Globalization Week 3 Lecture Notes PDF

Globalization Department of Government  Lecture Plan What is globalization? What is driving it? Why does it matter so much? How was it affected by the pandemic? Implications from the war in Ukraine Department of Government ...

Globalization Department of Government  Lecture Plan What is globalization? What is driving it? Why does it matter so much? How was it affected by the pandemic? Implications from the war in Ukraine Department of Government  Globalization Can be understood as the widening, deepening and speeding up of world wide interconnectedness Described by Grieco and Ikenberry 2003: 207 as “the emergence and operation of a single, worldwide economy”. Many would argue that it is more than an economic phenomenon and that it encompasses social and political life Globalization is often considered along with modernization, Westernization, or liberalization The shrinking world, the global economy Now considered to be a ‘grand narrative’ that connects politics and economics (Ravenhill, 2020: 251) Department of Government  Globalization Globalization is measured by reference to patterns of trade and financial activity. Most agree that globalization is a process rather than a condition (See Keohane and Nye 2003 for further discussion) Globalization is measured with enthusiasm but there is a large debate on the appropriateness of individual indicators (Caselli 2008) Indicators include the A.T. Kearney Foreign Policy Globalization Index and the CSGR Index And since the great recession and the start of the populist backlash, there are big questions about whether the relevance of globalisation is overstated (Ravenhill, 2020) Department of Government Evidence of Globalization: Trade Global trade has increased enormously in the last four decades, however, it is concentrated among OECD countries with a small handful of East Asian and BRIC economies becoming more important (see work by Kevin O’Rourke). New regional specialisations Barriers still exist (the new regionalism) However, Wolf writing in 2001 (3 decades into the 2nd wave) as a % of GDP, trade was higher during the period from 1870-1914 (Wolf 2001) And what about evidence from gravity models, home bias effects, etc Global trade dropped sharply in 2009 but recovered quickly (Eichengreen and O’Rourke, 2009) But the pandemic did interrupt trade noticeably, goods continued to flow but there were supply interruptions, price increases in the years afterwards. And changed preferences about outsourcing, affected by Chinese lockdowns in particular. (El Erian, 2023) Leads to the question: are we on the cusp of a new era of deglobalisation? Department of Government Martin Wolf Financial Times 2024 Department of Government  Evidence of Globalization: Finance Financial markets have seen massive increases in activity and turnover since the 1960s. – World wide foreign exchange market – Global financial services market Qualitative difference to 1st wave of globalisation Legal restrictions on capital flows and mobility have declined significantly since the 1960s (but were subject to renewed discussion as a result of the financial crisis) Foreign ownership of many asset classes (equities, bonds) has increased dramatically in recent decades (see Lund et al, 2017) – Nevertheless the 2008 financial crisis caused a collapse in activity that took a long time to rebuild in the 2010s Department of Government  Evidence of Globalization: Migration Main pattern is South to North and largely urban in character. Ravenhill (2008: 291) 75% of migration was concentrated in 23 countries in 1970, and only 28 countries by 2000. Remittances and personal financial transfers Wolf (2001) argues that migration is far more controlled today than it was during the period 1870-1914, especially when you consider the Americas but the UN Migration Reports (2000 – 2022) demonstrates considerable growth in migration numbers. Ravenhill (2017) urban phenomenon, gender balanced Has become intensely politicised since the global migrant crisis of 2015, Brexit and the election of Trump. And Covid 19 has been described as the great disrupter in the 2022 UN Migration Report Department of Government Department of Government Un Migration Report (2022) Department of Government Department of Government Foreign Policy: Measuring Globalization 2001 Department of Government  Digital Divides Source: Foreign Policy – Measuring Globalization 2001 Department of Government  Source: Foreign Policy – The Globalization Index 2007 Department of Government Digital Divide Source: Foreign Policy – The Globalization Index 2007 Department of Government  KOF Index of Globalisation http://globalization.kof.ethz.ch/ The KOF Index of Globalization measures the three main dimensions of globalization: economic, social and political. In addition to three indices measuring these dimensions, we calculate an overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data on information flows data on personal contact, and data on cultural proximity. Data are available on a yearly basis for 207 countries over the period 1970 - 2010. Department of Government OECD – Measuring Globalization http://www.oecd.org/dataoecd/22/25/4595452 6.pdf Eurostat – Measuring Globalization http://ec.europa.eu/eurostat/c/portal/layout?p_ l_id=6031625&p_v_l_s_g_id=0 Department of Government  Globalists and Sceptics Globalists Patterns in world trade, finance, investment and labour confirm the new epoch of globalization However, they see globalization as an uneven process, given the concentration in OECD countries Sceptics Argue that globalization is exaggerated (Stiglitz, 2005). It is not the only force in global economic activity (regionalism, Hay 2000). Outline the limits of globalization It could be irrelevant Has all been seen before (La Belle Epoch) Yet, globalisation survived the Great Recession (more embedded that thought?) Department of Government  The Causes of Globalization Very difficult to identify specific causes of globalization – Economic Globalization Many authors distinguish between thick and thin explanations Technology is often the primary thick causal factor as it is argued that globalization could not have happened in its absence Thin explanations consider factors such as the liberalization of trade, neoliberalism. Department of Government  Technology Modern Communications Infrastructure The shrinking world has facilitated a world economy Infomatics revolution has facilitated the emergence of post-industrial economies Department of Government  The Economic Logic (see Ravenhill summary, 2020) Two distinct sets of literature – Orthodox economics explain globalization in terms of market dynamics Globalization is a direct consequence of market competition (trade, comparative advantage, MNCs) The pursuit of profit, wealth and market position explains the process of economic integration which inevitably leads to globalization – Radical economics explains globalization in terms of the inevitable consequences of capitalism It occurs because of the tendency of capitalism to overproduce, resulting in the search for new markets, cheaper labour, and new sources of profit Department of Government  Politics Ideas, Interests and Institutions The rise and dominance of neo-liberalism (deregulation, privatisation and liberalization) is seen as a central factor in explaining globalization Across the OECD, the last fifty years has witnessed considerable liberalisation of markets which has facilitated globalization The hegemonic power of the US Is a liberal world order a by-product of US dominance in the world?? Has the relative world power of the US been eroded in recent years Digital commerce BRICS (expanded since 2023) Department of Government  Discussion Questions What are the principle causes of globalization, Discuss? Assess the argument that globalization is essentially a political project. Are we in the midst of a new stage of deglobalisation? Department of Government  Interrogating globalisation Irish Times Podcast Interview with Lionel Barber (former FT editor) on his book The Powerful and the Damned (2021) https://www.irishtimes.com/news/politics/inside-politics/inside-politics-the-po werful-and-the-damned-with-lionel-barber-1.4650106 Kevin O’Rourke (2019) https://voxeu.org/vox-talks/end-globalisation Slowbalisaton https://www.irishtimes.com/opinion/david-mcwilliams-ireland- has-a-lot-to-lose-from-slowbalisation-1.3777973 Robert Keohane – Conversations with History https://www.youtube.com/watch?v=5foxGFXNl-s Mohamed El-Erian (2023) From near-shoring to friend-shoring: the changing face of globalization https://www.theguardian.com/business/2023/mar/09/from-near-shoring-to- friend-shoring-the-changing-face-of-globalisation Martin Wolf (2024) ‘the world economy’s story remains one of integration’ Financial Times https://www.ft.com/content/e167eca5-e1e7-4927-abb5- d87dfb699cf3 Department of Government  References Quinn Slobodian (2018), The Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge MA: Harvard University Press) Caselli, M., (2008) ‘Measuring... What? Notes on Some Globalization Indices’ Globalizations. Held, D. and McGrew, A. (2007) Globalization/Anti Globalization. UK: Polity Press. Jeffrey Friedan (2017) ‘The politics of the globalization backlash: Sources and implications’ https://scholar.harvard.edu/files/jfrieden/files/the_politics_of_the_globalization_bac klash.pdf Dani Rodrik (2017), “Populism and the Economics of Globalization,” Journal of International Business Policy O’Keohane, R and Nye, J.S., (2000) ‘Globalization: What’s New, What’s Not (And So What)’ Foreign Policy. Stephen D King (2017) Grave New World: The End of Globalization, the Return of History. Yale University Press. Ravenhill, J., (2017) Global Political Economy, Oxford: Oxford University Press Sachs, J., (1998) ‘International Economies: Unlocking the Mysteries of Globalization’ Foreign Policy. Waters, M., (2001) Globalization, London: Routledge. Suzanne Berger (2000), “Globalization and Politics,” Annual Review of Political Science (3):43-62. 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