module 23 Learning Objectives: 1.​ To understand the creation, attributes, and types of global corporations 2.​ To enumerate the functions and importance of global corporations 3.​ To explain the development processes that occur among global corporations 4.​ To appreciate the existence of the emerging global corporations LESSON 3 MARKET INTEGRATION This chapter discusses the summary of the “The Rise of the Global Corporation” as presented by Deane Neubauer (2014) which was adopted from the “SAGE Handbook of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014). The Historic Rise of the Global Corporation The methodology used in the study of globalization which is also known as “historical globalization” is based on arrangements in trade and exchange (Bentley, 2003; Gills & Thompson, 2006; Moore & Lewis, 2000). In the earlier times, globalization was stimulated by the leading technologies in shipping and navigation (Harvey, 1990). After the massive destructions of World War II, economic recovery and growth were spearheaded by American corporations followed by the reentry of Japanese and European companies into the international arena which later on were regarded as multinational corporations (MNCs) (Barnet & Mueller, 1974). How Do Global Corporations Function? What Constitutes a Global Corporation? According to Iwan (2012), the current international corporation may be called as any of the following: International Companies. They import and export but have no investments outside of their country. Multinational Companies. They invest in foreign countries, but do not possess coordinated commodity offerings in every nation. Global Companies. They invest in and are existing in many countries. They sell their goods and services to each local market. Transnational Companies. They are complex corporations and have invested in foreign nations. They also possess fundamental commercial facilities, however, give decision making, research and development (R&D), and marketing authorities to every individual overseas market. This section will utilize the term “global corporation” to refer to all of these classifications. A TNC is defined by the United Nations Center on Transnational Corporations (UNCTC) as a business organization that involves itself in activities which add value (manufacturing, extraction, services, marketing, etc.) in more than one nation (UNCTC, 1991). The post-war period can be delineated in three structural periods: (a) investment-based globalization (1950-70); (b) trade-based globalization (1970-95); and (c) digital globalization (1995 onwards) (Geriffi, 2001). Another approach of validating the growth of TNCs/MNCs is to identify the sources and levels of Foreign Direct Investment (FDI). As Hedley shows, in 1900 only European companies were principal investors. Later on, American firms started to follow in the 1930s. An FDI is defined as the influx of private capital from a foreign source into a receiving nation. FDIs were regarded as the principal components of international economic development for third world countries (TWCs). But in reality, the bulk of FDIs in the 1990s was among nations of the industrialized world (i.e., North America, Europe and Japan) (Geriffi, 2001). A Self-regulated Learning Module 24  According to Gilpin (2000), the investment-based era was led by producer-driven commodity or value chains dominated by companies possessing massive amounts of capital using extensive and capital-intensive manufacturing strategies. Many companies in the United States that operate via the producer-driven commodity chain were structured based on the “fordist” management principles. The advent of Japan as a principal producer of automobiles and consumer electronic products since the 1970s introduced new prototypes of effective manufacturing strategies which centered on quality and flexible production. These are seen by American companies as challenges to their dominant positions on commodity design, manufacturing efficiency, and quality which resulted to an advanced reinvention of the US corporate model, especially in the industrial sector (Risi, 2005).​ Corporate brands signify a company’s corporate activities and evaluate a corporation’s prominence in the international arena based on the value of its commodities and services. This is also recognized as “Brand Finance”, a current trend which ranks global companies on the value of their brands, aggregate revenue, earnings, etc. (Brand-Finance, 2012). In this sense, technology brands developed as the greatest and most valuable global corporate brands in 2012 with Apple surpassing Google as Number 1 with a brand finance worth of US$70.6 billion. Meanwhile, Amazon’s brand finance value increased by 61 per cent over the previous year (2011). Digitalization also influenced the entire operation of how international corporations function. Producer-driven commodity chains now try to reduce the effects of time and distance in terms of design, finance and accounting, advertising and brand development, legal services, inventory control etc. Digitalization is innovating the usual value chain of manufacturing centered on improvement along the following (Capgemini, 2012): Product Design and Innovation are replaced with innovations via digital product design; Labor Intensive Manufacturing is substituted by digitizing the factory shop floor making it more capital-intensive; Supply Chain Management is changed by digital supply chain management; and Marketing Sales and Service is innovated by digital customization. Buyer-driven commodity chains gradually become digital with companies’ specialization in Internet marketing of products and services to increase market share over traditional marketing and retailing. The last thirty or more years observed the revolution of the apparel industry motivated by digital processes from design, to ordering, factory processing, inventory control, delivery, branding, marketing and advertising (Capgemini, 2012). ​ Kentor (2005) studied the economic and spatial growth of multinational corporate linkages and found out that the top 100 largest MNCs/TNCs owned 1,288 subsidiaries in 1962, and after 36 years, the top 100 manufacturing corporations owned about 10,000 subsidiaries. The top 44 MNCs in the top 100 global corporations in year 2009 produced revenues of US$6.4 trillion, which is tantamount to 11% of the world’s GDP (Global Trends, 2013).​ What is Different about this Phase of Global Corporate Development? ​ The alleged developing economies of Brazil, India, China, and South Africa (BRICS) became the most vibrant region of international corporate growth, as reflected by their noteworthy FDIs over the past 30 years. The number of MNCs from the BRICS (listed in the Fortune Global 500 that ranks companies in terms of revenue) rose from 47 companies in 2005 to 95 in 2010. Capital flows now originate from China and India. For instance, China's Lenovo company purchased IBM's PC business and India's investment in British companies A Self-regulated Learning Module 25 including Jaguar Land Rover (Economist, 2011). China is the leading outward investor among developing economies with projected assets in 2009 of approximately US$1 trillion (OECD, 2010). Wolfsensohn, suggested a “four-speed world” categorization which distinguishes economies as Affluent, Converging, Struggling and Poor, with the BRICS dominating the growth of the convergent group. With 40% of the globe’s inhabitants, the BRICS signifies a major power in both worldwide production and consumption (Wolfsensohn, 2007). ​ According to The Boston Consulting Group (2009), the following are some “Emerging Market Global Corporations”: ​ 1. Basic Element (Russia) is a world leader in alumina production.​ 2. Bharat Forge (India) is one of the world's largest forging companies.​ 3. BYD Company (China) is the world's largest manufacturer of nickel-cadmium batteries.​ 4. CEMEX (Mexico) has developed into one of the world's largest cement producers.​ 5. China International Marine Containers Group (China) is the world's largest manufacturer of shipping containers.​ 6. Cosco Group (China) is one of the largest shipping companies in the world.​ 7. Embraer (Brazil) has surpassed Canada's Bombardier as the market leader in regional​ jets.​ 8. Galanz Group (China) has a 45 per cent share of the European and a 25 per cent share of the US microwave market.​ 9. Hisense (China) is the number one supplier of flat-panel TVs to France.​ 10. Johnson Electric (China) is the world's leading manufacturer of small electric motors.​ 11. Nemak (Mexico) is one of the world's leading suppliers of cylinder head and block casings for the automotive industry.​ 12. Sistema (Russia) is a conglomerate with a focus on telecommunications.​ 13. Tata Chemicals (India) is an inorganic-chemicals producer with a significant global market share of soda ash.​ 14. Techtronic Industries Company is the number one supplier of power tools to Home Depot.​ 15. Wipro (India) is the world's largest third-party engineering services company. In 2009 China was the primary trade partner of Brazil, India and South Africa, and Tata of India was the most dynamic investor in sub-Saharan Africa. Government-owned and controlled corporations (GOCCs or state-owned corporations) may be defined as businesses composing of parent companies and their overseas partners in which the government possesses control (full, majority, or significant minority), whether or not registered on a stock exchange play an important part in these emerging or developing economies (UNCTAD-WIR, 2011). State-owned corporations may comprise both national and local governments such as regions, provinces and cities. Another description of China's state-owned MNCs affirms that these are legacy institutions (relics) of China's command-socialist system that propagates in its revised neo-capitalist economy. Companies that lack economic efficiency and competitive discipline are in effect subsidized or funded by the Chinese state which gives them market leverage to become globally competitive (Woetzel, 2008; Greenacre, 2012). A Self-regulated Learning Module 26  Activity 3.A (Matching Type) Name: Score: Course/Year/Section: Date: Direction: Match the items under Column A with those items under Column B. Write your answer on the space provided before each of the items below. Use CAPITAL LETTERS and erasures of any kind will NOT be credited. Column A Column B ___1. A company that invests, exists, and sells its goods and A. Transnational services to each local market in foreign countries Company ___2. A commodity chain that uses massive amounts of B. Buyer-driven capital-intensive manufacturing strategies Commodity Chain ___3. In 2012, this MNC was ranked “Number 1” with a brand C. Digitalization finance amounting to US$70.6 billion ___4. This is defined as the influx of private capital from a D. Producer-driven foreign source into a receiving nation Commodity Chain ___5. Under the “four-speed world” categories of Wolfsensohn, E. GOCCs the BRICS fall under this characterization ___6. A company that imports and exports but have no F. Foreign Direct investments outside of its country Investment (FDI) ___7. Under the “four-speed world” categories of Wolfsensohn, G. Global Company the highly-developed countries fall under this type ___8. They are classified as developing economies as reflected H. Affluent by their noteworthy FDIs over the past 30 years ___9. This is the other term for state-owned corporations I. International Company ___10. A complex corporation that gives decision making, J. Lenovo research and development, and marketing authorities to every individual foreign market ___11. This is a current trend which ranks global companies on K. BRICS the value of their brands, aggregate revenue, earnings, etc. ___12. A Chinese company that purchased IBM's PC business L. Apple ___13. This innovation among companies reduces the effects M. Multinational of time and distance in terms of design, advertising, Company brand development, inventory control, etc. ___14. A commodity chain that uses a more labor-intensive N. Brand Finance production strategies ___15. A company that invests in foreign countries, but do not O. Converging possess coordinated commodity offerings in every nation Activity 3.B A Self-regulated Learning Module 27  (Essay Type) Name: Score: Course/Year/Section: Date: Essay Question: Explain your answer in not more than five (5) sentences. How do digital technologies transform the structures and operations of global corporations? Learning Objectives: A Self-regulated Learning Module 28  1.​ To understand how nation-states interact and comply with global standards in a world of economic interdependence 2.​ To recognize the importance of economic and political Integration among the members of the European Union 3.​ To appreciate the significance of international law and universal principles 4.​ To explain how transnational activism and ccommunication networks affect governments LESSON 4 THE GLOBAL INTER-STATE SYSTEM This chapter discusses the summary of the “Governments and Citizens in a Globally Interconnected World of States” as presented by Hans Schattle (2014) which was adopted from the “SAGE Handbook of Globalization” edited by Manfred B. Steger, Paul Battersby, and Joseph M. Siracusa (2014). Introduction ​ The 21st century illustrates that globalization dispersed political and economic supremacy beyond the state. Countries today are answerable to various global rules and standards. States at present face various types of pressures (i.e., advances toward supranational or regional integration on one side and forces of domestic fragmentation on the other side. According to Rosenau (2003), these opposing dynamics is called “fragmegration”. After World War II (1945), the United Nations (UN) had 51 founding member-states. In 2012, the organization had 193 members. Palestine obtained acknowledgement in November 2012 as a “nonmember observer state” of the UN. This is also the status held by the Vatican. When the People's Republic of China (PRoC) took over mainland China in 1949 and replaced the Republic of China (Taiwan) as China's representative in the United Nations, Taiwan totally lost its UN membership and its permanent seat in the UN Security Council in 1971. Taiwan is trying for years (but without success) to be acknowledged as a “non-member observer” standing in the UN (Schattle, 2008). According to Max Weber (1997) a “state” (a political concept) is an obligatory political association having endless operations as long as its administrative staff effectively gains a claim to the monopoly of the use of legitimate physical force in the execution of its mandate. Regimes and constitutions come and go, but states continuously endure. The word “nation” (an ethnic concept) emphasizes organic relations that hold clusters of people as one and promotes a sense of allegiance and belongingness. At present, nations are seen as communities of people that unite citizens together based on various cross-cutting identities: ethnicity, language, religion, etc. (Anderson, 1991). The State in a World of Economic Interdependence The word globalization is associated with global free-market capitalism; the intensification of transnational enterprises, the easy flows of capital across intercontinental borders. Both the supporters and detractors of the Washington Consensus and its neo-liberal stress on deregulation, privatization, and free trade view globalization as commanding a forced choice among nation-states which is to comply with free-market principles or suffer the risk of being left behind. Thomas Friedman (2000) introduced the notion on the “Golden Straitjacket” which explains how countries are now obligated to adhere to rules that suit the likings of investment houses and corporate executives (the “Electronic Herd”) who speedily transfer capital (money and other resources) into states preferred as adaptable to the dictates of transnational firms. On the other hand, withdraw investments from nation-states which are believed to be uncompetitive. Hence countries rely heavily on the Electronic Herd for investments (Friedman, 2000). A Self-regulated Learning Module 29  Former national leaders such as Ronald Reagan (former US president) and Margaret Thatcher (former prime minister of UK) pursued the laissez-faire economic policy of Friedrich Hayek and Milton Friedman. This policy on the “invisible hand” (no/less government intervention in economic affairs) generated the conditions for deregulation, privatization and free trade to flourish worldwide. This encouraged the least developed countries to attract the capital of the globe’s wealthiest banks, companies, and foreign investors in the expectation of raising their citizens’ standard of living (Frieden, 2006). ​ Under import substitution policy, Mexico failed to produce a feasible car industry. Nonetheless, it was able to develop its global market for automobile parts. Growers in Argentina and New Zealand generated profit exporting winter fruits and vegetables to Northern Hemisphere buyers. Firms in Thailand and Turkey, facing difficulties of borrowing money domestically, now had access to cheap and abundant overseas finance. These nations and their populace benefitted out of foreign markets to hasten their growth (Frieden, 2006). ​ Experts on neoliberalism argue that if LDCs follow their recommendations on free and open markets, they would later on become newly-industrialized countries (NICs). However, in reality what the HDCs planned was to sustain control of the LDCs wealth, raw materials, and cheap labor (Barajas, 2004). The Japanese rejected American ideas, and focused more on developing globally competitive capabilities by protecting and funding infant industries (i.e., steel, consumer electronics, and semiconductors). In South Korea, the most prosperous companies are the steel maker POSCO (established with government investment) and Samsung (a huge family-dominated conglomerate with wide-ranging special affiliations with the government in various interlocking industries and technologies (Prestowitz, 2012). According to Clarke (2004), very minimal wages, awful working environments, and negligible environmental standards entice MNCs to establish sweatshops/firms (usually through subcontractors) in many LDCS. These LDCS only became aware when accidents happen (i.e., series of factory fires in Bangladesh in 2012; the collapse of a factory building in April 2013 in which more than 1,100 workers died producing clothes for retailers ranging from Benetton to Wal-Mart). The detractors of economic globalization encourage states to define economic, social and environmental objectives for their national development. In addition states must compel MNCs to meet these priorities and to establish new systems of participatory democracy whereby citizens become effectually involved in determining international policies on trade, investment and finance (Clarke, 2004). ​ ​ Economic and Political Integration: The Case of the European Union Due to intensifying economic interdependence, states decided to form regional linkages with neighboring countries that encourage commerce and economic cooperation. Some of these include the African Union (AU); the Association of Southeast Asian Nations (ASEAN); trading blocs (i.e., North American Free Trade Agreement - NAFTA); the Caribbean Community (Comunidad del Caribe). After World War II, the political leaders in Europe, launched the European Coal and Steel Community (ECSC). Currently, the European Union (EU) which has 28 member states (with Croatia becoming the 28th member in July 2013). The EU has a single currency (euro) and monetary system. It also established a supranational European Parliament with increasing legislative powers alongside the Council of Ministers. The EU Parliament composed of elected representatives from the national governments of member-states. In 1992, with the adoption of the Maastricht Treaty, the signatories approved a common citizenship that gives citizens of the member-states the rights to live, work, vote and even run for office in European parliamentary elections outside one's country (Council of Europe, 2012).​ ​ According to the Council of Europe (2012), by the summer of 2012, there were campaigns for “fiscal union” among the 17 member-states of the Eurozone to complement monetary union. Thus the national budgets of these Eurozone countries will be subject to authorization and oversight by the UE’s European Commission. The EU Parliament also passed a law in September 2013 to administer closer integration and regulation of the banking sector. A Self-regulated Learning Module 30  From 1952, the European Court of Justice (ECJ) operated as the highest dispute resolution body for the EU and its forerunners. It set forth provisions such as “direct effect” (EU laws take precedence over national laws when the two sets of laws come into conflict) and “supremacy” (member-states are obligated to follow EU laws) (Council of Europe, 2012). The European Court of Human Rights (ECHR) which is a portion of an even bigger association (the Council of Europe) advocates the European Convention of Human Rights (ECHR), currently ratified by all 47 of its member-states. Any person, group of persons, or CSO can file ECHR cases against a member-state, and member-states can also initiate cases against each other. The ECHR has dispensed groundbreaking decisions in various areas (i.e., freedom of expression, freedom of religion, protection from discrimination, and the right to a fair trial) which are frequently violated by member states (Council of Europe, 2012).​ ​ The Rise of International Law and Universal Principles According to Doyle (2011), the failure of the League of Nations before World War II reinforced the cooperative will among leaders of the world to establish another international association that would assist global negotiations and uphold human rights and fundamental freedoms. Leaders of the Allies (US, UK, France, Russian and China) collectively established the “United Nations” while fighting the war against the Axis Powers (Japan, Germany, and Italy). The San Francisco Conference in 1945 established the organization that endures up to this day. The system has various limitations: (a) the United Nations (UN) has never surpassed the states system; and (b) it only functions as a forum for countries to air their grievances and try to resolve them; (c) the Security Council and its outmoded structure awards veto power only to each of the five countries that won the Second World War; and (d) the General Assembly’s lack of power with its state-based configuration (Doyle, 2011). Other criticisms against the UN also include the Cold War deadlock between the United States and the Soviet Union which made it problematic for the Security Council to reach cooperative judgments. In addition, the US-led invasion of Iraq in 2003 without the consent of the Security Council signified that countries invading foreign nations unilaterally and in violation of the UN Charter would suffer no penalties of their actions aside from criticisms and hatred. The organization also was not able to prevent many violence and killings from happening globally during its existence (Doyle, 2011). Some of the shortcomings of the UN were gradually addressed with the formation of ad hoc tribunals that sentenced several persons from Rwanda and the former Yugoslavia of war crimes. Another significant accomplishment was the permanent establishment of the International Criminal Court (ICC) in 2002. Its role is to prosecute individuals accused of genocide and other crimes against humanity. However, China, India, and the US are not among the 122 states that authorized the court's founding treaty, the Rome Statute. This signifies that adherence to international law ultimately remains a matter of choice among states, and states can often evade international law without any sanction (Doyle, 2011). According to Doyle (2011), the UN also works with countries across the globe to advocate human rights and humanitarian values. The UN Security Council promotes the doctrine of “Responsibility to Protect” (R2P) when it approved in early 2011 a “no-fly zone”, an arms embargo, and the use of “hard power” in Libya's civil war. This strategy aimed to protect civilians from government attacks and gave the revolutionary forces a better chance at dethroning the government of Moammar Gaddafi. The R2P doctrine indicates an intensifying willingness among states to interfere in the unlawful undertakings of governments which are unable to safeguard their own citizens. The North Atlantic Treaty Organization (NATO), with Britain, France and the United States taking the lead, intervened in Libya in ousting Gaddafi through its NATO air strikes. A Self-regulated Learning Module 31  In Syria, Bashar Hafez al-Assad stayed in power at the start of 2014 even though his regime and military supporters committed various atrocities against thousands of citizens (fighters and protesters), including a chemical weapons attack in August 2013 that killed an estimated 1,400 civilians. After U.S. President Barack Obama threatened to launch limited military strikes against Syria but obtained little support from Americans and foreign countries, the Syrian regime sworn in an agreement worked out by the Organization for the Prohibition of Chemical Weapons and the United Nations Security Council to extinguish its stockpiles of chemical armaments. In this manner, the R2P doctrine symbolizes that the protection of human beings over any particular government or regime must take priority (Doyle, 2011). ​ According to Nye (2005), the partnership among countries in some cases means better provision of government services. However, in some instances it may also mean infringements by the “national security state” into civil liberties and privacy rights. These were evident in the immense global surveillance operations engineered by the United States National Security Agency (USNSA) and its government and business associates worldwide. These included interceptions of e-mail messages and tracking of mobile phones. Global travelers and migrants are conscious that passport control officers take compulsory photographs and collect fingerprints of people passing through checkpoints. These make it easier for national governments to impart facts on the biometrics and travel patterns of countless people. Other countries also include “biometric authentication” components in the issuance of passports and visas. States also compete not only for economic development but also for moral credibility. This is evident on how various CSOs rank countries and publish annual indexes worldwide. Some of these include the following: (a) Transparency International's “corruption perceptions index”; (b) Freedom House's “freedom in the world index” of political rights and civil liberties; (c) the “democracy index” published by The Economist Intelligence Unit; (d) the “press freedom index” compiled by Reporters without Borders; (e) the “failed states index” from Foreign Policy Magazine; (f) the Fund for Peace; and (g) the “better life index” launched in 2011 by the Organization for Economic Cooperation and Development (OECD). All of these have an impact on a country's global competitiveness and “soft power” (Nye, 2005). States as Targets: The Rise of Transnational Activism According to Keck and Sikkink (1998), transnational activism has roots that go back to 19th century campaigns against slavery; against foot-binding practices in China; and for women's voting rights. Keck and Sikkink coined the phrase “boomerang pattern of influence” to describe what can happen when domestic CSOs/NGOs on the losing ends of political struggles join forces with compatible foreign advocacy groups that can pressure the national governments in question. The Norwegian Nobel Committee, a transnational CSO called attention to the rising trend of Internet activism by awarding the 1997 Peace Prize to the International Campaign to Ban Landmines. The global advocacy campaign to ban landmines as a weapon of war specifically targeted states and urged them to sign the Ottawa Treaty that now has 160 signatories. However, similar to the International Criminal Court, some of the world's largest countries (China, Russia, and the United States) have not signed the treaty (Keck & Sikkink, 1998). The Global Justice Movement called for alternatives to neoliberal economic globalization. Scholars and activists trace the contemporary origins of this movement to the transnational campaign launched in 1994 in Chiapas, Mexico, by the Zapatista Army of National Liberation in response to the North American Free Trade Agreement (NAFTA) (Barlow & Clarke, 1997). In November 1999, the “Alter-globalization Movement became famous during the meeting of the World Trade Organization (WTO) in Seattle. The media focused more on street disruptions and violent incidents and branded it as an “anti-globalization” movement rather than an alternative model of globalization more attentive to human rights, participatory democracy, local control, sustainability and cultural diversity (Cavanagh & Mander, 2004). The implications of this proved that people obtained public consciousness on globalization. Hence they think of themselves as “global citizens” who link this idea with concepts such as awareness, responsibility, participation, and cross-cultural empathy (Schattle, 2008). A Self-regulated Learning Module 32  The entry of the World Social Forum (WSF) made it a counterpoint to the World Economic Forum (WEF) (Steger & Wilson, 2012). The World Economic Forum is lavishly funded, efficiently organized, and easy to observe online with a comprehensive website and abundantly archived documents and transcripts of proceedings (print, audio and video). On the other hand, the World Social Forum avoids hierarchy and centralized control which exists without a single permanent website. Unlike the world's largest corporations and national governments that back up the WEF and advocate neoliberalism, the WSF promotes a more socially and environmentally-responsive alternatives to globalization. According to Busby (2010), the social media revolution has lifted advocacy groups and social movements into an exciting new phase and energized CSOs at all levels. The revolutions in Tunisia and Egypt in early 2011 showed how engaged citizens could topple dictatorships. Protests in Myanmar (Burma) which were encouraged by cyber-activists eventually pushed the government there to open up partially. In China, citizens are more linked and vocal than before, even if the government is still working to manipulate public opinion and crush dissent (Shirk, 2010). Social media platforms also eased the way for citizens’ groups across the “global south” to build network partners. Facebook, Twitter and their local counterparts worldwide are now utilized in transnational advocacy movements (Gladwell, 2010; Starbird & Palen, 2012). Communication Networks, New Media and the State ​ According to Morozov (2011), technological advances made it easier for authoritarian states from Russia to Saudi Arabia, and to Myanmar to silence bloggers utilizing software programs that filter Internet content and denial-of-service attacks, making the targeted computers or web servers momentarily inaccessible. Even the world's most isolated and repressive state (North Korea) maintains websites boasting their national leaders and stirring out colorful news releases. Ambassadors worldwide now utilize “public diplomacy” and maintain Facebook groups, Twitter feeds, and dual blog postings written in both languages (that of the country they represent and the language of the state that they are serving). Across all levels of government, from city halls to presidential offices, interactive “e-government” sites have spread worldwide in partnership with constitutional democracies. Citizens can converse with government officials through the Internet, not only to obtain information about government policies and initiatives but to communicate their grievances (Coleman & Blumler, 2009). There is also an increase in state-funded television networks. No longer is the American vanguard of CNN a hegemonic presence. BBC World (United Kingdom), Al Jazeera English (Qatar), Al Arabiya (Saudi Arabia), France 24, Russia Today, CCTV (China), NHK World (Japan) are some of the most evident players in this rising industry (Coleman & Blumler, 2009). Television news performed a crucial role during the dismantling of the Berlin Wall in 1989 as live news from West Germany ignited public demands in East Berlin to open the checkpoints. Similarly, Al Jazeera played a significant role in the Arab Spring revolutions, broadcasting videos filmed by protesters through their mobile phones and sent via e-mail to television studios (McChesney & Pickard, 2011). Al Jazeera tends to go easy on the Emir of Qatar, while Russia Today features a Putinesque view of the world (Seib, 2008). In this current world of government-run broadcasting, the lines amid journalism and propaganda are often blurred and concealed, and also defended, if not legitimized, by the government ministries shelling out the money. The world's “digital citizens” who have enough Internet access and possess the capability to make the most of cyberspace now evaluate for themselves which sources are credible and compelling enough to follow on a continuing basis (Jamieson & Cappella, 2010; Sunstein,​ 2009). A Self-regulated Learning Module 33 A Self-regulated Learning Module 34  Activity 4.A (Matching Type) Name: Score: Course/Year/Section: Date: Direction: Match the items under Column A with those items under Column B. Write your answer on the space provided before each of the items below. Use CAPITAL LETTERS and erasures of any kind will NOT be credited. Column A Column B ___1. It calls for alternatives to neoliberal economic A. Alter-globalization globalization and a response to the North American Movement Free Trade Agreement (NAFTA) ___2. This doctrine symbolizes that the protection of human B. Palestine and Vatican beings over any particular government or regime must take priority ___3. It was permanently established in 2002 and its role is C. Allied Nations to prosecute individuals accused of genocide and other crimes against humanity ___4. It refers to opposing dynamics of supranational or D. Laissez-faire regional integration on one side and forces of Economics domestic fragmentation on the other side ___5. It was composed of US, UK, France, Russia and China E. Ottawa Treaty which won in World War II ___6. With Britain, France and the United States, this F. Fragmegration organization intervened in Libya in ousting Gaddafi through its air strikes ___7. It is a reaction to the World Economic Forum that G. Global Justice promotes a more socially and environmentally Movement responsive alternatives to globalization ___8. This agreement approved a common citizenship that H. European Coal and gives citizens of EU the rights to live, work, vote and Steel Community even run for office in European parliamentary (ECSC) elections ___9. This was the predecessor of the European Union (EU) I. State which currently has 28 member states ___10. They are acknowledged as “nonmember observer J. International Criminal states” of the UN Court (ICC) ___11. It was composed of Japan, Germany, and Italy K. Axis Powers which lost the battle in World War II ___12. This policy advocates the “invisible hand” (no or less L. Responsibility to government intervention in economic affairs) Protect ___13. It is an obligatory political association having M. Maastricht Treaty endless operations as long as it gains a claim to the monopoly