LECTURE 10: Bretton Woods and the Bretton Woods Systems

Harry Dexter White (US) American Minister of state John Maynard Keynes (GB) British
Economist
• Bretton wood system established in 1944.
• Large capital movement and less controllable.
• Requirement of stabilizing system.
• Financial security and stable situation.
• Restructure international finance and currency relationships.
• Implementing a system of fixed exchange rates with the U.S. dollar as the key currency.

GOALS
• Intended to govern currency regulations and establish legal obligations (through the IMF).
Set a standard for exchange rates. (1 ounce gold= $35)
• Establish international monetary cooperation.
• Money pool from which member nations can borrow funds.

BENEFIT FROM THE SYSTEM

• Through capital controls, the countries would pursue full employment and price stability
(low inflation) and the external balance (keeping exchange rates stable) simultaneously.

OUTCOME
• Quotas embedded in the IMF.
• Several conferences dealing with the world monetary problems caused by the ‘Great
Depression’ had ended.
• The creation of the IMF and World Bank.
• The dollar standard.

PROBLEMS
• Occasional devaluations under the supervision of the IMF to remove “fundamental
disequilibria” in the balance of payments (BOP).
• United States free from external economic pressures.
• Countries were not willing to accept the high inflation rates.
• Countries no longer based this value on gold.

EVOLUTION AND BREAKDOWN

• The reserves of most countries became a mixture of gold and dollars.
• In 1958, countries in Europe completed the restoration of convertibility.
• National interest rates were closely linked with each other due to the opportunity to move
funds across borders.
• In 1970s the balance of payment crisis were so massive that finally countries couldn’t keep
up with the adjustments, so the system collapsed and replaced with a regime of floating
exchange rates

The End of Bretton Woods

The End of the Bretton Woods System is due to the following :
• Due to the costs of the Vietnam War and nations trading dollars for gold.
• The link between gold and the dollar is severed.
• Flexible exchange rates allow for countries to adjust to increased prices.
• The formation of the European Monetary System.

The Multinational Corporation

Multinational corporation (MNC) is an enterprise that manages production or delivers

services in more than one country can also be referred to as an international corporation

According to Franklin Root (1994), an MNC is a parent company that engages in foreign

production through its affiliates located in several countries, exercises direct control over the

policies of its affiliates, implements business strategies in production, marketing, finance

and staffing that transcend national boundaries.

EXAMPLES OF The largest MNCs:

● Ford

● Wal-Mart Stores

● IBM

● ExxonMobil

● British Petroleum

● Royal Dutch Shell

● Mc Donald’s

These companies have turnovers in excess of Phillips the GNPs of some countries.
A COMPANY CLASSIFIED AS AN MNC are the Subsidiaries in Stakeholdersforeign are from

countries; Operations in a different number of High proportion of countries. countries; assets

in or/ and revenues from global operations.

ORGANIZATION OF MULTINATIONAL CORPORATIONS include:

● Subsidiaries ● Franchise Hold

● Joint Ventures Companies ● Turn Key Project

REASONS FOR THE ESTABLISHMENT OF MNCS :

● To increase market share.

● To secure cheaper premises and labour.

● Employment and Health & Safety Legislations in other countries may be more

relaxed.

● To avoid or minimise the amount of tax to be paid.

● To take advantage of government grants available.

● To save on costs of transporting goods to the marketplace. To develop an

international brand.

ADVANTAGES OF MNCS:

● Transfer of technology, capital and entrepreneurship.

● Increase in the investment level and thus, the income and employment in the host

country.

● Greater availability of products for local consumers.

● Increase in exports and decrease in imports.

● Acquisition of raw materials from abroad.

● Technology and management expertise acquired from competing in global markets.

Export of components and finished goods for assembly or distribution in foreign

markets. Inflow of income from overseas profits, royalties and management

contracts.
DISADVANTAGES OF MNCS:

● Trade restrictions imposed at the government-level Limited quantities (quotas) of

imports.

● Effective management of a globally dispersed organization.

● Slow down in the growth of employment in home countries.

● Destroy competition and acquire monopoly.

Lecture 11: THE GLOBAL ECONOMY: BRETTON WOODS

WTO principles and agreements are a very important component of the global business

environment significantly impacting domestic as well as global business.

The General Agreement on Tariffs and Trade (GATT), the predecessor of WTO, was born in

1948 as result of the international desire to liberalise trade. The GATT was transformed into

a World Trade Organisation (WTO) with effect from January, 1995. India is one of the

founder members of the IMF, World Bank, GATT and the WTO.

Objectives
-GATT mentioned the following as its important objectives.
● Raising standard of living.
● Ensuring full employment and a large and steadily growing volume of real income
and effective demand.
● Developing full use of the resources of the world.
● Expansion of production and international trade.
For the realisation of its objectives, GATT adopted the following principles:
1. Non-discrimination: The principle of non-discrimination requires that no member country
shall discriminate between the members of GATT in the conduct of international trade.
2. Prohibition of Quantitative Restrictions: GATT rules seek to prohibit quantitative
restrictions as far as possible and limit restrictions on trade to the less rigid tariffs.
3. Consultation: By providing a forum for continuing consultation, it sought to resolve
disagreements through consultation.
The Uruguay Round
-Uruguay Round (UR) is the name by which the eighth Round of the multilateral trade
negotiations (MTNs) held under the auspices of the GATT is popularly known because it was
launched in Punta del Este in Uruguay, a developing country, in September 1986.

The UR sought to broaden the scope of MTNs far wider by including new areas such as:
• Trade in services
• Trade related aspects of intellectual property (TRIPs)
• Trade related investment measures (TRIMs).

GATT and WTO

Following the UR Agreement, GATT was converted from a provisional agreement into a
formal international organisation called World Trade Organisation (WTO) with effect from
January 1, 1995.

Salient Feature of Ur Agreement

Liberalisation of Trade in Manufactures is sought to be achieved mostly by reduction of
tariffs and phasing out of non-tariff barriers.
Tariff Barriers : The major liberalisations in respect of trade in manufactures, regarding
tariffs, are:
● Expansion of tariff bindings
● Reduction in the tariff rates
● Expansion of duty-free access

Non-tariff Barriers
In the area of NTBs, the Agreements to abolish voluntary export restraints (VERs) and to
phase out the Multi Fibre Arrangements (MFA) are regarded as landmark achievements for
developing countries.

Liberalisation of Agricultural Trade

The important aspects of the UR Agreement on agriculture include:
● Tariffication
● Tariff binding
● Tariff cuts
● Reduction in subsidies and domestic support.

The General Agreement on Trade in Services (GATS) which extends multilateral rules and
disciplines to services is regarded as a landmark achievement of the UR. In short, the GATS
covers four modes of international delivery of services.
● Cross-border supply (transborder data flows, transportation services)
 ● Commercial presence (provision of services abroad through FDI or representative
offices).
● Consumption abroad (tourism)
● Movement of personnel (entry and temporary stay of foreign consultants)

INTERNATIONAL MONETARY FUND(IMF)

THE WORLD BANK

The World Bank is an international financial institution that provides loans to developing
countries for capital programs. The World Bank's official goal is the reduction of poverty.
THE TRADING BLOCS

Meaning
● Group of countries
● Existence within a geographical region.
● Motive is to protect themselves from the imports of non-members
● A form of economic integration increasingly shaping the pattern of world trade.

Major Types of Trading Blocs:

● Preferential Trade Area (PTA’s)
● Free Trade Area
● Customs Union
● Common Market

MAJOR TRADE BLOCS

● EU (European Union)
● NAFTA (North American Free TradeAgreement)
● OPEC (Organisation of Petroleum ExportingCountries)
● ASEAN (Association of SouthEast AsianNations)
● SAARC ( South Asian Association forRegional Cooperation)
 ● MERCOSUR (Mercado Común del ConoSur, also known as Southern
CommonMarkets (SCCM)

European Union (EU) - The world’s largest trading bloc and 2nd largest economy in the

world. Originally called the “Economic Community”. (Common Market or The Six) Formed

from the ‘Treaty of Rome’ in 1957. It comprised 6 members- Germany, France, Italy,Belgium,

Netherlands and Luxembourg. At present it comprises of 27member states.

Objectives of European

● UnionSetting up a common market for all goods & services by eliminating all trade

barriers.

● Promoting free trade among the members.

● Continuous and balanced expansion.

● Closer relations between the member states.

North American Free TradeAgreement (NAFTA) - Initially bilateral trade between Canada &

U.S. NAFTA went into effect in January 1,1994 after the joining of Mexico, creating a

trilateral trade bloc in North America. World’s largest free trade area. NAFTA has two

supplements, the North AmericanAgreement on EnvironmentalCooperation (NAAEC) and the

NorthAmerican Agreement on LabourCooperation (NAALC).

Provisions of NAFTA:

● Eliminate barriers to trade & investment between US, Canada & Mexico.

● Duty-free market access.

● ade rules- safeguard, subsidies countervailing & antidumping duties, health & safety

standards.

● Rules on trade in services & investment.

● Protection of intellectual property.

● Dispute settlement mechanism.

Organisation of Petroleum ExportingCountries (OPEC) - A permanent intergovernmental

Organization, created at the Baghdad Conference on September 10–14, 1960 ( Iraq,Kuwait,

Iran, Saudi Arabia and Venezuela ). Later joined by 8 more countries.

The main objective is to coordinate and unify petroleum policies among the member

countries. To secure a fair and stable price for petroleum producers. Proper price and

regular supply for petroleum consuming nations.

Association of Southeast AsianNations (ASEAN)- Formed 8thAugust,1967 (Indonesia,

Malaysia,Philippians, Singapore & Thailand)Later joined by Brunei, Burma, Cambodia,Laos &

VietnamEstablished ASEAN Free Trade Area (AFTA)

Primary goals of AFTA and Objectives are::

● To encourage inflow of foreign investment into this region.

● To establish a free trade area in the member countries.

● To reduce tariff of the products produced inASEAN countries.

● Accelerating Economic Growth.

● Social Progress.Cultural Development among its members.

● Protection of regional peace and stability.

● Discuss issues peacefully.

South Asian Association forRegional Cooperation (SAARC) - Established on 8thDecember

1985 Member Countries- Bangladesh, Bhutan, India,Maldives, Nepal, Pakistan & Sri Lanka.

Objectives of SAARC is to promote the welfare of the people of South Asia and to improve

their quality of life to accelerate economic growth, social progress and cultural development

in the region to promote and strengthen selective self-reliance among the countries of South

Asia to contribute to mutual trust, understanding and appreciation of one another's

problems to strengthen cooperation with other developing countries to maintain peace in the

region
SAPTA

• The council of ministers have signed theSAARC preferential trading arrangement

agreement on April 11, 1993.Objectives:- To gradually liberalize the trade among members

of SAARC To eliminate trade barriers among SAARCcountries & reduce or eliminate tariffs

To promote and sustain mutual trade & economic cooperation among member countries

F. MERCOSUR- Mercado Común del Cono Sur

● Established in 1991 by Brazil, Argentina,Paraguay, Uruguay.

● These four members generate 70% GNP of SouthAmerica.

● By 1996, MERCOSUR had abolished tariffs on goods accounting for 90% of the trade

between its member countries, with remaining tariffs to be abolished by 2000.

● MERCOSUR & EU Signed a cooperation agreement to pave the way for free trade

according 2001.

Lecture 12: GLOBAL ECONOMIC FLOWS

TRADE
-the action of buying and selling goods and services.
-involves the transfer of goods or services from one person or entity to another, often in
exchange for money. Economists refer to a system or network that allows trade as a market.

Trade Deficit- A trade deficit occurs when one country buys more foreign goods than it sells
to other countries.
Trade Surplus- A trade surplus occurs when one country sells more goods to other
countries than it buys.

MARKET INTEGRATION - Market integration occurs when prices among different locations

or related goods follow similar patterns over a long period of time. Groups of goods often

move proportionally to each other and when this relation is very clear among different

markets it is said that the markets are integrated.

 Types of market integration

1. Horizontal integration

● This occurs when a firm or agency gains control of other firms or

agencies performing similar marketing functions at the same level in

the marketing sequence. In this type of integration, some marketing

agencies combine to form a union with a view to reducing their

effective number and the extent of actual competition in the market.

It is advantageous for the members who join the group.

2. Vertical integration

● This occurs when a firm performs more than one activity in the

sequence of the marketing process. It is a linking together of two or

more functions in the marketing process within a single firm or under

a single ownership. This type of integration makes it possible to

exercise control over both quality and quantity of the product from

the beginning of the production process until the product is ready for

the consumer. It reduces the number of middle men in the marketing

channel.

a) Forward integration

If a firm assumes another function of marketing which is closer to the

 consumption function, it is a case of forward integration. Example:

wholesaler assuming the function of retailing

b) Backward integration

This involves ownership or a combination of sources of supply. Example:

when a processing firm assumes the function of assembling/purchasing the

produce from the villages.

3. Conglomeration

● A combination of agencies or activities not directly related to each other

may, when it operates under a unified management, be termed a

conglomeration.

International Financial Institutions

● International Financial Institutions (IFIs) are established by more than one country
and subject to international law. Owners and shareholders are generally governments
or other international institutions. IFIs can refer to members of the World Bank Group
such as International Finance Corporation (IFC); regional development banks such as
Asian Development Bank (ADB) and European Bank for Reconstruction and
Development (EBRD); and export credit agencies of individual country
governments,such as the US Export Import Bank (EXIM). IFIs are important in project
finance because they play a significant role in supporting large scale infrastructure
projects in emerging markets. They can provide critical capital and catalyze the
participation of other players.
Government-Backed Institutions

Some financial institutions are inherently linked with a government’s treasury department.
The Federal Reserve, the World Bank and the International Monetary Fund are good
examples. The IMF is an international institution that provides countries experiencing an
economic crisis with a temporary loan to stabilize its economy. This loan is backed by the
institution’s founder, the United States government. The World Bank is a specialized
institution of the United Nations designed to give aid to governments, private agencies and
corporations. The goal of these loans is to assist with development and health-related
projects.

Private Institutions

● Several international institutions are private, such as Deutsche Bank, HSBC, Goldman
Sachs and AIG. These companies make loans based on the risk level of the
investment and the potential for profit. As is the case with most financial decisions:
The higher the risk, the greater the potential reward. For example, a financial
institution may decide to invest in Nigerian oil fields despite the government’s high
level of corruption and known vandalism.
● The primary incentive under which private institutions issue loans is for the sake of
increasing wealth to its shareholders. International financial institutions measure risk
by the government or company’s ability to repay, its level of debt and what the group
can offer as collateral in case of default. Government-backed institutions typically
issue loans regardless of the amount of debt, primarily because the loan is issued
because of economic catastrophes.
● During the Grecian debt crisis, the IMF offered Greece a bailout package to stabilize
its flailing economy. In this case, the risk was mitigated because of the strength of
other economies in the European Union, including Germany and France. Private
corporations have other means of managing the risk, primarily through high interest
rates, up-front fees and stringent terms and conditions. Private institutions can also
request the collection of collateral in the event of default.

Global Corporation

● A global corporation is a business that operates in two or more countries. It also

goes by the name “multinational company” Expanding your business globally can
offer several advantages over running a strictly domestic company but operating in
multiple countries also pose logistical and cultural challenges.
● A major motive of becoming a global corporation is to expand revenue opportunities
and to diversify business risks. If you have a model that works well domestically and
translates well in foreign markets, you gain access to more customers and capital.
Operating in multiple countries allows you to achieve success in different types of
economies;
● Globalization can also offer the benefits of economies of scope and economies of
scale. Economies of scope means that you can take advantage of different skill sets
and market advantages .

● Cultural variance is a major challenge for global corporations. Developing a positive,

effective work culture can be challenging enough in your home country. Getting
 workers to think globally when their values differ from the values of colleagues in
other countries are even harder.
● Marketing strategy is also distinct in a global marketplace. You have to invest more
time and effort to research the laws in each country, the needs of the marketplace,
buying habits and product uses.

The Global Interstate System

● It is the whole system of human interactions. The world economy is now all the
economic interactions of all the people on Earth, not just international trade and
investment. The modern world-system is structured politically as an interstate
system – a system of competing and allying states.
● One of the important systemic features of the modern system is the rise and fall of
hegemonic core powers – the so-called “hegemonic sequence” (Wallerstein 1984;
Chase-Dunn 1998). A hegemon is a core state that has a significantly greater amount
of economic power than any other state, and that takes on the political role of
system leader.
● In the seventeenth century the Dutch Republic performed the role of hegemon in the
Europe-centered system, while Great Britain was the hegemon of the nineteenth
century, and the United States has been the hegemon in the twentieth century.
Hegemons provide leadership and order for the interstate system and the world
economy. But the normal operating processes of the modern system – uneven
economic development and competition among states – make it difficult for
hegemons to sustain their dominant positions, and so they tend to decline.

Contemporary Global Governance

● Global governance or world governance is a movement towards political cooperation

among transnational actors, aimed at negotiating responses to problems that affect
more than one state or region. Institutions of global governance, like the United
Nations, the International Criminal Court, the World Bank, etc., tend to have limited or
demarcated power to enforce compliance.
Lecture 13-16: GLOBAL DIVIDES: GLOBAL INEQUALITIES 1-2

THE NORTH-SOUTH DIVIDE IS A SOCIO-ECONOMIC AND POLITICAL CATEGORIZATION OF

COUNTRIES.THE NORTH IS COMPRISED OF ALL FIRST WORLD COUNTRIES AND MOST
SECOND WORLD COUNTRIES WHILE THE SOUTH IS COMPRISED OF
THIRD WORLD COUNTRIES.

● Countries in the East like the Soviet Union and China which became classified as

Second World countries.

● In the west, the United States and its allies were labelled as First World countries.

● This division left out many countries which were poorer than the First World and

Second World countries.

● The poor countries were eventually labeled as Third World countries.

● This categorization was later abandoned after the Second World countries joined the

First World countries.

The North (First World Countries)

The North of the Divide comprises countries which have developed economies and account
for over 90% of all manufacturing industries in the world. Although these countries account
for only one-quarter of the total global population, they control 80% of the total income
earned around the World. About 95% of the population in countries in The North have
enough basic needs and have access to functioning education systems. Countries
comprising the North include The United States, Canada, all countries in
Western Europe, Australia, New Zealand as well as the developed countries in Asia such as
Japan and South Korea.

The South (Third World Countries)

The South is comprised of countries with developing economies which were
initially referred to as Third World countries during the Cold War. An important characteristic
of countries in the South is the relatively low GDP and the high population. Another common
characteristic of the countries in the South is the lack of basic amenities. As little as 5% of
the population is able to access basic needs such as food and shelter. The economies of
most countries in the South rely on imports from the North and have low technological
penetration. The countries making up the South are mainly drawn from Africa, South
America, and Asia with all African and South American countries being from the South. The
only Asian countries not from the South are Japan and South Korea.

The region’s authorities need to:

a.progressively eliminate national obstacles to the movement of goods, services, capital,

and labor;
b.harmonize and coordinate national and regional policies; and
c.institutionalize the regional framework, mechanisms and standards to promote regional
integration. Greater collaboration among the region’s economies underpinned by a strong
regional institutional framework would further deepen regional integration across all
dimensions.

The Meaning of Race and Ethnicity

LEARNING OBJECTIVES

1. Critique the biological concept of race.

2. Discuss why race is a social construction.

3. Explain why ethnic heritages have both good and bad consequences.

To begin our understanding of racial and ethnic inequality, we first need to understand what

race and ethnicity mean. These terms may seem easy to define but are much more complex

than their definitions suggest.

Race- Let’s start first with race, which refers to a category of people who share certain

inherited physical characteristics, such as skin color, facial features, and stature. A key

question about race is whether it is more of a biological category or a social category. Most

people think of race in biological terms, and for more than three hundred years, or ever since

white Europeans began colonizing nations filled with people of color, people have been

identified as belonging to one race or another based on certain biological features. Many
people think of races as “natural” categories reflecting important biological differences

across groups of people whose ancestors came from different parts of the world. Since

racial classifications are generally hooked to observable physical differences between

people, the apparent naturalness of race seems obvious to most people. This conception

reflects a fundamental misunderstanding about the nature of racial classifications. Race is a

social category, not a biological one. While racial classifications generally use inherited

biological traits as criteria for classification, nevertheless how those traits are treated and

how they are translated into the categories we call “races” is defined by social conventions,

not by biology.

Ethnicity- Because of the problems in the meaning of race, many social scientists prefer the

term ethnicity in speaking of people of color and others with distinctive cultural heritages. In

this context, ethnicity refers to the shared social, cultural, and historical experiences,

stemming from common national or regional backgrounds, that make subgroups of a

population different from one another. Similarly, an ethnic group is a subgroup of a

population with a set of shared social, cultural, and historical experiences; with relatively

distinctive beliefs, values, and behaviors; and with some sense of identity of belonging to the

subgroup. So conceived, the terms ethnicity and ethnic group avoid the biological

connotations of the terms race and racial group.

At the same time, the importance we attach to ethnicity illustrates that it, too, is in many

ways a social construction, and our ethnic membership thus has important consequences

for how we are treated. In particular, history and current practice indicate that it is easy to

become prejudiced against people with different ethnicities from our own. Much of the rest

of this chapter looks at the prejudice and discrimination operating today in the United States

against people whose ethnicity is not white and European. Around the world today, ethnic

conflict continues to rear its ugly head. The 1990s and 2000s were filled with ethnic
cleansing and pitched battles among ethnic groups in Eastern Europe, Africa, and elsewhere.

Our ethnic heritages shape us in many ways and fill many of us with pride, but they also are

the source of much conflict, prejudice, and even hatred, as the hate crime story that began

this chapter so sadly reminds us.

GENDER INEQUALITY

What Is Gender?

● Gender describes the role ,rights and responsibilities that society consider s

appropriate for men and women .

● It refers to social ,economic and cultural attributes and opportunities associated

with being a male or female.

● Gender roles ,responsibilities inequalities and differences are not the same in various

societies .

Gender equality has an important role in the economic development of a country.

Meanwhile, Cavalcanti and Tavares (2007) suggests that gender inequality in work has a

relationship with higher fertility rates, which in turn reduces economic growth. Therefore, the

education of girls actually has a higher marginal return.

Globalization vs Regionalization

The inexorable forces of globalization and regionalization have reshaped the

world economic landscape over the past quarter century. Global trade and
financial flows have registered unprecedented growth during this period.
Intra-regional economic linkages have also become much stronger with the
proliferation of regional trade agreements and common currency areas. Specifically, some
regions (e.g., Asia) exhibited surprising resilience during the worst of the financial crisis and
rapidly returned to high growth whereas some others (e.g., North America and Europe)
experienced deep and prolonged contractions. (Blanchard, Faruqee, and Das, 2010; Lane and
Milesi-Ferretti, 2011; Rose and Spiegel, 2011)

Asian Regionalism

Asia’s output today roughly equals that of Europe or North

America and may well be 50% larger than theirs will be by 2020,
in terms of purchasing power parity. The challenge for a
prosperous and interdependent Asia is to strengthen and spread the
benefits of regional cooperation while playing a substantial,
constructive role in global economic leadership. As Asia’s economies have grown larger and
more complex, they also have become more integrated, through trade, financial flows,
direct investment, and other forms of economic and social exchange. Today, Asia trades
about as much with itself as Europe and North America do with themselves.

Asian Integration

Regional integration is a dynamic, evolutionary process that offers everyone access to

markets and resources, allows goods and services to move easily across borders, and lets
citizens travel freely for leisure and work. It is also about unlocking the region’s potential by
encouraging capital and production to move and grow beyond national limits.

Regional integration is a multidimensional process. The index allows comparative analysis

on multiple dimensions across different sub regional groups and countries to capture the
diversity in Asia’s RCI process.

The six-dimensional indexes are designed to reflect the core socioeconomic dimensions
integral to the dynamic RCI process.

These include:
a.trade and investment,
b.money and finance,
c.regional value chains,
d.infrastructure and connectivity,
e.movement of people, and
f.institutional and social integration.
Lecture 17: GLOBAL CULTURE AND CULTURAL FLOWS

Global cultural flow is a result of the process of globalization. Anthropologist Arjun

Appadurai has discussed this in terms of five specific “scapes” or flows: ethnoscapes,
technoscapes, ideoscapes, financescapes, and mediascapes.

Ethnoscapes refer to the shifting landscape of people across culture and borders such as
tourists, immigrants, refugees, exiles, guest workers. An example of ethnoscapes is
Australia – a multi-ethnic country with one of the most linguistically and culturally diverse
populations in the world.
Technoscapes are the transmission of cultures through the flow of technology. New types
of cultural interactions and exchanges are brought about by technology, particularly the
Internet. The globally integrated information network has become a powerful tool in shaping
how culture and communication are transmitted across the globe.
Financescapes refer to the global movement of money, including currency, trade and
commodity. Countries nowadays are allowed to freely exchange goods. However, it leads to
the intensification of competition amongst corporations.
Mediascapes refers to the electronic capabilities of production and dissemination of
information through media. Ideoscapes are the global flow of ideologies. Mediascapes and
ideoscapes have a close relationship as they usually work upon the reliance of the other
scape. Ideas can be disseminated via media platforms.

CULTURAL FLOWS

This chapter examines the global flows of culture, which tend to move more easily around
the globe than ever before, especially through non-material digital forms. Three perspectives
on global cultural flows are examined – differentialism, hybridization, and convergence.
Cultural differentialism emphasizes the fact that cultures are essentially different and are
only superficially affected by global flows. The interaction of cultures is deemed to contain
the potential for “catastrophic collision.” Samuel Huntington’s theory of a clash of the
civilizations best exemplifies this approach.
According to him, after the Cold War, political-economic differences were overshadowed by
new fault lines which were primarily cultural in nature. Increasing interaction among different
“civilizations” (such as the Sinic, Islamic, Orthodox, Western) would lead to intense clashes,
especially economic conflict between the West and Sinic civilization and bloody political
conflict between the Western and the Islamic civilizations. This theory has been critiqued for
a number of reasons, especially its portrayal of Muslims as being “prone to violence.”
The process of globalization, considered as involving the spread of religion (closely related
to civilizations), could be said to be more than 2,000 years old. The growth of major world
religions such as Islam, Hinduism, Buddhism, Christianity, Judaism, and Mormonism, is
examined, as is also the fact they involve global flows as well as the processes through
which they adapt to other flows.
The cultural hybridization approach emphasizes the integration of local and global cultures.
Therefore, globalization is considered to be a creative process which gives rise to hybrid
entities that are not reducible to either the global or the local. A key concept is
“glocalization,” or the interpenetration of the global and local resulting in unique outcomes in
different geographic areas.
Another key concept is Arjun Appadurai’s “scapes” (global flows involving people,
technology, finance, political images, and media) and the disjunctures between them, which
lead to the creation of cultural hybrids.
The cultural convergence approach stresses homogeneity introduced by globalization.
Cultures are deemed to be radically altered by strong flows.
Cultural imperialism, wherein one culture imposes itself and tends to destroy at least parts
of another culture, is also analyzed under the heading of this approach. One important
critique of cultural imperialism is based on the idea of “deterritorialization” of culture. This
means that it is much more difficult to tie culture to a specific geographic point of its origin.
McDonaldization involves the global spread of rational systems, based on the principles of
fast-food restaurants, such as efficiency, calculability, predictability, and control. This
process is extended to other businesses, sectors, and geographical areas. Grobalization (in
contrast to glocalization) is a process wherein nations, corporations, etc. impose
themselves on geographic areas in order to gain profits, power, and so on.
Globalization can also be seen as a flow of “nothing” (as opposed to “something”), involving
the spread of non-places, non-things, non-people, and non-services. The interplay between
these processes (grobalization and glocalization; nothing and something) can be clearly
seen in the globalization of sports, a phenomenon that is an important part of culture.