Contemporary World Effects of Globalization Notes PDF

**Contemporary World- Lesson 2 and Lesson 3** **Effects of Globalization** ***Individual Effects*** On an individual level, globalization has affected the standard of life and quality of life of individuals and families throughout the world. **Standard of living** is the level wealth, comfort, ma...

**Contemporary World- Lesson 2 and Lesson 3** **Effects of Globalization** ***Individual Effects*** On an individual level, globalization has affected the standard of life and quality of life of individuals and families throughout the world. **Standard of living** is the level wealth, comfort, material goods, and necessities available to a certain socioeconomic class in a certain geographic area. **Quality of life** is the degree to which a person enjoys the important possibilities of his or her life. In many instances, quality of life has improved for those who live in developing nations. For many developing nations, globalization has led to an improvement in standard of living through improved roads and transportation, improved health care, and improved education due to the global expansion of corporations. However, globalization has had a negative effect on individuals who live in developed nations. This is due to the fact that corporations now have the option of establishing manufacturing operations in nations where manufacturing and production costs are less expensive. As a result, many manufacturing jobs leave developed nations and move to developing nations. **The Global Economy** - Also referred to as "world economy" - Refers to the international exchange of goods and services - The global economy refers to the interconnected economies of the world\'s nations, where goods, services, capital, and labor move across borders. **What is Economic Globalization?** - IMF defined economic globalization as a historical process, the result of human innovation and technological progress. - It refers to the increasing integration of economies around the world, particularly through the movements of goods, services and capital across boarders (IMF, 2008). - Economic globalization is the process of increasing the financial integration amongst countries. Consequently, economic globalization leads to the development of a \"global marketplace\" or \"a single world market\". **Economic globalization has several in interwoven dimensions** 1. *The globalization of trade of goods and services; (this refers to the increasing exchange of goods and services across international borders.)* 2. *The globalization of financial and capital markets; (The integration of national financial markets into a single global market, where capital (money) can move freely across borders.)* 3. *The globalization of technology and communication; and (The rapid spread and sharing of technological innovations and communication systems across the globe.)* 4. *The globalization of production (The process by which production is fragmented across different countries to maximize efficiency and reduce costs.)* **Factors that facilitate Economic Globalization** 1\. HISTORICAL: The trade routes were made over the years so that goods from one kingdom or country moved to another. The well-known silk-route from east to west is an example of historical factor. 2\. ECONOMY: The cost of goods and values to the end user determine the movement of goods and value addition. The overall economics of a particular industry or trade is an important factor in globalization. 3\. RESOURCES AND MARKETS: The natural resources like minerals, coal, oil, gas, human resources, water, etc. make an important contribution in globalisation. 4\. PRODUCTION ISSUES: Utilisation of built up capacities of production, sluggishness in domestic market and over production makes a manufacturing company look outward and go global. The development of overseas markets and manufacturing plants in autos, four wheelers and two wheelers is a classical example. 5\. POLITICAL: The political issues of a country make globalisation channelised as per political bosses. The regional trade understandings or agreements determine the scope of globalization. Trading in European Union and special agreement in the erstwhile Soviet block and SAARC are examples. 6\. INDUSTRIAL ORGANISATION: The technological development in the areas of production, product mix and firms are helping organisations to expand their operations. The hiring of services and procurement of sub-assemblies and components have a strong influence in the globalization process. 7\. TECHNOLOGIES: The stage of technology in a particular field gives rise to import or export of products or services from or to the country. European countries like England and Germany exported their chemical, electrical, mechanical plants in 50s and 60s and exports high tech (then) goods to under developed countries. Today India is exporting computer / software related services to advanced counties like UK, USA, etc. **Confluence vs Divergence** ***Confluence*** Convergence generally means coming together ***Divergence*** Divergence generally means moving apart. In the world of finance and trading, convergence and divergence are terms used to describe the directional relationship of two trends, prices, or indicators. Is globalization the answer to end, if not minimize, inequality and dehumanizing poverty in the peripheries? Or would it only make the poor worse off and benefit more the rich? Why most poor countries failed to catch up with developed ones? ***Core countries** --- Produce products that require advanced skills and/or significant financial investment to make. They have dominant, often unbalanced economic relationships with the semi-periphery and periphery nations. Core countries are highly developed, high-income capitalist countries that have significant economic, political, and military power. This enables them to exploit periphery and semi-periphery nations for cheap labor, agricultural products, and raw materials.* ***Periphery countries** --- These are the least-developed and still developing countries. They produce labor-intensive and/or low-skill products and are typically exploited as a source of cheap labor, raw materials, and agricultural production for core and semi-periphery countries.* ***Semi-Periphery countries** --- These countries represent the intermediate state of development. They are often still exploited by core countries, but have developed to the extent that they too can begin to source cheaper labor, food, and resources from periphery countries.* **WAVES OF ECONOMIC GLOBALIZATION** *Early Wave* Boudreaux (2008) aptly described the primary reason people engage in trade so that "each party expects to be made better off by that trade." Through trade the exchange is not limited merely to goods and services there is also more important and that is ideas and knowledge. This trade did not only transpire from its close neighbors but encompasses for thousands of miles. Famous of which that lasted for 2,000 years, from ancient times into the 16th century was known as the Silk Road. The coverage of this trade was so vast connecting by land and sea from Asia to the far end of Europe, Middle East, as well as Africa. During this period traded goods, silk, spices, ceramics, textile, compasses, gun powder from India and China (Frank, 1998). *The Keynesian Liberal Wave* In anticipation of the inevitable end of the Second World war, 44 countries headed by the United States of America in Great Britain gathered in Bretton Woods, New England to frame new international economic policies that will regulate trade and financial agreement. Economic setbacks in the Inter war years From 1918- 1938 such as The Great Depression in 1929 and 1930s motivated political and financial leaders to set the institutional foundations for the establishment of three international economic organizations. The International Monetary Fund was established to administer responsibility to coordinate and regulate International Monetary transaction as well as to promote global economic prosperity and political stability. The international bank for reconstruction and development became known as World Bank, primarily designed for the Marshall Plan to extend financial loans to reconstruct the devastated economies in Europe. By 1950s Loans were expanded to the developing countries in the world to provide funds to finance various industrial projects (Steger, 2002). *The Neo-Liberal Wave* After the dissolution of the Bretton Woods a new set of policies were introduced: neoliberalism and the Washington consensus. Neoliberalism economic policies were grounded under the laissez-faire principal that market is the fundamental dominant decision maker. Joseph Stiglitz aptly described neoliberal doctrine is more on freedom from the government in terms of taxation, freedom from Regulation. **The Power of transnational Corporation** **International companies** are importers and exporters, typically without investment outside of their home country. **Multinational companies** have investments in other countries, but do not have coordinated product offerings in each country. They are more focused on adopting their products and services to each individual local market. **Global companies** have invested in and are present in many countries. They typically market their products and services to each individual local market. **Transnational companies** are more complex organizations which have a central Corporation facility but give decision making, research and development and marketing powers to each individual foreign markets. There are three fundamental innovations that have substantially changed the character of global Corporation. First was the advent and impact of digitalization in instantaneous global communication. Third, the increasing role performed through the global system by financial elements an emergence of the global financial firm. **Lesson 3 Market Globalism and Integration** *WHAT IS MARKET GLOBALISM?* For Manfred Steger, market globalization contains an ideological dimension filled with a range of norms, claims, beliefs, and narratives about the phenomenon itself. It is construed to be the dominant ideology of our time. Ideology is a system of widely shared ideas, pattern believes , guiding norms and values, and ideals that are accepted as truths by certain group of people (Steger, 2014). They help organize the complexity of human experience into fairly simple, but frequently distorted images and slogans that serves as guide and compass for social and political action. **THE FIVE CORE CLAIMS OF MARKET GLOBALISM-** *David's claim Is so optimistic that in one way or another, stresses that globalization is beneficial to the world citizens. It seems to imply that with globalization at hand, the lives for most people would become better for days or years to come.* *Globalization Is about the liberalization and global integration of markets.* The first core claim of globalization's essence is that it simply espouses the idea of the inevitability of the spread of ideals of free trade and free enterprise to us many States and nations across the globe. One of its side effects is that it paved the way to many governments' "HANDS OFF" attitude towards the interest of large transnational and multinational Corporation. 1. *Globalization is inevitable an irreversible.* *For the market- globalist perspective, the coming of globalization would be an absolute certainty. In fact, once it happens, there is no turning back since globalization is inevitable an irreversible.* *As a process, globalization did not happen overnight. It is a product of the ever-increasing innovativeness of human spirit.* 2. *Globalization is inevitable an irreversible.* *The advancement of science and technology facilitated globalization\'s encroachment to many aspects of people\'s lives whether collectively or individually since the products of globalization are, more often than not, employed as means to address problems that have confronted humanity as a whole ( Steger, 2014).* 3. *Nobody is in charge of globalization.* *The claim is based on the classical concept of "self regulating" market.* 4. *Nobody is in charge of globalization.* *The question on who owns responsibility for whatever its effects would strongly taken into consideration since globalization would not pinpoint who is in charge. This is where corporate social responsibility comes in.* 5. *Globalization benefits everyone in the long run.* *With globalization bringing a lot of improvements on the things that people use on the way they live, it would be logical to assert that globalization would benefit everyone in the long run.* *As it is defined by Steger as the expansion and intensification of social relations and consciousness across world - time and world- space.* *Globalization furthers the spread of the democracy in the world.* *The 5th claim links globalization and market to the adjacent concept of democracy, which also plays a significant role in liberalism, conservatism, and socialism.*