Globalization Midterm PDF

Globalization The term “globalization” is derived from the word “globalize” which refers to the emergence of an international network of economic system. In economic terms, it usually refers to the integration of the national markets to a wider global signified by the increased free tr...

Globalization The term “globalization” is derived from the word “globalize” which refers to the emergence of an international network of economic system. In economic terms, it usually refers to the integration of the national markets to a wider global signified by the increased free trade. It is a process by which goods, services, capital, people, information and ideas flow across national borders. (Grewal/Levy) The expansion and intensification of social relations and consciousness across world- time and across world-space. (Manfred Steger) According to Arjun Appadurai (anthropologist), that globalization can be divided into the five “scapes”. * An “ethnoscape,” refers to the global movement of people. * A “mediascape,” is about the flow of culture. * A “technoscape,” refers to the circulation of mechanical goods and software; * a “financescape” denotes the global circulation of money; * an “ideoscape” is the realm where political ideas move around. Globalization has various aspects which affect the world in several different ways. These aspects include: Industrial globalization – development of worldwide production markets and broader access to a range of foreign products for consumers and companies involving particularly movement of material and goods between and within national boundaries. Financial globalization – development of worldwide financial markets and better access to external financing borrowers. Economic globalization – establishment of global common market, based on the freedom of exchange of goods and capital Political globalization – creation of international organizations to regulate the relationships among governments and to guarantee the rights arising from social and economic globalization. Informational globalization – increase in information flows between geographically remote locations. Cultural globalization – sharing ideas, attitudes and values across national borders. ELEMENTS OF GLOBALIZATION: 1. Trade Agreements – bilateral, regional or multilateral economic arrangements designed to reduce or eliminate trade barriers. 2. Capital Flow – measurement of increase or decrease in a nation’s domestic or foreign assets. 3. Migration Patterns – impact of labor market fluidity on production costs through the loss (emigration) or gain (immigration) of potential workers especially those with particular skills. 4. Information Transfer – communication trend that helps mitigate the asymmetric functioning of markets and economies. 5. Spread Technology – rapid diversion of the means and methods of producing goods and services. GLOBAL ECONOMY -system of trade and industry across the world that has emerged due to globalization. -The origins of a global economy can be traced back to the expansion of long-distance trade during the period of 1450-1640, which Wallerstein has labeled the “long sixteenth century”. Economic Globalization -a result of human innovation and technological progress. -It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders. -It may also refer to the movement of people (labor) and knowledge (technology) across international borders Commodity - is a basic physical asset, often used as a raw material in the production of goods or services. Capital - Capital is identified with money, wealth -Growth of wealth, surplus value, formed by the labour - Accumulation of wealth with the help of wage labour Labor Market - refers to the supply of and demand for labor, in which employees provide the supply and employers provide the demand. GLOBAL STRATIFICATION -refers to the hierarchical arrangement of individuals and groups in societies around the world. Different typologies of global stratification are the following: First Typology  A. First World - The Western Capitalist democracies of North and Europe, and other certain nations (Australia, New Zealand and Japan). B. Second World – Nations belonging to the Soviet Union. C. Third World – All the remaining nations, almost all of them from Central and South America, Africa and Asia. II. Replacement Typology A. Developed B. Developing C. Undeveloped III. Popular Typology A. Wealthy (or high income) B. Middle-income C. Poor or low-income THEORIES OF GLOBAL STRATIFICATION Modernization Theory – According to this theory, rich nations became wealthy because early on they were able to develop the correct beliefs, values, and practices. Dependency Theory – According to this view, the poor nations never got the chance to pursue economic growth because early on they were conquered and colonized by European ones. World System Theory- This theory states that some nations become modernized by exploiting other nations. TYPES OF GLOBAL POVERTY 1. RELATIVE POVERTY - is the condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live. 2. ABSOLUTE POVERTY - refers to a condition where a person does not have the minimum amount of income needed to meet the minimum requirements for one or more basic living needs over an extended period of time. 3. SUBJECTIVE POVERTY - describes poverty that is composed of many dimensions; it is subjectively present when your actual income does not meet your expectations and perceptions. GLOBAL INTERSTATE SYTEM -It is the fundamental basis of the competitive commodity economy at global system level. -A system of international relations. International Relations (IR) - is defined as the study of interconnectedness of politics, economics and law on a global level. Economic Interdependence - A relationship between countries in which each country is dependent on another for necessary goods or services. Economic Integration - A process whereby countries cooperate with one another to reduce or eliminate barriers to the international flow of products, people and capital. Political Integration - It refers to the integration of components within political system. International Organization - is an organization established by a treaty or other instrument governed by international law and possessing its own international legal personality. Different types of International Organizations I. Intergovernmental Organization (IGO) is an organization composed primarily of sovereign states (referred to as member of states), or of other intergovernmental organizations.  Association of Southeast Asian Nation (ASEAN) (One Vision, One Identity, One Community) - It was established on 8 August 1967 in Bangkok, Thailand with the signing of the ASEAN Declaration (Bangkok Declaration) by the founding fathers of ASEAN namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei Darussalam (1984), Vietnam (1995), Lao PDR and Myanmar in 1997 and Cambodia (1999) makes up what is today the 10 member-state of ASEAN  European Union (EU) (United in Diversity) - The EU began in 1957 when six countries signed Treat of Rome. The six countries were called the European Economic Community. - The euro is the common currency for the EU area. The goals of the European Union are: 1. Promote peace, its values and the well-being of its citizens; 2. Offer freedom, security and justice without internal borders; 3. Sustainable development based on balanced economic growth and price stability; 4. Environment protection; 5. Enhance economic, social and territorial cohesion and solidarity among EU countries; and 6. Respect its rich cultural and linguistic diversity  North American Free Trade Agreement (NAFTA) - In 1994, North American Free Trade Agreement (NAFTA) came into effect creating one of the world’s largest free trade zones and laying foundations for strong economic growth and rising prosperity for Canada, the United States of America, and Mexico. II. International Non-Governmental Organization (INGO) a group having members from more than one country, government or non-governmental, profit or non-profit. An international organization not created by an international treaty. 1. BINGO: Business-friendly International NGO Example – Red Cross 2. ENGO: Environmental NGO Example – World Wildlife Fund 3. GONGO: government-organized non-governmental organization Example – Myanmar Women’s Affairs Federation III. Multinational Enterprises (MNE) -sometimes also called multinational corporation (MNC), just multinational or international corporation, is an enterprise producing goods or delivering services in more than one country. MARKET INTEGRATION It is defined as by Koester, (2000), is a state of affairs or a process of involving attempts to combine separate national economies into larger economies. It is a means of stimulating trade and improving the division of labor between participating countries. THREE KINDS OF MARKET INTEGRATION: HORIZONTAL INTEGRATION- occurs when a firm or agency gains control of other firms or agencies performing similar marketing functions at the same level in the marketing sequence. -some marketing agencies combine to form a union with a view to reducing their effective number and the extent of actual competition in the market VERTICAL INTEGRATION- occurs when a firm performs more than one activity in the sequence of the marketing process. It is a linking together of two or more functions in the marketing process within a single firm or under a single ownership. -This type of integration makes it possible to exercise control over both quality and quantity of the product from the beginning of the production process until the product is ready for the consumer. 2 TYPES: a) Forward integration If a firm assumes another function of marketing which is closer to the consumption function, it is a case of forward integration. wholesaler assuming the function of retailing b) Backward integration This involves ownership or a combination of sources of supply. when a processing firm assumes the function of assembling/purchasing the produce from the villages. CONGLOMERATION- A combination of agencies or activities not directly related to each other, when it operates under a unified management, be termed a conglomeration. FIVE FORMS OF MARKET INTEGRATION 1. Preferential Agreement – is a trading block that gives preferential access to certain products from the participating countries. 2. Free Trade Agreement – reduces trade barriers among member countries to zero but each member still has autonomy in deciding on the external rate of tariff for its trade with non- member countries. 3. Custom Union – Represents a higher stage of economic integration. In this form, countries agree to abolish tariff and non-tariff to trade in goods flowing between them. They agree a common external tariff. 4. Common Market – Free movement of labor and capital within the member-countries. Hence, the intention of a common market is to integrate both product and factor markets member-countries. 5. Economic Union – It is the highest form of economic integration. In addition to the conditions of a common market, member-countries also agree to integrate monetary fiscal, and other policies. INTERNATIONAL FINANCIAL INSTITUTION WORLD TRADE ORGANIZATION (WTO) The WTO is the only global international organization dealing with the rules of trade between nations. The goal is to ensure that the trade flows as smoothly, predictably, and freely as possible. WORLD BANK (WB) It is an international intergovernmental organization for providing long-term loans on easy term for specific developmental projects INTERNATIONAL MONETARY FUND (IMF) Works as short-term credit institution; Provides for the orderly adjustment of exchange rates HISTORY OF MARKET INTEGRATION Agriculture Revolution is the name given to a number of cultural transformations that initially allowed humans to change from a hunting and gathering subsistence to one of agriculture and animal domestications. Industrial Revolution This transition included going from hand production methods to machines, new chemical manufacturing and iron production processes, improved efficiency of water power, the increasing use of steam power, the development of machine tools, and the rise of the factory system. Capitalism is the socio-economic system where all property is privately owned, where freely formed contracts form the basis of economic interaction, and where the government does not engage in regulation, supervision, or direction of market processes. Laissez-faire capitalism means the systematic implementation of the principle underlying the separation of economy and state—freedom. Socialism is a system in which person in the community has an equal share of the various elements of production, distribution, and exchange of resources. Information revolution is a period of change that might prove as significant to the lives of people. Computer technology is at the root of this change, and continuing advancements in that technology seem to ensure that this revolution would touch the lives of people. 1. Primary labor market - includes jobs that provide many benefits to workers, like high incomes, job security, health insurance, and retirement packages. 2. Secondary labor market - jobs provide fewer benefits and include lower-skilled jobs and lower service sector. GLOBAL GOVERNANCE refers to the entirety of regulations put forward with reference to solving specific denationalized problems or providing transnational common goods UNITED NATIONS The United Nations is an international organization founded in 1945. President Franklin D. Roosevelt, was first used in the “Declaration by United Nations” of 1 January 1942, during the Second World War, when representatives of 26 nations pledged their governments to continue fighting together against the Axis powers. ROLE OF UNITED NATION 1. Maintain International Peace and Security 2. Protect Human Rights 3. Deliver Humanitarian Aid 4. Promote Sustainable Development 5. Uphold International Law Compliance Gap – The fifth and final gap is the compliance gap. Compliance measures must include mechanism to identify defections and defectors from agreed upon norms and commitments in the realm of international governance as well as incentives that reward cooperation and disincentives that punish defection, including the use of force to bring those who have not complied back into line.