Globalization

From Wikipedia, the free encyclopedia

Globalization (or Globalisation) refers to increasing global connectivity, integration and interdependence in the economic, social, technological, cultural, political, and ecological spheres. Globalization is an umbrella term and is perhaps best understood as a unitary process inclusive of many sub-processes (such as enhanced economic interdependence, increased cultural influence, rapid advances of information technology, and novel governance and geopolitical challenges) that are increasingly binding people and the biosphere more tightly into one global system. An example of globalization was the invention of the telephone.

There are several definitions and all usually mention the increasing connectivity of economies and ways of life across the world. The Encyclopedia Britannica says that globalization is the "process by which the experience of everyday life ... is becoming standardized around the world." While some scholars and observers of globalization stress convergence of patterns of production and consumption and a resulting homogenization of culture, others stress that globalization has the potential to take many diverse forms.^[1]

In economics, globalization is the convergence of prices, products, wages, rates of interest and profits towards developed country norms.^[2] Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets. The International Monetary Fund notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread diffusion of technology. Theodore Levitt is usually credited with globalization's first use in an economic context. ^[3]

Globalization has various aspects which affect the world in several different ways such as:

• Industrial (alias trans nationalization) - emergence of worldwide production markets and broader access to a range of goods for consumers and companies
• Financial - emergence of worldwide financial markets and better access to external financing for corporate, national and subnational borrowers
• Economic - realization of a global common market, based on the freedom of exchange of goods and capital.
• Political - Political globalization is the creation of a world government which regulates the relationships among nations and guarantees the rights arising from social and economic globalization. ^[4]
• Informational - increase in information flows between geographically remote locations
• Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities such as Globalism - which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture".
• Ecological- the advent of global environmental challenges that can not be solved without international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species.
• Social - the achievement of free circulation by people of all nations.
• Transportation - Fewer and fewer American cars on American roads each year.
• Greater international cultural exchange
  • Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood and Bollywood movies). However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures has taken place over most of Asia for many centuries.
  • Greater international travel and tourism
  • Greater immigration, including illegal immigration
  • Spread of local consumer products (e.g. food) to other countries (often adapted to their culture)
  • World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol series, YouTube, Facebook, and MySpace.
  • World-wide sporting events such as FIFA World Cup and the Olympic Games.
  • Formation or development of a set of universal values
• Technical/legal
  • Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones
  • Increase in the number of standards applied globally; e.g. copyright laws, patents and world trade agreements.
  • The push by many advocates for an international criminal court and international justice movements.

Since World War II, barriers to international trade have been considerably lowered through international agreements - General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the World Trade Organisation (WTO), for which GATT is the foundation, have included:

• Promotion of free trade
  • Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs
  • Reduced transportation costs, especially from development of containerization for ocean shipping.
  • Reduction or elimination of capital controls
  • Reduction, elimination, or harmonization of subsidies for local businesses
• Intellectual property restrictions
  • Harmonization of intellectual property laws across the majority of nations, with more restrictions.
  • Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States)

Globalization can also be defined as the internationalization of everything related to different countries [Internationalization however, is a contrasted phenomenon to that of Globalization]

[edit] Historical precedents

The term "globalization" was popularized by Theodore Levitt, a professor at the Harvard Business School. ^[5] Levitt has been erroneously credited with coining the term in 1983, but the word "globalization" can be traced back to 1944. The term has been used by economists since 1981, however its concepts did not permeate popular consciousness until the latter half of the 1990's. Various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods.^[6].

Globalization is sometimes viewed as a centuries long process, tracking the expansion of human population and the growth of civilization, that has accelerated dramatically in the past 50 years. Earlier forms of globalization existed during the Arab Empire, when knowledge from many cultures were integrated, and during the Mongol Empire, when there was greater integration along the Silk Road. Global integration continued through the expansion of European trade, as in the 16th and 17th centuries, when the Portuguese and Spanish Empires reached to all corners of the world.

Globalization became a business phenomenon in the 17th century when the Dutch East India Company, which is often described as the first multinational corporation, was established. Because of the high risks involved with international trade, the Dutch East India Company became the first company in the world to share risk and enable joint ownership through the issuing of shares: an important driver for globalization.

Liberalization in the 19th century is often called "The First Era of Globalization", a period characterized by rapid growth in international trade and investment, between the European imperial powers, their colonies, and, later, the United States. The "First Era of Globalization" began to break down at the beginning with the first World War, and later collapsed during the gold standard crisis in the late 1920s and early 1930s. Lenin's Imperialism, the Highest Stage of Capitalism (1916) provided a seminal critique of this period as being characterised by the exploitation of the third world by those in the first. This theme forms the basis of many recent critiques of globalisation.

Globalization in the era since World War II has been driven by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on free trade. The Uruguay round (1984 to 1995) led to a treaty to create the World Trade Organization (WTO), to mediate trade disputes and set up a uniform platform of trading. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade grand.

The world increasingly is confronted by problems that can not be solved by individual nation-states acting alone. Examples include cross-boundary air and water pollution, over-fishing of the oceans and other degradations of the natural environment, regulation of outer-space, global warming, international terrorist networks, global trade and finance, and so on. Solutions to these problems necessitate new forms of cooperation and the creation of new global institutions. Since the end of WWII, following the advent of the UN and the Bretton Woods institutions, there has been an explosion in the reach and power of multinational corporations and the rapid growth of global civil society.^[7]

[edit] Measuring globalization

Looking specifically at economic globalization, it can be measured in different ways. These centre around the four main economic flows that characterize globalization:

• Goods and services, e.g. exports plus imports as a proportion of national income or per capita of population
• Labor/people, e.g. net migration rates; inward or outward migration flows, weighted by population
• Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population
• Technology, e.g. international research & development flows; proportion of populations (and rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances such as the telephone, motorcar, broadband)

To what extent a nation-state or culture is globalized in a particular year has until most recently been measured employing simple proxies like flows of trade, migration, or foreign direct investment, as described above. A multivariate approach to measuring globalization is the recent index calculated by the Swiss Think tank KOF. The index measures the three main dimensions of globalization: economic, social, and political. In addition to three indices measuring these dimensions, an overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated. Data are available on a yearly basis for 122 countries. According to the index, the world's most globalized country is Belgium, followed by Austria, Sweden, the United Kingdom and the Netherlands. The least globalized countries according to the KOF-index are Haiti, Myanmar the Central African Republic and Burundi.^[8]. Other measures conceptualize Globalization as Diffusion and develop interactive procedure to capture the degree of its impact Jahn 2006.

A.T. Kearney and Foreign Policy Magazine jointly publish another Globalization Index. According to the 2006 index, Singapore, Ireland, Switzerland, the U.S., the Netherlands, Canada and Denmark are the most globalized, while Egypt, Indonesia, India and Iran are the least globalized among countries listed.

[edit] Popular attitudes toward globalization

According to a 2003 survey of teenagers from New York, Lebanon, Azerbaijan, and the Philippines, teenagers both in the United States and elsewhere are largely in favor of globalization.[4]

Conversely a CNN survey in 2007 found that only 5% of all people in America are in favor of globalisation. The people involved cited major job insecurity as a big worry.

[edit] Pro-globalization (globalism)

Supporters of free trade claim that it increases economic prosperity as well as opportunity, especially among developing nations, enhances civil liberties and leads to a more efficient allocation of resources. Economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment, higher output and a higher standard of living for those in developing countries.^[9][10]

One of the ironies of the recent success of India and China is the fear that... success in these two countries comes at the expense of the United States. These fears are fundamentally wrong and, even worse, dangerous. They are wrong because the world is not a zero-sum struggle... but rather is a positive-sum opportunity in which improving technologies and skills can raise living standards around the world.

—Jeffrey D. Sachs, The End of Poverty, 2005

Libertarians and other proponents of laissez-faire capitalism say that higher degrees of political and economic freedom in the form of democracy and capitalism in the developed world are ends in themselves and also produce higher levels of material wealth. They see globalization as the beneficial spread of liberty and capitalism. Liberals see it as a tool for relieving poverty and providing the poor with a foothold in the global economy.^[9]

Supporters of democratic globalization are sometimes called pro-globalists. They believe that the first phase of globalization, which was market-oriented, should be followed by a phase of building global political institutions representing the will of world citizens. The difference from other globalists is that they do not define in advance any ideology to orient this will, but would leave it to the free choice of those citizens via a democratic process ^{[citation needed]}.

Supporters of globalization argue that the anti-globalization movement uses anecdotal evidence^{[citation needed]} to support their protectionist view, whereas worldwide statistics strongly support globalization:

• From 1981 to 2001, according to World Bank figures, the number of people living on $1 a day or less declined from 1.5 billion to 1.1 billion in absolute terms. At the same time, the world population increased, so in percentage terms the number of such people in developing nations declined from 40% to 20% of the population.^[11] with the greatest improvements occurring in economies rapidly reducing barriers to trade and investment; yet, some critics argue that more detailed variables measuring poverty should be studied instead.^[12]

• The percentage of people living on less than $2 a day has decreased greatly in areas effected by globalization, whereas poverty rates in other areas have remained largely stagnant. In East-Asia, including China, the percentage has decreased by 50.1% compared to a 2.2% increase in Sub-Saharan Africa.^[10]

'SOURCE: World Bank, Poverty Estimates, 2002^[10]

• Income inequality for the world as a whole is diminishing.^[13] As noted below, there are others disputing this. The economist Xavier Sala-i-Martin in a 2007 analysis argues that this is incorrect, income inequality for the world as a whole has diminished.[5]. Regardless of who is right about the past trend in income inequality, arguably absolute poverty is more important than relative inequality. If everyone lived in abject absolute poverty, then relative income inequality would be very low.

• Life expectancy has almost doubled in the developing world since World War II and is starting to close the gap between itself and the developed world where the improvement has been smaller. Even in Sub-Saharan Africa, the least developed region, life expectancy increased from 30 years before World War II to about a peak of about 50 years before the AIDS pandemic and other diseases started to force it down to the current level of 47 years. Infant mortality has decreased in every developing region of the world.^[14]

• Democracy has increased dramatically from there being almost no nations with universal suffrage in 1900 to 62.5% of all nations having it in 2000.^[15]

• Feminism has made great advances in areas such as Bangladesh through economically liberating and empowering women with jobs.^[9]

• The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s.^[16]

• Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000.^[17]

• The percentage of children in the labor force has fallen from 24% in 1960 to 10% in 2000.^[18]

• There are similar increasing trends toward electric power, cars, radios, and telephones per capita, as well as a growing proportion of the population with access to clean water.^[19]

• The book The Improving State of the World also finds evidence for that these, and other, measures of human well-being has improved and that globalization is part of the explanation. It also responds to arguments that environmental impact will limit the progress.

Others, such as Senator Douglas Roche, O.C., simply view globalization as inevitable and advocate creating institutions such as a directly-elected United Nations Parliamentary Assembly to exercise oversight over unelected international bodies.

Supporters of globalization are highly critical of some current policies. In particular, the very high subsidies to and protective tariffs for agriculture in the developed world. For example, almost half of the budget of the European Union goes to agricultural subsidies, mainly to large farms and agricultural businesses, which form a powerful lobby.^[20] Japan gave 47 billion dollars in 2005 in subsidies to its agricultural sector,^[21] nearly four times the amount it gave in total foreign aid.^[22] The US gives 3.9 billion dollars each year in subsidies to its cotton sector, including 25,000 growers, three times more in subsidies than the entire USAID budget for Africa’s 500 million people.^[23] This drains the taxed money and increases the prices for the consumers in developed world; decreases competition and efficiency; prevents exports by more competitive agricultural and other sectors in the developed world due to retaliatory trade barriers; and undermines the very type of industry in which the developing countries do have comparative advantages. Tarrifs and trade barriers, thereby, hinder the economic development of developing economies, adversely affecting living standards in these countries.^[24]

Although critics of globalization complain of Westernizaion, a 2005 UNESCO report^[25] showed that cultural exchange is becoming mutual. In 2002, China was the third largest exporter of cultural goods, after the UK and US. Between 1994 and 2002, both North America's and the European Union's shares of cultural exports declined, while Asia's cultural exports grew to surpass North America.

[edit] Anti-globalization

Main article: Anti-globalization

Critiques of the current wave of economic globalization typically look at both the damage to the planet, in terms of the perceived unsustainable harm done to the biosphere, as well as the perceived human costs, such as increased poverty, inequality, injustice and the erosion of traditional culture which, the critics contend, all occur as a result of the economic transformations related to globalization. They challenge directly the metrics, such as GDP, used to measure progress promulgated by institutions such as the World Bank, and look to other measures, such as the Happy Planet Index,^[26] created by the New Economics Foundation^[27]. They point to a "multitude of interconnected fatal consequences--social disintegration, a breakdown of democracy, more rapid and extensive deterioration of the environment, the spread of new diseases, increasing poverty and alienation"^[28] which they claim are the unintended but very real consequences of globalization..

The critics of globalization typically emphasize that globalization is a process that is mediated according to corporate interests, and typically raise the possibility of alternative global institutions and policies, which they believe address the moral claims of poor and working classes throughout the globe, as well as environmental concerns in a more equitable way.^[29]

The movement is very broad, including church groups, national liberation factions, peasant unionists, intellectuals, artists, protectionists, anarchists, those in support of relocalization and others. Some are reformist, (arguing for a more humane form of capitalism) while others are more revolutionary (arguing for what they believe is a more humane system than capitalism) and others are reactionary, believing globalization destroys national industry and jobs.

One of the key points made by critics of recent economic globalization is that income inequality, both between and within nations, is increasing as a result of these processes. one study from 2001 found that significantly, in 7 out of 8 metrics, income inequality has increased in the twenty years ending 2001. Also, "incomes in the lower deciles of world income distribution have probably fallen absolutely since the 1980s". Furthermore, the World Bank's figures on absolute poverty were challenged. In particular, some economists are skeptical of the World Bank's claim that the number of people living on less than $1 a day has held steady at 1.2 billion from 1987 to 1998, because of biased methodology.^[30]

A chart that gave the inequality a very visible and comprehensible form, the so-called 'champagne glass' effect^[31] , was contained in the 1992 United Nations Development Program Report, which showed the distribution of global income to be very uneven, with the richest 20% of the world's population controlling 82.7% of the world's income.^[32]

SOURCE: United Nations Development Program. 1992 Human Development Report^[33]

Most importantly, critics of recent economic globalization see that these developments are not at all occurring in a vacuum, but feed into ethnic, religious, and factional tensions that lead to wars and help breed terrorism. Furthermore, these terrorists, now globally interconnected and empowered with knowledge, create a whole new category of warfare based, in part, on the disruption of the interconnections which are both created by and necessary for globalization. ^[34] Some commentators believe the nation-state is ill-equipped to deal with this emergent threat.^[35]

In terms of the controversial global migration issue, disputes revolve around both its causes, whether and to what extent it is voluntary or involuntary, necessary or unnecessary; and its effects, whether beneficial, or socially and environmentally costly. Proponents tend to see migration simply as a process whereby white and blue collar workers may go from one country to another to provide their services, while critics tend to emphasize negative causes such as economic, political, and environmental insecurity, and cite as one notable effect, the link between migration and the enormous growth of urban slums in developing countries. According to "The Challenge of Slums," a 2003 UN-Habitat report, "the cyclical nature of capitalism, increased demand for skilled versus unskilled labour, and the negative effects of globalization — in particular, global economic booms and busts that ratchet up inequality and distribute new wealth unevenly — contribute to the enormous growth of slums."^[36]

Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. This movement has no unified name. "Anti-globalization" is the media's preferred term; it can lead to some confusion, as activists typically oppose certain aspects or forms of globalization, not globalization per se. Activists themselves, for example Noam Chomsky, have said that this name is meaningless as the aim of the movement is to globalize justice.^[37] Indeed, the global justice movement is a common name. Many activists also unite under the slogan "another world is possible", which has given rise to names such as altermondialisme in French.

There are a wide variety of types of "anti-globalization". In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations, the working class, and the natural environment into account. One of the proposed solutions to the uncontrolled environmental damage created by global econmic expansion is to set prices for that environmental damage done to the biosphere, so that the economy 'sees' the price signals from the environment, and begins to internalize the value of the environment. ^[38] The present global economic system, critics of globalization would note, does not price the damage (e.g., pollution) done to limited environmental resources making those resources, in effect, free.^[38] Economic theory, however, holds that items of economic utility and in limited supply should be priced in order to be used efficiently by the market.^[39] Presently, the two proposals for sending these price signals to the economy are a 'Carbon Tax', proposed by in the U.S. by Al Gore, and a 'Cap and Trade' system, as has been create in the European Union.

Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.^[40]

Some opponents of globalization see the phenomenon as the promotion of corporatist interests.^[41] They also claim that the increasing autonomy and strength of corporate entities shapes the political policy of countries.^{[42] [43]}

Some anti-globalization groups argue that globalization is necessarily imperialistic; it can therefore be said that "globalization" is another term for a form of Americanization, as it is believed by some observers that the United States could be one of the few countries (if not the only one) to truly profit from globalization.^{[citation needed]}

Some argue that globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises. ^[43]

The financial crises in Southeast Asia that began in 1997 in the relatively small, debt-ridden economy of Thailand but quickly spread to the economies of South Korea, Indonesia, Malaysia, Hong Kong, the Philippines and eventually were felt all around the world ^[44], demonstrated the new risks and volatility in rapidly changing globalized markets ^{[citation needed]}. The IMF's subsequent 'bailout' money came with conditions of political change (i.e. government spending limits) attached and came to be viewed by critics as undermining national sovereignty in neo-colonialist fashion ^{[citation needed]}. Anti-Globalization activists pointed to the meltdowns as proof of the high human cost of the indiscriminate global economy.^{[citation needed]}

Many global institutions that have a strong international influence are not democratically ruled, nor are their leaders democratically elected. Therefore they are considered by some as supranational undemocratic powers.^{[45][46][47][48]}

The main opposition is to unfettered globalization guided by governments and what are claimed to be quasi-governments (such as the International Monetary Fund and the World Bank) that are not held responsible through transparent or democratic processes by the populations that they affect and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of "corporate globalism".

Some anti-globalization activists and supporters object to the fact that the current "globalization" encompasses money and corporations, but not people and unions. This can be seen in the strict immigration controls in nearly all countries, and the lack of labour rights in many countries in the developing world.

Another more conservative camp opposed to globalization is state-centric nationalists who fear globalization is displacing the role of nations in global politics and point to NGOs as encroaching upon the power of individual nations. Some advocates of this warrant for anti-globalization are Pat Buchanan and Jean-Marie Le Pen and Ned Pencil.

Many have decried the lack of unity and direction in the movement, but some, such as Noam Chomsky, have claimed that this lack of centralization may in fact be a strength.