World View Presentations: GLOBALIZATION

1. World View Presentations:GLOBALIZATION Presented by Dr. Loren Fauchier Queens University of Charlotte August 29, 2003

2. GLOBALIZATION • Defining Globalization • Components of Globalization • Thinking About Globalization—Globalists vs. Skeptics • Major Questions and Dilemmas of Globalization

3. 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.

4. 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.”

5. Friedman: Globalization’s new structure and balance of power • Traditional balance between states (countries), U.S. is the paramount player • Balance between states and global markets: states can’t 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

6. Important Conclusions from Friedman’s argument • Rewards. Those who participate in globalization are rewarded, though there are winners and losers. • Peace Dividend. Those engaged in globalization have too much to lose with war. • Democratic Dividend. Free movement of information with markets produces drive for freedom and liberty—seeds of democracy.

7. Components of Globalization? • Economic globalization • Political globalization • Cultural globalization

8. Q: Is there a global economy?If so, is this good? • Globalizers (Integrationists) : Yes! • Increased integration has brought a higher volume of trade. This means more goods and services for most of the world. • Increased GDPs and overall standard of living for those that participate

10. 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 ______________________________________________

11. “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.

12. 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 industries—help raise GDP per capita and the overall standard of living • Cheaper goods and services with global market

13. 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

14. World Bank Policy Research Report: Globalization, Growth andPoverty, 2002. Key Points: • 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. • Higher growth rates increase a country’s GDP and standard of living.

15. 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.

17. The success stories or “new globalizers” include: China India Bangladesh Uganda Vietnam • Why successful? • Good investment climate • Social policies that aid human capital

18. 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 world’s population -important examples of “how to do it.”

19. UN 2003 Report • China has lifted 150 million people out of poverty in the last 10 years—the biggest success story in international poverty alleviation. • Why? • Rapid economic growth • Political will (centralized government) • Economic and policy reforms—more open trade, investment, technology

20. Skeptics (Separatists): No. • 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. • World economy is dominated by the U.S. and major western powers. • Major U.S. trade partners: Canada, Mexico, Japan, China, Germany, U.K. South Korea, Taiwan, France, Italy.

21. LOCATIONS OF THE WORLD’S 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.

22. 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.

23. Globalization does not alleviate inequality and poverty, it increases it. Gap between rich and poor countries has increased.

24. Per Capita GNP, North and South

25. 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.

26. Intentions and statistics of the World Bank and the International Monetary Fund suspect. Joseph Stiglitz, Chief Economist for the World Bank. Book: Globalization and ItsDiscontents, 2002. These organizations put the interests of Wall Street and the financial community ahead of the poorer nations.

27. Globalization hurts workers in developing countries—forced to work for cheap wages and in poor working conditions e.g. China, India. Rights of workers ignored. • 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.

28. 11. Labor is anything but “global.” 12. Developed countries are still protectionist. This hurts developing countries, limits globalization, and only helps the already developed.

29. Important Points • China and India are important cases but they don’t represent “the world.” • Need to ask what life would be like in China, India and other globalizers without reforms. • Rich countries HAVE grown richer, and most of the VERY POOR countries HAVE stayed poor. Question is WHY.

30. 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? • Some governments are politically unready to even try to provide the a proper environment e.g. “failed states.”

31. 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”

32. Q: Is there a Global Culture? • Globalists: Yes and No. • Decline of nationalism. • Growing universal language: English • Universal Market of popular culture: entertainment, the Internet, food, etc.

33. Globalization does not destroy local cultures, though it may influence them. • Likely growth of a democratic culture. Over 120 democracies today, including over ½ of the world’s population. Most of these encompass capitalist economies.

34. Skeptics: No. • Nationalism and ethnic nationalism are alive and well in many parts of the world. • Globalization = Americanization, a “McWorld” led by the U.S. Vast majority of products originate from the U.S. • Globalization undermines and destroys local cultures e.g. Guatemala and Mayan culture. • Globalization engenders a backlash and resistance.

35. Q: Has globalization reconfigured Political Power and National Interests? • Globalists: Yes • The power of governments has declined in the face of the market. • Downside: states are more vulnerable—economic pressures and non-state actors e.g. terrorists.

36. Societies are freer of government control; people are better able to “link up” for common purposes. • War is less likely because of the costs • 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.” • States are losing their sovereignty to the market and other multilateral organizations

37. Skeptics: No. • States are still powerful, some clearly more than others—US unilateralism. • National interest? Each state still defines its own if it can. • States ignore the goals and regulations of multilateral organizations when it benefits them.

38. Dilemmas and Strategies • Each side can muster evidence for its cause—what is the broad, sustainable picture? • Globalization can be “trainwrecked” - Economic collapse -War -Terrorism

39. Globalization’s impact on the environment and our future? Global warming, resource use, rainforest destruction, etc. • Can everyone “globalize” at once? • How can governments provide a stable economic environment in the face of AIDS and ethnic conflict? • Gender discrimination and empowerment

40. America? Comprehensive Policy • Support globalization but negotiate a more level playing field for American workers. • Improve worker training and “retooling at home.” • Support governments that both liberalize their economies and attempt to improve human capital. Offer “sweet deals.” • Bring cases of worker exploitation to the spotlight.

41. Encourage and negotiate improvements in human rights in other countries but protect the market of opportunity. • Encourage the economic empowerment of women. • Better entrust and finance UN agencies to achieve sustainable development.

42. -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

43. Suggestions for Readings • Thomas Friedman, The Lexus and theOlive 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