World View Presentations:

GLOBALIZATION

Presented by Dr. Loren Fauchier

Queens University of Charlotte
August 29, 2003
GLOBALIZATION
Defining Globalization
Components of Globalization
Thinking About GlobalizationGlobalists
vs. Skeptics
Major Questions and Dilemmas of
Globalization
Definitions of Globalization
1.Joseph Nye and John Donahue:
Globalism is a state of the world involving
networks of interdependence at
multicontinental distances.
2. World Bank: Globalization is the growing
integration of economies and societies
around the world.
Thomas Friedman, The Lexus and
the Olive Tree
A globalist system has replaced the Cold War system
The new system has unique rules, logic, pressures and
incentives driven by international capitalism
Features integration: free flow of capital, goods, ideas
more broadly, faster, deeper than anytime in the past.
The Golden Straightjacket: must abide by goals of free
market principles, efficiency. Rewarded if you do.
New key players: The Electronic Herd.
Globalization promotes cultural homogenization, the Big
Mac.
Friedman: Globalizations new
structure and balance of power
Traditional balance between states (countries),
U.S. is the paramount player
Balance between states and global markets:
states cant ignore the market any longer without
costs
Balance between individuals and states: people
influence governments through the market at
home and abroad (for good and evil).
Globalization produces super-empowered
individuals
Important Conclusions from
Friedmans argument
1. Rewards. Those who participate in
globalization are rewarded, though there are
winners and losers.
2. Peace Dividend. Those engaged in
globalization have too much to lose with war.
3. Democratic Dividend. Free movement of
information with markets produces drive for
freedom and libertyseeds of democracy.
Components of Globalization?
Economic globalization
Political globalization
Cultural globalization
Q: Is there a global economy?
If so, is this good?
Globalizers (Integrationists) : Yes!
1. Increased integration has brought a
higher volume of trade. This means
more goods and services for most of the
world.
2. Increased GDPs and overall standard of
living for those that participate
Merchandise Exports as percentage of GDP in 1990
prices, world and major regions, 1870-1998
______________________________________________
1870 1913 1950 1773 1998
______________________________________________
Western Europe 8.8 14.1 8.7 18.7 35.8
Eastern Europe &
former USSR 3.3 4.7 3.8 6.3 12.7
Latin America 9.7 9.0 6.0 4.7 9.7
Asia 1.7 3.4 4.2 9.6 12.6
Africa 5.8 20.0 15.1 18.4 14.8
World 4.6 7.9 5.5 10.5 17.2
______________________________________________
Development cycle working well
Economies in post-industrial societies
increasingly depend on the service sector
Developing countries are industrializing. By the
late 1990s almost 50% of total world
manufacturing jobs were located in developing
economies while over 60% of developing
country exports to the industrialized world were
manufactured goods.
America?
Loss of manufacturing jobs natural. 2.6 million
between 1979 and 1999, but overall job
increases, especially in the 1990s.
Increasing role of the service sector: IT,
banking, insurance, service industrieshelp
raise GDP per capita and the overall standard of
living
Cheaper goods and services with global market
Is economic globalization good?
All boats rising (for those who
participate) but at different rates
Raised incomes, though not equal
More individual choice and freedom in the
marketplace
Costs of goods and services go down
World Bank Policy Research Report:
Globalization, Growth and Poverty, 2002.
Key Points:
1. Strong correlation between integrating
into the world economy and economic
growth. Poor countries with around 3
billion people have broken into the global
market for manufactures and services.
2. Higher growth rates increase a countrys
GDP and standard of living.
3. Globalization has reduced the number of
people living in poverty by over 120
million.
4. Globalization has not increased income
inequality (as many skeptics claim).
5. Globalization has reduced poverty, but
not everywhere. About 2 billion people
have been left out of the globalization
process.
 The success stories or new globalizers
include:
China
India
Bangladesh
Uganda
Vietnam
Why successful?
Good investment climate
Social policies that aid human capital
Related Study by David Dollar and
Aart Kraay, Spreading the Wealth,
Foreign Affairs, 2002.
The current wave of globalization (starting
around 1980) has reduced poverty and
promoted economic equality
Key examples: China and India

-account for 36% of the worlds population

-important examples of how to do it.
UN 2003 Report
China has lifted 150 million people out of
poverty in the last 10 yearsthe biggest
success story in international poverty
alleviation.
Why?
1. Rapid economic growth
2. Political will (centralized government)
3. Economic and policy reformsmore open
trade, investment, technology
 Skeptics (Separatists): No.
1. Not a globalized economy. Trade is
overwhelmingly dominated by the
developed countries (U.S. and Europe).
These countries amass 76% of the
exports in goods and services.
2. World economy is dominated by the U.S.
and major western powers.
3. Major U.S. trade partners: Canada,
Mexico, Japan, China, Germany, U.K.
South Korea, Taiwan, France, Italy.
LOCATIONS OF THE WORLDS 500 LARGEST MULTINATIONAL
ENTERPRISES

Country/bloc
Number of MNEs in 1999
United States 179
European Union 148
Japan 107
Canada 12
South Korea 12
Switzerland 11
China 10
Australia 7
Brazil 3
Other 11

Source: Held and McGrew, 2002, p. 43.

4. Developed countries have overwhelming
advantage with investment and trade. Do
little to help poor countries. Center for
Global Development and Foreign Policy
Magazine recently ranked overall
contributions by developed countries to
developing countries. The U.S. (despite
having the largest economy) ranked
second to last out of 21 countries. U.S.
spends 0.1 percent of its GDP on
development.
5. Globalization does not alleviate inequality
and poverty, it increases it. Gap between
rich and poor countries has increased.
Per Capita GNP, North and South
6. Gap between the rich and the poor
within countries has increased. Good
example? China! Top 10 percent to
bottom 10 percent income ratio: 1:35.

Countries with the highest inequality in

income and consumption? Sub-
Saharan Africa.
7. Intentions and statistics of the World
Bank and the International Monetary
Fund suspect.
Joseph Stiglitz, Chief Economist for the
World Bank. Book: Globalization and Its
Discontents, 2002.
These organizations put the interests of
Wall Street and the financial community
ahead of the poorer nations.
8. Globalization hurts workers in developing
countriesforced to work for cheap
wages and in poor working conditions e.g.
China, India. Rights of workers ignored.
9. Cheap foreign competition and off-shore
production of manufacturing hurts
American workers e.g. Pillowtex.
10. Globalization is undermining the white-
collar class as well with the export of jobs,
for instance, to India.
11. Labor is anything but global.

12. Developed countries are still

protectionist. This hurts developing
countries, limits globalization, and only
helps the already developed.
Important Points
1. China and India are important cases but
they dont represent the world.
2. Need to ask what life would be like in
China, India and other globalizers without
reforms.
3. Rich countries HAVE grown richer, and
most of the VERY POOR countries HAVE
stayed poor. Question is WHY.
4. Some governments clearly fail to provide
a sufficient environment for economic
growth and development. Others fail to
create fair tax systems e.g. Guatemala.
Role of ethnic conflict?
5. Some governments are politically
unready to even try to provide the a
proper environment e.g. failed states.
6. Key differences between the Globalists
and Skeptics revolve around:

a. Efficiency: let em eat cake

b. Fairness: social safety-netters
c. Quality of life under globalization

Need policies that address all of them:

Sustainable development
Q: Is there a Global Culture?
Globalists: Yes and No.
1. Decline of nationalism.
2. Growing universal language:
English
3. Universal Market of popular culture:
entertainment, the Internet, food,
etc.
4. Globalization does not destroy local
cultures, though it may influence them.

5. Likely growth of a democratic culture.

Over 120 democracies today, including
over of the worlds population. Most of
these encompass capitalist economies.
 Skeptics: No.
1. Nationalism and ethnic nationalism are alive
and well in many parts of the world.
2. Globalization = Americanization, a McWorld
led by the U.S. Vast majority of products
originate from the U.S.
3. Globalization undermines and destroys local
cultures e.g. Guatemala and Mayan culture.
4. Globalization engenders a backlash and
resistance.
Q: Has globalization reconfigured
Political Power and National
Interests?
Globalists: Yes
1. The power of governments has
declined in the face of the market.
2. Downside: states are more
vulnerableeconomic pressures
and non-state actors e.g. terrorists.
3. Societies are freer of government control;
people are better able to link up for
common purposes.
4. War is less likely because of the costs
5. The U.S. is the dominant power but it acts
as a positive force in the globalization
process providing rules of the market
and creative destruction.
6. States are losing their sovereignty to the
market and other multilateral
organizations
 Skeptics: No.
1. States are still powerful, some clearly
more than othersUS unilateralism.
2. National interest? Each state still defines
its own if it can.
3. States ignore the goals and regulations
of multilateral organizations when it
benefits them.
 Dilemmas and Strategies
1. Each side can muster evidence for its
causewhat is the broad, sustainable
picture?
2. Globalization can be trainwrecked
- Economic collapse
-War
-Terrorism
3. Globalizations impact on the
environment and our future? Global
warming, resource use, rainforest
destruction, etc.
4. Can everyone globalize at once?
5. How can governments provide a stable
economic environment in the face of
AIDS and ethnic conflict?
6. Gender discrimination and empowerment
America? Comprehensive Policy
1. Support globalization but negotiate a more
level playing field for American workers.
2. Improve worker training and retooling at
home.
3. Support governments that both liberalize their
economies and attempt to improve human
capital. Offer sweet deals.
4. Bring cases of worker exploitation to the
spotlight.
5. Encourage and negotiate improvements in
human rights in other countries but protect the
market of opportunity.
6. Encourage the economic empowerment of
women.
7. Better entrust and finance UN agencies to
achieve sustainable development.
 -micro-level investment strategies
-cheap health programs
-address AIDS in a comprehensive way
-transparency for all economic actors
-sensible taxation policies
-progressive deprotectionism
-open markets in developed countries for goods
from developing countries

Develop and maintain middle classes--Aristotle

Suggestions for Readings
Thomas Friedman, The Lexus and the Olive Tree, 1999
David Held and Anthony McGrew, Globalization/Anti-Globalization,
2002
Manfred B. Steger, Globalism. The New Market Ideology, 2002
Jackie Smith & Hank Johnston (eds), Globalization and Resistance,
2002
Joseph Stiglitz, Globalization and Its Discontents, 2002
Frank Lechner & John Boli (eds), The Globalization Reader, 2000
Robert M. Jackson (ed), Global Issues 03/04, Annual Editions, 2003