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The Formation of the Contemporary Globalization System

The Formation of the Contemporary Globalization System. The Role of the United States. When did Globalization Begin? With human origins Empires Age of Discovery and Columbus’s voyage Industrial Revolution Post-World War II. Post-War Situation Victory of Allies over Axis

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The Formation of the Contemporary Globalization System

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  1. The Formation of the Contemporary GlobalizationSystem The Role of the United States

  2. When did Globalization Begin? • With human origins • Empires • Age of Discovery and Columbus’s voyage • Industrial Revolution • Post-World War II

  3. Post-War Situation • Victory of Allies over Axis • US and Soviet dominance • Worldwide disruption and devastation • US acquisition of atomic bomb • Legacy of Depression and War: The Munich Analogy • Policy makers strive to prevent a repeat of interwar crisis and consequent world war

  4. Post-War Institutions • United Nations • Economic Institutions: “Bretton Woods” • International Monetary Fund • World Bank • GATT ⇒ WTO • NATO • Bilateral security agreements

  5. Breakdown of US-Soviet Cooperation • Soviet occupation of Poland and Czechoslovakia • Division of Germany and Berlin Crisis • Conflicts on European periphery: Iran, Turkey, Greece • Soviet acquisition of atomic bomb • Korea

  6. US Policy: Containment • Mr. X and NSC-68 • Military containment • Nuclear deterrent • Global alliance system and forward basing • Standing military • Covert operations and interventionism

  7. Containment • Economic containment • LIEO • US accepts costs of maintaining world economic system • US economic dominance is basis • Political Containment • US support for anti-communists • Public diplomacy • US human rights policy

  8. Economic Globalization During the Cold War • Social Compact in the United States • “Embedded Liberalism” • Keynesian demand management • Managed currency values • G.I. Bill, support for social safety net and unions, equal opportunity • Protection for vital industries • Citizenship and cultural identity

  9. Trends in Trade • GATT • Steady increase in global trade of goods and services • 1950: $300 billion • 2000: $6 trillion (merchandise) $8 trillion goods and services • Tariff reductions from average of 40% in 1940 to 5% today among industrialized countries

  10. Trends in Monetary Relations • U.S. dollar is international reserve currency • Gold based system gives way to floating exchange rates • Daily turnover increases from $200 billion (1979) to $2 trillion (2000) • Private capital markets overwhelm government management

  11. Rise of MNC • US corporations enjoy advantages in world market after WWII • Large internal market • Strength of US economy • Competitive edge • MNCs rival nation-states in economic size: 50 of top 100 in 2001 • Foreign Direct Investment grows with MNC • Transnational Banks: assets of top 20 = $425 trillion

  12. Cultural Globalization • Cultural aspect of Social Compact • Spread of American ideals as part of Cold War public diplomacy • Responses • The Backlash: Fundamentalism • Nationalism, regulation of cultural productions • Joining the competition: Japan and Bollywood

  13. Environmental Globalization • June 3: UN’s World Environmental Day • Stockholm Conference (UNCHE) • Declaration • UNEP • Rio (UNCED) • Agenda 21: Sustainable Development • CSD, GEF

  14. The End of the Cold War • USSR withdraws from Eastern Europe, reforms its economic and political institutions, and ultimately breaks up • Why? • US power • Weaknesses of Soviet system • Globalization-related factors: technology, communications, travel, spread of ideas, success of global capitalism

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