Notes on Globalization: A Very Short Introduction PDF

**NOTES ON GLOBALIZATION: A VERY SHORT INTRODUCTION** **By Manfred B. Steger** **CHAPTER 1: INTRODUCTION -- GLOBALIZATION: A CONTESTED CONCEPT** ***Page 23 -- 35*** - The term 'globalization' in the English language can be traced back to the **1940s**. - However, it was **not until half...

**NOTES ON GLOBALIZATION: A VERY SHORT INTRODUCTION** **By Manfred B. Steger** **CHAPTER 1: INTRODUCTION -- GLOBALIZATION: A CONTESTED CONCEPT** ***Page 23 -- 35*** - The term 'globalization' in the English language can be traced back to the **1940s**. - However, it was **not until half a century later** that this concept took the public consciousness by storm. - Some early bestsellers about globalization: - "The End of the Nation State" by Kenichi Ohmae - "The Lexus and the Olive Tree" by Thomas Friedman's - Spectre of 'Americanization' - 'Global War on Terror' in the 2000s spearheaded by an 'American Empire' - **Global-Local Nexus or 'glocalization' --** Global and local interactions - Examples of which are Football World Cup, first organized in 1930 by Federation of Football Associations (FIFA) - World Cup done every four years (except 1942 and 1946), all countries except Oceana - 2010 World Cup in South Africa - Diego Forlán - Uruguayan striker (the tournament's most valuable player) - Shakira - Colombian singer-entertainer, who performed the official anthem of the 2010 World Cup at the opening and closing ceremonies of the mega-event. - Modern Era -- what your parents lived in, the period between 1945 and 2000 embracing technology and the new. - Post-modern Era -- is your world, a variety, a collection of ideas, some old, some new, some domestic, other foreign ideas. A postmodern building. You can do what you want to do. Sort of freedom of expressions. - View from above, rich people, powerful nations -- examples are presidents - View from below, poor people of the world. Usually living in poor nations. - ***Global North***; rich world, ***Global South***; poor world, East; Asia, West; Europe and North America and Australia or easier, white people - The Philippines is part of the Global South. We are a developing nation. - The Philippines is NOT a third-world nation. It is close to the upper-middle income country. It is currently a lower-middle income country. - The United States is a developed nation. **DEFINITION OF GLOBALIZATION** - *Globalization refers to the process of reducing barriers between countries, encouraging closer economic, political, cultural, interaction.* - The myriad forms of connectivity and flows *linking* the **local** (and national) to the **global**---as well as the **West to the East**, and the **North to the South**. - 'Globalization' has been variously used in both the popular press and academic literature to **describe a process, a condition, a system, a force, and an age**. - Adopting the term 'globality' to signify a social condition characterized by **tight global economic, political, cultural, and environmental interconnections and flows** that make most of the currently existing borders and boundaries irrelevant. - **'Planetarity'** - a new social condition brought about by the successful colonization of our solar system. - **Different social manifestations of globality:** - Values of individualism, competition, and laissez-faire capitalism - Communal and cooperative norms - These possible alternatives point to the fundamentally ***indeterminate character of globality.*** - The term **globalization** applies to a set of social processes that appear to transform our present social condition of conventional nationality into one of globality. - This does **not mean** that the national or the **local are becoming extinct or irrelevant.** - In fact, the national and local are changing their character as a result of our movement towards globality. - 'Globalization' suggests a sort of dynamism best captured by the notion of 'development' or 'unfolding' along discernible patterns. - Theme of *social change* - Conceptualization of globalization as a **dynamic process** *rather than a static condition*. - **Globality** - a noun, refers to the situation today of tight connections around the world, that are economic, political cultural and environmental. Globality means the state of being globalized. but as a term it is rarely used. - **Global Imaginary** - concept referring to people's *growing consciousness of global connectivity*. - The **thickening of the global consciousness destabilizes and unsettles** the **conventional nation state** within which people imagine their communal existence. - **Global imaginary** - Refers to the growing idea, consciousness that the world is a single whole. That nations are losing their significance in their citizen's outlook, and instead a global perspective is substituting itself. - Globality gives us *one defining characteristic* of the process: movement towards more intense forms of connectivity and integration. - Globalization is an uneven process, meaning that **people** living in various parts of the world are **affected very differently** by this gigantic transformation of social structures and cultural zones. - Analyzed and explained by various commentators in **different, often contradictory ways.** - Globalization refers to the expansion and intensification of social relations and consciousness across world-time and world-space. **THE GLOBALIZATION SCHOLARS AND THE ELEPHANT** - The essence of globalization represents a **postmodern version** of the *parable of the blind men and the elephant*. - Each globalization researcher is **partly right** by correctly identifying one important dimension of the phenomenon in question. - However, their **collective mistake** lies in their dogmatic attempts to reduce such a complex phenomenon as globalization to one or two domains that corresponds to their own expertise. **DIFFERENT DEFINITIONS OF GLOBALIZATION BY DIFFERENT SCHOLARS** **Anthony Giddens, Former Director of the London School of Economics** Globalization can thus be defined as the intensification of worldwide social relations which **link distant localities** in such a way that local happenings are shaped by events occurring many miles away and vice versa. **David Held, Professor of Politics and International Relations, Durham University** Globalization may be thought of as a process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions---assessed in terms of their extensity, intensity, velocity and impact---generating transcontinental or interregional flows and networks of activity, interaction, and the exercise of power. **Roland Robertson, Emeritus Professor of Sociology, University of Aberdeen, Scotland** Globalization as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole. **FOUR ADDITIONAL QUALITIES AT THE CORE OF GLOBALIZATION** 1. **Creation and multiplication** - First, 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. - Today's media combine conventional TV coverage with multiple feeds into digital devices and networks that transcend nationally based services. 2. **Expansion and stretching** - Expansion and the stretching of social relations, activities, and connections. - Financial markets - Electronic trading - Gigantic and virtually identical shopping malls have emerged on all continents, catering to those consumers who can afford commodities from all regions of the world. 3. **Intensification and acceleration** - Intensification and acceleration of social exchanges and activities. - The creation of a global network society fueled by 'communication power' required a technological revolution. - Rapid development of new information and communication technologies. - The World Wide Web relays distant information in real time, and satellites provide consumers with instant pictures of remote events. - The intensification of worldwide social relations means that local happenings are shaped by events occurring far away, and vice versa. - The seemingly opposing processes of **globalization and localization** actually imply each other. - The local and global **intermingle**, sometimes messily, with the national and regional, in overlapping horizontal scales. 4. **Not only objective but also subjective** - Emphasized in our definition of the global imaginary - Globalization processes do not occur merely on 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'. - Facilitating the **creation** of multiple individual and collective identities nurtured by the intensifying relations between the personal and the global. - A very short definition of globalization: - Globalization refers to the expansion and intensification of social relations and consciousness across world-time and world-space. **GLOBALIZATION IN THE PHILIPPINES** - The Philippines has benefitted from globalization. - Example is the people has the financial capability to buy a motorcycle now. - We are in the lower half, \#115 out of 185 nations. 114 nations above us, 70 nations below us. - we are a developing country, the USA is a developed country. **BENEFITS/POSITIVES OF GLOBALIZATION** - **High technology** -- example is online classes - High standards of living - Greater number of jobs - 2 Billion people are pushed out of poverty **DISADVANTAGES/NEGATIVES OF GLOBALIZATION** - Losses of cultural traditions - Small businesses that does not utilize technology or the internet are at a disadvantage - Loss of political control -- Other international police (InterPol) can operate in other countries so there is no definite person of power. - Tariff import taxes - Import of rice -- we cannot produce rice as cheaply as Vietnam. - Rising inequality within nations, and between nations. **OTHER IMPORTANT POINTS TO KNOW** - NGO -- National Government Organizations **CHAPTER 2: GLOBALIZATION AND HISTORY: IS GLOBALIZATION A NEW PHENOMENON?** ***Page 36 - 51*** - Essence of globalization - reference to growing forms of connectivity fueled by exploding information and communication technologies. - As important as **technology** is for the **intensification of global connectivity**, it provides only a **partial explanation** for the latest wave of globalization since the 1980s. - The Internet and the World Wide Web - Globalization is, indeed, a relatively new phenomenon. - Dynamic nature of the phenomenon - The global expansion of social relations and the rise of the global imaginary are gradual processes with **deep historical roots**. - If we talk about the history of globalization backwards, we could go from the engineers who developed personal computers and **supersonic jet planes** to the **emergence of language** at the dawn of human evolution. - Some argue that globalization really represents the continuation and extension of complex processes that began with the emergence of modernity and the capitalist world system in the 1500s. - Few remaining researchers **refuse to confine globalization to time periods** measured in **mere decades or centuries**. Rather, they suggest that these processes have been unfolding for millennia. - Five historical periods - The history of globalization has involved all major regions and cultures of our planet - The first approach have marshalled impressive evidence for their view that the dramatic expansion and acceleration of global exchanges since the 1980s represents a quantum leap in the history of globalization. - Second view correctly emphasize the tight connection between contemporary forms of globalization and the explosion of technology known as the **Industrial Revolution**. - Third perspective rightly point to the significance of the time-space compression that occurred in the **16th century** when Eurasia, Africa, and the Americas first became connected by enduring trade routes. - Fourth approach advance a rather sensible argument when they insist that any truly comprehensive account of globalization falls short without the incorporation of ancient developments and enduring dynamics into our planetary history. **THE PREHISTORIC PERIOD (10,000 BCE--3500 BCE)** - 12,000 years ago - Hunters and gatherers (include definition) - In the hunting and gathering tribe, there were no sense of superiority, "it is like one big happy family". - Begun by our hominid **African ancestors** more than one million years ago - Small bands of hunters and gatherers reached the southern tip of South America. - 10 years ago - This fleeting mode of social interaction changed dramatically about 10,000 years ago when humans took the crucial step of producing their own food. - Domestication of animals - Regions near the vast Eurasian landmass proved to be ideal for these growing agricultural settlements - These areas are Fertile Crescent, north-central China, North Africa, northwestern India, and New Guinea - The [first civilization] is the **Fertile Crescent**. - plowing the earth exposed the rich soil underneath for planting grains, like rice, wheat, or barley. This was the invention of agriculture. - In Sumer, in Mesopotamia, or Fertile Crescent, here grew the first cities, essential for **learning and technology**. These people invented writing, essential for **transmission of ideas.** - Food surpluses achieved by early farmers led to: - Population increases - Establishment of permanent villages, and; - Construction of fortified laws - Roving bands of nomads lost out to settled tribes, chiefdoms, and, ultimately, powerful states based on agricultural food production. - Replaced by centralized and highly stratified **patriarchal social structures**. Headed by chiefs and priests who were exempted from hard manual labour. - Farming societies were able to support two additional social classes whose members did not participate in food production. These are: - One, **full-time craft specialists** who directed their creative energies toward the invention of new technologies, such as powerful iron tools, beautiful ornaments made of precious metals, complex irrigation canals, sophisticated pottery and basketry, and monumental building structures. - Two, comprised of **professional bureaucrats and soldiers** who would later play a key role in the monopolization of the means of violence in the hands of a few rulers, the precise accounting of food surpluses necessary for the growth and survival of the centralized state, the acquisition of new territory, the establishment of permanent trade routes, and the systematic exploration of distant regions. - Globalization in the prehistoric period was **severely limited**. - Advanced forms of technology capable of overcoming existing geographical and social obstacles **were largely absent**; - Only towards the end that **key agents of intensifying modes of social exchange** that would involve a growing number of societies in many regions of the world. - Centrally administered forms of agriculture - Religion - Bureaucracy, and; - Warfare - The best way of characterizing the dynamic of this earliest phase of globalization would be to call it 'divergence' - **'Divergence'**---people and social connections stemming from a single origin but moving and diversifying greatly over time and space **THE PREMODERN PERIOD (3500 BCE--1500 CE)** - The **invention of writing** in Mesopotamia, Egypt, and central China between 3500 and 2000 BCE. - Coincided with the **invention of the wheel** around 3000 BCE in Southwest Asia. - In Sumer, in Mesopotamia, or Fertile Crescent, here grew the **first cities**, essential for learning and technology. These people invented writing, essential for transmission of ideas. - The two historical events above marked the close of the prehistoric period. - **Technological and social boosts** that moved globalization to a new level. - The **wheel** spurred **crucial infrastructural innovations** such as **animal-drawn carts** **and permanent roads** that allowed for the faster and more efficient transportation of people and goods. - **Writing** greatly facilitated the coordination of complex social activities and thus encouraged large state formations. - Only the **Andes civilizations of South America** managed to **grow into the mighty Inca Empire** *without the benefits* of either the **wheel or the written word** **ASSYRIAN CLAY TABLET WITH CUNEIFORM WRITING, C.1900--1800 BCE** - The later premodern period was the **age of empires**. - The resulting vast **territorial accumulations** formed the basis of the: - Egyptian Kingdoms - The Persian Empire - The Macedonian Empire - The American Empires of the Aztecs and the Incas - The Roman Empire - The Indian Empires - The Byzantine Empire - The Islamic Caliphates - The Holy Roman Empire - The African Empires of Ghana, Mali, And Songhay - The Ottoman Empire - All of these empires fostered the **multiplication and extension of long-distance communication** and the **exchange of culture, technology, commodities, and diseases**. - **Chinese Empire** - The most enduring and technologically advanced of these vast premodern conglomerates. - Chinese seismograph and rocket launchers. - The **Qin Emperor's** armies, in 221 BCE, finally unified large portions of northeast China. - For the next **1,700 years**, successive dynasties known as the Han, Sui, T'ang, Yuan, and Ming ruled an empire supported by vast bureaucracies that would extend its influence to such distant regions as tropical Southeast Asia, the Mediterranean, India, and East Africa. - **Dazzling artistry and brilliant philosophical achievements** stimulated new discoveries in other fields of knowledge such as astronomy, mathematics, and chemistry. - Long list of major technological innovations achieved in China during the premodern period: - Redesigned plowshares - Hydraulic engineering - Gunpowder - The tapping of natural gas - The compass - Mechanical clocks - Paper - Printing - Lavishly embroidered silk fabrics, and; - Sophisticated metalworking techniques - The **construction of vast irrigation systems** consisting of hundreds of small canals enhanced the region's agricultural productivity while at the same time providing for one of the best river transport systems in the world. - **The codification of law** and the fixing of weights, measures, and values of coinage fostered the expansion of trade and markets. - The **standardization of the size of cart axles and the roads** they travelled on allowed Chinese merchants for the first time to make precise calculations as to the desired quantities of imported and exported goods. **THE GREAT WALL OF CHINA, BEGUN IN THE 7TH CENTURY BCE BY WARLORDS, WAS ENLARGED AND REBUILT REPEATEDLY** - **The Silk Road** - The most extensive of these trade routes. It linked the Chinese and the Roman Empires, with Parthian traders serving as skilled intermediaries. - Chinese also had porcelain (nice clay) and silk. - Series of fateful political decisions that halted overseas navigation and mandated a retreat from further technological development. - Migration - Plague, Bubonic Plague **FEUDALISM** - The global wealth pyramid. - It depended on who your parents were. - Peasants \< Knights (Vassals to Lords) \< Lords (Vassals to King) \< King - You do not rise in ranks, your class was whatever you were born in. - North and South America were called the New World, because they were. 1492, voyages of Columbus. - **Columbus, the 1^st^ major European Explorer, driven by a desire for profit and glory.** - They were able to prove that the earth was round due to their expedition. - Global trade was small stuff back in those days. Magellan's Victoria. - A Portuguese Caravel, invented by **Prince Henry the Navigator**. A maneuverable ship that could said nearly into the wind. **THE INVENTION OF THE PRINTING PRESS** - Invented in 1450 by Johannes Gutenberg - Mass printing of books - Accurate and with speed - Without books, information cannot be passed simply **THE EARLY MODERN PERIOD (1500--1750)** - The term **'modernity'** has become associated with **the 18th-century European Enlightenment** project of developing **objective science**, achieving a **universal form of morality and law**, and **liberating rational modes of thought** and *social organization* from the perceived **irrationalities of myth, religion, and political tyranny.** - **'Early Modern'** - refers to the period between the **European Renaissance and the Enlightenment**. - **Europe and its social practices** emerged as the primary catalyst for globalization after a long period of **Asian predominance**. - Decline of Asia's dominance in globalization. - Embodying the new values of individualism and unlimited material accumulation. - 'Capitalist world system' - By the 1600s, the Dutch were seeking trade and profits world wide. As you can see by this painting by Vermeer, they knew where they were going, even if the natives they were exploiting did not. - First corporations by the Indians. **THE SALE OF THE ISLAND OF MANHATTAN IN 1626** - Religious warfare - dislocation and displacement for Caucasian populations - protracted armed conflicts, - military alliances and political arrangements underwent continuous modification. - This highlights the crucial **role of warfare** as a catalyst of globalization. - Europe as the modern container of social life - As the early modern period drew to a close, **interdependencies** among nation-states were **multiplying as well as increasing in density**. **THE MODERN PERIOD (1750--1980)** - 18^th^ century, **Australia and the Pacific islands** were slowly incorporated into the **European-dominated** network of political, economic, and cultural exchange. - **Europeans** and their descendants on other continents took it upon themselves to assume the role of the world's guardians of civilization and morality. - Capitalist - Racist and appalling conditions of inequality - Free market and 'invisible land' - 1847, German political radicals **Karl Marx and Friedrich Engels**, the passage below taken from their famous ***Communist Manifesto*** captures the qualitative shift in social relations that pushed globalization to a new level in the modern period. **MARX AND ENGELS ON GLOBALIZATION** - The discovery of America prepared the way for mighty industry and its creation of a truly global market. - The latter greatly expanded trade, navigation, and communication by land. - Rise of the bourgeoisie and capital - old social classes of the Middle Ages - the bourgeoisie has no choice but settle everywhere; cultivate everywhere; establish connections everywhere... - pull all nations into civilization---even the most barbarian ones - it creates the world in its own image. **THE INDUSTRIAL REVOLUTION** - In 1840, a telegraph key to send messages. It was essential to maintain control over distant colonies. - The Americans built a transcontinental railroad. The railroad, invented in the 1820s, spanned the American Continent in 1880. - Steam ships, ***bapor***, used coal to heat water, making steam pressure to turn the propellers, starting 1830s. - Travel by ship is faster, more efficient. - "Without a steamship, we would never know Jose Rizal." - In the 1800s, aided by the telegraph, banks invested in the growing PH. - Many of the world's banks were located on Rosario Street, now known as Quintin Parades in Binondo. There are still banks here, but most have moved their big branches to Makati. **IMPORTANT FOR GLOBALIZATION:** - Transportation - Communication - Money/Economy **TRANSPORTATION:** - A Boeing passenger plane, 1928. Very luxurious! - This Boeing clipper plane landed in Cavite, connecting San Francisco and Shanghai in 1938. Travel was only for rich Americans, costing about \$5,000. A one-way journey took six days, versus six weeks on a steamer. **INCREASE OF WORLD TRADE BETWEEN 1850 AND 1914** - Colonial rule of the global South by the European nation-states - Would not have been possible without the 19th-century explosion of science and technology. - Power sources such as electricity and petroleum - Annihilation of countless animal and plant species as well as the toxification of entire regions - Railways, mechanized shipping, and 20th-century intercontinental air transport - Establishment of a genuine global infrastructure, while at the same time lowering transportation costs. - Communication: telegraph, telephone, and wireless radio communication - Mass circulation newspapers and magazines, film, and television - Enhanced a growing consciousness of a rapidly shrinking world - Population Explosion - Migration - Industrialization - extreme political programs - The ensuing period of **extreme nationalism** culminated in **two devastating world wars**, genocides, a long global economic depression, and hostile measures to protect narrowly conceived political communities. - World War 2: - Explosion of two powerful atomic bombs that killed 200,000 Japanese, most of them civilians - Cold-War acronym 'MAD' (mutually assured destruction) - **Process of Decolonization -** slowly revived global flows and international exchanges. - A new **political order of sovereign** but interdependent nation states anchored in the charter of the United Nations raised the prospect of global democratic governance. - a liberal-capitalist 'First World' dominated by the United States - authoritarian-socialist 'Second World' controlled by the Soviet Union - Third World - **Cuban Missile Crisis** raised the spectre of a global conflict **THE CONTEMPORARY PERIOD (FROM THE 1980S)** - **'Convergence'**---different and widely spaced people and social connections coming together more rapidly than ever before. - 1991 collapse of the communist Soviet Empire - 'neoliberal' attempts to create a single global marke - Information and Communication Technology (ICT) Revolution - Interactive communication that connected the local and global - Worldwide diffusion of the Internet, wireless communication, digital media, and online social networking tools. THINGS TO NOTE: - Globalization is not a single process but a set of processes that operate simultaneously and unevenly on several levels and in various dimensions. - Compare these interactions and interdependencies to an intricate tapestry of overlapping shapes and colours. **PPT EXPLANATION** - Global trade was small stuff back in those days.\ Magellan's *Victoria*. - They think there were sex division in hunting and gathering tribes. - Most of the food came from the women. - Women were responsible for the farming/agriculture. - They realized that rice would grow into a rice plant. - Bow and arrow is basically technology. Now, in modern times, it is made of wood and strings. - Bow and arrow and the flames helped increase the amount of food. - This increased the amount of people on Earth. - Technology changed the way we worked. - **Plow** -- This is important because plowing the earth exposed the rich soil underneath for planting grains, like rice, wheat, or barley. This was the invention of agriculture. - It's hard to say when globalization really started. But **New World** may have great indications of the start of globalization. - AFRICA - When they got out of Africa, it doesn't seem that races immediately developed. GLOBALIZATION VIDEO 1\. The Great Disperse 2\. The Neolithic Revolution 3\. Land-Based Globalization 4\. Ocean-Based Globalization 5\. The Anglo-American World / Industrial Revolution 6 The New Globalization **CHAPTER 3: THE ECONOMIC DIMENSION OF GLOBALIZATION** ***Page 52 - 69*** - **Economic globalization** - refers to the intensification and stretching of economic connections across the globe. **THE EMERGENCE OF GLOBAL ECONOMIC ORDER** - Contemporary economic globalization can be traced back to the **gradual emergence of a new international economic order** assembled at an economic conference held towards the **end of World War II**. - Leadership of United States of America and Great Britain. **BRETTON WOODS CONFERENCE OF 1944** - **John Maynard Keynes** -- A British economist who is the architect of the Bretton Woods system. - **Bretton Woods** also set the institutional foundations for the establishment of three new international economic organizations. - The International Monetary Fund (IMF) - The International Bank for Reconstruction and Development (later known as the World Bank) - General Agreement on Tariffs and Trade (GATT) **DESCRIBING THE THREE NEW INTERNATIONAL ECONOMIC ORGANIZATIONS** - The **International Monetary Fund (IMF)** was created to administer the **international monetary system**. - The **International Bank for Reconstruction and Development**, later known as the **World Bank**, was initially designed to provide **loans for Europe's postwar reconstruction**. - During the 1950s, however, its purpose was expanded to **fund various industrial projects** in **developing countries** around the world. - the **General Agreement on Tariffs and Trade (GATT)** was established in 1947 as a global trade organization charged with fashioning and **enforcing multilateral trade agreements**. - In 1995, the **World Trade Organization (WTO)** was founded as the successor organization to GATT. By the late 1990s, the WTO had become **the focal point of intense public controversy** over the design and the **effects of economic globalization**. - Bretton Woods regime contributed greatly to the establishment of the *'golden age of controlled capitalism'.* - By the early **1970s**, however, the Bretton Woods system collapsed. - Its demise strengthened those **integrationist economic tendencies** that later commentators would identify as **the birth pangs of the new global economic order**. - Business elites in the US and Japan consciously linked the novel term **'globalization'** to a political agenda aiming at the 'liberation' of state-regulated economies around the world. **NEOLIBERALISM** - Neoliberalism is rooted in the classical liberal ideals of Adam Smith (1723--90) and David Ricardo (1772--1823). - Viewed the market as a self-regulating mechanism tending toward equilibrium of supply and demand, thus securing the most efficient allocation of resources. - Neoliberalism is a political and economic philosophy that emphasizes **free trade, deregulation, globalization, and a reduction in government spending.** - It is related to **laissez-faire economics**, which advocates for minimal government interference in economic issues. - British sociologist **Herbert Spencer (1820--1903)** added to this doctrine a twist of social Darwinism by arguing that free market economies constitute the most **civilized form of human competition** in which the ***'fittest'*** would naturally rise to the top. **THREE MOST SIGNIFICANT DEVELOPMENTS RELATED TO ECONOMIC GLOBALIZATION** - Internationalization of trade and finance - Increasing power of transnational corporations and large investment banks - The enhanced role of international economic institutions **THE INTERNATIONALIZATION OF TRADE AND FINANCE** - Many associate economic globalization with the controversial issue of **free trade**. - China is the world's leading manufacturer. - The United States is the world's most voracious consumer. - In 2010, **China**, the world's leading manufacturer, was responsible for **11 per cent of global exports** while the **US,** the world's most voracious consumer, accounted for **13 per cent of global imports**. - **Free trade proponents** have nonetheless assured the public that the **elimination or reduction of** **existing trade barriers** among nations will **increase global wealth and enhance consumer choice**. - The **ultimate benefit of integrated markets**, they argue, would be **secure peaceful international relations** and **technological innovation for the benefit of all**. 1. Privatization of public enterprises. 2. Deregulation of the economy. 3. Liberalization of trade and industry. 4. Massive tax cuts. 5. 'Monetarist' measures to keep inflation in check, even at the risk of increasing unemployment. 6. Strict control on organized labour. 7. The reduction of public expenditures, particularly social spending. 8. The down-sizing of government. 9. The expansion of international markets. 10. The removal of controls on global financial flows - There is evidence that some national economies have **increased their productivity** as a result of free trade. - Millions of people have been lifted out of poverty in developing countries like China, India, or Indonesia. - The proportion of people living in extreme poverty decreased in developing region from 2005-2008. - The United Nations' Millennium Goals to cut extreme poverty in half has been met three years before its 2015 deadline. - A number of studies suggest that the **gap between rich and poor** countries is actually **widening at a fairly rapid pace**. - The **internationalization of trade** has gone hand in hand with the **liberalization of financial** transactions. Its key components include: - The deregulation of interest rates - The removal of credit controls - The privatization of government-owned banks and financial institutions; and - The explosive growth of investment banking - During the 1990s, new satellite systems and fibre-optic cables provided the nervous system of **Internet-based technologies** that further **accelerated the liberalization of financial transactions**. - Millions of individual investors utilized global electronic investment networks not only to place their orders, but also to receive valuable information about relevant economic and political developments. - 'Financialization' of global capitalism - Investors are betting on commodities or currency rates that do not yet exist. - Global speculators often take advantage of weak financial and banking regulations to make astronomical profits in emerging markets of developing countries. **THE GLOBAL SOUTH: A FATE WORSE THAN DEBT** - Sda **THE POWER OF TRANSNATIONAL CORPORATIONS** - **Transnational corporations (TNCs)** are the contemporary previous chapter. - Powerful firms with subsidiaries in several countries, their numbers skyrocketed from 7,000 in 1970 to about 80,000 in 2012. - Enterprises like General Motors, Wal-Mart, Exxon-Mobil, Mitsubishi, and Siemens belong to the 200 largest TNCs - These corporations account for over half of the world's industrial output. - None of these corporations maintains headquarters outside of North America, Mexico, Europe, China, Japan, and South Korea. - This geographical concentration reflects **existing asymmetrical power relations** between the North and the South. - Rivalling nation-states in their economic power, these corporations **control much of the world's investment capital, technology, and access to international markets**. - TNCs frequently merge with other corporations in order to maintain their prominent positions in the global marketplace. - Hence, it is not surprising that some critics have characterized economic globalization as **'corporate globalization'** or **'globalization-from-above'**. - The availability of cheap labour, resources, and favourable production conditions in the **global South** has enhanced corporate mobility and profitability. - As the 2012 UNCTAD World Investment Report shows, the total foreign direct investment of the world's hundred largest TNCs in 2011 amounted to over US\$374 billion. - These giant firms and their global strategies have become **major determinants of trade flows**, the **location of industries**, and other **economic activities around the world**. **THE ENHANCED ROLE OF INTERNATIONAL ECONOMIC INSTITUTIONS** - These three international economic institutions (IMF, the World Bank, and the WTO) enjoy the privileged position of **making and enforcing the rules of a global economy** that is sustained by significant power **differentials between the global North and South**. - Their important function of **providing loans** for developing countries became connected to the **West's political objective of containing communism**. - Starting in the 1970s, and especially after the fall of the Soviet Union, the economic agenda of the IMF and the World Bank has **synchronized neoliberal interests** to **integrate and deregulate markets around the world**. - 'Structural Adjustment Programmes' - **'Washington Consensus'** - Unleashed on developing countries in the 1990s, this set of neoliberal policies is called this Washington Consensus. - The official purpose of the document was to **reform the internal economic mechanisms** of debtor countries in the developing world so that they would be in **a better position to repay the debts they had incurred**. 1. A guarantee of fiscal discipline, and a curb to budget deficits. 2. A reduction of public expenditure, particularly in the military and public administration. 3. Tax reform, aiming at the creation of a system with a broad base and with effective enforcement. 4. Financial liberalization, with interest rates determined by the market. 5. Competitive exchange rates, to assist export-led growth. 6. Trade liberalization, coupled with the abolition of import licensing and A reduction of tariffs. 7. Promotion of foreign direct investment. 8. Privatization of state enterprises, leading to efficient management and improved performance. 9. Deregulation of the economy. 10. Protection of property rights - The **United States** has been the **dominant power** in the IMF and the World Bank. - However, large portions of the 'development loans' granted by these institutions have either been **pocketed by authoritarian political leaders** or **have enriched local businesses** and the **Northern corporations** they usually serve. **CONCLUSION:** - The intensification of global economic interconnections does not simply fall from the sky; rather, it is **set into motion by a series of political decisions**. - The multidimensional nature of globalization demands that we flesh out in more detail the interaction between its political and economic aspects. **NOTES ON PPT** - **The Great Depression: 1930s** - Caused by high tariffs, and nations protecting their currency. - There were no buyers, there were so many sellers - Lay off of workers. - First In, Last Fired - Many did not have jobs. - Without the Great Depression, we may not have had WW2. - **Economic instability caused WW2.** - If the economy had been healthy, the conflict would not have started. - 60,000 million or more died because of WW2 - **Bretton Woods: US Dollar at Center** - No more high-tariff walls - Every nation had to have gold in their currency so that we can keep inflation in check. - Low tariff rates -- tax based on imports. - High tariff rates were ok for wealthy nations. - For developing nations, **infant industries** were allowed. - If international trade was encouraged, the world economy would be more evened out, prosperity would be shared, and catastrophes in one country could hopefully be avoided. So, GATT was introduced. - Trade was based on a US dollar, which was based on **gold bullion** held at Fort Knox. - There were going to be 2 super banks, IMF (International Monetary Fund) and World Bank. - Their idea is to not gain profit. - They want to help nations that are in distress. - Bretton Woods policies worked well until the 1970s. At this decade, the world was hit by **stagflation**, caused by the OPEC cartel. - **Stagflation** -- Inflation in a stagnant economy. - This monopoly restricted oil output, making gas prices skyrocket. - All prices rose, inflation, while nations had a stagnant economy. - The USA **took its dollar off the gold standard**. - The followers of Keynes were outcast. - **Neoliberals or conservatives** - Conservatives (neo-liberals) want the government to stay away from regulating business, and believe in **Adam Smith, laissez faire**, those who believe in **David Ricardo theory of comparative advantage**, and free trade. - There have been ONLY ONE TIME where the Philippines did not import rice. - **Philippines Comparative Advantage** - English-speaking workforce - Best mangos, export more mangos, mango farms - Liberal leaders like **Keynes** - who said it was necessary for the govt to closely regulate business, that business could not police itself, and was only interested in short term profits. - The govt needed to protect the overall market, and its citizens. - The liberals advocate a **strong government intervention** in the market, and promote anti-poverty programs. - **Taken Off the Gold Standard** - Most currencies were taken off the gold standard in the 1970s, following the USA move. Still, **most nations hold gold in case of emergencies**. - The price of gold can go way up and can go way down. - Gold is the last asset that you can own in case of a political or economic emergency. - **The Organization of Petroleum Exporting Countries (OPEC)** - There was a hike in energy prices due to OPEC. - All oil prices jumped three times (3x). - Neo-Liberalism (Again) - Ironically, these are not liberals, but conservatives. - Margaret Thatcher of the UK with Ronald Reagan of the USA. Both conservatives, and led a great privatization of govt. owned corporations. The rich got richer. Both also hated communism and labor unions. Their policies were successful, and growth resumed. - Government does not know how to run corporations. - **Neo Liberalism Today** - Thus, the importation of rice, of pork, of chicken to the PH, even if it cuts the profit of farmers and livestock owners. Yet it saves the PH consumer money, lowering inflation. - This is, Ricardo's theory of *comparative advantage.* - The BSP policy is to lower inflation, to keep high economic growth. - Jeep fare hikes, and wage demands are rejected since they cause inflation. The poor drivers are offered only 500p monthly to offset inflation. - The govt says that it cannot afford massive help programs because it would only drive up the debt. (2024 -- Php 137,000 per person) - Theory of Comparative Advantage - Smuggling is a problem because vegetables are cheaper abroad. So is rice. So, one solution would be to allow allow all produce to freely come into the the PH, thus lowering the cost of food for PH consumers, thus slowing down inflation. - the Dutch, in Netherlands, grow huge amounts of tulips. They grow flowers in their fertile soil to sell worldwide. They import most of their food needs. - Laissez Faire - the idea that the state **"leave the economic operation to business"** has a flaw.\ Businessmen will try every possible way to make money: illegal, screw their investors, and generally too risky chances. This was the problem with the sub-prime mortgage crisis 2008, and Asian currency crisis 1997. The govt had to intervene. Yet, neo-liberalism lives on.