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GLOBALIZATION.
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Examined as an economic process that transformed the status quo.... More...
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Paper Abstract:
Examined as an economic process that transformed the status quo. Nature and origins of globalization. Impact of technological advances; interconnected world economy. Free market Capitalism. Controversies surrounding globalization. Discusses economic, political, environmental and cultural issues. Different markets and trade policies of developed and less developed countries. Future of globalization.
Paper Introduction:
GLOBALIZATION
This research paper summarizes the nature and origins as well as the principal impacts of, and reactions to, globalization. Globalization is the dynamic, interconnected, high velocity international economic regime which emerged during the last quarter of the 20th century. Like other economic processes in the past such as the rise of merchant capitalism or industrialization, it is inherently neither good nor bad but rather constitutes an ubiquitous reality which has profoundly disturbed and transformed the status quo and is itself undergoing an ongoing metamorphosis of uncertain dimensions.
Nature and Origins
Globalization was made possible by, and is a logical consequence of technological advances. According to Tharoor
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The current wave of globalization has been accompanied by themovement toward free trade, the elimination of tariff and other barriers tothe free flow of goods and services, and the removal of nationalimpediments to transnational movements of public and private capital. (2 2, January 1). IMF dictates to LDC governments. 25). Friedman is undoubtedly correct in observing that thequality of government is critical under globalization. In itsfirst phase, from roughly 188 to 1914, it took the form of a massiveoutflow of private capital and exodus of peoples from Europe (the core) toother parts of the world (the periphery). The core inventions were the transistor and the integratedcircuit which Dunn (1999, October 25) said "created whole new industries bypacking electronic components onto a single silicon chip the size of afingernail" and "powered the great postwar boom" (p. Future of Globalization: Conclusion In the wake of the September 11, 2 1 attacks, Professor Gray intonedthat "the era of globalization is over" (p. 35). Gray, J. The backlash against globalization first became overt during protestdemonstrations, marches and sporadic violence at the Seattle meeting of theWorld Trade Organization (WTO) (November 3 -December 3, 1989).Subsequently, similar protests have been mounted at conclaves of worldpolitical and economic leaders at Washington, D.C., Prague, Quebec andGenoa. . The 198 s saw the fall of communist rule in the SovietUnion (which collapsed) and in Eastern Europe. Issues in Dispute Economic issues. After the end of thePersian Gulf war, President George Bush hailed hopes for a newinternational order. (2 1, November). However,Bhagwati says that "wage differentials against women have decreased fasterin industries that compete internationally" (p. Almost the entire former communist worldabandoned statist economic policies and embraced the neo-liberal orWashington Consensus. American Scholar, 71,66-67. A 13). (1999, October 25). Kentnor, J. Geopolitically, Friedman argues that globalization strengthens theforces of democratization and peace. 2). Argentina which opened up its markets toforeign capital and competition in the late 198 s is today an economicbasket case, etc. He cites as examples its ruling against South Africa's attempt torule invalid Western patents on anti-AIDs drugs, a Massachusetts lawbanning the importation of goods from Myannmar and European efforts toprevent genetically engineering goods from the United States to enter theEuropean Union (p. (2 1, November-December). U 2). Heightened internationalcompetition leads to "a race to the bottom in which government vie forneeded international investment by scrambling to offer employers thecheapest body of laborers" (Wella & Hersh, p. (p. 16). One result hasbeen a much more tightly (albeit imperfectly) integrated and interdependentworld economy. Dunn, A. 25).The first era of globalization ran its course and ended. Globalization is seen by some as a threat to theeffective functioning of national governments, in effect, an infringer ofsovereignty. Foreign Affairs, 81, 2-8. Globalization has been accompanied by an accommodating internationalpolitical framework. The lexus and the olive tree understandingglobalization. The globalization of amovement. According toFriedman (1999), innovations in information technology andtelecommunications "have steadily brought down the cost of a phone call anddata transfers, while constantly increasing their speed, distance, andamounts of information that can be transmitted" (p. During the 1997-1998 Asian financial crisis, the weaknessof one Southeast Asian country's currency, the Thai baht, quickly spreadthroughout that region and undermined economies as far afield as LatinAmerica and Russia. . 175). Gray said that it appeared to some in the early 199 sthat "the world was to be made over in the image of Western modernity"(2 1, April 24, p. Foreign Policy, 16-19. The movement has,however, helped prevent the adoption of certain measures such as theproposed Multilateral Agreement on Investment (MAI). Cultural issues. Micklethwaite & Wooldridge commented that its critics "have turnedglobalization into a shorthand for many of the world's ills" (p. New York: Farrar, Straus Giroux. 435). U 2-U 3. 2). has not garnered enough critical massanywhere yet to really disrupt this new system" (p. (2 1, September 16).The globalization backlash. At the same time the trend toward concentration internationallythrough mergers and acquisitions in many international industries (banking,autos, computers, media, etc.) certainly raises legitimate fears concerningmonopoly and oligopoly power. This type of argument downplaysthe importance of tradition and ideology as motivating factors ininternational relations. Nature and Origins Globalization was made possible by, and is a logical consequence oftechnological advances. Access of ordinary Soviet citizens tothe Internet helped bring down communist rule. Powershift. Nor do materialconsiderations appear to be foremost in the minds of Islamic fundamentalistterrorists. Itwas not surprising that anti-globalization forces had various and oftencontradictory goals consisting as they did of anarchists, animal lovers, ex-communist factory managers, downsized Western executives, environmentalgroups, human rights groups, Islamic fundamentalists, pacifists, tradeunionists and conservative nationalists. Kentor (2 1 November) claims that "the long term effects ofglobalization on income inequality, population growth, and economicdevelopment" are negative (p. (2 1, September 24). Humanist, 61, 15-18. No one can gainsay those effects but the issue is whether theyare the result of globalization or the more fundamental expansion of globaleconomic activity itself. 8). Many formerly socialist or autarchic regimesadopted free-market oriented policies at home and entered into bilateraland multilateral trade and investment agreements. Wooldridge. A particular object ofcriticism is the International Monetary Fund (IMF) whose structuraladjustment policies call for LDCs which fall behind in their internationaldebt obligations to adopt austerity programs which principally harm thepoor. Asweeping cycle of technological innovation facilitated the spread ofglobalization. (199 ). Backlash to Globalization Despite its evident positive impact on global living standards,globalization has, according to Bhagwati (2 2, January-February), been "aphenomenon doomed to unending controversy" (p. Friedman says it creates "asense that your job, community or work place can be changed at any momentby anonymous economic and technological forces that are anything butstable" (p. Toeffler, A. It produced rising living standards in the coreand the newly industrializing areas of North America and Australasia buthad only mixed benefits for European colonies. Why is this record heralded as a success? These are basically anti-free trade, protectionistarguments which appeal to many conservatives as well as liberals. With transistor, they sparked arevolution. Tharoor, S. A13). Globalization is thedynamic, interconnected, high velocity international economic regime whichemerged during the last quarter of the 2 th century. Micklethwaite, J., & A. The lure of Western aid did little to dampen theexpansionist impulses of Josef Stalin after 1945 or the urge of the NorthVietnamese to seize control of South Vietnam in the 196 s. Friedman maintains that globalization"increases the incentives for not making war" of nations which areintegrated into the world economy (p. The same couldhappen again, especially if the world economy is headed into a 193 s typeprotracted period of depression. . Since the 197 s, income inequality has increased inmany developed countries and even more strikingly in most LDCs. Friedman says that "globalization means the spread offree-market capitalism to virtually every country in the world" under a setof rules "that revolve around opening, deregulating and privatizing youreconomy" (p. Friedman points out that the democratization of technology, aleading feature of globalization, "greatly lowered the barriers to entryinto almost any business" (p. WTO, three men appointed bydeveloped nation governments, issue trade rulings binding upon allsignatory nations. 15). Micklethwaite & Wooldridge argue that the worstpolluters, of, for example, tropical rainforests or of the air and water,are smaller indigenous firms not the TNCs who understand that "dirtyfactories lose them customers" and who invest in modern pollution controltechnologies (p. Globalization has brought in its wake transformative evenrevolutionary changes in established political, economic and culturalpatterns and traditions. (2 2, Winter). 295). Globalization is not new. As Gray points out, "it is simply nottrue that liberal capitalism is the only way of organising a moderneconomy" (p. The effects of globalization are often random,difficult to predict and can be devastating. The era of globalization is over. (1999). Friedman notesthat "the backlash against globalization is a broad phenomenon that is fedby many different emotions and anxieties that have been triggered by thenew system and the challenge of adapting to it" (p. Political issues. Free markets and poverty:Since 198 , as the world has deregulated its markets, income gaps havewidened. . Defenders of globalization such as Friedman arguethat it is a response to "the basic human desire to have a better life" andthat it has helped raise living standards in many countries (p. xix). 16). . References Bhagwati, J. The global century. He added that "we have moved from aworld where the key to wealth is how you seize, hold and exploit territoryto [one] in which the key to wealth is how your country or company amasses,shares and harvests knowledge" (p. Coping with anti-globalization. Primary products were exportedfrom the periphery to the core and manufactured goods were imported by theperiphery from the core. Open communications soessential to economic progress weaken the hold of authoritarian regimessuch as China's on their populaces. NewStatesman, 25-26. Social Problems, 48, 435-439. And neo-liberals exaggerate the role of capitalism ineconomic growth, neglecting often to mention the key part played bygovernmental action in the economic success stories of countries such asSingapore, South Korea and Taiwan. A 17). (2 2, January-February). Most capital flows have been among developed nations; however, privateflows of foreign direct investment (FDI) from the developed to the lessdeveloped or Third World also rose --from $1.9 billion in 198 to $12 .3billion in 1997 (Wella & Hersh, 2 2, January 1, p. Whereas proponents of globalizationsuch as Micklethwaite & Wooldridge maintain that it "increases choice" andis largely responsible for the great increase in the size of the middleclasses in, for example, China and India since 198 , globalization'scritics accuse Western governments and the transnational corporations(TNCs) of using their hegemonic or monopolistic influence to oppress theimpoverished populations of the Third World. 269). Globalization has been linked with the spread of free marketcapitalism but that only occurred because of the juxtaposition of extremelyfavorable political and economic forces. The psychological impact of sudden and comprehensivetechnological, economic, political and cultural changes was described byToffler (199 ) as future shock: "the disorientation and stress brought onby trying to cope with too many changes in too short a time" (p. GLOBALIZATION This research paper summarizes the nature and origins as well as theprincipal impacts of, and reactions to, globalization. 286). Anti-globalization forces are concerned thatglobalization fosters the homogenization of the world's cultures as theeconomy becomes one wall to wall shopping mall after another and Americanpopular culture captures the imagination of youth throughout the world.Friedman says the choices are not that stark: "the challenge in the era ofglobalization . His argument is that "theattempt to force life everywhere into a single mould is bound to fuelconflict and insecurity" (p. Hersh. China opted for free marketreforms and entry into the world capitalist system while retaining amodified internal Communist Party dictatorship. 65). American Prospect, 13, A13-A 18.----------------------- 1 11). Some of the worst polluters in the world have beengovernments, such as in Nikolai Ceaucescu's Romania in the 198 s. Environmental issues. This globalization failed tosurvive the dislocations of the First World War, the boom and bust businesscycles which culminated in the Great Depression and autarchic tradepolicies. He says thatgovernments which open their doors to free market capitalism withoutensuring the rule of law invite 'kleptocracy,' the theft of the state'spatrimony (p. 134). Hartman (2 1, November-December) points out that anumber of rulings by WTO have interfered with worthwhile domestic socialpolicies. As such, it has been perceived by many asprofoundly disquieting and threatening and as a consequence generated astrong backlash which has gathered momentum in recent years. Los Angeles Times, pp. 17). Micklethwaite & Wooldridge pointout that most technological innovation occurs in smaller companies and inrecent decades "the proportional output from big companies has declined notincreased" (p. It isdifficult, for example, to imagine that India could have become the world'ssecond largest producer of software if it had not adopted free marketpolicies. The major developed nations led by the United States have promotedthe spread of free market policies since the end of World War II.Interestingly, many less developed countries (LDCs) initially pursuedprotectionist external trade policies and domestic importsubstitution/subsidized centrally planned economic development strategies.By and large, such policies failed and were replaced in the 198 s and 199 sby free market oriented policies. Overthe past 5 years the total gross national product (GDP) of the worldeconomy and the volume of international trade expanded six and sixteentimes, respectively (Micklethwaite & Wooldridge, 2 1, September 16, p.18). 25). National currencies were wiped out overnightduring the Asian financial crisis by funds transfers of a few Wall Streetmanipulator like George Soros. 66). The evidence concerning these conflicting contentions is mixed. 42). 25). 286).Bhagwati says anti-globalization forces counter that "while globalizationmay be economically benign, in that . Friedman, T. New York: Bantam Books. Like other economicprocesses in the past such as the rise of merchant capitalism orindustrialization, it is inherently neither good nor bad but ratherconstitutes an ubiquitous reality which has profoundly disturbed andtransformed the status quo and is itself undergoing an ongoingmetamorphosis of uncertain dimensions. Globalization is highlycontroversial because in the minds of many, its impact has been uneven andin many spheres destructive. 197). Wella, C., & A. Globalizationinvolves a continuous and ever accelerating cycle or process oftechnological advance. Hartman, A. is to find a healthy balance between preserving a senseof identity, home and community and doing what it takes to survive withinthe globalization system" (p. According to Tharoor (2 2, Winter), the dominantcharacteristics of the contemporary interconnected world economy at theturn of the 2 th century is "ease of communications and travel, the flow ofpeople of all nationalities and colors across the world, [and] the swiftpulsing of financial transactions with the press of a button" (p. Movements for politicaldemocratization came to power in many (but by no means all) East Asian andLatin American countries. Wella & Hersh define the Washington Consensus as follows:"growth is maximized when barriers to the free flow of capital and commerceare dismantled and when individual economies are exposed to the discipline,consumer markets and entrepreneurship of the world economic system" (p. Friedman points out that "countries thathave been the most open to globalization, like Taiwan, Singapore, Israel,Chile and Sweden, have achieved standards of living comparable to those inAmerica and Japan" (p. it increases overall wealth, itis socially malign in terms of its impact on poverty, literacy, genderequality," etc. Friedman dismisses the impact oftheir protests: "the backlash . . The longer term effects ofglobalization on income inequality, population growth, and economicdevelopment. However, in all likelihood, Friedman isright when he says, whether we like or not, globalization is here to stay.The more likely course of events is that the adverse impacts ofglobalization will be regulated and modified in order to curb its excessesand to preserve more humane values. 4). Opposition to globalization for many is closelylinked with the deleterious effects of global capitalism on the naturalenvironment.
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