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Introduction

Over many centuries, human societies across the globe have established progressively closer
contacts. Recently, the pace of global integration has dramatically increased. Unprecedented
changes in communications, transportation, and computer technology have given the process
new impetus and made the world more interdependent than ever. Multinational corporations
manufacture products in many countries and sell to consumers around the world. Money,
technology and raw materials move ever more swiftly across national borders. Along with
products and finances, ideas and cultures circulate more freely. As a result, laws, economies, and
social movements are forming at the international level.

The globalized world sweeps away regulation and undermines local and national politics, just as
the consolidation of the nation state swept away local economies, dialects, cultures and political
forms. Globalization creates new markets and wealth, even as it causes widespread suffering,
disorder, and unrest. It is both a source of repression and a catalyst for global movements of
social justice and emancipation. The great financial crisis of 2008-09 has revealed the dangers of
an unstable, deregulated, global economy but it has also given rise to important global initiatives
for change. The term globalization encompasses a range of social, political, and economic
changes. Within the section Defining Globalization, we provide an introduction to the key
debates. The materials ask what is new, what drives the process, how it changes politics, and
how it affects global institutions like the UN.

Globalization expands and accelerates the exchange of ideas and commodities over vast
distances. It is common to discuss the phenomenon in highly generalized terms, but
globalization's impacts are often best understood at the local level. Cases of
Globalization explore the various manifestations of interconnectedness in the world, noting how
globalization affects real people and places. Globalization often appears to be a force of nature, a
phenomenon without bounds or alternatives. But peoples’ movements have shown that it is
neither unalterable nor inevitable. Citizens all over the world—ordinary people from the global
North and South—can work together to shape alternate futures, to build a globalization of
cooperation, solidarity and respect for our common planetary environment.
Globalization

Globalization (or globalisation) describes a process by which regional economies, societies,


and cultures have become integrated through a globe-spanning network of communication and
trade. The term is sometimes used to refer specifically to economic globalization: the integration
of national economies into the international economy through trade, foreign direct
investment, capital flows, migration, and the spread of technology. However, globalization is
usually recognized as being driven by a combination of economic, technological, socio cultural,
political, and biological factors. The term can also refer to the transnational circulation of ideas,
languages, or popular culture through acculturation.

The United Nations ESCWA has written that globalization "is a widely-used term that can be
defined in a number of different ways. When used in an economic context, it refers to the
reduction and removal of barriers between national borders in order to facilitate the flow of
goods, capital, services and labor though considerable barriers remain to the flow of labor...
Globalization is not a new phenomenon. It began in the late nineteenth century, but it slowed
down during the period from the start of the First World War until the third quarter of the
twentieth century. This slowdown can be attributed to the inward-looking policies pursued by a
number of countries in order to protect their respective industries... however, the pace of
globalization picked up rapidly during the fourth quarter of the twentieth century.

Saskia Sassen writes that "a good part of globalization consists of an enormous variety of micro-
processes that begin to denationalize what had been constructed as national — whether policies,
capital, political subjectivity, urban spaces, temporal frames, or any other of a variety of
dynamics and domains."
History

The historical origins of globalization are the subject of on-going debate. Though some scholars
situate the origins of globalization in the modern era, others regard it as a phenomenon with a
long history.

Perhaps the most extreme proponent of a deep historical origin for globalization was Andre
Gunder Frank, an economist associated with dependency theory. Frank argued that a form of
globalization has been in existence since the rise of trade links between Sumer and the Indus
Valley Civilization in the third millennium B.C. Critics of this idea point out that it rests upon an
overly-broad definition of globalization.

An early form of globalized economics and culture existed during the Hellenistic Age, when
commercialized urban centers were focused around the axis of Greek culture over a wide range
that stretched from India to Spain, with such cities as Alexandria, Athens, and Antioch at its
center. Trade was widespread during that period, and it is the first time the idea of a
cosmopolitan culture (from Greek "Cosmopolis", meaning "world city") emerged. Others have
perceived an early form of globalization in the trade links between the Roman Empire,
the Parthian Empire, and the Han Dynasty. The increasing articulation of commercial links
between these powers inspired the development of the Silk Road, which started in western
China, reached the boundaries of the Parthian empire, and continued onwards towards
Rome. With 300 Greek ships a year sailing between the Greco-Roman world and India, the
annual trade may have reached 300,000 tons.

The Islamic Golden Age was also an important early stage of globalization,
when Jewish and Muslim traders and explorers established a sustained economy across the Old
World resulting in aglobalization of crops, trade, knowledge and technology. Globally significant
crops such as sugar and cotton became widely cultivated across the Muslim world in this period,
while the necessity of learning Arabic and completing the Hajj created a cosmopolitan culture.
The advent of the Mongol Empire, though destabilizing to the commercial centers of the Middle
East and China, greatly facilitated travel along the Silk Road. This permitted travelers and
missionaries such as Marco Polo to journey successfully (and profitably) from one end
of Eurasia to the other. The so-called Pax Mongolica of the thirteenth century had several other
notable globalizing effects. It witnessed the creation of the first international postal service, as
well as the rapid transmission of epidemic diseases such as bubonic plague across the newly
unified regions of Central Asia. These pre-modern phases of global or hemispheric exchange are
sometimes known as archaic globalization. Up to the sixteenth century, however, even the largest
systems of international exchange were limited to the Old World.

The Age of Discovery brought a broad change in globalization, being the first period in which
Eurasia and Africa engaged in substantial cultural, material and biologic exchange with the New
World.[18] It began in the late 15th century, when the two Kingdoms of the Iberian
Peninsula - Portugal and Castile - sent the first exploratory voyages around the Horn of
Africa and to the Americas, "discovered" in 1492 by Christopher Columbus. Shortly before the
turn of the 16th century, Portuguese started establishing trading posts (factories) from Africa to
Asia and Brazil, to deal with the trade of local products like gold, spices andtimber, introducing
an international business center under a royal monopoly, the House of India.

Global integration continued with the European colonization of the Americas initiating
the Columbian Exchange, the enormous widespread exchange of plants, animals, foods, human
populations (including slaves), communicable diseases, and culture between
the Eastern and Western hemispheres. It was one of the most significant global events
concerning ecology, agriculture, and culture in history. New crops that had come from the
Americas via the European seafarers in the 16th century significantly contributed to the world's
population growth.

This phase is sometimes known as proto-globalization. It was characterized by the rise of


maritime European empires, in the 16th and 17th centuries, first
thePortuguese and Spanish Empires, and later the Dutch and British Empires. In the 17th
century, globalization became also a private business phenomenon when chartered
companies like British East India Company (founded in 1600), often described as the
first multinational corporation, as well as the Dutch East India Company (founded in 1602) were
established. Because of the large investment and financing needs and high risks involved in
international trade, the British East India Company became the first company in the world to
share risk and enable joint ownership of companies through the issuance of shares of stock: an
important driver for globalization.

The 19th century witnessed the advent of globalization approaching its modern
form. Industrialization allowed cheap production of household items using economies of scale,
while rapid population growth created sustained demand for commodities. Globalization in this
period was decisively shaped by nineteenth-century imperialism. After the Opium Wars and the
completion of British conquest of India, vast populations of these regions became ready
consumers of European exports. It was in this period that areas of sub-Saharan Africa and the
Pacific islands were incorporated into the world system. Meanwhile, the conquest of new parts of
the globe, notably sub-Saharan Africa, by Europeans yielded valuable natural resources such
as rubber, diamonds and coal and helped fuel trade and investment between the European
imperial powers, their colonies, and the United States.

The first phase of "modern globalization" began to break down at the beginning of the 20th
century, with the first world war. The novelist VM Yeates criticised the financial forces of
globalization as a factor in creating World War I. The final death knell for this phase came
during the gold standard crisis and Great Depression in the late 1920s and early 1930s.

In the middle decades of the twentieth century globalization was largely driven by the global
expansion of multinational corporations based in the United States and Europe, and worldwide
exchange of new developments in science, technology and products, with most
significant inventions of this time having their origins in the Western world according
to Encyclopedia Britannica. Worldwide export of western culture went through the new mass
media: film, radio and television and recorded music. Development and growth of
international transport and telecommunication played a decisive role in modern globalization.

In late 2000s, much of the industrialized world entered into a deep recession.[26] Some analysts
say the world is going through a period of deglobalization after years of increasing economic
integration.[27][28] Up to 45% of global wealth had been destroyed by the global financial crisis in
little less than a year and a half. China has recently become the world's
largest exporter surpassing Germany.
Modern globalization

Globalization, since World War II, is largely the result of planning by politicians to break down
borders hampering trade to increase prosperity and interdependence thereby decreasing the
chance of future war. Their work led to the Bretton Woods conference, an agreement by the
world's leading politicians to lay down the framework for international commerce and finance,
and the founding of several international institutions intended to oversee the processes of
globalization.

These institutions include the International Bank for Reconstruction and Development
(the World Bank), and the International Monetary Fund. Globalization has been facilitated by
advances in technology which have reduced the costs of trade, and trade negotiation rounds,
originally under the auspices of the General Agreement on Tariffs and Trade (GATT), which led
to a series of agreements to remove restrictions on free trade.

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

 Promotion of free trade:


 elimination of tariffs; creation of free trade zones with small or no tariffs
 Reduced transportation costs, especially resulting from development
of containerization for ocean shipping.
 Reduction or elimination of capital controls
 Reduction, elimination, or harmonization of subsidies for local businesses
 Creation of subsidies for global corporations
 Harmonization of intellectual property laws across the majority of states, with more
restrictions
 Supranational recognition of intellectual property restrictions (e.g. patents granted by
China would be recognized in the United States)
Cultural globalization, driven by communication technology and the worldwide marketing of
Western cultural industries, was understood at first as a process of homogenization, as the global
domination of American culture at the expense of traditional diversity. However, a contrasting
trend soon became evident in the emergence of movements protesting against globalization and
giving new momentum to the defense of local uniqueness, individuality, and identity, but largely
without success.

The Uruguay Round (1986 to 1994) led to a treaty to create the WTO to mediate trade disputes
and set up a uniform platform of trading. Other bilateral and multilateral 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.

World exports rose from 8.5% in 1970, to 16.2% of total gross world product in 2001.
Measuring globalization

Looking specifically at economic globalization demonstrates that it can be measured in different


ways. This center 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)

As globalization is not only an economic phenomenon, 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 is available on a yearly basis for 122
countries, as detailed in Dreher, Gaston and Martens (2008). 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.
Globalization of the World Economy

"Globalization" will be understood here to mean major increases in worldwide trade and
exchanges in an increasingly open, integrated, and borderless international economy. There has
been remarkable growth in such trade and exchanges, not only in traditional international trade in
goods and services, but also in exchanges of currencies; in capital movements; in technology
transfer; in people moving through international travel and migration; and in international flows
of information and ideas. One measure of the extent of globalization is the volume of
international financial transactions, with some $1.2 trillion flowing through New York currency
markets each day, and with the volume of daily international stock market transactions exceeding
this enormous amount.

Globalization has involved greater openness in the international economy, an integration


of markets on a worldwide basis, and a movement toward a borderless world, all of which have
led to increases in global flows. There are several sources of globalization over the last several
decades. One such source has been technological advances that have significantly lowered the
costs of transportation and communication and dramatically lowered the costs of data processing
and information storage and retrieval. The latter stems from developments over the last few
decades in electronics, especially the microchip revolution. Electronic mail, the Internet, and the
World Wide Web are some of the manifestations of this new technology, where today's $2,000
laptop computer is many times more powerful than a $10 million mainframe computer of twenty
years ago.

A second source of globalization has been trade liberalization and other forms of
economic liberalization that have led to reduced trade protection and to a more liberal world
trading system. This process started in the last century, but the two World Wars and the Great
Depression interrupted it. It resumed after World War II through the most-favored-nation
approach to trade liberalization, as embodied in the 1946 General Agreement on Tariffs and
Trade (GATT) and now in the World Trade Organization (WTO). As a result, there have been
significant reductions in tariffs and other barriers to trade in goods and services. Other aspects of
liberalization have led to increases in the movement of capital and other factors of production.
Some have suggested that globalization is little more than a return to the world economy of the
late nineteenth century and early twentieth century, when borders were relatively open, when
there were substantial international capital flows and migrations of people, and when the major
nations of Europe depended critically on international trade. This is particularly the view of some
British scholars, looking back to the period of British imperial dominance of the world economy.
While there are some similarities in terms of trade and capital movements, the period of a
century ago did not have some of the major technological innovations that have led to a
globalized world economy today that is qualitatively different from the international economy of
the last century.
A third source of globalization has been changes in institutions, where organizations have
a wider reach, due, in part, to technological changes and to the more wide-ranging horizons of
their managers, who have been empowered by advances in communications. Thus, corporations
that had been mainly focused on a local market have extended their range in terms of markets
and production facilities to a national, multinational, international, or even global reach. These
changes in industrial structure have led to increases in the power, profits, and productivity of
those firms that can choose among many nations for their sources of materials, production
facilities, and markets, quickly adjusting to changing market conditions. Virtually every major
national or international enterprise has such a structure or relies on subsidiaries or strategic
alliances to obtain a comparable degree of influence and flexibility. As one measure of their
scale, almost a third of total international trade now occurs solely within these multinational
enterprises. With the advent of such global firms, international conflict has, to some extent,
moved from nations to these firms, with the battle no longer among nations over territory but
rather among firms over their share of world markets. These global firms are seen by some as a
threat to the scope and autonomy of the state, but, while these firms are powerful, the nation state
still retains its traditional and dominant role in the world economic and political system.
Non-government organizations, the NGO's, have also taken a much broader perspective
that, as in the case of the global firms, is often multinational or global. Even international
organizations, such as the United Nations, the International Monetary Fund and World Bank, and
the new World Trade Organization have new global roles. Overall, multinational enterprises and
other such organizations, both private and public, have become the central agents of the new
international globalized economy.
A fourth reason for globalization has been the global agreement on ideology, with a
convergence of beliefs in the value of a market economy and a free trade system. This process
started with the political and economic changes that started in the 1978 reforms in China and
then involved a “falling dominoes” series of revolutions in Eastern and Central Europe starting in
1989 that ended with the dissolution of the Soviet Union in December 1991. This process led to a
convergence of ideology, with the former division between market economies in the West and
socialist economies in the East having been replaced by a near-universal reliance on the market
system. This convergence of beliefs in the value of a market economy has led to a world that is
no longer divided into market-oriented and socialist economies. A major aspect of this
convergence of beliefs is the attempt of the former socialist states to make a transition to a
market economy. These attempted transitions, especially those in the former Soviet Union and in
Eastern and Central Europe have, however, been only partially successful. The nations involved
and their supporters in international organizations and advanced western market economies have
tended to focus on a three-part agenda for transition, involving: 1) stabilization of the
macroeconomy, 2) liberalization of prices, and 3) privatization of state-owned enterprise.
Unfortunately, this “SLP” agenda fails to appreciate the importance of building market
institutions, of establishing competition, and of providing for an appropriate role for the
government in a modern mixed economy.

A fifth reason for globalization has been cultural developments, with a move to a
globalized and homogenized media, the arts, and popular culture and with the widespread use of
the English language for global communication. Partly as a result of these cultural developments,
some, especially the French and other continental Europeans, see globalization as an attempt at
U.S. cultural as well as economic and political hegemony. In effect, they see globalization as a
new form of imperialism or as a new stage of capitalism in the age of electronics. Some have
even interpreted globalization as a new form of colonialism, with the U.S. as the new metropole
power and with most of the rest of the world as its colonies, supplying it not only with raw
materials, as in earlier forms of European colonialization, but also with technology; production
facilities; labor, capital, and other inputs to the production process; and markets on a global
basis.
Whether one sees globalization as a negative or as a positive development, it must be
understood that it has clearly changed the world system and that it poses both opportunities and
challenges. It is also clear that the above technological, policy, institutional, ideological, and
cultural developments that have led to globalization are still very active. Thus, barring a radical
move in a different direction, these trends toward greater globalization will likely continue or
even accelerate in the future. One important aspect of these trends will be the growth in
international trade in services that has already increased substantially but promises even greater
growth in the future, especially in such areas as telecommunications and financial services. The
result will be continued moves toward a more open and a more integrated world as it moves
closer and closer to a planet without borders and to a more integrated, open, and interdependent
world economy. The result will be even greater worldwide flows of goods, services, money,
capital, technology, people, information, and ideas.

Foreign Direct Investment

Foreign direct investment (FDI) has increased tenfold over the last 20 years. This kind of
investment brings private overseas funds into a country for investments in manufacturing or
services (for example, General Motors building an auto factory in the Philippines). FDI can bring
impressive growth, as in China's coastal provinces, but also instability and economic distress, as
during the 1997-98 Asian financial crisis. Governments of many poor countries see foreign
capital as a means of economic growth, and they have taken steps to attract it. These steps often
include minimizing business regulation and weakening codes for labor, health, and the
environment. Such governments may also try to improve the investment climate by using
violence to silence opposition parties and movements. Rich countries, for their part, have sought
legal protection for investors, and have used the World Bank and the IMF to impose new
arrangements in this field. Bilateral and multilateral agreements, such as the North American
Free Trade Area, protect investments at the expense of environmental and health regulations.
The proposed Multilateral Investment Agreement (MIA), under negotiation at the WTO, would
replicate this imbalance at the global level.
Changes in Investment Regulations:
Dollarization

Traditionally, each independent nation had its own currency as a symbol of sovereignty, but in a
globalizing world national currencies have been weakening or even disappearing. The US dollar
has been taking over as the world's currency of account. Neo-liberal open markets and rapid
currency conversion have reinforced the dollar's role since the mid-1970s. Much trade is now
dollar-based, countries prefer to hold their central bank reserves in US dollars, and private
companies as well as wealthy citizens often hold dollars or dollar-denominated assets. The
United States derives great economic and political power from this dollar hegemony. During the
1990s, dollarization accelerated. A number of countries pegged their currencies to the dollar or
even adopted the dollar outright as their national currency, hoping that this would solve inflation
problems. Dollar-denominated notes, especially $100 bills, grew in popularity with individuals
as well as criminal networks, becoming the US's largest export. But huge US trade imbalances
and federal budget deficits undermined the dollar and eventually knocked down its value in
international currency markets. Further erosion of the dollar could undermine and reverse
decades of dollarization, but a globalizing world still needs a strong common currency. If the
dollar weakens further, alternatives might emerge. But for the moment, the (weaker) dollar still
is King.

Impacts of Globalization on National Economies

Globalization has had significant impacts on all economies of the world, with manifold
effects. It affects their production of goods and services. It also affects the employment of labor
and other inputs into the production process. In addition, it affects investment, both in physical
capital and in human capital. It affects technology and results in the diffusion of technology from
initiating nations to other nations. It also has major effects on efficiency, productivity, and
competitiveness.

Several impacts of globalization on national economies deserve particular mention. One


is the growth of foreign direct investment (FDI) at a prodigious rate, one that is much greater
than the growth in world trade. Such investment plays a key role in technology transfer, in
industrial restructuring, and in the formation of global enterprises, all of which have major
impacts at the national level. A second is the impact of globalization on technological
innovation. New technologies, as already noted, have been a factor in globalization, but
globalization and the spur of competition have also stimulated further advances in technology
and speeded up its diffusion within nations through foreign direct investment. A third is the
growth of trade in services, including financial, legal, managerial, and information services and
intangibles of all types that have become mainstays of international commerce. In 1970, less than
a third of foreign direct investment related to the export of services, but today that has risen to
half and it is expected to rise even further, making intellectual capital the most important
commodity on world markets. As a result of the growth of services both nationally and
internationally, some have called this "the age of competence," underscoring the importance of
lifelong education and training and the investment in human capital in every national economy.

The Costs of Globalization and Potential Conflicts

Globalization involves not only benefits, but also has costs or potential problems that
some critics see as great perils. These costs could lead to conflicts of various types, whether at
the regional, national, or international level. One such cost or problem is that of who gains from
its potential benefits. There can be substantial equity problems in the distribution of the gains
from globalization among individuals, organizations, nations, and regions. Indeed, many of the
gains have been going to the rich nations or individuals, creating greater inequalities and leading
to potential conflicts nationally and internationally. Some have suggested the possibility of
convergence of incomes globally based on the observation that the poor nations are growing at a
faster rate than the rich nations. The reality, however, is that a small group of nations, the "tiger
economies" of East Asia, have been growing at rapid rates, while the least developed nations of
Africa, Asia, and South and Central America have been growing at a slower rate than the rich
nations. These poor nations are thus becoming increasingly marginalized. The result has been not
a convergence but rather a divergence or polarization of incomes worldwide, with the rapid-
growth economies joining the rich nations, but with the poor nations slipping even further
behind. This growing disparity leads to disaffection and possibly even international conflicts as
nations seek to join the club of rich nations and have-not nations struggle with the have nations
for their share of world output. This issue of distribution is a major challenge in the process of
the globalization of the world economy.
A second cost or problem stemming from globalization is that of major potential regional
or global instabilities stemming from the interdependencies of economies on a worldwide basis.
There is the possibility that local economic fluctuations or crises in one nation could have
regional or even global impacts. This is not just a theoretical possibility as seen in the exchange
rate and financial crisis in Asia, starting in Thailand in 1998 and then spreading to other
Southeast Asian economies and even to South Korea. These linkages and potential instabilities
imply great potential mutual vulnerability of interconnected economies. A worldwide recession
or depression could lead to calls to break the interdependencies that have been realized through
the globalization process, as happened in the Great Depression of the 1930's, with competitive
devaluations, beggar-my-neighbor policies, escalating tariffs, other forms of protectionism, etc.
The result could be economic conflict, gravitating to economic warfare and possibly to military
conflict, repeating the history of the interwar period leading to the largest war in human history.
A third type of problem stemming from globalization is that the control of national
economies is seen by some as possibly shifting from sovereign governments to other entities,
including the most powerful nation states, multinational or global firms, and international
organizations. The result is that some perceive national sovereignty as being undermined by the
forces of globalization. Thus globalization could lead to a belief among national leaders that they
are helplessly in the grip of global forces and an attitude of disaffection among the electorate.
The result could be extreme nationalism and xenophobia, along with calls for protectionism and
the growth of extremist political movements, ultimately leading to potential conflicts.
It is sometimes alleged that a cost of globalization is unemployment in the high wage
industrialized economies. The low unemployment rates in many high wage nations and their high
rates in many low wage nations disprove this allegation. National policy and technological trends
are much more important determinants of employment than global factors. A related myth is that
globalization is threatening the social welfare provisions of some states, but other factors are
much more important, including domestic fiscal policy and demographic trends. In both cases,
globalization is a convenient scapegoat for failures of national policy.
It is important also to appreciate that the economic aspects of globalization are but one
component of its effects. There are potential noneconomic impacts of globalization involving
great risks and potential costs, even the possibility for catastrophe. One is that of security, where
the negative effects of globalization could lead to conflicts, as suggested above, or the very
process of globalization leading to integration of markets could make conflicts escalate beyond a
particular region or raise the stakes of conflict, for example, from conventional weapons to
weapons of mass destruction. A second noneconomic area in which globalization could lead to
catastrophic outcomes is that of political crises, that could escalate from local to large-scale
challenges and, if unresolved, to a catastrophic outcome. A third such area is that of the
environment and health, where the greater interconnectedness stemming from globalization
could lead again to catastrophic outcomes, such as those stemming from global environmental
impacts, such as global warming, and pandemics.

The Role of Global Cooperation in Dealing with Global Threats and


in Creating a New Post Cold War System

The last two sections have highlighted both the benefits and the costs stemming from
globalization. Some could see globalization as a very dangerous negative development by
focusing on the costs and the potential for conflict while others could see it as a positive
development offering unprecedented opportunities. Both of these views contain some elements
of truth, but each should be offset by the other in order to gain a full understanding of the
impacts of globalization. There are twin myths here, the optimistic one that globalization leads to
only positive outcomes and the pessimistic one that globalization leads only to negative
outcomes. Any objective treatment or net assessment, however, would have to recognize both the
benefits and costs of globalization.
What is the net result of globalization, when taking both benefits and costs into account?
The answer depends crucially on the nature of the world system. In a world beset by conflicts,
globalization would probably have a net negative impact. Conversely, in a cooperative world,
globalization would probably have a net positive impact. Thus, globalization represents a major
challenge and at the same time an unprecedented opportunity in terms of the possibilities for
conflict or cooperation. The challenge is to create a new world system in the aftermath of the
cold war and the movements toward globalization that would enhance its generally beneficial
effects and that would minimize its actual or potential costs. The key to such a world system will
be cooperation among the nations of the world and dynamic innovation, including the
establishment of new institutions.
The challenge of the present globalized and post cold war economy is comparable to the
challenge facing the winning nations in World War II. The old world had been destroyed and a
new world had to be created. Not one, but two world systems were created, one in the West and
the other in the East. Both involved the creation of new institutions that would replace the ones
that had been destroyed in the war. Each side had its own ideology and organization, that in the
West being market oriented and that in the East being socialist. Now, of course, the ideological
divide has dissolved where there is a convergence of ideology on the value of a market economy.

A small group of Americans helped create a new world system for the West during the
period from 1945 to 1955. One of the major participants was Dean Acheson, the U.S. Secretary
of State during part of this period. His memoirs are aptly named Present at the Creation, given
his role in creating this new world system. Another was Will Clayton, who developed the
blueprints for both the Marshall Plan and the General Agreement on Tariffs and Trade. These
people, together with President Truman, George Marshall, and others created the institutions that
brought the devastated nations of Europe into the world community. These institutions included
GATT, which evolved into the WTO; the United Nations; the World Bank and the IMF; the
Marshall Plan and OEEC (later to evolve into the OECD); NATO; and others. These institutions
and the new world system that they helped create was most successful in bringing the nations of
Europe, including both former enemies and devastated allies, into this new world system and in
promoting reconstruction and growth.
The present post Cold War period has some similarities to the one after World War II in
that a new world system must be created. Such a system that would have to take account of the
new situation of a world not divided by ideology and becoming increasingly integrated. The
sequence of revolutions that began in Eastern Europe in 1989 led directly or indirectly to the end
of the Cold War, the demise of the Warsaw Pact, the unification of Germany, the dissolution of
the Soviet Union, and the attempted transition of the former socialist states to democracy and a
market economy, with only mixed success. The West for its part has largely failed to establish
structures such as those developed after World War II to bring Russia, other former Soviet states,
and Central and Eastern Europe into the world economic and political system. In some respects
the treatment of Russia in the current period is similar to the treatment of Germany after World
War I rather than its treatment after World War II. NATO expansion is perhaps the most serious
error made in the post Cold War period, in that it isolated Russia and added little to European
security but at enormous expense. The total cost of NATO expansion will, in fact, be of the same
order of magnitude as the current value of the Marshall Plan, some $90 billion. A new Marshall
Plan for the former socialist nations of Europe could have promoted their transition and growth
through institution building, industrial restructuring, investment and capital inflows, their
integration into the world economy, and their cooperation. These would have contributed more
to European security than the acquisition of advanced fighter jets and other military equipment
by some of these nations that have been admitted into NATO.
Overall, the challenge of globalization will require truly cooperative efforts of the great
nations, especially among the new great powers of the European Union, the United States,
Canada, Japan, Russia, China, India, Brazil, and others. Their joint activity in establishing new
political arrangements and institutions could go a long way to solving global problems, including
the economic and other problems stemming from globalization. As was true in the earlier period
of the creation of a new world, it will be necessary to revamp existing institutions or to create
new ones so as to deal with economic challenges, such as the problems of distribution and
mutual vulnerability stemming from globalization. These institutions must have global
perspectives and responses and they will require substantial resources and enforcement
mechanisms, including some elements of supranational decision making and authority, along
with appropriate transparency and accountability.
Consider how global cooperation and new international institutions can treat the several
problems identified earlier as costs or problems of globalization. The first of these problems was
that of the distribution of income and specifically the gains from globalization both within and
between nations. A supranational institution based on global cooperation could address this
problem. It would, in effect, tax the nations gaining from globalization and use the proceeds to
provide financial and technical assistance to those losing from globalization. This is already
being done in a somewhat haphazard way through the World Bank and, in particular, its soft
lending arm, the International Development Association (IDA) that provides subsidized loans to
poor nations on more favorable terms than the World Bank could give. It should be done,
however, on a more systematic basis, which would require either a new international institution
or an expansion and change in the nature of the World Bank. The rich nations should be expected
to support the establishment of such an institution as an investment in global stability, if they
recognize the dangers of serious disparities in the worldwide distribution of income.

The second of the problems identified earlier as stemming from globalization was the
fragility of the international economic system, leading to mutual vulnerability. Again,
international cooperation and the development of new institutions or the expansion of existing
institutions could address this problem. The International Monetary Fund could be instrumental
in dealing with this problem. The IMF has played a key role in providing support to nations that
have experienced instabilities, as in its support for Mexico during the peso crisis and its
agreement to support South Korea during the East Asia financial crisis. A more credible
insurance against these risks would require a substantial augmentation of the resources of the
IMF, the assets of which have not grown at the same rate as international financial exchanges.
International cooperation could also lead to the implementation of the Tobin tax, a small tax on
foreign exchange transactions that could play a valuable role in limiting destabilizing currency
speculation and, at the same time, provide funding for international organizations.
The third of the problems identified earlier as stemming from globalization was that of
the perceived loss of sovereignty of national governments and political leaders. This
development could lead to fear of the loss of ability of nations to determine their economic
policies, political disaffection, and the rise of extremist politicians and political movements. The
process of globalization, however, need not lead to a loss of sovereignty. Once again,
international cooperation can play a role in ensuring the sovereignty of national governments and
the proper role for political leaders, drawing a firm line between what is in the province of these
governments and their leaders on the one side and what is in the province of international
organizations and multinational or global enterprise on the other. Participation in the
establishment of the needed institutions to deal with these and other problems stemming from
globalization will, by itself, help political leaders to regain a sense of control over their futures
and positions in the global community. For example, the regulatory regimes of nations and even
international organizations have become more porous and more easily overcome through
advances in technology. Examples include the lack of regulation of the global integrated capital
market, of trade in information services that is widely expected to grow enormously, and of labor
and environmental safeguards. Cooperation among nations and international organizations could
offset these developments by themselves taking advantage of recent technological advances and
using them to reassert control through cooperative activities.
Overall, there are several possible vehicles for cooperation as a way of responding to the
challenges of globalization. One is the strengthening of existing international institutions.
Another is the establishment of new institutions, as in the case of the World Trade Organization,
which has a binding dispute settlement mechanism of a supranational character. A third is the
establishment of larger entities, such as the European Union, or loose combinations of nations to
treat certain economic issues, such as the G-8 or the Asian Pacific Economic Cooperation
(APEC).
Global cooperation through formal or informal institutions provides an increasingly
important mechanism to ensure the proper treatment of global problems, including those
stemming from globalization. Through such global cooperation it should be possible to ensure
equity and stability in a globalized world, leading to economic growth for all, the transition to a
market economic for former socialist states, and economic development for the poorer nations.
Such cooperation is also the way to treat the noneconomic problems of globalization, including
those of environmental and health protection on a world-wide basis, freedom from political
crises or instability, and global peace and security for the planet.

Globalization For the Benefit of All

When your Secretary General asked me to participate in this session of entrepreneurs from
approximately 100 countries, I was delighted. Let me be candid from the outset: I’m reasonably
confident that many of your fellow citizens, like Canadians aplenty, fear globalization. Many say
it brings the decay of social values, cultures and the environment; I would argue that the main
challenge is not to decide whether globalization is good or bad, but rather to ensure that a
"walled-down world" provides more fulfilled lives for all. Globalization can be an agent for
good, a force to create unprecedented growth and opportunity for those who embrace it.

Economists have talked about globalization for many decades even if the term itself emerged
only recently. Many speak of a borderless world, but that is a far from today’s reality where
boundaries are still very real. Too often the term is thought of as synonymous with unbridled
capitalism where any entrepreneur can raise money anywhere in the world, make anything and
sell it anywhere. But globalization is also about the free flow of ideas, the exchange of culture
and values, the greater attention now being given to issues such as human rights, environmental
protection and technological advances which have brought people closer together than ever.

Benefits of Globalization

Virtually all economists agree that the large majority of residents of our shrunken planet are
considerably better off through the growth of markets and the efforts of the GATT and its
successor, the WTO, to keep them open. With ever expanding technology comes new markets,
increased demand for products but also greater competition. There are now more people with
computers connected to the world who are investing than ever before. As Klaus Schwab of the
Davos World Economic Forum observed: "We have moved from a world where the big eat the
small to a world where the fast eat the slow." More than $1.5 trillion is now exchanged in the
world’s currency markets each day, and nearly a fifth of the goods and services produced each
year are traded.

Consumers of goods and services in all countries are one huge community who benefit from
trade for reasons which include increased competition, comparative advantage, economies of
scale and access to a greater range of products and services. There are also those likely to gain
less than others from globalization.

Lower inflation is often cited as a favourable consequence of globalization because increased


competition makes businesses more reluctant to boost prices/wages unless warranted by
productivity increases. Another possible benefit is faster technological and productivity growth
because increased international competition has obliged business generally to innovate more
rapidly since the ’70s.

Social Tensions

Dani Rodrik of Harvard has singled out three sources of tension between global markets and
social stability:

1) Globalization makes the services of large segments of working populations more easily
substitutable across boundaries,

2) Trade can unleash forces that undermine norms in national practices, for example when child
labour in Honduras replaces workers in South Carolina or cuts in pension benefits in France are
called for in response to the requirements of the Maastricht treaty,

3) Globalization and its competitive pressures make it more difficult for governments to carry
out the important functions of providing the social programs which since World War II helped to
maintain social cohesion and domestic support for liberalization.

Successful Globalizers

Rodrik concludes from the experience of both Europe and Asia that successful globalizers have
had "market-friendly but pro-active governments, adequate social insurance and have integrated
into the world economy on their own terms. This lesson contradicts much of today’s
conventional wisdom that globalization requires small government, that welfare states have to be
cut down to size, and that there is a single (read Anglo-American) model on which all countries
will reasonably converge." He asserts that it is the overall quality of a society’s domestic
institutions - respect for the rule of law, human rights, good governance, social and political
stability, adequate infrastructure and a skilled labour force- rather than labour costs or taxes that
determines where most investments go.

Few question that unprecedented freedom in many markets has resulted in spectacular economic
growth; international trade since 1988 alone has doubled to almost US$7 trillion. Quite a number
of countries around the world are experiencing rapid overall growth, and some currently enjoy
record low unemployment rates. In the case of a uniquely export dependent country like Canada,
where about 43 per cent of our gross domestic output now is exports, I believe virtually all of us
have benefitted from more open economies worldwide.

NAFTA

When the North American Free Trade Agreement (NAFTA) began in 1994 for Canada the
United States and Mexico, there were more than few skeptics. Six years later, the figures speak
for themselves: total merchandise trade across North America surpassed $752 billion in 1998.
Canada’s merchandise trade with Mexico doubled over the same period, reaching $9 billion a
year. In the last four years an estimated 1.5 million new jobs have been created in Mexico alone.
Since NAFTA there were 15,883 new Mexican export firms created.

There was also fear that NAFTA would lead to environmental degradation in Mexico;
environmental regulations would be relaxed in an attempt to woo investors. Mexican President
Ernesto Zedillo put some of those fears to rest in comments earlier this year. Since 1994, he
explained, Mexico’s enforcement of environmental standards has become stricter; he added that
new employment opportunities offered by international trade have made it possible for highly
polluting activities to be replaced by environmentally friendly ones.

Developing World

Many are concerned about the impact globalization is having on developing countries. Consider
these statistics from the 1999 UN Human Development Report:

 The income gap between the fifth of the world’s people living in the richest countries and
the fifth living in the poorest was 74 to 1 in 1997, up from 60 to 1 in 1990.
 By the late 1990s the fifth of the world’s people living in the highest income counties
had:
 86% of world GDP, while the bottom fifth, just 1%,
 68% of foreign direct investment, and the bottom fifth, just 1%
 and,74% of world telephone lines, the bottom fifth, just 1.5%
 And most striking of all, the assets of the top three billionaires are more than the
combined GNP of all least developed countries and their 600 million people. This has
contributed to the perception that globalization benefits only the rich, leaving the poor
behind.

Recently, countries in Sub-Saharan Africa have begun to experience the benefits of


globalization, and some have led the world in percentage economic growth. Angola, Uganda and
Botswana already stand among the ten fastest growing economies globally. The IMF forecasts
that Africa’s overall GDP should grow by 5% in 2000, a significant improvement from 3.1% in
1999.

Botswana and Mauritius are shining examples of the positive effects of globalization. Both
experienced exponential growth as they embraced foreign investment on their own terms and
married their economic success with good governance and generous budget allocations for
education and health care. Botswana, often cited as a major African success story, was one of the
poorest countries in the world at independence, but has evidently been the fastest growing
economy on earth since 1965. While such successes may continue to be the exception rather than
the rule in Africa, other economies can do well too.

Much of what separates the developed and developing worlds today is the knowledge gap. In
many developing countries, resources and people are abundant; it is the relative lack of
experience in good economic, social and political structures that hurts their ability to compete. In
1998, the Internet had more than 140 million users and that number is expected to surpass 700
million by 2001. However South Asia, home to 23% of the world’s population, has less than 1%
of Internet users.
Dissemination of ideas through the Information Highway, television or satellites introduces ideas
about the environment, democracy, human rights and even wealth creation. I would suggest that
one of the best effects of globalization is that information technology has brought attention to the
need for more democratic development worldwide and the protection of human rights
everywhere. The BBC World Service, TV-5, CNN and other television broadcasters are the
principal vehicles of instant communication, which has revolutionized our understanding of the
world. At the same time, many worry about the growing exports of American films, music and
commercial television programs.

Whither Globalization?

The European financial problems of the early 90s, the Latin American crisis, beginning in
Mexico in the mid 90s, and the East Asian flu which also hit Russia and Brazil in 1998-99, were
highly destructive of many livelihoods. If the sudden removal of capital from these countries
caused financial instability, it should be added that their access to global investments helped
them to prosper earlier and for most of them to recover much faster then expected. Could not
these crises have been avoided through better regulation of financial markets by international
organizations and national governments?

In the case of the WTO, critics should note that its dispute settlement mechanism is much better
than the one in the GATT, which curiously required the unanimous agreement of all members,
including the offending member country itself. The WTO requires a unanimous decision to block
a dispute panel report. Even large countries have thus stopped dealing with important trade
complaints outside the GATT/WTO, which should benefit smaller economies.

Labour Standards/Environment

The WTO also promises to phase out over 10 years the Multi-Fibre Agreement, which limited
exports of textiles and apparels from developing countries to developed ones. Some initial steps
have been taken to include agriculture by converting market barriers to tariffs as a first stage in
negotiating them downwards. A parallel agreement on services (GATS) hopes to do for services
what the GATT has done for goods.

Three areas where the WTO has not extended its authority in a significant way is labour
standards, human rights and the environment. I understand that the WTO does permit some uses
of trade policies, including economic sanctions, for human rights abuses. The issue is more
complicated for labour standards. Prohibiting slave labour and exploitive child labour is obvious,
but what of issues such as minimum wage levels? If it is mostly better paid employees in OECD
countries who lose from the WTO’s present exclusion of labour standards from trade policy, is it
not understandable that developing countries see the issue as protecting job-holders in highly
developed countries?

The Future

The way ahead is certainly unclear judging from the fairly recent protests at the IMF and World
Bank meeting in Washington DC. The next US President will probably have to obtain fast track
legislation from the new Congress before any new trade negotiations can make substantive
progress. Greater participation by NGO’s in trade negotiations might help win public support.
Developing countries should be represented formally in WTO decision-making, perhaps through
a steering committee having permanent members from developed economies and rotating reps
from small/developing countries.

The alternative to managed globalization could be painful if we recall what happened to the pre-
1914 short-lived victory of free markets and liberal democracy over mercantilism and
nationalism. Globalization today must be complemented by social programs, safety nets and
more investments in education/ training. We ignore at our peril the challenge to build genuine
legitimacy in each of our countries for more open economies.

Many people I talk to in Canada and elsewhere think the momentum today is with the anti-
globalization forces. If Fred Bergsten of the Institute for International Economics is correct that
on trade matters you either move forward or fall over - the bicycle theory - there is real work to
be done by all of us. It is clear that globalization is a force of great change and not simply a
spectre on the horizon. Through technology, communications and economics, globalization and
our increasing interconnection with each other are inevitable. Time and distance are shrinking:
globalization is a reflection of that reality. That is why I question those who wholly condemn the
phenomenon. Countries cannot succeed in isolation today. A poor country that closes its borders
to investment is likely to stay poor. Globalization can champion stability, democracy and greater
sharing around the world.

Action Needed

Here are four areas in which Bergsten thinks you and I should be active in our own countries:

1. Public education above all, which will require better analyses of the real consequences of
globalization, including all of its benefits,

2. An honest admission that there are costs and losers with globalization, together with creating
better safety nets and education/training programs in many countries for those dislocated by
globalization or related factors,

3. Reviewing efforts to reform the international financial institutions to help prevent crises,
including approving capital controls in certain cases, more effective early warning systems,
better co-ordination of exchange rates among the big economies, and engaging the private sector
more systematically in rescue operations, and

4. Restarting the truly multilateral liberalization of the global trading system, which should
address the key issues of the critics, including food trade, labour agreements and the
environment.

As successful entrepreneurs, the world is counting on you to ensure that globalization is for the
benefit of people everywhere. I wish you every success.

Effects of globalization

Globalization has various aspects which affect the world in several different ways such as:
 Industrial - emergence of worldwide production markets and broader access to a range of
foreign products for consumers and companies. Particularly movement of material and
goods between and within national boundaries. International trade in manufactured goods
increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since
1955. China's trade with Africa rose sevenfold during 2000-07 alone.
 Financial - emergence of worldwide financial markets and better access to external
financing for borrowers. By the early part of the 21st century more than $1.5 trillion in
national currencies were traded daily to support the expanded levels of trade and
investment.[40] As these worldwide structures grew more quickly than any transnational
regulatory regime, the instability of the global financial infrastructure dramatically
increased, as evidenced bYFinancial crisis of 2007–2010. Globalization of a global
common market, based on the freedom of exchange of goods and capital. The
interconnectedness of these markets, however, meant that an economic collapse in any
one given country could not be contained.
 Health Policy - On the global scale, health becomes a commodity. In developing nations
under the demands of Structural Adjustment Programs, health systems are fragmented
and privatized. Global health policy makers have shifted during the 1990s from United
Nations players to financial institutions. The result of this power transition is an increase
in privatization in the health sector. This privatization fragments health policy by
crowding it with many players with many private interests. These fragmented policy
players emphasize partnerships, specific interventions to combat specific problems (as
opposed to comprehensive health strategies). Influenced by global trade and global
economy, health policy is directed by technological advances and innovative medical
trade. Global priorities, in this situation, are sometimes at odds with national priorities
where increased health infrastructure and basic primary care are of more value to the
public than privatized care for the wealthy.
 Political - some use "globalization" to mean the creation of a world government which
regulates the relationships among governments and guarantees the rights arising from
social and economic globalization. Politically, the United States has enjoyed a position of
power among the world powers, in part because of its strong and wealthy economy. With
the influence of globalization and with the help of The United States’ own economy, the
People's Republic of China has experienced some tremendous growth within the past
decade. If China continues to grow at the rate projected by the trends, then it is very
likely that in the next twenty years, there will be a major reallocation of power among the
world leaders. China will have enough wealth, industry, and technology to rival the
United States for the position of leading world power.
 Informational - increase in information flows between geographically remote locations.
Arguably this is a technological change with the advent of fibre optic communications,
satellites, and increased availability of telephone and Internet.
 Language - the most popular language is Mandarin (845 million speakers) followed by
Spanish (329 million speakers) and English (328 million speakers).
 About 35% of the world's mail, telexes, and cables are in English.
 Approximately 40% of the world's radio programs are in English.
 About 50% of all Internet traffic uses English.[53]
 Competition - Survival in the new global business market calls for improved productivity
and increased competition. Due to the market becoming worldwide, companies in various
industries have to upgrade their products and use technology skillfully in order to face
increased competition.
 Ecological - the advent of global environmental challenges that might be solved with
international cooperation, such as climate change, cross-boundary water and air pollution,
over-fishing of the ocean, and the spread of invasive species. Since many factories are
built in developing countries with less environmental regulation, globalism and free trade
may increase pollution. On the other hand, economic development historically required a
"dirty" industrial stage, and it is argued that developing countries should not, via
regulation, be prohibited from increasing their standard of living.
 Cultural - growth of cross-cultural contacts; advent of new categories
of consciousness and identities which embodies cultural diffusion, the desire to increase
one's standard of living and enjoy foreign products and ideas, adopt new technology and
practices, and participate in a "world culture". Some bemoan the
resulting consumerism and loss of languages. Also see Transformation of culture.
 Spreading of multiculturalism, and better individual access to cultural diversity (e.g.
through the export of Hollywood and, to a lesser extent, Bollywoodmovies). Some
consider such "imported" culture a danger, since it may supplant the local culture,
causing reduction in diversity or even assimilation. Others consider multiculturalism
to promote peace and understanding between people. A third position gaining
popularity is the notion that multiculturalism to a new form of monoculture in which
no distinctions exist and everyone just shift between various lifestyles in terms of
music, cloth and other aspects once more firmly attached to a single culture. Thus not
mere cultural assimilation as mentioned above but the obliteration of culture as we
know it today.
 Greater international travel and tourism. WHO estimates that up to 500,000 people
are on planes at any one time. In 2008, there were over 922 million international
tourist arrivals, with a growth of 1.9% as compared to 2007.
 Greater immigration, including illegal immigration. The IOM estimates there are
more than 200 million migrants around the world today. Newly available data show
that remittance flows to developing countries reached $328 billion in 2008.
 Spread of local consumer products (e.g., food) to other countries (often adapted to
their culture).
 Worldwide fads and pop culture such as Pokémon, Sudoku, Numa
Numa, Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to
those who have Internet or Television, leaving out a substantial segment of the Earth's
population.
 Worldwide sporting events such as FIFA World Cup and the Olympic Games.
 Incorporation of multinational corporations in to new media. As the sponsors of
the All-Blacks rugby team, Adidas had created a parallel website with a
downloadable interactive rugby game for its fans to play and compete.
 Social - development of the system of non-governmental organisations as main agents of
global public policy, including humanitarian aid and developmental efforts.
 Technical
 Development of a Global Information System, global telecommunications
infrastructure and greater transborder data flow, using such technologies as
theInternet, 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.
 Legal/Ethical
 The creation of the international criminal court and international justice movements.
 Crime importation and raising awareness of global crime-fighting efforts and
cooperation.
 The emergence of Global administrative law.
 Religious
 The spread and increased interrelations of various religious groups, ideas, and
practices and their ideas of the meanings and values of particular spaces.

Cultural effects

"Culture" is defined as patterns of human activity and the symbols that give these activities
significance. Culture is what people eat, how they dress, beliefs they hold, and activities they
practice. Globalization has joined different cultures and made it into something different. As Erla
Zwingle, from the National Geographic article titled "Globalization" states, "When cultures
receive outside influences, they ignore some and adopt others, and then almost immediately start
to transform them."

One classic culture aspect is food. Someone in America can be eating Japanese noodles for lunch
while someone in Sydney, Australia is eating classic Italianmeatballs. India is known for
its curry and exotic spices. France is known for its cheeses. America is known for its burgers and
fries. McDonald's is an American company which is now a global enterprise with 31,000
locations worldwide. This company is just one example of food causing cultural influence on the
global scale.

Another common practice brought about by globalization is the usage of Chinese kanji in tattoos.
These tattoos are popular with today's youth despite the lack of social acceptance of tattoos in
China. Also, there is a lack of comprehension in the meaning of Chinese characters that people
get, making this an example of cultural appropriation.

The internet breaks down cultural boundaries across the world by enabling easy, near-
instantaneous communication between people anywhere in a variety of digital forms and media.
The Internet is associated with the process of cultural globalization because it allows interaction
and communication between people with very different lifestyles and from very different
cultures. Photo sharing websites allow interaction even where language would otherwise be a
barrier.

Negative effect
Globalization has been one of the most hotly debated topics in international economics over the
past few years. Globalization has also generated significant international opposition over
concerns that it has increased inequality and environmental degradation. In the Midwestern
United States, globalization has eaten away at its competitive edge in industry and agriculture,
lowering the quality of life in locations that have not adapted to the change.

Effect on disease

Globalization, the flow of information, goods, capital and people across political and geographic
boundaries, has also helped to spread some of the deadliest infectious diseases known to humans.
Starting in Asia, the Black Death killed at least one-third of Europe's population in the 14th
century. Modern modes of transportation allow more people and products to travel around the
world at a faster pace, they also open the airways to the transcontinental movement of infectious
disease vectors. One example of this occurring is AIDS/HIV. Approximately 1.1 million persons
are living with HIV/AIDS in the United States, and AIDS remains the leading cause of death
among African American women between ages 25 and 34. Due to immigration, approximately
500,000 people in the United States are believed to be infected with Chagas disease. In 2006,
the tuberculosis (TB) rate among foreign-born persons in the United States was 9.5 times that of
U.S.-born persons.

Brain drain

Opportunities in richer countries drives talent away from poorer countries, leading to brain
drains. Brain drain has cost the African continent over $4.1 billion in the employment of 150,000
expatriate professionals annually. Indian students going abroad for their higher studies costs
India a foreign exchange outflow of $10 billion annually.

Economic liberalization

The World today is so interconnected that the collapse of the subprime mortgage market in the
U.S. has led to a global financial crisis and recession on a scale not seen since the Great
Depression. Government deregulation and failed regulation of Wall Street's investment banks
were important contributors to the subprime mortgage crisis.

A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United
States, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in
recent decades. However, Chinese textile and clothing exports have recently encountered
criticism from Europe, the United States and some African countries. In South Africa, some
300,000 textile workers have lost their jobs due to the influx of Chinese goods. A total of 3.2
million – one in six U.S. factory jobs – have disappeared since the start of 2000.

Effect on Income disparity

A study by the World Institute for Development Economics Research at United Nations
University reports that the richest 1% of adults alone owned 40% of global assets in the year
2000. The threerichest people possess more financial assets than the poorest 10% of the world's
population, combined. The combined wealth of the 10 million millionaires grew to nearly $41
trillion in 2008. In 2001, 46.4% of people in sub-Saharan Africa were living in
extreme poverty. Nearly half of all Indian children are undernourished.

Effect on environmental degradation

The World watch Institute said the booming economies of China and India are planetary powers
that are shaping the global biosphere. In 2007, China overtook the United States as the world's
biggest producer of CO2. At present rates, tropical rainforests in Indonesia would be logged out
in 10 years, Papua New Guinea in 13 to 16 years. A major source of deforestation is the logging
industry, driven spectacularly by China and Japan. Thriving economies such as China and India
are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly
since 2002, doubling from 1996–2006. Crude oil prices in the last several years have steadily
risen from about $25 a barrel in August 2003 to over $140 a barrel in July 2008. State of the
World2006 report said the two countries' high economic growth hid a reality of severe pollution.
The report states:
The world's ecological capacity is simply insufficient to satisfy the ambitions of China,
India, Japan, Europe and the United States as well as the aspirations of the rest of the
world in a sustainable way

Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out
by 2017, and terbium could be gone before 2012. It said that if China and India were to consume
as much resources per capita as United States or Japan in 2030 together they would require a full
planet Earth to meet their needs. In the longterm these effects can lead to increased conflict over
dwindling resources and in the worst case a Malthusian catastrophe.

Food security

The head of the International Food Policy Research Institute, stated in 2008 that the gradual
change in diet among newly prosperous populations is the most important factor underpinning
the rise in global food prices. From 1950 to 1984, as the Green
Revolution transformed agriculture around the world, grain production increased by over 250%.
The world population has grown by about 4 billion since the beginning of the Green Revolution
and most believe that, without the Revolution, there would be
greater famine and malnutrition than the UN presently documents (approximately 850 million
people suffering from chronic malnutrition in 2005).

It is becoming increasingly difficult to maintain food security in a world beset by a confluence of


"peak" phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish.
Growing populations, falling energy sources and food shortages will create the "perfect storm"
by 2030, according to the UK government chief scientist. He said food reserves are at a 50-year
low but the world requires 50% more energy, food and water by 2030. The world will have to
produce 70% more food by 2050 to feed a projected extra 2.3 billion people and as incomes rise,
the United Nations'Food and Agriculture Organization (FAO) warned. Social scientists have
warned of the possibility that global civilization is due for a period of contraction and economic
re-localization, due to the decline in fossil fuels and resulting crisis in transportation and food
production. One paper even suggested that the future might even bring about a restoration of
sustainable local economic activities based on hunting and gathering, shifting horticulture, and
pastoralist.
The journal Science published a four-year study in November 2006, which predicted that, at
prevailing trends, the world would run out of wild-caught seafood in 2048.

Drug and illicit goods trade

The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug
trade generates more than $320 billion a year in revenues. Worldwide, the UN estimates there
are more than 50 million regular users of heroin, cocaine and synthetic drugs. The international
trade of endangered species is second only to drug trafficking. Traditional Chinese
medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and
also ingredients from animals and minerals. The use of parts of endangered species (such
as seahorses, rhinoceroshorns, saiga antelope horns, and tiger bones and claws) has created
controversy and resulted in a black market of poachers who hunt restricted animals. In 2003,
29% of open sea fisheries were in a state of collapse.

Sweatshops

It can be said that globalization is the door that opens up an otherwise resource-poor country to
the international market. Where a country has little material or physical product harvested or
mined from its own soil, large corporations see an opportunity to take advantage of the "export
poverty" of such a nation. Where the majority of the earliest occurrences of economic
globalization are recorded as being the expansion of businesses and corporate growth, in many
poorer nations globalization is actually the result of the foreign businesses investing in the
country to take advantage of the lower wage rate: even though investing, by increasing
the Capital Stock of the country, increases their wage rate.

One example used by anti-globalization protestors is the use of sweatshops by manufacturers.


According to Global Exchange these "Sweat Shops" are widely used by sports shoe
manufacturers and mentions one company in particular – Nike. There are factories set up in the
poor countries where employees agree to work for low wages. Then if labour laws alter in those
countries and stricter rules govern the manufacturing process the factories are closed down and
relocated to other nations with more conservative, laissez-faire economic policies.

There are several agencies that have been set up worldwide specifically designed to focus on
anti-sweatshop campaigns and education of such. In the USA, the National Labor Committee has
proposed a number of bills as part of the The Decent Working Conditions and Fair Competition
Act, which have thus far failed in Congress. The legislation would legally require companies to
respect human and worker rights by prohibiting the import, sale, or export of sweatshop goods.

Specifically, these core standards include no child labor, no forced labor, freedom of association,
right to organize and bargain collectively, as well as the right to decent working conditions.

Tiziana Terranova has stated that globalization has brought a culture of "free labour". In a digital
sense, it is where the individuals (contributing capital) exploits and eventually "exhausts the
means through which labour can sustain itself". For example, in the area of digital
media (animations, hosting chat rooms, designing games), where it is often less glamorous than
it may sound. In the gaming industry, a Chinese Gold Market has been established.

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.

Dr. Francesco Stipo, Director of the USA Club of Rome suggests that "the world government
should reflect the political and economic balances of world nations. A world confederation
would not supersede the authority of the State governments but rather complement it, as both the
States and the world authority would have power within their sphere of competence".

Proponents of laissez-faire capitalism, and some libertarians, 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.

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.

Some, such as former Canadian 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.

Anti-globalization
The "anti-globalization movement" is a term used to describe the political group who oppose
the neoliberal version of globalization, while criticisms of globalization are some of the reasons
used to justify this group's stance.

"Anti-globalization" may also involve the process or actions taken by a state or its people in
order to demonstrate its sovereignty and practice democratic decision-making. Anti-globalization
may occur in order to maintain barriers to the international transfer of people, goods and beliefs,
particularly free market deregulation, encouraged by organizations such as the International
Monetary Fund or the World Trade Organization. Moreover, as Naomi Klein argues in her
book No Logo, anti-globalism can denote either a single social movement or an umbrella
term that encompasses a number of separate social movements such as nationalists and socialists.
In either case, participants stand in opposition to the unregulated political power of large, multi-
national corporations, as the corporations exercise power through leveraging trade agreements
which in some instances damage the democratic rights of citizens,
the environment particularly air quality index and rain forests, as well as national government's
sovereignty to determine labor rights, including the right to form a union, and health and safety
legislation, or laws as they may otherwise infringe on cultural practices and traditions
of developing countries.

Some people who are labeled "anti-globalist" or "sceptics" (Hirst and Thompson) consider the
term to be too vague and inaccurate. Podobnik states that "the vast majority of groups that
participate in these protests draw on international networks of support, and they generally call for
forms of globalization that enhance democratic representation, human rights, and
egalitarianism."

Some members aligned with this viewpoint prefer instead to describe themselves as the "Global
Justice Movement", the "Anti-Corporate-Globalization Movement", the "Movement of
Movements" (a popular term in Italy), the "Alter-globalization" movement (popular in France),
the "Counter-Globalization" movement, and a number of other terms.

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 poverty, inequality, miscegenation, 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, created by the New Economics Foundation. 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" which they claim are the unintended but very real
consequences of globalization.

The terms globalization and anti-globalization are used in various ways. Noam
Chomsky believes that

 Poorer countries suffering disadvantages: While it is true that globalization encourages


free trade among countries, there are also negative consequences because some countries
try to save their national markets. The main export of poorer countries is usually
agricultural goods. Larger countries often subsidise their farmers (like the EU Common
Agricultural Policy), which lowers the market price for the poor farmer's crops compared
to what it would be under free trade.
 Exploitation of foreign impoverished workers: The deterioration of protections for
weaker nations by stronger industrialized powers has resulted in the exploitation of the
people in those nations to become cheap labor. Due to the lack of protections, companies
from powerful industrialized nations are able to offer workers enough salary to entice
them to endure extremely long hours and unsafe working conditions, though economists
question if consenting workers in a competitive employers' market can be decried as
"exploited". It is true that the workers are free to leave their jobs, but in many poorer
countries, this would mean starvation for the worker, and possible even his/her family if
their previous jobs were unavailable.

 The shift to outsourcing: The low cost of offshore workers have enticed corporations to
buy goods and services from foreign countries. The laid off manufacturing sector workers
are forced into the service sector where wages and benefits are low, but turnover is high.
This has contributed to the deterioration of the middle class which is a major factor in the
increasing economic inequality in the United States. Families that were once part of the
middle class are forced into lower positions by massive layoffs and outsourcing to
another country. This also means that people in the lower class have a much harder time
climbing out of poverty because of the absence of the middle class as a stepping stone.
 Weak labor unions: The surplus in cheap labor coupled with an ever growing number of
companies in transition has caused a weakening of labor unions in the United States.
Unions lose their effectiveness when their membership begins to decline. As a result
unions hold less power over corporations that are able to easily replace workers, often for
lower wages, and have the option to not offer unionized jobs anymore.
 Increase exploitation of child labor: for example, a country that experiencing increases
in labor demand because of globalization and an increase the demand for goods produced
by children, will experience greater a demand for child labor. This can be "hazardous" or
"exploitive", e.g., quarrying, salvage, cash cropping but also includes the trafficking of
children, children in bondage or forced labor, prostitution, pornography and other illicit
activities.

In December 2007, World Bank economist Branko Milanovic has called much previous
empirical research on global poverty and inequality into question because, according to him,
improved estimates of purchasing power parity indicate that developing countries are worse off
than previously believed. Milanovic remarks that "literally hundreds of scholarly papers on
convergence or divergence of countries’ incomes have been published in the last decade based
on what we know now were faulty numbers." With the new data, possibly economists will revise
calculations, and he also believed that there are considerable implications estimates of global
inequality and poverty levels. Global inequality was estimated at around 65 Gini points, whereas
the new numbers indicate global inequality to be at 70 on the Gini scale.

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.

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 moderate form of capitalism)
while others are more revolutionary (arguing for what they believe is a more humane system
than capitalism) and others arereactionary, 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 article 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. The article was 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.

A chart that gave the inequality a very visible and comprehensible form, the so-called
'champagne glass' effect, 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.

Distribution of world GDP,


1989

Quintile of Population Income

Richest 20% 82.7%

Second 20% 11.7%

Third 20% 2.3%

Fourth 20% 2.4%

Poorest 20% 0.2%

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.

Americanization related to a period of high political American clout and of significant growth of
America's shops, markets and object being brought into other countries. So globalization, a much
more diversified phenomenon, relates to a multilateral political world and to the increase of
objects, markets and so on into each others countries.

Critics of globalization talk of Westernization. A 2005 UNESCO report showed that cultural
exchange is becoming more frequent from Eastern Asia but . 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. Related factors are the fact that Asia's population and area are several
times that of North America.
Some opponents of globalization see the phenomenon as the promotion
of corporatist interests. They also claim that the increasing autonomy and strength of corporate
entities shapes the political policy of countries.

International social forums

The first WSF in 2001 was an initiative of the administration of Porto Alegre in Brazil. The
slogan of the World Social Forum was "Another World Is Possible". It was here that the WSF's
Charter of Principles was adopted to provide a framework for the forums.It proved to be a
vibrant player in macro level.

The WSF became a periodic meeting: in 2002 and 2003 it was held again in Porto Alegre and
became a rallying point for worldwide protest against the American invasion of Iraq. In 2004 it
was moved toMumbai (formerly known as Bombay, in India), to make it more accessible to the
populations of Asia and Africa. This last appointment saw the participation of 75,000 delegates.

In the meantime, regional forums took place following the example of the WSF, adopting its
Charter of Principles. The first European Social Forum (ESF) was held in November 2002
in Florence. The slogan was "Against the war, against racism and against neo-liberalism". It saw
the participation of 60,000 delegates and ended with a huge demonstration against the war
(1,000,000 people according to the organizers). The other two ESFs took place in Paris and
London, in 2003 and 2004 respectively.

Recently there has been some discussion behind the movement about the role of the social
forums. Some see them as a "popular university", an occasion to make many people aware of the
problems of globalization. Others would prefer that delegates concentrate their efforts on the
coordination and organization of the movement and on the planning of new campaigns. However
it has often been argued that in the dominated countries (most of the world) the WSF is little
more than an 'NGO fair' driven by Northern NGOs and donors most of which are hostile to
popular movements of the poor.

Conclusion
According to the foregoing analysis, globalization is not merely an intensification of global
interconnectedness brought about by market forces and technological change. Rather, it is a
worldview shaped by capital and hegemonic power that aspires to establish a global system in
line with the interests of capital. Capitalism, as a market-oriented system of production, has an
inherent globalizing tendency. However, capitalism is not always characterized by the level of
adherence to the liberal principles that globalization represents. In E. M. Wood's penetrating
analysis, globalization represents a new phase of capitalism that is more universal, more
unchallenged, more pure, and more unadulterated, than ever before.

The financial crises affecting different countries have shaken the confidence of the advocates of
globalization. The World Bank, for example, in stark contrast to the minimalist state dictum it
advocated in the 1980s, in the early twenty-first century recognizes the importance of the role of
the state in protecting and correcting markets. There also has been a growing realization that
unfettered financial flows, especially from advanced countries to emerging markets, can create
profound instability. Some proponents of globalization have even admitted that Keynes's
skepticism about financial mobility may still be relevant today. The September 11, 2001, terrorist
attacks on the United States also (temporarily, at least) raised questions about the wisdom of
supporting globalization. Yet despite notable setbacks and shaken confidence, the advocacy for
globalization remains strong.