GED 104 - The Contemporary World Module PDF

The Contemporary World 2020 The Contemporary World This module on GED 104 - The Contemporary World is designed to introduce students to varied concepts and perspectives of globalization; its effects to different social units and different challenges posed by it. This module is comprised of seven units with various subtopics. Unit I deals with the introduction to globalization where students will be able to present their own personal concepts of globalization; and be able to identify different underlying philosophies out of these notions. Unit II concerns with the structures of globalization which include the subtopics on the global economy, market integration, the global interstate system and contemporary global governance. Here, students will be able to articulate a stance on global economic integration; identify attributes of global corporations; explain the effects of globalization in governments as well as the challenges of global governance in the twenty first century. Unit III deals with a world of ideas where Global Divides: the North and the South as well as Asian regionalism is the focus. Students in this unit will be able to differentiate the Global South for the third world and identify the factors leading to a greater integration of the Asian region. Unit IV presents a world of ideas in relation to global media culture and globalization of religion. Students in this unit will be able to determine the drive of various media to different forms of global integration, as well as the relationship between religion and global conflict including global peace. Unit V focuses on globalization and mobility dealing on the subtopics about the global city, global demography and global migration. Students in this unit will be able to identify the attributes of the global city; explain the theory of demographic transition as it affects global population, and analyze economic, cultural and social factors underlying the global movements of the people. Unit VI concerns toward a sustainable world focusing on sustainable development and global food security. In this unit, students will be able to differentiate stability from sustainability and give concepts on global food security. Unit VII deals with global citizenship. Here, students will develop appreciation on the ethical obligations of global citizenship. 1 The Contemporary World 2020 With the different lessons covered in this module, it is hoped that students will gain the necessary competencies, skills and values intended for this course. 2 The Contemporary World 2020 The Contemporary World Weeks 1-2 Introduction to Globalization 3-5 The Structures of Globalization.The Global Economy. Market Integration. The Global Interstate System. Contemporary Global Governance 6-8 A World of Regions. Global Divides: The North and the South. Asian Regionalism 9 Midterm !0-11 A World of Ideas. Global Media Cultures. The Globalization of Religion 12-14 Global Population and Mobility.The Global City. Global Demography.Global Migration 15-16 Towards a Sustainable World. Sustainable Development. Global Food Security 17-18 Global Citizenship 3 The Contemporary World 2020 The Contemporary World At the end of the course the students should be able to: A. Competencies 1. Distinguish different interpretations of and approaches to globalization; 2. Describe the emergence of global economic, political, social, and cultural systems; 3. Analyze the various contemporary drivers of globalization; 4. Understand the issues confronting the nation-state; and 5. Assess the effects of globalization on different social units and their responses. B. Skills 1. Analyze contemporary news events in the context of globalization; 2. Analyze global issues in relation to Filipinos and the Philippines; and 3. Write a research paper with proper citations on a topic related to globalization. C. Values 1. Articulate personal positions on various global issues; and 2. Identify the ethical implications of global citizenship 4 The Contemporary World 2020 UNIT I INTRODUCTION TO GLOBALIZATION Coverage: Weeks 1 and 2 Duration: 6 hours Learning Objectives: After studying the unit, the students should be able to:  synthesize the definitions of globalization by the different authorities;  explain the different attributes or characteristics of globalization;  trace the historical periods of globalization;  identify the different dimensions of globalization; and  expound the major ideological claims of advocates of globalism. Globalization Concepts, Meanings, Features, and Dimensions Globalization is the process in which people, ideas and goods spread throughout the world, spurring more interaction and integration between the world's cultures, governments and economies(1). 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 (2). Globalization is about growing worldwide connectivity. Example: People are engaged in buying and selling from other places in far-away lands like the famed Silk Road across Central Asia that connected China and Europe during the Middle Age for thousands of years and they also invested in enterprises in other countries for centuries. There were similarities in features of those prevailing wave of globalization before the outbreak of the First World War in 1914 to the current wave. There is an increase cross border- trade, investment, and migration due to policy and technical developments in the past few decades. It is in the area of economic development that observers believe the world has entered a new phase. Today’s globalization is farther, 5 The Contemporary World 2020 faster, cheaper, and deeper in compared to earlier wave of globalization (3). Example: Since 1950, the volume of world trade has increased by 20 times and from 1997 to 1999, flows of foreign investment nearly doubled from $468 billion to $827 domestically. In the years since the Second World War, and especially during the past two decades, many governments have adopted free-market economic systems, vastly increasing their own productive potential and creating myriad new opportunities for international trade and investment. Governments also have negotiated dramatic reductions in barriers to commerce and have established international agreements to promote trade in goods, services, and investment. Taking advantage of new opportunities in foreign markets, corporations have built foreign factories and established production and marketing arrangements with foreign partners. A defining feature of globalization, therefore, is an international industrial and financial business structure (4). One principal driver of globalization is technology. Economic life is dramatically transformed by advancement in information technology. All sorts of individual economic actors like consumers, investors, and businesses which are valuable new tools for identifying and pursuing economic opportunities, including faster and more informed analyses of economic trends around the world, easy transfers of assets, and collaboration with far-flung partners are provided by information technologies. Globalization is the process of integration of economies across the world through cross-border flow of factors product and information (5). According to the International Monetary Fund (IMF) globalization is the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and wide diffusion of technology (6). Globalization is an expansion, and intensification of social relations and consciousness across world time and world space. It is about growing worldwide connectivity according to Steger. Further, globalization is considered a multi-dimensional process involving economic, political, technological, cultural, religious and ecological dimensions. It suggests a dynamic process of change that results in either positive or negative development. It leads to the creation of something new; it involves the multiplication of 6 The Contemporary World 2020 social connections and various activities that transgress traditional and political, economic, cultural and geographical lines. Attributes, Qualities or Characteristics of Globalization Globalization has four characteristics or qualities. These are: 1. It involves both the creation of new social networks and the multiplication of existing connections that cut across traditional, political, economic, cultural, and geographical boundaries. Example: Brazilian World Cup: Today’s media combine conventional TV coverage with multiple streaming feeds into digital devices and networking sites that transcend nationally based services. 2. Globalization is reflected in the expansion and the stretching of social relations, activities, and connections. Examples:  Reaching of financial markets around the globe  Occurrence of electronic around the clock  Emergence of gigantic and virtually identical shopping malls in all continents to cater to consumers who can afford commodities all over the world-including products whose various components were manufactured in different countries. This process is called social stretching. Covered in the process of social stretching are:  Non-governmental organization  Commercial enterprises  Social clubs  Regional & global institutions and associations (UN, EU, ASEAN, Google and others) 7 The Contemporary World 2020 3. Globalization involves the intensification and acceleration of social exchanges and activities. Examples:  The worldwide web relays distant information in real time  Satellites provide consumers with instant pictures of remote events  Sophisticated social networking by means of facebook or twitter has become routine activity for more than a billion people around the globe. The intensification of worldwide social relations means that local happenings are shaped by events occurring far away, and vice versa. This means that there is intermingling of local and global, with the national and regional in overlapping horizontal scale. 4. Globalization processes do not occur merely or an objective, material level but they also involve the subjective plane of human consciousness. Without erasing local and national attachments, the compression of the world into a single place has increasingly made global the frame of reference for human thought and action. Globalization involves both the macro-structures of a global community and the micro-structures of global personhood. It extends deep into the core of the self and its dispositions, facilitating the creation of multiple individual and collective identities nurtured by the intensifying relations between the personal and the global. They differ from each other by acceleration in the speed of social exchanges and widening of geographical scopes (7). Historical Periods of Globalization 1. The Prehistoric Period (10000 BCE-3500 BCE) In this earliest phase of globalization, contacts among hunters and gatherers – who were spread around the world – were geographically limited. In this period due to absence of advanced forms of technology, globalization was severely limited. 2. The Pre-modern Period (3500 BCE- 1500 CE) In this period the invention of writing and the wheel were great social and technological boosts that moved globalization to a new level. The invention of wheel in addition to roads made the transportation of people and goods more efficient. On the other hand writing facilitated the spread of ideas and inventions. 8 The Contemporary World 2020 3. The Early Modern Period (1500-1750) It is the period between the Enlightenment and the Renaissance. In this period, European Enlightenment project tried to achieve a universal form of morality and law. This with the emergence of European metropolitan centers and unlimited material accumulation which led to the capitalist world system helped to strengthen globalization. 4. The Modern Period (1750-1970) Innovations in transportation and communication technology, population explosion, and increase in migration led to more cultural exchanges and transformation in traditional social patterns. Process of industrialization also accelerated. 5. The Contemporary Period (from 1970 to present) The creation, expansion, and acceleration of worldwide interdependencies occurred in a dramatic way and it was a kind of leap in the history of globalization. Dimensions of Globalization There are six dimensions in globalization. These include: economic, political, technological, cultural, religious and ecological dimensions. 1. Economic Dimension This refers to the extensive development of economic relations across the globe as a result of technology and the enormous flow of capital that has stimulated trade in both sources and goods (8).  Major players in the current century’s global economic order 1. Huge international corporations (General Motors, Walmart, Mitsubishi)  International Economic Institutions (IMF, World Bank, The World Trade Organization)  Trading Systems The result of these powerful forces resulted in the wide gap between the rich and the poor countries. Major Sources of Economic Growth across Countries (9) 1. Property rights 2. Regulatory institutions 3. Institutions for macro-economics 9 The Contemporary World 2020 4. Stabilization 5. Institutions for social influence 7. Institutions for conflict management Economic institutions have decisive influence on investment in physical and human capital, technology, and industrial productions. It is also important for resource distribution. 2. Political Dimension This refers to an enlargement and strengthening of political interrelations across the globe (10). Political Issues that Surface in this Dimension 1. The principle of state sovereignty 2. Increasing impact of various intergovernmental organization 3. Future shapes of regional and global governance The globalization rendered almost powerless any political efforts to introduce restrictive policies affecting individual states, with the results that the world in many ways turned into a borderless world. Governments often seek to restrict the migration of peoples, especially those coming from the poor countries in the global South (11 a). In the development of supra-national structures and associations held together by common concerns and mutually agreed upon norm, the most obvious is political globalization. On the part of the involved parties, informal structures which are considered binding, bring together world power centers due to common interests. Example:  Global cities like New York, London, Tokyo, and Singapore are closely connected with one another than they are to various cities in their own countries.  European Union, United nations, NATO, The World Trade Organization 3. Cultural Dimension This refers to the increase in the amount of cultural flows across the globe. Cultural interconnections are at the foundations of contemporary globalization (11b). 10 The Contemporary World 2020 Individualism and consumerism which are the dominant cultural characteristics of our age and the drive for economic success stimulated by the internet and other technological devices circulate much more easily than they did in earlier periods. In the dissemination of popular culture, transactional media corporations play a major role which brought a sharp rise in homogenized popular culture that is manifested in the dominance of fast food restaurant on more aspects of life throughout the world. Cultural diversity often results hybridization- a constructive interaction process between global and local characteristics which is often visible in food, music, dance, film, fashion, and language. As a result there is a scarcely any society in the world that expresses itself in its own self-contained and authentic culture (11c). Media empires generated and directed the extensive flow of culture. Examples of these are Yahoo, Google, Microsoft, and Disney. Advertisement plays an important role in this cultural flow by featuring various celebrities in the television aside from transforming newscast into entertainment shows. 4. Religious Dimension Religion is a personal or institutionalized set of attitudes, beliefs, and practices relating to or manifesting faithful devotion to an acknowledged ultimate reality or deity (12). It is the most important defining element of any civilization as contrasted with race, language, or way of life. As such, it is also portrayed as a defining element in future conflicts. Whether the root cause of a particular conflict or merely a vehicle for the mobilization of nationalist or ethnic passions, religion is certainly central to much of the strife currently taking place around the globe (13). Jihadist globalism is a religious response to the materialist assault by the ungodly West in the rest of the world. Coming out of what they consider a pure form of Islam, its disciples seek to destroy all those alien influences that have been imposed on Muslim people. It applies to those extremely violent strains of religion that convert the global imaginary into very concrete political agendas and terrorist tactics. It is also applied to those violent fundamentalists in the West who seek to transform the world into a Christian Empire (14). Example:  Bin Ladin understands umma as a single community of believers professing faith in the one and only God, but at the same time committed to destroying not only alien invaders but also corrupt Islamic elites in order to return power to the Muslim masses.  Since one third of the world’s Muslim population lives in non-Islamic countries, the restoration of God’s proper reign must be a global event. Hence, Al-Qaeda established jihadist cells in various parts of the world. 11 The Contemporary World 2020 Roman Catholic Teaching of Globalization There are eight (8) principles that summarize the Roman Catholic Teachings (15). 1. Commitment to universal human rights 2. Commitment to the social nature of the human person 3. Commitment to the common good 4. Solidarity (The principle of Solidarity affirms that membership in the human family means that all bear responsibility for one another.) 5. Preferential option of the poor (In the Theology of the Incarnation- Christ God became poor for us so as to enrich us by his poverty. The poor are susceptible to the effects of environmental irresponsibility because they live in countries where cheap building materials and cheap labor are readily available. They regularly work in farming, fishing, and forestry, areas which suffer environmental damage). 6. Subsidiary (The Catholic Church teaches that decisions should be made at the lowest level in order to achieve the common good. 7. Justice 8. Integral Humanism- is concerned with whole person Justice is divided in three (3) categories: 1. Commutative justice This aims at fulfilling the terms of contracts and other promises on both personal and social level. 2. Distributive justice This ensures a basic equity in how both the burden and the goods of society are distributed and that ensures that every person enjoys a basically equal moral and legal standing apart from differences in wealth, privilege, talent and achievements 3. Social justice This refers to the creation of the conditions in which the first two categories of justice can be realized and the common good identified and defended. According to catholic teaching, a just society is one which these forms of justice are assured because they are required by human dignity. 12 The Contemporary World 2020 5. Ideological Dimensions Ideology is a system of widely shared ideas, beliefs, norms and values among a group of people. It is often used to legitimize certain political interests or to defend dominant power structures. Ideology connects human actions with some generalized claims (14a).Globalization is a social process of intensifying global interdependence while globalism is an ideology that gives the concept of neo-liberal values and meanings to globalization. Major Ideological Claims of Advocates of Globalism (14b) 1. Globalization is about the liberalization and global integration of markets. The problem with this claim is that liberalization and integration of markets happen through political project of engineering free markets by interference of centralized state power, and it is in contrast to the neoliberal ideal of limited role of governments. 2. Globalization is inevitable and irreversible. Globalists believe that spread of market forces driven by technological innovations is inevitable in globalization. Neoliberals use this claim to convince people to adopt the natural discipline of the market if they want to prosper, which implies the elimination of government controls over the market. 3. Nobody is in charge of globalization. This claim seeks to depoliticize the public debate on globalization and neutralizing anti -globalist movements. 4. Globalization benefits everyone. Globalists talk about the benefits of market liberalization such as rising global living standards, economic efficiency, individual freedom, and technological progress. But the reality is that the opportunities of globalization are spread unequally and power and wealth are concentrated among a specific group of people, regions and corporations. 5. Globalization furthers the spread of democracy in the world. For the globalists democracy and free markets are synonymous. The neoliberal explanation of globalization is ideological because it is politically motivated and contributes to the construction of particular meanings of globalization which stabilize existing power relations. Globalism tries to create collective meaning and shape people’s identities. 13 The Contemporary World 2020 References: 1. searchcio.techtarget.com/definition/globalization 2. http://www.globalization101.org/what-is-globalization/ 3. Thomas Friedman. (2012). International Politics: Concepts, Theories, & Issues. Sage publications. Edited by Rumki Basu 4. https://www.globalization101.org/what-is-globalization/ 5. Cherunilam, Francis (2010). International Business: Text and Cases. 5th Edition.PHI Learning Private Limited. New Delhi. 6. Cited by Charles Michell (2000). International Business Culture. World Trade Press. California 7. Steger. Manfred Globalization: A Very Short Introduction Published by OUP Oxford 8. Pereira, Carlos and Vladimir Teles (2011). Political Institutions, Economic Growth, and Democracy: The Substitute Effect. https:// www. brookings. Edu/ opinions/ political- institutions –economic- growth- and- democracy- the – substitute- effect/. January 19 9. Rodrik, D. (2007). One Economics Many Recipes: Globalization, Institutions, and Economic Growth Princeton: Princeton University Press. 10. Book Review on Globalization: a very short introduction. Faculties of American Studies. http:// www. American. Mcgill.ca/nast/; http:/ /www. American. Edu/sis /cnas. 11.(a,b,c,) Seazolts, Kevin R (2012). A Virtuous Church: Catholic Theology, Ethics, and Liturgy for the 21st Century 12. Samuel P. Huntington (1997). The Clash of Civilizations and the Remaking of World Order (New York: Touchstone/Simon and Schuster 13. Johnston, Douglas M. Religion and Culture: Human Dimensions of Globalization. http:// indian strategic knowledge online. com/ web/ C31 Johns. pdf 14. Seazolts, Kevin R (2012). A Virtuous Church: Catholic Theology, Ethics, and Liturgy for the 21st Century 16. (a,b) Steger, Manfred. Globalization: A Very Short Introduction. Published by OUP Oxford. 14 The Contemporary World 2020 UNIT I INTRODUCTION TO GLOBALIZATION Unit Test: A. Identification. Answer the following item by supplying the correct answer on the blank. __________ 1. In this period the invention of writing and the wheel were great social and technological boosts that moved globalization to a new level. __________ 2. It is often used to legitimize certain political interests or to defend dominant power structures. __________ 3. This is considered as one principal driver of globalization. __________ 4. This refers to the extensive development of economic relations across the globe as a result of technology and the enormous flow of capital that has stimulated trade in both sources and goods __________ 5. This results hybridization- a constructive interaction process between global and local characteristics which is often visible in food, music, dance, film, fashion, and language __________ 6. This is a religious response to the materialist assault by the ungodly West in the rest of the world. __________ 7. The period of leap in the history of globalization. __________ 8. 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; this is about growing worldwide connectivity. __________ /__________ 9 - 10. These are the dominant cultural characteristics of our age and the drive for economic success stimulated by the internet and other technological devices circulate much more easily than they did in earlier periods. 15 The Contemporary World 2020 B. True or False. Identify whether the statement is correct or not. Write True if it is correct, False if not. __________1. Today’s globalization, relatively, has more disadvantages in comparison to earlier wave of globalization. __________2. During the Prehistoric Period, globalization was severely limited. __________3. Globalization involves the macro-structures of a global community as its basic coverage and concern. __________4. Media empires generated and directed the extensive flow of culture. __________5. Social justice ensures a basic equity in how both the burden and the goods of society are distributed and that ensures that every person enjoys a basically equal moral and legal standing apart from differences in wealth, privilege, talent and achievements __________6. The Roman Catholic teaching of globalization believes that the poor are susceptible to the effects of environmental irresponsibility because they live in countries where building materials and labor are expensive. __________7. Social networking, social stretching, and controlled social exchanges and activities are among the positive implications of globalization. __________8. People engaging in buying and selling from other places in far-away lands is an example of how globalization works. __________9. Globalization processes occur on an objective, material level of human consciousness. __________10. Process of industrialization accelerated during the Modern Period. C. Essay Discuss the major ideological claims of advocates of globalism, and express your point of agreement/disagreement. (5 points each) 1. Globalization is about the liberalization and global integration of markets. 16 The Contemporary World 2020 2. Globalization is inevitable and irreversible. 3. Nobody is in charge of globalization. 4. Globalization benefits everyone. 5. Globalization furthers the spread of democracy in the world. 17 The Contemporary World 2020 UNIT II THE STRUCTURES OF GLOBALIZATION Coverage: Week 3, 4, and 5 Duration: 9 hours The Global Economy (2.25 hours; week 3) Market Integration (2.25 hours; week 3 and 4) The Global Interstate System (2.25 hours; week 4 and 5) Contemporary Global Governance (2.25 hours; week 5) Learning Objectives: After studying the unit, the students should be able to:  define economic globalization  explain the two major driving forces of global economy  differentiate economic globalization from internationalization  trace the origin of economic globalization 1.The Global Economy 2. Market Integration 3.The Global Interstate System 4. Contemporary Global Governance THE GLOBAL ECONOMY 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 (17). According to the International Monetary Fund (18) economic globalization is 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 18 The Contemporary World 2020 movement of goods, services, and capital across borders. It also refers to the movement of people (labor) and knowledge (technology) across international borders. In economic terms, globalization is nothing but a process making the world economy an organic system by extending transnational economic processes and economic relations to more and more countries and by deepening the economic interdependencies among them (19). Two Major Driving Forces for Economic Globalization 1. The rapid growing of information in all types of productive activities 2. Marketization (A restructuring process that enables state enterprises to operate as market-oriented firms by changing the legal environment in which they operate (20) and can be achieved through reduction of state subsidies, organizational restructuring of management such as corporatization, decentralization, and privatization (21). Rapid development of science and technologies served as basis for immediate globalization of the world economies which in turn provided an environment where there is a swift spreading of market economic system all over the world. It is also developed based on the increasing cross-border division of labor which penetrates within the enterprises of different countries on the level of production chains. Dimensions of Economic Globalization 1. The globalization of trade of goods and services 2. The globalization of financial and capital markets 3. The globalization of technology and communication 4. The globalization of production Difference between Economic Globalization from Internationalization Economic globalization is a functional integration between internationally dispersed activities which means that it is a qualitative transformation rather than a quantitative change while internationalization is an extension of economic activities between internationally dispersed activities (22). Economic globalization produces its own major players in the form of transnational corporations (TNCs), the main driving forces of economic globalization of 19 The Contemporary World 2020 the last 100 years or roughly two-thirds of world export (23). Transnational corporation otherwise known as multi -national corporation is a corporation that has a home base, but is registered, operates and has assets or other facilities in at least one other country at one time (24). Examples are the US-based General Electric (GE), the Coca-Cola Company of Atlanta, Georgia, US Nike and others. Origin of Economic Globalization Economic globalization is a process that creates an organic system of the world economy. In the 16th century world system analysts identify the origin of modernity and globalization through long distance trade in the 16th century (25). This best known example of archaic globalization is the Silk Road, which started in western China, reached the boundaries of the Parthian empire, and continued onwards towards Rome (26). It also connected Asia, Africa, and Europe (27). In the 17th and 18th century global economy exists only in trade and exchange rather than production as the world export to World GDP did not reached 1 to 2 percent (28). In the 19th century the advent of globalization approaching its modern form is witnessed. A short period before World War I is referred to as golden age of globalization characterized by relative peace, free trade, financial and economic stability (29). Growth in international exchange of goods accelerated in the second quarter of the 19 century. Global economy in the 19th and 20th centuries grew by an average of th nearly 4 percent per annum, which is roughly twice as high as growth in the national incomes of the developed economies since the late 19th century (30). International Monetary Systems and Gold Standard International monetary system (IMS) refers to a system that forms rules and standards for facilitating international trade among the nations. It helps in reallocating the capital and investment from one nation to another. It is the global network of the government and financial institutions that determine the exchange rate of different currencies for international trade. It is a governing body that sets rules and regulations by which different nations exchange currencies with each other (31). IMS as rules, customs, instruments, facilities, and organizations for effecting international payments with the main task of facilitating cross-border transactions, 20 The Contemporary World 2020 especially trade and investment (32). It also reflects economic power and interests, as money is inherently political, an integral part of high politics or diplomacy (33). Evolution of the International Monetary System In 1870 to 1914, with the help of gold and silver, trade was carried without any institutional support. Monetary system during that time was decentralized while market based and money played a minor role in international trade in contrast to gold. Gold was believed to guarantee a non-inflationary, stable economic environment, a means for accelerating international trade (34) and the gold standard functioned as a fixed exchange rate regime, with gold as the only international reserve. Gold Standard is a system of backing a country’s currency with its gold reserves. Such currencies are freely convertible into gold at a fixed price, and the country settles all its international trade transactions in gold (35) After World War I, the use of gold declined due to increased expenditure and inflation which were caused by war. Major economic powers were on gold standards but could not maintain it and failed because of the Great depression in 1931. In 1944, 730 representatives of 44 nations met at Bretton Woods, New Hampshire, United States to create a new international monetary system called as the Bretton Woods system, the aim of which is to create a stabilized international currency system and ensure a monetary stability for all the nations. Since the United States held most of the world’s gold, all the nations would determine the values of their currencies in terms of dollar. The central banks of nations were given the task of maintaining fixed exchange rates with respect to dollar for each currency. The Bretton Woods system ended in 1971 as the trade deficit and growing inflation undermined the value of dollar in the whole world. In 1973, the floating exchange rate system, also known as flexible exchange rate system was developed that was market based (36). To assess whether the gold standard was successful, the following roles of a properly designed IMS must be considered: to lend order and stability to foreign exchange markets, to encourage the elimination of balance-of-payments problems, and to provide access to international credits in the event of disruptive shocks (37). The gold standard has never worked satisfactorily in controlling inflation or maintaining equilibrium in international transactions. 21 The Contemporary World 2020 European Monetary Integration European monetary integration refers to a 30-year long process that began at the end of the 1960s as a form of monetary cooperation intended to reduce the excessive influence of the US dollar on domestic exchange rates, and led, through various attempts, to the creation of a Monetary Union and a common currency. This Union brings many benefits to Member States. However, over the past decade, the build-up of macroeconomic imbalances, and the imprudent fiscal policies of some Member States, resulted in the continuing double crisis in banking and sovereign. As a result of this crisis, many individual Member States face difficult re-adjustment processes, and Members States collectively must reappraise the governance architecture of Monetary Union and adopt new mechanisms to detect, prevent, and correct problematic economic trends (38). The European Monetary System (EMS) on the other hand is a 1979 arrangement between several European countries which links their currencies in an attempt to stabilize the exchange rate. This system was succeeded by the European Economic and Monetary Union (EMU), an institution of the European Union (EU), which established a common currency called the euro. The European Monetary System originated in an attempt to stabilize inflation and stop large exchange rate fluctuations between European countries. Then, in June 1998, the European Central Bank was established and, in January 1999, a unified currency, the euro, was born and came to be used by most EU member countries (39). According to the European Commission in 2008, the first ten years of the EMU were an evident success for participating countries in terms of increased trade and capital transactions, more integrated economies, restored macroeconomic stability and the utilization of Euro as the second most widely used reserve currency. But in 2008 to 2009 the European Union (EU) is presented with dramatic challenges brought by global financial and economic crisis. The EU in 2010 in response to the crisis enacted the three- pillar financial rescue program which includes: the European Financial Stability Mechanism, the European Financial Stability Facility, the financial assistance of International Monetary Fund (IMF). Since the three -pillar system is temporary EU in 2013 activated its own permanent European Stability Mechanism. The future of EMU depends on the willingness of member states to agree on more fundamental changes in the governance of Eurozone. The European Financial Stability Mechanism (EFSM) is a permanent fund created by the European Union (EU) to provide emergency assistance to member states within the Union. It raises money through the financial markets, and is guaranteed by the European Commission. Fund raised through the markets, use the 22 The Contemporary World 2020 budget of the European Union as collateral. The European Financial Stability Facility (EFSF) on the other hand, is an organization created by the European Union to provide assistance to member states with unstable economies. The EFSF is a special purpose vehicle (SPV) managed by the European Investment Bank, a lending institution. The fund raises money by issuing debt, and distributes the funds to eurozone countries whose lending institutions need to be recapitalized who need help managing their sovereign debt or who need financial stabilization (40). International Trade and Trade Policies International trade is the exchange of goods, services and capital across national borders. It is a multi-million dollar activity, central to the Gross Domestic Product (GDP) of many countries, and it is the only way for many people in many countries to acquire resources (41). In acquiring products where demand is inelastic and domestic supply is inadequate absent traders, consumers and suppliers are forced to either develop substitute goods or devote a large percentage of their income. International trade is the exchange of goods or services along international borders. This type of trade allows for a greater competition and more competitive pricing in the market (42). The two key concepts in the economics of international trade are specialization and comparative advantage. Comparative advantage comes in; so long as the two countries have different relative efficiencies, the two countries can benefit from trade – the country with absolute advantage will still benefit by directing its resources to those goods where it is most productive and trading for the others while specialization refers to this process; countries as well as individual businesses can maximize their welfare by specializing in the production of those goods where they are most efficient and enjoy the largest advantages over rivals (43). More affordable products for the consumer is also the result of competition. The economy of the world is also affected by the exchange of goods as dictated by supply and demand, making goods and services obtainable which may not be available globally to consumers. Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries. Almost every kind of products can be found on the international market aside from services being traded like banking, tourism, etc. Global trade allows wealthy countries to use their resources such as labor, technology, or capital more efficiently. Because countries are endowed with different assets and natural resources, some countries may produce the same good more efficiently and therefore sell it more cheaply than other countries (44). Specialization in international trade happens if a country cannot efficiently produce an item and obtain it by trading with another country that can. Trade policies on the other hand refer to the regulations and agreement of foreign countries (45). It defines standards, goals, rules, and regulations that pertain to 23 The Contemporary World 2020 trade relation between countries (46). Each country has specific policies formulated by its officials. Boosting the nation’s international trade is the aim of each country. Taxes imposes on import and export, inspection, regulations, tariffs and quotas are all part of country’s trade policy. Focuses of Trade Policy in International Trade Tariffs These are taxes or duties paid for a particular class of imports or exports. Imposing taxes on imported and exported goods is a right of every country. Heavy tariffs on imported goods are levied by some nations for the protection of their local industries. The prices of imported goods in local markets are inflated due to high imported taxes to ensure demand of local products. Trade barriers Theses are measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services (47). They are state-imposed restrictions on trading a particular product or with a specific nation. It can be linked to the product, service like technical requirement and it can also be administrative in nature such as rules and procedures of transactions. Tariffs, duties, subsidies, embargoes and quotas are the most common trade barriers. Safety This ensures that imported products in the country are of high quality. Inspection regulations laid down by public officials ensure the safety and quality standards of imported products. Types of Trade Policies National Trade Policy This safeguards the best interest of its trade and citizen. Bilateral Trade Policy 24 The Contemporary World 2020 To regulate the trade and business relations between two nations, this policy is formed. Under the trade agreement the national trade policies of both the nations and their negotiations are considered while bilateral trade policy is being formulated. International Trade Policy This defines the international trade policy under their charter like the International economic organizations, such as Organization for Economic Co- operation and Development (OECD), World Trade Organization (WTO) and International Monetary Fund (IMF).The best interests of both developed and developing nations are upheld by the policies. Trade Policy and International Economy In most developed countries where open market economy prevails, the international economic organizations support free trade policies. In the case of developing nations partially-shielded trade practices are preferred to protect their local trade industries. The following are dependent on globalization: sound trade policies for market changes, establishment of free and fair trade practices and expansion of possibilities for booming international trade. The World Trade Organization (WTO) The World Trade Organization (WTO) deals with the global rules of trade between nations with the main function of ensuring that trade flows smoothly, predictably and freely. It is the only global international organization dealing with the rules of trade between nations with WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments at its heart (48). WTO is viewed as the means by which industrialized countries can gain access to the markets of developing countries (49). Global Economy Outsourcing Outsourcing is an activity that requires search for a partner and relation-specific investments that are governed by incomplete contracts and the extent of international outsourcing depends on the thickness of the domestic and foreign market for input suppliers, the relative cost of searching in each market, the relative cost of customizing inputs and the nature of the contracting environment in each country (50). Subcontracting is a central element of the new economy (51). It is the practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor and 25 The Contemporary World 2020 especially prevalent in areas where complex projects are the norm like construction and information technology (52). Outsourcing is a means of finding a partner with which a firm can establish a bilateral relationship and having the partner undertake relationship-specific investments so that it becomes able to produce goods and services that fit the firm’s particular needs. Often, the bilateral relationship is governed by a contract, but even in those cases the legal document does not ensure that the partners will conduct the promised activities with the same care that the firm would use itself if it were to perform the tasks (53). One of the most rapidly growing components of international trade is the outsourcing of intermediate goods and business services. There are three essential features of a modern outsourcing strategy. 1. Firms must search for partners with the expertise that allows them to perform the particular activities that are required. 2. They must convince the potential suppliers to customize products for their own specific needs. 3. They must induce the necessary relationship-specific investments in an environment with incomplete contracting. Possible Determinants of the Location of Outsourcing 1. Size of the country can affect the “thickness” of its markets. 2. The technology for search affects the cost and likelihood of finding a suitable partner. 3. The technology for specializing components determines the willingness of a partner to undertake the needed investment in a prototype. 4. The contracting environments can impinge on a firm’s ability to induce a partner to invest in the relationship. 26 The Contemporary World 2020 References: The Global Economy 17. Gao Shangquan (2000). Economic Globalization: Trends, Risks and Risk Prevention http://www.un.org/en/development/desa/policy/cdp/index.shtml 18. IMF (2008). Globalization: A brief overview. Issues Brief Issue 02/08. Washington, DC. 19. Szentes, T. (2003) World Economics 2. Budapest Akademiai Kiado 20. Hoeven, van der R & György Sziráczki (1997). Lessons from Privatization. Geneva: International Labour Organization 21. Vickerstaff, Sarah (1998). The Transformation of Labour Relations. Oxford University Press. ISBN 0- 19-828979-0 p.63 22. Dicken P. (2004). Global shift: Reshaping the global economic map in the 21st century. London :SAGE. 23. Gerrifi, G. (2005). The Global Economy: Organization, Governance, and Development,. In Smesler N and Swedberg R. (eds) Handbook of Economic Sociology, Princeton, NJ: Princeton University Press, pp. 160-82. 24.Whiting, Brianna (2017). http://study.com/academy/lesson/transnational-corporation-definition- examples.html 25. Braudel, F (1973). The Mediterranean and the Mediterranean world in the age of Phillip II. Bekerley and Los Angeles: University of California Press. 26. Lee, Adela C. Y.(2010). Silkroad Foundation: “Ancient Silk Road Travellers”. Silk-road.com. Rerieved 2010-07-31 27. Gills BK and Thompson WR (2006). Globalization, global histories and historical globalities. In Gills, BK and Thompson (eds) Globalization and global history. London:Routledge, pp. 1-15. 28. Held D. and McGrew A. (1999). Global Transformations: Politics, economics and culture. Stanford, CA: Stanford University Press. 29. O’Rourke KH and Williamson JG (1999). Globalization and History. The evolution of a nineteen- century Atlantic economy. Cambridge University Press, pp. 285-300. 30. Pfister, Ulrich, (2012) http:// ieg- ego.eu/en threads/ backgrounds/ globalization=The Periodofthe Atlantic Economy 18501931. 31.Nitisha. International Monetary System: http:// www. economics discussion. net/ articles/ international- monetary system/ 4256 32. Salvatore D. (2007). International Economics. Hoboken; John Wiley and Son. 27 The Contemporary World 2020 33. Cohen, B. (2000). Money and power in world politics. In Lawton TC, Rosenau JN and Verdun AC (eds) Strange power. Aldershot, UK: Ashgate Publishing pp. 91-113. 34. Einaudi, L. (2001). Money and Politics: European monetary unification and the international gold standard. 1865-1873. Oxford: Oxford University Press 35. http:// www. business dictionary. Com/ definition/ gold- standard.html 36. www. economics discussion. net/ articles/ international-monetary-system/4256 37. Eichengreen, BJ (1996). Globalizing capital: A History of the International Monetary System. Princeton, NJ: Princeton University Press. 38. http:// www. europarl. europa. eu/Reg Data/etudes/ BRIE/2015/551325/ EPRS_ BRI (2015) 551325 _EN. Pdf 39. European Monetary System (EMS) http: www. Investopedia.com/ terms/e/ems.asp#ixzz4vBgDqKo3 40. European Commission, 2008. 41. Investopedia. com Website. “International Trade” Retrieved from: https:// www. investopedia. com/terms/e/ european- financial- stability- facility. asp 42. http://www.businessdictionary.com/definition/international-trade.html 43. Simpson, Stephen D. Macroeconomics: International Trade. https:// www. Investopedia. com/ university/ macroeconomics/11.asp 44. What is International Trade? https:// Investopedia. com/ articles/03/112503.asp#xzz4y0nbUED8. 45. The Balance.com Website. Trade Policy. Retrieved from: https:// www.the balance.com trade-policy- 4073939 46.Economywatch.com Website. “Trade Policy”. Retrieved from http://www.economywatch.com/international-trade/trade-policy.html.Dated June 29, 2010 47. Um.dk/en Website. “What is Trade Barrier”. Retrieved from:http://um.dk/en/tradecouncil/barriers/what- is/ 48. WTO.org.comWebsite.“The WTO”. Retrieved from https:// www.wto.org/english/the wtoe/thewto _ehtm 2018. 49. Khor M. (1995). “The WTO and the South: Implications and Recent Developments”. Third World Network 50. Grossman, Gene, and Helpman, Elhanan (2005). Outsourcing in a Global Economy. Review of Economic Studies. Retrieved from: http//about.jstor.org.com 28 The Contemporary World 2020 51. Financial times, July 31, 2001 52. Investopedia.com Website (2018). Subcontracting https:// www.investopedia.com/terms/s subcontracting.asp#ixzz5QIC0Oxw 53. Marsh, P. (2001). “A Sharp Sense of the Limits of Outsourcing”. The Financial Times, 31 July, 10 29 The Contemporary World 2020 UNIT II THE STRUCTURES OF GLOBALIZATION Coverage: Week 3, 4, and 5 Duration:9 hours The Global Economy (2.25 hours; week 3) Market Integration (2.25 hours; week 3 and 4) The Global Interstate System (2.25 hours; week 4 and 5) Contemporary Global Governance (2.25 hours; week 5) Learning Objectives: After studying the unit, the students should be able to:  define economic globalization  explain the two major driving forces of global economy  differentiate economic globalization from internationalization  trace the origin of economic globalization 1.The Global Economy 2. Market Integration 3.The Global Interstate System 4. Contemporary Global Governance MARKET INTEGRATION Market integration refers to how easily two or more markets can trade with each other (54a). It occurs when prices among different locations or related goods follow similar patterns over a long period of time. Groups of prices often move proportionally to each other and when this relation is very clear among different markets it is said that the markets are integrated (54b). The term is further used in identifying related phenomenon of market of goods and services experiencing similar patterns of increase or decrease in prices of products. It may also refer to the movement of prices of related goods and services sold in a defined geographical location in similar patterns. When government implement certain strategy to control the direction of economy then integration is intentional while shifting 30 The Contemporary World 2020 in supply and demand that has a spillover effect on several markets is another factor of market integration. One way of helping integration of market by reducing barriers to trade and increasing fluidity between markets is through foreign trade. Market integration exists when there are exerted effects that prompt similar changes or shifts in other markets that focus on related goods on events occurring within two or more markets. Example: China produces toys at a cheaper price than the US. If foreign trade increased between the two countries, toys could be sold to the US more easily, making them more available, thus reducing price (55a). If the demand for baby dolls within a given geographical market were to suddenly be reduced by 50%, there is a good chance that the demand for baby doll clothing would also decrease in proportion within that same geographical market. Should the baby market increase, this would usually mean that the market for doll clothing would also increase. Both markets would have the chance to adjust pricing in order to deal with the new circumstances surrounding the demand, as well as adjust other factors, such as production (55b). Types of Related Markets where Market Integration Occurs Stock Market Integration This is a condition in which stock markets in different countries trend together and depict same expected risk adjusted returns. Two markets are perfectly integrated if investors can pass from one market to another without paying any extra costs and if there are possibilities of arbitration which ensures the equivalence of stock prices on both markets (56). Financial Market Integration It is an open market economy between countries facilitated by a common currency and the elimination of technical, regulatory and tax differences to encourage free flow of capital and investment across borders (57). It occurs when lending rates in several different markets begin to move in tandem with one another. Emergence of similar patterns within the capital, stock, and financial 31 The Contemporary World 2020 markets with those trends coming together to exert a profound influence on the economy of that nation is involved in the integration within a nation. Global Corporation A global corporation is a business that operates in two or more countries. It also goes by the name "multinational company" (58). Several advantages are offered by global expansion of business over running a strictly domestic company. Success in different types of economies is achieved by means of multiple countries operation while it causes also logistic and cultural challenges. Expanding revenue opportunities and diversifying business risk are the purposes of becoming global corporation. Access to more customers and capital is obtained through a model that works domestically well and translates foreign markets well. Example: One can find more customers in a country whose economy is vibrant and expanding in lieu of stagnant local and domestic economy or market share that has hit a plateau. Historical Periods of Global Corporation An approach to the study of globalization that locates the phenomenon itself in early patterns of trade and exchange is known as historical globalization. In early historical periods as both cities and countries extended their reach beyond their own borders, a form of globalization was initiated which then followed complex patterns of interactive engagements organized through trade and industry directly influenced by the emergent and subsequently dominant technologies especially in shipping and navigation (59). The entities operating within this environment were functionally and organizationally not different from contemporary organizations being possessed with head offices, foreign branch plants, corporate hierarchies, extraterritorial business law, and even bit of foreign direct investment and value-added activity (60). Combination of invention and social organization resulting to increase in worldwide capital and wealth of nation is allowed by modern nation state system that emerged in the period prior to the end of World War II. American Corporations led the economic recovery and expansion after the World War II destruction. This period up to 32 The Contemporary World 2020 the reentry of Japanese and European corporation to the global scene is viewed as multinational corporations (MNCs) (61). From the end of World War II to the present is considered the period of transformation of global corporation. The Finance Function in a Global Corporation As corporations go global, capital markets open up within them, giving companies a powerful mechanism for arbitrage across national financial markets (62). Chief financial officers (CFOs) must balance the opportunities with the challenges of operating in multiple environments in managing their internal markets in building an advantage. These three functions can be created by CFOs through exploiting their internal capital markets. 1. Financing A group’s tax bill can be reduced by the CFO like borrowing in countries with high tax rates and lending to operations in countries with lower rates. 2. Risk Management Global firms can offset natural currency exposures through worldwide operations instead of managing currency exposures through financial markets. 3. Capital budgeting Getting smarter on valuing investment opportunities CFOs can add value. Foreign Direct Investment Foreign Direct Investment (FDI) was of corporate origin. It is a major driver of extended global corporate development. It is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company and the key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business (63). Foreign direct investment is made open to economies; frequently involves more than just a capital investment and includes provision of management or technology as well. There are many methods to establish FDIs such as opening a subsidiary or associate company in a foreign country; acquiring a controlling interest in an existing foreign company, or by means of a merger or joint venture with a foreign company. 33 The Contemporary World 2020 BRICS Economies Brazil, Russia, India, China and South Africa (BRICS) is an acronym for the combined economies of Brazil, Russia, India, China and South Africa. BRIC, without South Africa, was originally coined in 2003 by Goldman Sachs, which speculates that by 2050 these four economies will be the most dominant. South Africa was added to the list on April 13, 2011 creating "BRICS"(64a). These five countries were among the fastest growing emerging markets as of 2011. Further, Brazil, Russia, India and China (BRIC) refer to the idea that China and India will, by 2050, become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials. Due to lower labor and production costs in these countries now including a fifth nation, South Africa, many companies have also cited BRIC as a source of foreign expansion opportunity i.e. promising economies in which to invest (64b). General Agreement on Trade in Services (GATS) The General Agreement on Trade in Services (GATS) is the first multilateral agreement covering trade in services which was negotiated during the last round of multilateral trade negotiations, called the Uruguay Round, and came into force in 1995. The GATS provides a framework of rules governing services trade, establishes a mechanism for countries to make commitments to liberalize trade in services and provides a mechanism for resolving disputes between countries (65). GATS has similar principle with the General Agreement on Tariffs and Trade (GATT) that deals with trade in goods. The two primary objectives of GATTS are to ensure that all signatories are treated equitably when accessing foreign markets; and second, to promote progressive liberalization of trade and services. 34 The Contemporary World 2020 References Market Integration 54.(a,b) De Braux, P. (2017) “What is Market Integration” Retrieved from: https:// www. qoura. Com/ What –is-market-integration. Dated March 3, 2017. 55.(a,b) “What is Market Integration” Retrieved from: http://www.wisegeek.com/what-is-market- integration.html (n.d.) 56. Arouri, M.E.H. and Jawadi, F. (2009), “Stock market integration in emerging countries: further evidence from the Philippines and Mexico”, Retrieved from: www.finance‐innovation.org/risk09/work/1208330.pdf Dated: October 9, 2010. 57. Investorwords.com Website. “Integrated Financial Market” Retrieved from: http:// www. investorwords. Com/ 15491/ integrated financial markets. html #ixzz55 p6oq8Hb. 58. Kokemuller, Neil. (2018). “What is a Global Corporation?” Retrieved from: http:// smallbusiness,chron. com/ global- corporation- 63267. Html 59. Harvey D. (1990). The Condition of Post Modernity: An Inquiry into the Origins of Cultural Change. Oxford: Blackwell Publishers. 60. Moore K. and Lewis D. 2000 Foundation of Corporate Empire. London: Prentice Hall. 61 Barnet and Mueller (1974). Global Reach: The Power of the multinational corporations. New York: Simon and Schuster 62.Desai, Mihir A. 2008. The Finance Function in a Global Corporation. Harvard Business Publishing. 63. Foreign Direct Investment (FDI) https://www. investopedia.com/ terms/f/fdi. asp#ixzz58qxoZoR0 64.(a,b,) Brazil, Russia, India, China And South Africa (BRICS) https://www. investopedia.com/terms/b/brics.asp#ixzz58r2tplyS 65.General Agreement on Trade in Services (GATS) 2013 http://www. international. gc.ca/trade- agreements-accords-commerciaux/wto-omc/gats-agcs/index.aspx?lang=eng 35 The Contemporary World 2020 UNIT II THE STRUCTURES OF GLOBALIZATION Coverage: Week 3, 4, and 5 Duration: 9 hours The Global Economy (2.25 hours; week 3) Market Integration (2.25 hours; week 3 and 4) The Global Interstate System (2.25 hours; week 4 and 5) Contemporary Global Governance (2.25 hours; week 5) Learning Objectives: After studying the unit, the students should be able to:  define economic globalization  explain the two major driving forces of global economy  differentiate economic globalization from internationalization  trace the origin of economic globalization 1.The Global Economy 2. Market Integration 3.The Global Interstate System 4. Contemporary Global Governance THE GLOBAL INTERSTATE SYSTEM Globalization and the Nation- States Globalization in the early years of the 21st century has not displaced the state. Max Weber, a German social theorist define state as a compulsory political organization with a centralized government that maintains a monopoly of the legitimate use of force within a certain territory (66). Hedley Bull, a 20th century international philosopher stated that states are independent political communities each of which possesses a government and asserts sovereignty in relation to a particular portion of the earth’s surface and a particular segment of the human population (67). This means that government and constitutions come and go but states readily endure. 36 The Contemporary World 2020 Nation on the other hand is an imagined political community and imagined as both inherently limited and sovereign (68a).  It is imagined because the members of even the smallest nation will never know most of their fellow- members, meet them, or even hear of them, yet in the minds of each lives the image of their communion (68b).  The nation is imagined as limited because even the largest of them, encompassing perhaps a billion human beings, has finite, if elastic, boundaries, beyond which lie other nations (68c).  It is imagined as sovereign because the concept was born in an age in which Enlightenment and Revolution were destroying the legitimacy of the divinely ordained, hierarchical dynastic realm…nations dream of being free, and if under God, directly so. The gauge and emblem of this freedom is the sovereign state (68d).  It is imagined as community, because regardless of actual inequality and exploitation that may prevail in each, the nation is always conceived as a deep horizontal comradeship (68e). In everyday political speech and media commentary, the terms nation and states are used interchangeably. The term nation-state has a dual concept, with the modern state going back to the Peace of Westphalia, and nationalism tracing back to Protestantism, the Enlightenment, the rise of the vernacular, with both concepts of nation and state fused in the French Revolution. Nation –states are territorial organizations characterized by the monopolization of legitimate violence (qua states) while nation –states are membership associations with a collective identity and a democratic pretension to rule (qua nation) (69). The State and the Economic Interdependence The rising momentum of global free-market capitalism in the final decades of the 20 century, the accompanying rise in transnational enterprises, and the resulting th disparities between easy flows of money and commodities across international boarders and the legal barriers and logistical hurdles that keep most workers tied to their home communities are associated with globalization. The belief that globalization imposes a forced choice upon states either to conform to free market principles or run the risk of being left behind is termed into a phrase called “Golden Straitjacket” by Thomas Friedman, a neoliberalism journalist and advocate, to illustrate the forcing of states into policies that suit the preferences of investment houses and corporate executives (Electronic Herd) who swiftly move money and resources into countries favored as adaptable to the demands of international business and withdraw even more rapidly from countries deemed uncompetitive (70a). 37 The Contemporary World 2020 Further, countries are compared to individual stocks where the states and their government are rewarded and punished similar to buying and selling shares of individual companies. States also have lost an important element of economic sovereignty and that neo-liberalism is beyond contestation (70b). There are two things that will happen if a country is in Golden Straitjacket: the economy grows and politics shrinks. It is a straitjacket because it narrows the political and economic policy choices of those in power to relatively tight parameters. This is the reason of the difficulty of finding any real differences today between ruling and opposition parties in those countries that have put on the Golden Staitjacket (71). Neoliberalism and Economic Sovereignty Neoliberalism is the intensification of the influence and dominance of capital. It is the elevation of capitalism as a mode of production into an ethic, a set of political imperatives, and a cultural logic. It is a project to strengthen, restore, or, in some cases, constitute anew the power of economic elites. It values market exchange as an ethic in itself capable of acting as a guide to all human action and substituting for all previous held ethical beliefs. It emphasizes the significance of contractual relations in the marketplace. It also holds that the social good will be maximized by maximizing the reach and frequency market transactions, and it seeks to bring all human action into domain of the market (72). Economic sovereignty on the other hand is the power or national governments to make decisions independently of those made by other governments (73). Globalization as an increase in the international integration of markets for goods, services, capital and labor, is also a counterpoint of national sovereignty. In a globalized world economy, governments have no alternative but to adopt neoliberal economic policies of privatization, deregulations, and reductions in public expenditures (74a). There are four different concepts of sovereignty. These include: International Legal Sovereignty It refers to the acceptance of a given state as a member of the international community. Westphalian Sovereignty It is based on the principle that one sovereign state should not interfere in the domestic arrangements of another. Interdependence Sovereignty It is the capacity and willingness to control flows of people, goods and capital into and out of the country. 38 The Contemporary World 2020 Domestic Sovereignty It is the capacity of a state to choose and implement policies within the territory (74b) Global economic trends are influenced by economic sovereignty of an individual member. The increase of the number of international organizations and the expansion of their functions have undeniably restricted an individual country's sovereignty to certain extent. The most typical example is the increasingly extensive involvement of the world's three leading financial institutions the World Bank (WB), the International Momentary Fund (IMF) and the World Trade Organization (WTO) in domestic economic affairs of their members. The 60,000-plus transnational corporations, which developed rapidly in the latter half of the last century, are now sharing or "encroaching upon" individual country's "sovereignty" in the economic domain (75). Many underdeveloped nations that resorted to foreign assistance and interventions resulted to the deprivation of government as regard control of their economy due to the disorderly domestic economic establishments. Due to this, some scholars predicted the loss of their economic sovereignty under this form of neo- colonialism. More importantly, some of the world's leading economic entities, such as the United States, the European Union and Japan, by taking advantage of their predominant economic status, are affecting or infringing upon other countries' economic sovereignty. Under these circumstances, an increasing number of scholars have concluded that the economic dominion of individual nations has come to an end. While countries inevitably cede some control over their economic sovereignty to external actors, it is the “structural power” of sovereign states which still dictates the terms and tenets of globalization (76). Economic and Political Integration (European Integration) European integration is the process of industrial, political, legal, economic, social and cultural integration of states wholly or partially in Europe. European integration has primarily come about through the European Union and its policies (77). European Union (EU), is an international organization comprising 28 European countries and governing common economic, social, and security policies (78). In the early 21st century EU expanded into central and eastern Europe with the following members: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. 39 The Contemporary World 2020 Economic integration can be described as a process and a means by which a group of countries strives to increase their level of welfare (79). It is an arrangement between different regions that often includes the reduction or elimination of trade barriers, and the coordination of monetary and fiscal policies (80). Reducing costs for both consumers and producers and increasing trade between the countries involved in the agreement are the aims of economic integration. Seven Stages of Economic Integration 1. Preferential trading area (PTA) 2. Free trade area 3. Customs union 4. Common market 5. Economic union 6. Eonomic and monetary union 7. Complete economic integration Preferential Trade Areas (PTAs) happens when there’s an agreement on reducing or eliminating tariff (tax or duty to be paid on a particular class of imports or exports) barriers on selected goods imported from other members of countries within the geographical region or areas. Agreement can either be bilateral (between two countries), or multi-lateral (several countries). Free Trade Areas (FTAs) are created when two or more countries in a region agree to reduce or eliminate barriers to trade on all goods coming from other members. The North Atlantic Free Trade Agreement (NAFTA) is an example of such a free trade area, and includes the USA, Canada, and Mexico (81). Free Trade Agreements (FTAs) or Preferential Trade Tgreements (PTAs) eliminate import tariffs as well as import quotas between signatory countries. These agreements can be limited to a few sectors or can encompass all aspects of international trade. FTAs can also include formal mechanisms to resolve trade disputes. The North American Free Trade Agreement (NAFTA) is an example of such an arrangement (82). Removal of tariff barriers between members, together with the acceptance of a common or unified external tariff against non-members is involved in the Custom Union. Single payment or duty is made by countries exporting to customs union. Goods inside the union can move freely with no additional tariffs. Members shared tariff revenues while a small share is retained by the country that the collects the duty. Removing internal barriers to trade and requiring participating nations to harmonize their external policy as well as building a free trade area are put up by customs union. One major step towards economic integration is Common Market (CM). All barriers to the mobility of people, capital and other resources within the area in question, as well as eliminating non- tariff barriers to trade, such as the regulatory treatment of 40 The Contemporary World 2020 product standards are removed by CM aside from containing the provisions of a customs union. The extension of free trade from just tangible goods, to include all economic resources which means that all barriers are eliminated to allow the free movement of goods, services, capital, and labor, including removal of tariffs and reduced non-tariff barriers is the key feature of a common market. The trading bloc that has both a common market between members, and a common trade policy towards non-members, although members are free to pursue independent macro-economic policies is termed Economic Union. It requires coordinated monetary and fiscal policies as well as labor market, regional development, transportation and industrial policies. In economic union the use of a common currency and a unified monetary policy is considered. The best example of Economic union is the European Union (EU). As a key stage towards complete integration, the Economic and Monetary Union (EMU) involves a single economic market, a common trade policy, a single currency and a common monetary policy. It represents a major step in the integration of EU economies. EMU involves the coordination of economic and fiscal policies, a common monetary policy and a common currency, the euro. EMU is a means to provide stability and for stronger, more sustainable and inclusive growth across the euro area and the EU as a whole for the sake of improving the lives of EU citizens (83). Complete Economic Integration is the final stage of economic integration in which member states completely forego independence of both monetary and fiscal policies. States that participate in complete economic integration have no control of economic policy including economic trade rules. There is full monetary union where regulations regarding labor and capital are shared between member states and this includes a single currency. There is also a complete harmonization of fiscal policy which includes shared regulation of tax and benefit rates (84). Involved in complete economic integration are single economic market, a common trade policy, a single currency, a common monetary policy, together with a single fiscal policy, including common tax and benefit rates or the complete harmonization of all policies, rates, and economic trade rules. Political integration refers to the integration of components within political systems; the integration of political systems with economic, social, and other human systems; and the political processes by which social, economic, and political systems become integrated (85). Creating common policy frame work that creates equal conditions for the functions of the integrated parts of the economy is the aim of policy integration. Political integration is mainly based on welfare increasing effects of integrated policy making according to the Economics of European integration. It brings economic benefits by leading the recovery of effectiveness in policy making. 41 The Contemporary World 2020 Theories of European Integration Neo-functionalism This theory focuses on the supranational institutions of the EU of which the main driving forces of integration are interest group activity at the European and national levels, political party activity, and the role of governments and supranational institutions. The European integration is mostly seen as an upper class- driven process- driven by national and international political and economic upper crusts. It is a theory of regional integration, building on the work of Ernst B. Haas, an American political scientist and Leon Lindberg, also an American political scientist. Jean Monnet's approach to European integration, which aimed at integrating individual sectors in hopes of achieving spill-over effects. The core of neo-functionalism is the use of the concept ‘spill –over’, situations when an initial decision by governments to place a certain sector under the authority of central institutions creates pressures to extend the authority of the institutions into neighboring areas of policy, such as currency exchange rates, taxation, and wages. This core claim meant that European integration is self- sustaining: ‘spill-over’ triggers the economic and political dynamics driving further cooperation (86). Intergovernmentalism This theory provides a conceptual explanation of the European integration process. The main concept of the Intergovernmentalism is emphasizing on the role of national states in the European integration; in another words it argues that "European integration is driven by the interest and actions of nation states" (87). This theory was suggested by Stanley Hoffmann.The theory proposed the Logic of Diversity, which 'set limits to the degree which the ‘spill-over’ process can limit the freedom of action of the governments...the logic of diversity implies that on vital issues, losses are not compensated by gains on other issues' (88). Liberal Intergovernmentalism This a dominant political theory developed by Andrew Moravsik in 1993 to explain European integration. Application of rational institutionalism to the field of European integration is the aim of this theory. Moravcsik stated that 'state-society relations--the relationship of state to the domestic and transnational social context in which they are embedded--have a fundamental impact on state behavior in world politics and that the 'universal condition of world politics is globalization.' It is the web of globalized economic, social and political relationships that determines the living conditions of individual citizens, corporations and civic groups and shapes what they want and thus what their governments want” (89). Liberal intergovermentalists stated that the bargaining power of member states is important in the pursuit of integration, and package deals and side payments also occur in the process of making deals. 42 The Contemporary World 2020 New Institutionalism This theory emphasized the importance of institutions in the process of European integration. Its three key strands are: rational choice, sociological and historical. Multi-level Governance (MLG) This is a new theory of European integration. Writers Liesbet Hooghe and Gary Marks defined MLG as dispersion of authority across multiple levels of political governance. They stated that over the last fifty years, authority and sovereignty has moved away from national governments in Europe, not just to the supranational level with the EU, but also to subnational levels such as regional assemblies and local authorities (90) Transnational Activism in States Transnational activism can be defined as the mobilization of collective claims by actors located in more than one country and/or addressing more than one national government and/or international governmental organization or another international actor (91). It is a social movements and other society organizations and individuals operating across state borders (92). It also refers to the the coordinated international campaigns on the part of networks of activists against international actors, other states, or international institutions (93). A social movement is a type of group action. It refers to the organizational structures and strategies that may empower oppressed populations to mount effective challenges and resist the more powerful and advantaged elites". They are large, sometimes informal, groupings of individuals or organizations which focus on specific political or social issues. They carry out, resist, or undo a social change. They provide a way of social change from the bottom within nations (94). A social movement is a collective challenges to elites, authorities, other groups or cultural codes by people with common purposes and solidarity in sustained interactions with elites, opponents and authorities (95). The global justice movement describes the loose collection of individuals and groups often referred to as a “movement of movements”, who advocate fair trade rules and are negative to current institutions of global economics such as the World Trade Organization (91). The movement is often labeled the anti-globalization movement by the mainstream media. Those involved, frequently deny that they are anti-globalization, insisting that they support the globalization of communication and people and oppose only the global expansion of corporate power (96). Anti- capitalist and universalist perspective on globalization in also indicated in the term differentiating the movement from those whose politics are based on a defense of conservative on national sovereignty as they identified opponents of globalization. 43 The Contemporary World 2020 The new transnational activism is as multifaceted as the internationalism. Although globalization and global neo-liberalism are frames around which many activists mobilize, the protests and organizations are not the product of a global imaginary but of domestically rooted activists who are the connective tissue of the global and the local, working as activators, brokers and advocates for claims both domestic and international (97). Social Media and the State Social media is a computer-based technology that facilitates the sharing of ideas and information and the building of virtual networks and communities. By design, social media is internet based and offers users easy electronic communication of personal information and other content, such as videos and photos. Users engage with social media via computer, tablet or smartphone via web-based software or web application, often utilizing it for messaging (98). It “empowers” individuals to have a voice (99). Many social movements have increasingly seen social media as a means to collaboratively crowdsource with diverse stakeholders (100). In large organizations, social media are often supported because the technology can help foster the sense of a “digital village” (101) where individuals are able to “see” the lives of others within their organization and feel closer to them (102). Social media are used commercially as a key mode for product exposure and messaging (103). Landscape of organizational communication within social movements is shaped and often fundamentally influenced by social media. Rippling effects which touch many different aspects of the movements process from resource mobilization to actual interventions is often created by social media. Social movements can and do draw from accumulated knowledge gleaned from previous movements and activities. Social media have changed the ways in which this knowledge is being recorded and passed on (104). New forms of digital media are accompanied by globalization in bringing to light the possibilities for merging new kinds of communities via networks and creating new arenas for political interaction, identity and belonging. The concept of network society affirms that citizens and civil society organizations can increasingly use networks to gain power relative states by generating alternative discourses that have the potential to overwhelm the disciplinary discursive capacity of the state as a necessary step to neutralizing its use of violence (105). It is believed that states are making pragmatic transformation by adapting to fit in among decisive global networks in finance, education, science, technology, arts, culture and sports. New Media opens up potential for citizens to gain leverage. It is the only power of global civil society acting on the public mind via the media and communication networks that may eventually overcome the historical inertia of nation states (106). 44 The Contemporary World 2020 References: The Global Interstate System 66. Weber, M. (1997). The Theory of Social and Economic Organization. New York: Free Press. 67. Bull, H. (1995). The Anarchichal Society: A Study of Order and World Politics. 2nd Edition, New York: Columbia University Press. 68. (a,b,c,d,e) Anderson, B. (1991). Imagined Communities: Reflections on the Origin and Spread of Nationalism. London: Verso. 69. Joppke, C. (1998). Immigration Challenges the nation-state In: Joppke, C. (ed.) Challenge to the Nation-State Immigration in Western Europe and The United States. Oxford University Press. 70. (a,b)Friedman, T. (2000). The Lexus and the Olive Tree. 2nd edn, New York: Farrar, Straus and Giroux 71. Beder, Sharon. (2017). Golden Straitjacket. Retrieved from: http:// www. herinst. Org/ BusinessManagedDemocracy/government/international/straitjacket.html. 72. Harvey, David (20

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