MAAM-HEYS-Lesson-Week-1-to-5-GE3-Contemporary-World PDF

1 WEEK 1 GE 3 CONTEMPORARY WORLD What is Globalization? We often hear the word globalization in many contexts and repeated frequently as a concept to denote more trade, foreign companies and even the ongoing economic crisis. Before we launch into a full-fledged revie...

1 WEEK 1 GE 3 CONTEMPORARY WORLD What is Globalization? We often hear the word globalization in many contexts and repeated frequently as a concept to denote more trade, foreign companies and even the ongoing economic crisis. Before we launch into a full-fledged review of the term and its various manifestations, it is important to consider what exactly we mean when we say globalization. Globalization is the free movement of goods, services and people across the world in a seamless and integrated manner. Globalization can be thought of to be the result of the opening up of the global economy and the concomitant increase in trade between nations. In other words, when countries that were hitherto closed to trade and foreign investment open up their economies and go global, the result is an increasing interconnectedness and integration of the economies of the world. This is a brief introduction to globalization. Further, globalization can also mean that countries liberalize their import protocols and welcome foreign investment into sectors that are the mainstays of its economy. What this means is that countries become magnets for attracting global capital by opening up their economies to multinational corporations. Further, globalization also means that countries liberalize their visa rules According to the article, what is globalization? After reading the article, do you think globalization is important? Why or why not? INTRODUCTION TO GLOBALIZATION The concept of globalization has numerous definitions, depending on the subject matter being explained. To international economists, it has a simple definition, albeit one with powerful implications. Specifically, globalization occurs when the markets of different countries become more integrated and interconnected through economic transactions that cross national borders. These transactions can be in real merchandise, various forms of services, financial instruments, investments in local production facilities by multinational firms (a process called foreign direct investment, or FDI), temporary and permanent labor migration, and technological information. They can involve individuals, trade between unrelated firms, transactions within international enterprises, and governments. What drives these transactions and how they are organized is endlessly fascinating. In addition, when people think about globalization, they often think first of the increasing volume of trade in goods and services. Economic movements are also one of the most noticeable forms of 2 globalization. Yet other experts claim that foreign trade is a far greater factor moving the world towards deeper global integration. Investment can modify whole processes of development by the conversion of information, technologies and management practices, and hence can bring in even greater improvement than the mere exchanging of commodities. Moreover, globalization implies the continuing expansion and intensification of economic, political, social, cultural and judicial relations across borders. It is furthered by reductions in transportation Giovanni Reyes (2001) explains that the term globalization has two principal meanings. First, globalization is a phenomenon. He implies that there is a greater interdependence among different regions and countries in the world in terms of finances, trade and communications. Second, globalization is a theory of economic development. It assumes that a greater level of integration is taking place among different regions of the world and this integration has an important impact on economic growth Beck (2009) explains that globalization is the process through which sovereign national states are interwoven and undermined by transnational actors with varying prospects of powers, orientations, identities and networks. Schafer (2007) adds that globalization points to a spatial expansion or developments that involve more of the globe. Utkin (2002) believes that drawing from the ideology of globalism, globalization as a process is determined by market forces and not the state. As the term’s origin and definition is largely disputed, so is the connotation of this term. Scholars and academics argue whether globalization denotes a process, a phenomenon or a belief system. Many of these arguments arise from the loose and interchangeable use of terms, thereby causing further confusion and disagreement. Terms and concepts that are closely related to the subject of globalization such as interconnectedness, interdependence. Integration and flows shall also be defined. Interconnectedness = referred to as global interconnectedness, means the connection and oneness of entities and actors in a globalized world such that the action or actions of these actors 3 have consequences on other actors and the world in general Interdependence = known as global interdependence, refers to the mutual dependence of countries or nation-states and other important actors in the international community, individuals, NGOs, business organizations and international organizations, for one another’s resources. Services, information and data. Integration = referred to as global integration, means the process of organization of component elements – which could be an actor, process, phenomenon, activity or events – in separate locations around the world in a harmonious global whole. Flows = is the rate of movement of goods, resources, services, information, data, transactions, finance and people on a global scale. DEFINITIONS OF GLOBALIZATION Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. PHILOSOPHIES OF GLOBALIZATION There are different underlying philosophies of the varying definitions of globalization. According to Pro-Globalization philosophy, globalization is about the liberalization and global integration of markets. Globalization is inevitable and irreversible. Nobody is in-charge of globalization but globalization benefits everyone. Globalization furthers the spread of democracy around the world. Neoliberal Capitalism is an example of Pro-Globalization Philosophy. In a Neoliberal Capitalist philosophy, freeing corporations from much government regulation will encourage capitalists to invest more on existing industries, even on experimental and innovative ones. Privatizing industries and services will create more wealth from almost sure profits and possibly reduce the price of commodities as competition between enterprises becomes stiffer. 4 Module WEEK 2 GE 3 CONTEMPORARY WORLD The Global Economy ECONOMIC GLOBALIZATION Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world at the turn of the millennium. The rapid growing significance of information in all types of productive activities and marketization are the two major driving forces for economic globalization. In other words, the fast globalization of the world’s economies in recent years is largely based on the rapid development of science and technologies, has resulted from the environment in which market economic system has been fast spreading throughout the world, and has developed on the basis of increasing cross-border division of labor that has been penetrating down to the level of production chains within enterprises of different countries. Economic globalization, broadly understood, is the growing global integration not only of markets but also of systems of finance, commerce, communication, technology, and law that bypass traditional national, cultural, ethnic, and social boundaries. Proponents of economic globalization argue that it leads to more efficient division of labor, greater specialization, increased productivity, higher standards of living and wealth, and ultimately the end of poverty. Proponents also argue that recent economic growth has greatly contributed to the high standard of living enjoyed by many within the developed world and raised living standards of many people formerly living in abject poverty. Many others have not made such gains. Benefits of Economic Globalization: Foreign Direct Investment = Foreign direct investment (FDI) tends to increase at a much greater rate than the growth in world trade, helping boost technology transfer, industrial restructuring, and the growth of global companies. Technological Innovation = Increased competition from globalization helps stimulate new technology development, particularly with the growth in FDI, which helps improve economic output by making processes more efficient. Economies of Scale = Globalization enables large companies to realize economies of scale that 5 reduce costs and prices, which in turn supports further economic growth. However, this can hurt many small businesses attempting to compete domestically. Telecommunication = While economic globalization has been expanding since the emergence of trans-national trade, it has grown at an increased rate due to improvements in the efficiency of long distance transportation, advances in telecommunication, the importance of information rather than physical capital in the modern economy and by developments in science and technology. ACTORS THAT FACILITATE ECONOMIC GLOBALIZATION Acting in the globalized world, all appear to benefit from the increased liberalization of markets, more especially socio-economic reforms, which is considered as the necessary condition for the realization of the full impact of globalization. The actors that facilitate economic globalization are the following: International Economic and Financial Organizations = International economic and financial organizations provide the structure and funding for many unilateral and multilateral development projects. Such organizations deal with the major economic and political issues facing domestic societies and the international community as a whole. Their activities promote sustainable private and public sector development primarily by: financing private sector projects located in the developing world; helping private companies in the developing world mobilize financing in international financial markets; and providing advice and technical assistance to businesses and governments. International Governmental Organizations (IGOs) = International Governmental Organizations have international membership, scope and presence. Their primary members consist of sovereign states. These organizations bring member states together to cooperate on a particular theme or issues that have global impacts and implications such as human rights, trade, development, poverty, gender or migration. Multilateral Development Banks = Multilateral development banks are international financial institutions owned by countries. There are four regional multilateral development banks: the Inter- American Development Bank, the African Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development. These institutions provide loans, grants, guarantee, private equity and technical assistance to public and private sector projects in developing countries. 6 Nation-States = Nation-states refer to a certain form of state that derives its political legitimacy from serving as a sovereign entity for a nation within its sovereign territorial space. The state is a political and geopolitical entity while the nation is a cultural and/or ethnic entity The term "nation-state" implies that the two geographically coincide, and this distinguishes the nation state from the other types of state, which historically preceded it. Non-Governmental Organizations = Non-governmental organization (NGO) refers to a legally constituted organization created with no participation or representation of any government and driven. These organizations are task-oriented perform a variety of service and humanitarian functions. Some are organized around specific issues such as human rights, environment, gender, or health. In many jurisdictions these types of organization are defined as "civil society organizations." Trans-National Corporations = Transnational Corporations exert a great deal of power in the globalized world economy. Many corporations are richer and more powerful than the states that seek to regulate them. Through mergers and acquisitions corporations have been growing very rapidly and some of the largest TNCs now have annual profits exceeding the GDPs of many low and medium income countries. It is important to explore how TNCs dominate the global economy and exert their influence over global policy making. MODERN WORLD SYSTEM Immanuel Wallerstein created a huge stir in the 1970s with the publication of The Modern World- System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century (1974). The book is an intellectual masterpiece, synthesizing a vast range of fundamental literature on the economic history of Europe and the world. The concept of "world system" is itself a key component of our current understanding of globalization, in that it captures the idea of causal interconnectedness across the globe among major organizations, firms, populations, and states. The World Systems Theory (WST) was developed by Immanuel Wallerstein. In a nutshell, Wallerstein (1976) asserts that a world-system is a social system, one that has boundaries, structures, member groups, rules of legitimation and coherence. Its life is made up of the conflicting forces which hold 7 WEEK 3 GE 3 CONTEMPORARY WORLD Module on Market Integration Usui spoke to over 50 businessmen and business group leaders in Marco Polo Plaza Hotel last Tuesday for the 2nd National Business Conference of Independent Business Clubs and Chambers. Philexport executive director Fred Escalona agreed. “From my personal point of view, one way to really ensure the competitiveness of our local industries especially the exporters is to do something about our cost structures,” said Escalona. Escalona said that our yearly wage adjustment would make export manufacturers less competitive over the years because they would incur more operational costs making them unable to compete based on price points with our neighbors in the region. On the brighter side, Escalona said that the local manufacturers could also outsource jobs to other countries with lower labor costs like Myanmar and Laos once AEC 2015 would convene. Trade Undersecretary Adrian Cristobal Jr., however, said that the government had already developed a unified industry and international trade strategy guided on the three pillars which included institutionalizing stakeholder engagement in industry and trade policy making, trade and industry policy research network and capacity building, and enhanced inter-agency coordination and capacity building for trade negotiators. “At the base of these three pillars is our industry competitiveness. This is one of the main shifts in strategy that was lacking in the past, a foundation upon which our international trade policy and negotiation positions are aligned. We need to identify the strengths and weaknesses of our industries, the opportunities and threats,” said Cristobal. He said that they were working on road maps for specific sectors like chemicals, copper, and copper products, furniture, biodiesel, petrochemicals, and auto parts. “We expect to complete most of these road maps and the comprehensive industrial strategy by the 1st quarter of 2013.this in turn will feed into the PDP (Philippine Development Plan) review and the IPP (Investment Priorities Plan) for 2013,” Cristobal said. One of the best ways to increase productivity in export and ensure that industries can compete when the integration comes in to attract manufacturers to locate in the country, said Usui. Cristobal agreed and added that the government was aggressively marketing the country as a destination for manufacturing companies. According to Cristobal, companies like Fujifilm Optics Philippines, Inc., a subsidiary of Fujifilm Japan, for the manufacture high-performance lenses for digital cameras, projectors and CCTV (surveillance) cameras, Philippine Manufacturing Co. of Murata, to manufacture electronics products are now in the country. “We are now encouraging 230 suppliers of Canon in Japan and China to co-locate in the Philippines,” Cristobal. Global Market Integration refers to the increasing uniformity of prices or simply the elimination of price differences, since all markets become one. Economic theorists argue that the spatial aspect of globalization has an effect on the economic relationships of different units of analysis in the global system. 8 According to Shangquan (2000), fast globalization of the world’s economies in recent years is largely based on the rapid development of science and technologies and it has resulted from the environment in which market economic system has been fast spreading throughout the world and has developed on the basis of increasing cross-border division of labor that has been penetrating down to the level of production chains within enterprises of different countries. HISTORY OF GLOBAL MARKET INTEGRATION The Bretton Woods Agreement is the landmark system for monetary and exchange rate management established in 1944. It was developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire, from July 1 to July 22, 1944. Under the agreement, currencies were pegged to the price of gold and the US dollar was seen as a reserve currency linked to the price of gold. From a global economic perspective, the two world wars exposed a considerable flaw in the manner through which currencies and exchange rates were managed in the international level. There was a high level of agreement among the powerful nations that failure to coordinate exchange rates had exacerbated political tensions. This facilitated the decisions reached by the Bretton Woods Conference. Furthermore, all the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons. The experience of World War II was fresh in the minds of public officials. The planners at Bretton Woods hopes to avoid a repeat of the Treaty of Versailles after World War I, which had created enough economic and political tension to lead World War II. After World War I, Britain owed Unites States substantial sums, which Britain could not repay because it had used the funds to support allies such as France during the war; the Allies could not pay back Britain, so Britain could not pay back the United States. The solution at Versailles for the French, British and Americans seemed to be “make Germany pay for it all”. It the demands on Germany were unrealistic, then it was realistic for France to pay back Britain and for Britain to pay back the Unites States. Thus, many assets on bank balance sheets internationally were actually unrecoverable loans, which culminated in the 1931 banking crisis. Intransigent insistence by creditor nations for the repayment of Allied war debts and reparations, combined with an inclination to isolationism, lead to a breakdown of the international financial system and a worldwide economic depression. The so-called “beggar thy neighbor” policies that emerged as the crisis continued saw some trading nations using currency devaluations in an attempt to increase their competitiveness, though recent research suggests this de facto inflationary policy probably offset some 9 of the contractionary forces in world price levels. In the 1920s, international flows of speculative financial capital increased, leading to extremes in balance of payments situations in various European countries and the United States. In the 1930s, world markets never broke through the barriers and restrictions on international trade and investment volume – barriers haphazardly constructed, nationally motivated and imposed. The various anarchic and often autarkic protectionist and neo-mercantilist national policies – often mutually inconsistent – that merged over the first half of the decade worked inconsistently and self-defeating to promote national import substitution, increase national exports, divert foreign investment and trade flows and even prevent certain categories of cross-border trade and investment outright. Global central bankers attempted to manage the situation by meeting with each other, but their understanding of the situation as well as difficulties in communicating internationally, hindered their abilities. Britain in the 1930s had an exclusionary trading bloc with the nations of British Empire known as the “Sterling Area”, so named after the British currency. If Britain imported more than it exported to nations such as South Africa, South African recipient of pounds sterling tended to put them into London banks. This meant that though Britain was running a trade deficit, it had a financial account surplus and payments balanced. Increasingly, Britain’s positive balance of payments required keeping the wealth of Empire nations in British banks. One incentive for, say, South African holders of rand to park their wealth in London to keep the money in Sterling, was a strongly valued pound sterling. Unfortunately, as Britain deindustrialized in the 1920s, the way out of the trade deficit was to devalue the currency. But Britain couldn’t devalue or the Empire surplus would leave its banking system. Nazi Germany also worked with a bloc of controlled nations by 1940. Germany forced trading partners with a surplus to spend that surplus importing products from Germany. Thus, Britain survived by keeping Sterling nation surpluses in its banking system and Germany survived by forcing trading partners to purchase its own products. The US was concerned that a sudden drop-off in war spending might return the nation to unemployment levels of the 1930s and so wanted Sterling nations and everyone in Europe to be able to import from the US. Hence the US supported free trade and international convertibility of currencies into gold or dollars. When many of the same experts who observed the 1930s became the architects of a new, unified, post-war system at Bretton Woods, their guiding principles became ‘no more beggar thy neighbor” and “control flows of speculative financial capital”. Preventing a repetition of this process of competitive devaluations was desired, but in a way that would not force debtor nations to contract their industrial bases by keeping interest rates at a level high enough to attract foreign bank deposits. John Maynard 10 Keynes, the foremost British economist whose core ideas essentially changed our understanding of macroeconomics and economic policy trends, became wary of a return to the Great Depression. He was behind Britain’s proposal that surplus nations be forced by a “use-it-or-lose-it” mechanism, to either import from debtor nations, build factories in debtor nations or donate to debtor nations. The US opposed Keynes’ plans and a senior official at the US Treasury, rejected Keynes’ proposals, in favor of an International Monetary Fund with enough resources to counteract destabilizing flows of speculative finance. However, unlike the modern IMF, The US Treasury’s proposed fund would have counteracted dangerous speculative flows automatically, with no political strings attached – no IMF conditionality. According to economic historian Brad Delong, on almost every point where he was overruled by the Americans, Keynes was later proved correct by succeeding events. After World War II, a number of developing countries attained independence from their former colonial rulers. One of the common claims made by leaders of independence movements was that colonialism had been responsible for perpetuating low living standards in the colonies. Thus, economic development after independence became an objective of policy not only because of the humanitarian desire to raise living standards but also because political promises had been made, and failure to make progress toward development could be interpreted as a failure of the independence movement. Developing countries in Latin America and elsewhere that had not been, or recently been, colonies took up the analogous belief that economic domination by the industrial countries had thwarted their development, and they, too, joined the quest for rapid growth. Memories of the Great Depression, when developing countries’ terms of trade had deteriorated markedly, producing sharp reductions in per capita incomes, haunted many policymakers. Finally, even in the developed countries, the Keynesian legacy attached great importance to investment. In this milieu, it was thought that a “shortage of capital” was the cause of underdevelopment. It followed that policy should aim at an accelerated rate of investment. Since most countries with low per capita incomes were also heavily agricultural (and imported most of the manufactured goods consumed domestically), it was thought that accelerated investment in industrialization and the development of manufacturing industries to supplant imports through “import substitution” was the path to development. Moreover, there was a fundamental distrust of markets, and a major role was therefore assigned to government in allocating investments. Distrust of markets extended especially to the international economy. Frieden sees the development of economic globalization after WWII in the context of this prior epoch of economic globalization, as well as its collapse as a result of WWI, the Depression, and WWII. All of these events had negative effects on almost all major economies (the US economy was a major 11 exception, at least in terms of the effect of the two world wars). INTERNATIONAL FINANCIAL INSTITUTIONS AND THE GLOBAL ECONOMY In many parts of the world, international financial institutions (IFIs) play a major role in the social and economic development programs of nations with developing or transitional economies. This role includes advising on development projects, funding them and assisting in their implementation. Some of the international financial institutions are the following: Bretton Woods System In times of globalization the economic environment changes rapidly. Capital movements become larger and at the same time less controllable. Therefore, the need for a stabilizing system became more and more apparent. Such a system was established at the conference of Bretton Woods – the Bretton Woods System. Already in 1944 the British economist John Maynard Keynes emphasized “the importance of rule-based regimes to stabilize business expectations”, something he accepted in the Bretton Woods system of fixed exchange rates. Leading industrial nations called for a renewal of the purpose and the spirit of this system to cope with the growing size of international trade and capital flows. The Bretton Woods Institutions were established just over fifty years ago, at the conclusion of World War II and in the aftermath of the great depression to aid in the reconstruction of Europe and to make it less likely that another global calamity such as the great depression would occur again, as an afterthought. 1. First, it sought to avoid the exchange rate instability of the floating-rate regime of the 1920s, which was seen as having impeded external adjustment and the post-World War I reconstruction of trade and finance. 2. Second, it aimed to prevent a repetition of the beggar-thy-neighbor policies that had characterized the latter stages of the interwar gold-exchange standard, during which countries used trade restrictions and competitive currency devaluations to increase trade surpluses (or reduce trade deficits) in attempts to reduce domestic unemployment, shifting that unemployment to other countries. 3. Third, it endeavored to provide autonomy for national authorities to pursue domestic targeted at achieving full employment. 4. Fourth, it sought to attain symmetric adjustment between those countries with balance-of- 12 payments surpluses and those with balance-of-payments deficits. 5. Fifth, it aimed to achieve symmetric positions among national currencies within the international financial regime. The plans for the system of Bretton Woods were developed by two important economists then, the American minister of state in the U.S. treasury, Harry Dexter White, and the British economist John Maynard Keynes who stated: “We, the delegates of this Conference, Mr. President, have been trying to accomplish something very difficult to accomplish. It has been our task to find a common measure, a common standard, a common rule acceptable to each and not irksome to any.” This statement outlines the difficulty of creating a system that every nation could accept. The ideas of John Maynard Keynes and Harry Dexter White have been described as very different from each other on several occasions but in fact there are extraordinary similarities. International Monetary Fund (IMF) The International Monetary Fund (IMF) was officially established on December 27, 1945, when the 29 participating countries at the conference of Bretton Woods signed its Articles of Agreement. It commenced its financial operations on March 1, 1947. The IMF today consists of 183 member countries. The IMF is a lightning rod for critics who see it as supporting developed countries and their efforts to impose their policies on less developed countries. Its supporters see it as key to the emergence and further development of the global economy. The origin of the IMF lies in the experience of countries during the inter-war period, including the Great Depression. In the 1920s and 1930s, many countries attempted to maintain domestic income in the face of shrinking markets through competitive devaluation of their currencies and resort to exchange and trade restrictions. Such measures could achieve their objectives only by aggravating the difficulties of trading partners who, in self-defense, were led to adopt similar policies, leading to a destructive vicious cycle. The purposes of the IMF are as follows: 1. To promote international monetary cooperation by establishing a global monitoring agency that supervises, consults, and collaborates on monetary problems. 2. To facilitate world trade expansion and thereby contributes to the promotion and maintenance of high levels of employment and real income. 13 World Bank The World Bank is an international organization that helps emerging market countries to reduce poverty. Its first goal is to end extreme poverty. It wants no more than 3% of people to live on $1.90 a day or less by 2030. Its second goal is to promote shared prosperity. It wants to improve the incomes of the bottom 40% of the population in each country. Since 1947, the World Bank has funded more than 12,000 projects. The World Bank, officially the International Bank of Reconstruction and Development (IBRD) is the most important element of the World Bank Group (WBG). The IBRD or the Bank was established in 1944 at Bretton Woods and began operations in 1964. The World Bank is not a bank in the conventional sense of the word. Instead, it consists of two organizations, the IBRD which provides loans, credit, and grants, and the International Development Association which provides low- or no-interest loans to low-income countries. The Bank works closely with three other organizations in the World Bank Group: 1. The International Finance Corporation (IFC) provides investment, advice, and asset management to companies and governments. 2. The Multilateral Investment Guarantee Agency (MIGA) insures lenders and investors against political risk such as war. 3. The International Centre for the Settlement of Investment Disputes (ICSID) settles investment disputes between investors and countries. General Agreement on Tariffs and Trade (GATT) The General Agreement on Tariffs and Trade (GATT), signed on Oct. 30, 1947, by 23 countries, was a legal agreement minimizing barriers to international trade by eliminating or reducing quotas, tariffs, and subsidies while preserving significant regulations. The GATT was intended to boost economic recovery after World War II through reconstructing and liberalizing global trade. The GATT went into effect on Jan. 1, 1948. Since that beginning it has been refined, eventually leading to the creation of the World Trade Organization (WTO) on January 1, 1995, which absorbed and extended it. By this time 125 nations were signatories to its agreements, which covered about 90% of global trade. In addition, this is a set of multilateral trade agreements aimed at the abolition of quotas and the reduction of tariff duties among the contracting nations. When such an agency failed to emerge, GATT was amplified and further enlarged at several succeeding negotiations. It 14 subsequently proved to be the most effective instrument of world trade liberalization, playing a major role in the massive expansion of world trade in the second half of the 20th century. The GATT was created to form rules to end or restrict the costliest and undesirable features of the prewar protectionist period, namely quantitative trade barriers such as trade controls and quotas. The agreement also provided a system to arbitrate commercial disputes among nations, and the framework enabled a number of multilateral negotiations for the reduction of tariff barriers. The GATT was regarded as a significant success in the postwar years. One of the key achievements of the GATT was that of trade without discrimination. All signatory members of the GATT were to be treated as equals, known as the most-favored-nation principle, and it has been carried through into the World Trade Organization. A practical outcome of this was that once a country had negotiated a tariff cut with some other countries (usually its most important trading partners), this same cut would automatically apply to all GATT signatories. World Trade Organization (WTO) The World Trade Organization (WTO) began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.) It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations. The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property). GLOBAL CORPORATIONS A global corporation, also known as a global company, is coined from the base term ‘global’, which means all around the world. It makes sense to assume that a global company is a company that does business all over the world. There aren’t many companies in the world that can boast of having a business presence in every major country. Actually, they probably can be numbered on the fingers of both hands. The global company definition, therefore, should be a little more lenient to accommodate this 15 fact, which would enable more companies to call themselves global companies. Really, a global company is any company that operates in at least a country other than the country where it originated. Realistically, expanding to even just one additional country is a lot of work and is therefore a great achievement. If you are operating in one country, selling your products around the world and shipping them to customers in countries in Europe while you’re in the Philippines, that doesn’t necessarily mean you’re a global company. It takes more than that to earn the name a global company. To be a global company, you need to introduce not only your products, but also your company to people who live in another country. You need to conduct significant research to figure out which country is your best choice for expansion and how to introduce yourself. Probably, you'll have to send some of your employees to that country to speak with people face-to-face and to experience that country on a first-hand basis, before you decide whether the country is right for your company. Once you expand to another country and establish yourself successfully, it's only natural that you will want to try an additional country, and another, and yet another. That is how global companies have started, and now they have a massive list of countries in which they do business. Example: Coca-Cola now sells its beverages in more than 200 countries. Not only does the Coca-Cola company sell its popular fizzy drinks such as Coke, Fanta, and Sprite, it also sells some 3,800 other products, including soy-based beverages that have been enriched with vitamins. The Coca-Cola company also sells juices, iced teas, bottled water, and a lot more. One of the reasons why Coca-Cola has seen such monumental success in nearly every country it has established itself is that it never has a standardized view of all countries. Instead, each country is considered on an individual basis. The company will make sure it only provides products that fit with the tastes and culture of the local community. Often, this means that Coca-Cola must create entirely new products to fit a market's demographics, or it may tweak an existing product so that it will appeal to residents in a specific locality. You may have noticed this. Some Coca-Cola products are available in some countries but not in others; this is because those products were created for that country or were tweaked to suit the preferences of a specific country. 16 WEEK 4 CONTEMPORARY WORLD Module on The Global Interstate GLOBALIZATION ON GOVERNMENTS The goal of globalization is to provide governments and organizations a superior competitive position with lower operating costs, to gain greater numbers of products, services, and consumers. The impact of globalization is noticeable in the following aspects of government: 1. Communications = Existing technologies have dramatically changed how we communicate and exchange information with one another within or across national borders. Traditional means of communication such as postal mail, telegram and international direct dial telephone calls (which usually affected by time-space factors) are now replaced by more efficient, fast and less error-prone communication technologies such as electronic mails (email), messaging applications, smartphones and social networking sites. For example, through Skype, Viber or Facebook Messenger, we can communicate with our loved ones in real time. It eliminates the difficulties posed by distance and physical barriers, like national borders or the oceans, that traditional means of correspondence such as postal mail and telegram, must undertake in order to do so. 2. Information Technology = The traffic of information is more rapid and advanced more than ever. The worldwide web or the internet has revolutionized the availability and access of information and other resources to humankind. It has broadly impacted science and different fields of knowledge as information, data, research and other developments are relatively accessible and are utilized with greater relevance and accuracy compared to the past. Traditional means of research and information gathering would require our physical presence in different libraries in order to enrich our research work. With recent advances in the internet, such as online information repositories or online libraries, access to information no longer require physical presence and extended periods of time to conduct research. News and information about real time events all over the world are also presented to us conveniently by News Channels that have an elaborate network of new reporters and news gatherers all over the world. 3. Culture = A significant number of scholars claim that societies are culturally homogenizing, that their 17 differences are gradually weakening, that there is an ongoing universalization of cultures among various groups of people. This means that different societies are now more capable of influencing the culture of other groups and vice versa. For example, we see the assimilation of foreign popular cultural influences such as rock and pop music, hip hop culture, Korean pop, manga anime into our local culture and vice versa. We can also observe this in the various types of cuisine that we enjoy, such as French fries, sushi, kimbap, tacos, nasi goreng, pudding, etc. We can also observe our exposure to different cultures and practices through various television shows that present other people’s ways of life such as MTV, HBO, Asian Food Channel, etc. 4. Economics = Globalization is evident in the economic aspects of social existence. Indelible gains of globalization are easily detectable in this aspect. Widespread global economic interdependence can be observed in the commodity chains of products that we patronize and use. For example, a t-shirt that we buy in the Philippine malls may not necessarily be produced in one country alone. The cotton which serves as its raw material may have been cultivated in United States and shipped to countries like Bangladesh or Indonesia to transform it to thread and cloth. It is then sold to factories in China, Bangladesh, Vietnam or the Philippines where it is transformed into finished clothing products. It is then boxed and shipped back to companies in the United States, printed with their respective brand names, repackaged and distributed to different markets all over the world. Another example is the well-defined interdependence of our financial institutions. Our banking industry’s well-entrenched linkages with the worldwide banking system hastens financial transactions all over the world. While there are advantages to this, there are also inherent risks. One can remember how the mortgage problems in the United States of America sparkled the global financial crisis worldwide in 2008. 5. Politics = The focus of this aspect is the role of the state and the impact of globalization upon it. Traditionally, all forms of political, social and economic activities are conducted within the sphere of influence of the State. Increasingly unhampered transnational and cross-border economic activities has caused the decline in the importance of the nation-state and the growth of a global political system, thereby necessitating the creation of international bodies of governance such as United Nations, International Tribunals, NATO, etc. We can also observe this in the increasing regionalization of countries all over the world. Nation-states also willingly enter into treaties and agreements that seek to establish universal policies, norms or laws that govern the decorum of various state and non-state actors at the national and international levels. Examples of these are the 18 Universal Declaration of Human Rights, International tribunal on the Law of the Seas and the International Criminal Court. There are also political actions that are local in nature but tend to resonate and are replicated internationally. Through social media and real-time messaging apps, the Arab Spring, a series of anti-government movements which began in Tunisia spread through neighboring Arab countries with varying consequences. 6. Environment = In this aspect, the focus is the shared world that us human beings have. The balance between our manner of consumption of resources that we all need to survive and the ways by which we sustainably or unsustainably use these resources is of high concern. The consequences of our carelessness and neglect for the environment has proven to be devastating to our chances of survival given the rapid deterioration of our environment. EFFECTS OF GLOBALIZATION ON GOVERNMENTS Globalization brings reorganization at the international, national, and sub-national levels. Specifically, it brings the reorganization of production, international trade, and the integration of financial markets. This affects capitalist economic and social relations, via multilateralism and microeconomic phenomena, such as business competitiveness, at the global level. The transformation of production systems affects the class structure, the labor process, the application of technology, and the structure and organization of capital. Globalization is now seen as marginalizing the less educated and low-skilled workers. Business expansion will no longer automatically imply increased employment. Additionally, it can cause a high remuneration of capital, due to its higher mobility compared to labor. INSTITUTIONS THAT GOVERN INTERNATIONAL RELATIONS The study and practice of international relations is interdisciplinary in nature, blending the fields of economics, history, and political science to examine topics such as human rights, global poverty, the environment, economics, globalization, security, global ethics, and the political environment. International relations (often referred to international affairs) has a broad purpose in contemporary society, as it seeks to understand: The origins of war and the maintenance of peace The nature and exercise of power within the global system The changing character of state and non-state actors who participate in international decision- 19 Making International institutions form a vital part of contemporary international relations. Much interaction at the system level is governed by them, and they outlaw some traditional institutions and practices of international relations. Some of the institutions that govern international relations are the following: Humanitarian Organizations Action Against Hunger = Action Against Hunger is a global humanitarian that takes decisive action against the causes and effects of hunger. Oxfam International = Oxfam is a global movement of people, working together to end the injustice of poverty. They tackle the inequality that keeps people poor. They save, protect and rebuild lives when disaster strikes. They also help people build better lives for themselves, and for others, take on issues like land rights, climate change and discrimination against women. United Nations World Food Program = The World Food Program's long experience in humanitarian and development contexts has positioned the organization well to support resilience building in order to improve food security and nutrition. WFP helps the most vulnerable people strengthen their capacities to absorb, adapt, and transform in the face of shocks and long- term stressors. Intergovernmental Organizations United Nations (UN) = United Nations can take action on the issues confronting humanity in the 21st century, including maintaining international peace and security, protecting human rights, delivering humanitarian aid, promoting sustainable development and upholding international law. World Trade Organization (WTO) = The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. North Atlantic Treaty Organization (NATO) = North Atlantic Treaty Organization or NATO’s purpose is to guarantee the freedom and security of its members through political and military means. NATO promotes democratic values and enables members to consult and cooperate on defense and security-related issues to solve problems, build trust and, in the long run, prevent conflict. NATO is committed to the peaceful resolution of disputes. If diplomatic efforts fail, it has the military power to undertake crisis-management operations. 20 International Communications Amnesty International = Amnesty International is a global movement of more than 7 million people who take injustice personally. They are campaigning for a world where human rights are enjoyed by all. Freedom House = Freedom House is founded on the core conviction that freedom flourishes in democratic nations where governments are accountable to their people; the rule of law prevails; and freedoms of expression, association, and belief, as well as respect for the rights of women, minorities and historically marginalized groups, are guaranteed. Human Rights Watch = Human Rights Watch defends the rights of people in 90 countries worldwide, spotlighting abuses and bringing perpetrators to justice. Basically, they are protecting and saving lives. Reporters Without Borders = Reporters Without Borders is an international non-profit and non- governmental organization that safeguards the right to freedom of information. Its advocacy is founded on the belief that everyone requires access to the news and information, inspired by Article 19 of the Universal Declaration of Human Rights, that recognizes the right to receive and share information regardless of frontiers, along with other international rights charters. INTERNATIONALISM Internationalism is a political principle that advocates greater political or economic cooperation among nations and people. It is associated with other political movements and ideologies, but can also reflect a doctrine, belief system, or movement in itself. Supporters of internationalism are known as internationalists and generally believe that humans should unite across national, political, cultural, racial, or class boundaries to advance their common interests, or that governments should cooperate because their mutual long-term interests are of greater importance than their short-term disputes. Internationalism has several interpretations and meanings, but is usually characterized by opposition to nationalism and isolationism; support for international institutions, such as the United Nations; and a cosmopolitan outlook that promotes and respects other cultures and customs. GLOBALISM Globalism is the ideology of globalization. Ideology here means a set of beliefs or a way of thinking. Steger interprets globalism as an ideological creed that tries to extend the Anglo-American model of liberal capitalism and its underlying norms and values to all regions of the world. According to 21 Ulrich Beck, globalism is the ideology of rule by the world market, the ideology of neoliberalism. Globalism is an ideology that promotes the principle of interdependence and unity of the whole world, of all nations and states instead of a national and state particularism. It tends to negate the crucial role of politics of nation-states in defining the basic legal, social and ecological conditions under which economic activities are enabled and socially facilitated. Steger adds and critiques six core claims of globalism: a. support for the worldwide liberalization and integration of markets b. articulation of the inevitability and irreversibility of globalization c. propagation of impersonal forces d. as agents of globalization e. unimpeded globalization to benefit the largest number of people f. the spread of democracy around the world g. the need for a war on terror WEEK 5 CONTEMPORARY WORLD Module on Contemporary UNITED NATIONS The name United Nations, coined by United States President Franklin D. Roosevelt was first used in the Declaration by United Nations of 1 January 1942, during Second World War. The United Nations is an international organization founded in 1945. The mission and work of the United Nations are guided by the purposes and principles contained in its founding Charter. The United Nations represents the peak of modern globalization. The United Nations is an intergovernmental organization tasked to promote international co-operation and to create and maintain international order. A replacement for the ineffective League of Nations, the organization was established 22 on October 24, 1945, after the World War II with the aim of preventing another such conflict. At its founding, the United Nations had 51 member states; there are now 193. The headquarters of the United nations is in Manhattan, New York City and is subject to extraterritoriality. Further main offices are situated in Geneva, Nairobi and Vienna. The organization is financed by assessed and voluntary contributions from its member states. Its objectives include maintaining international peace and security, promoting human rights, fostering social and economic development, protecting the environment and providing humanitarian aid in cases of famine, natural disaster and armed conflict. The United Nations is the largest, most familiar, most internationally represented and most powerful intergovernmental organization in the world. The UN Charter was drafted at a conference between April-June 1945 in San Francisco and was signed on June 26, 1945 at the conclusion of the conference; this charter took effect on October 24, 1945 and the UN began operation. The UN’s mission to preserve world peace was complicated in its early decades by the Cold War between the United States and the Soviet Union and their respective allies. The organization participated in major actions in Korea and the Congo, as well as approving the creation of the Israeli state in 1947. The organization’s membership grew significantly following widespread decolonization in the 1960s and by the 1970s, its budget for economic and social development programs far outstripped its spending on peacekeeping. After the end of the Cold War, the UN took on major military and peacekeeping missions across the world with varying degrees of success. Role of United Nations Due to the powers vested in its Charter and its unique international character, the United Nations can take action on the issues confronting humanity in the 21st century, such as peace and security, climate change, sustainable development, human rights, disarmament, terrorism, humanitarian and health emergencies, gender equality, governance, food production, and more. Some of the roles of United Nations are the following: Maintain International Peace and Security = The United Nations came into being in 1945, following the devastation of the Second World War, with one central mission: the maintenance of international peace and security. The UN does this by working to prevent conflict; helping parties in conflict make peace; peacekeeping; and creating the conditions to allow peace to hold and flourish. These activities often overlap and should reinforce one another, to be effective. The UN Security Council has the primary responsibility for international peace and security. The General Assembly and the Secretary- General play major, important, and complementary roles, along with other UN offices and bodies. 23 Protect Human Rights = The term “human rights” was mentioned seven times in the UN's founding Charter, making the promotion and protection of human rights a key purpose and guiding principle of the Organization. In 1948, the Universal Declaration of Human Rights brought human rights into the realm of international law. Since then, the Organization has diligently protected human rights through legal instruments and on-the-ground activities. Deliver Humanitarian Aid = One of the purposes of the United Nations, as stated in its Charter, is "to achieve international co-operation in solving international problems of an economic, social, cultural, or humanitarian character." The UN first did this in the aftermath of the Second World War on the devastated continent of Europe, which it helped to rebuild. The Organization is now relied upon by the international community to coordinate humanitarian relief operations due to natural and man-made disasters in areas beyond the relief capacity of national authorities alone. Promote Sustainable Development = From the start in 1945, one of the main priorities of the United Nations was to “achieve international co-operation in solving international problems of an economic, social, cultural, or humanitarian character and in promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language, or religion.” Improving people’s well-being continues to be one of the main focuses of the UN. The global understanding of development has changed over the years, and countries now have agreed that sustainable development – development that promotes prosperity and economic opportunity, greater social well-being, and protection of the environment – offers the best path forward for improving the lives of people everywhere. Uphold International Law = The UN Charter, in its Preamble, set an objective: "to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained". Ever since, the development of, and respect for international law has been a key part of the work of the Organization. This work is carried out in many ways - by courts, tribunals, multilateral treaties - and by the Security Council, which can approve peacekeeping missions, impose sanctions, or authorize the use of force when there is a threat to international peace and security, if it deems this necessary. These powers are given to it by the UN Charter, which is considered an international treaty. States are bound by it. The UN Charter codifies the major principles of international relations, from 24 sovereign equality of States to the prohibition of the use of force in international relations. UN System Agencies include the World Food Program, UNESCO and UNICEF. The UN’s most prominent officer is the Secretary-General, an office held by Portuguese politician and diplomat Antonio Guterres since 2017. Non-governmental organizations may be granted consultative status with ECOSOC and other agencies to participate in the United Nations’ work. The UN has six principal organs: 1. The General Assembly = The General Assembly (the main deliberative assembly) is the main deliberative, policymaking and representative organ of the UN. All 193 Member States of the UN are represented in the General Assembly, making it the only UN body with universal representation. Each year, in September, the full UN membership meets in the General Assembly Hall in New York for the annual General Assembly session, and general debate, which many heads of state attend and address. Decisions on important questions, such as those on peace and security, admission of new members and budgetary matters, require a two-thirds majority of the General Assembly. Decisions on other questions are by simple majority. The General Assembly, each year, elects a GA President to serve a one-year term of office. 2. The Security Council = The Security Council (for deciding certain resolutions for peace and security) has primary responsibility, under the UN Charter, for the maintenance of international peace and security. It has 15 Members (5 permanent and 10 non-permanent members). Each Member has one vote. Under the Charter, all Member States are obligated to comply with Council decisions. The Security Council takes the lead in determining the existence of a threat to the peace or act of aggression. It calls upon the parties to a dispute to settle it by peaceful means and recommends methods of adjustment or terms of settlement. In some cases, the Security Council can resort to imposing sanctions or even authorize the use of force to maintain or restore international peace and security. The Security Council has a Presidency, which rotates, and changes, every month 3. The Economic and Social Council = The Economic and Social Council (ECOSOC, for promoting international economic and social cooperation and development) is the principal body for coordination, policy review, policy dialogue and recommendations on economic, social and environmental issues, as well as implementation of internationally agreed development goals. It serves as the central mechanism for activities of the UN system and its specialized agencies in the economic, social and environmental fields, supervising subsidiary and expert bodies. It has 54 Members, elected by the General Assembly for overlapping three-year terms. It is the United Nations’ central platform for reflection, debate, and innovative thinking on sustainable development. 4. The Secretariat = The Secretariat (for providing studies, information and facilities needed by the 25 United Nations) comprises the Secretary-General and tens of thousands of international UN staff members who carry out the day-to-day work of the UN as mandated by the General Assembly and the Organization's other principal organs. The Secretary-General is chief administrative officer of the Organization, appointed by the General Assembly on the recommendation of the Security Council for a five-year, renewable term. UN staff members are recruited internationally and locally, and work in duty stations and on peacekeeping missions all around the world. But serving the cause of peace in a violent world is a dangerous occupation. Since the founding of the United Nations, hundreds of brave men and women have given their lives in its service. 5. The International Court of Justice = The International Court of Justice (the primary judicial organ) is the principal judicial organ of the United Nations. Its seat is at the Peace Palace in The Hague (Netherlands). It is the only one of the six principal organs of the United Nations not located in NewAs such, it is an instrument of international law, and UN Member York (United States of America). The Court’s role is to settle, in accordance with international law, legal disputes submitted to it by States and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies. 6. Trusteeship Council = The Trusteeship Council (inactive since 1994) was established in 1945 by the UN Charter, under Chapter XIII, to provide international supervision for 11 Trust Territories that had been placed under the administration of seven Member States, and ensure that adequate steps were taken to prepare the Territories for self-government and independence. By 1994, all Trust Territories had attained self-government or independence. The Trusteeship Council suspended operation on 1 November 1994. By a resolution adopted on 25 May 1994, the Council amended its rules of procedure to drop the obligation to meet annually and agreed to meet as occasion required - by its decision or the decision of its President, or at the request of a majority of its members or the General Assembly or the Security Council. Functions of United Nations As it was in the past, the main function of the UN today is to maintain peace and security for all of its member states. Though the UN does not maintain its own military, it does have peacekeeping forces that are supplied by its member states. On approval of the UN Security Council, these peacekeepers are, for example, sent to regions where armed conflict has recently ended to discourage combatants from resuming fighting. In 1988, the peacekeeping force won a Nobel Peace Prize for its actions. 26 In addition to maintaining peace, the UN aims to protect human rights and provide humanitarian assistance when needed. In 1948, the General Assembly adopted the Universal Declaration of Human Rights as a standard for its human rights operations. The UN currently provides technical assistance in elections, helps to improve judicial structures and draft constitutions trains human rights officials, and provides food, drinking water, shelter, and other humanitarian services to peoples displaced by famine, war, and natural disaster. Finally, the UN plays an integral part in social and economic development through its UN Development Program. This is the largest source of technical grant assistance in the world. In addition, the World Health Organization; UNAIDS; The Global Fund to Fight AIDS, Tuberculosis, and Malaria; the UN Population Fund; and the World Bank Group, to name a few, play an essential role in this aspect of the UN. The parent organization also annually publishes the Human Development Index to rank countries in terms of poverty, literacy, education, and life expectancy. GLOBAL GOVERNANCE IN THE 21ST CENTURY Global Governance was developed to explain an international system that was becoming more complex. It refers to the “loose framework of global regulation, both institutional and normative, that constrains conduct. It has many elements: international organizations and law; transnational organizations and frameworks; elements of global civil society; and shared normative principles”. It refers to the institutions, organizations, laws or principles, agreements and treaties and codes of conduct in the international system which controls or limits the conduct of processes, flows, interactions and actions or behaviors of actors in the international system. It is important to know that this international system does not have a global government that exerts authority or implements laws which members in the international system, states or private organizations and individuals, obey. According to Adil Najam, global governance is the management of global processes in the absence of a global government. Global governance requires a certain degree of organization and understanding among key actors in the international system of the need to regulate interdependent relationships on a global scale. Our present epoch seems to be increasingly characterized by fear of the future with growing insecurity, social fragmentation and polarization, and a lack of hope, even among the young who often face a more uncertain future than that of their parents. The economic system favors profits for the rich over 27 employment for the masses, with many in the middle seeing decades without improvement, if not falling backward, and half the world population still struggling to meet basic needs. Poverty, exclusion and neglect present fundamental social challenges, with no easy solutions in sight. The world economy is running on increasing debt, threatening a return to the financial chaos of a decade earlier, but with governments’ room for maneuver significantly reduced. The forces of disintegration are reflected in growing evidence of the failing institutions of governance, with often discredited leadership, widespread corruption, loss of public confidence, and the recent rise of populist, reactionary and autocratic movements rejecting multilateralism and diversity. Contributing to all this is a generalized loss of moral responsibility, higher ethics or values, even spirituality, able to fill the vacuum of any higher human purpose in a materialistic society. It is not easy to set priorities among the many challenges of today, as all are interrelated. Their complexity calls for new approaches suitable for dynamic, integrated systems evolving through constant innovation in technologies, forms of communications, patterns of organization and institutional frameworks. The challenge for mechanisms of governance at all scales of human organization is to accompany and steer these processes to ensure the common good, setting limits that prevent their being captured by the already rich and powerful for their own benefit, and ultimately ensuring a just society that guarantees the well-being of every person on the planet. Some of the challenges of global governance in the 21st century are the following: Environmental Challenges = In the scientific community, the major areas of urgent concern have been climate change, biodiversity loss and pollution. To take just a few examples: global carbon dioxide emissions from fossil fuels have grown at an average annual rate of 2 percent since 1990 and hit record levels in 2018, reflecting the continued growth of the global economy, and a sharp rise in energy consumption in China, accompanied by the weakening of natural carbon sinks, such as forests and seas. Not surprisingly, large volumes of Arctic ice have melted and accelerated flow in Greenland glaciers and now in the Antarctic is contributing to rising sea levels. Social Challenges = Unemployment is in fact one of our most important social challenges, as it is a driver for exclusion and marginalization, with consequences including increasing crime, drug trafficking and use, juvenile delinquency, family breakdown, domestic violence, and migration in search of better opportunities. Meaningful employment is essential for human dignity and a place in the community, and work in a spirit of service to the community has important benefits including 28 refining human character and empowering individuals to develop their human potential. No one should be deprived of the opportunity to work, and one purpose of good governance should be to guarantee this opportunity. Neither governments nor private actors have found a solution to this challenge at present. Some have proposed a guaranteed minimum income. While this could be an effective tool to alleviate poverty and provide a safety net for vulnerable groups, it does not address the problem of unemployment and the associated waste of resources. Work is necessary for individual and social health. Economic Challenges = One economic challenge is the growing risk of a global financial collapse when the present debt bubble bursts. The global economy has no lender of last resort. There is no reliable, depoliticized mechanism to deal with financial crisis. Whether a country receives or is refused an International Monetary Fund (IMF) bailout in the middle of a financial meltdown is a function not of a transparent set of internationally agreed rules, but rather of several other factors, including whether the IMF’s largest shareholders consider the country to be a strategic ally worth supporting. There is also no effective international legal framework to ensure that global business enterprises are socially, environmentally and economically responsible. RELEVANCE OF STATE AMID GLOBALIZATION The role of the state in globalization is a complex one in part due to the varying definitions and shifting concepts of globalization. While it has been defined in many ways, globalization is generally recognized as the fading or complete disappearance of economic, social, and cultural borders between nation-states. Some scholars have theorized that nation-states, which are inherently divided by physical and economic boundaries, will be less relevant in a globalized world While increasingly reduced barriers regarding international commerce and communication are sometimes seen as a potential threat to nation-states, these trends have existed throughout history. Air and sea transportation that made same-day travel to other continents possible and greatly expanded trade among countries did not abolish the sovereignty of individual nations. Instead, globalization is a force that changed the way nation-states deal with one another, particularly in the area of international commerce. Globalization has changed the role of the state politically because of strengthened interstate relationships and dependence on one another. States were created to be sovereign but now, due to globalization, often give their sovereignty away to pooling in conventions, contracting, coercion and imposition. This has led to increasingly similar jurisdictions across states and to power being seen as.