Professional Documents
Culture Documents
Contemporary World – the circumstances and ideas of the present age; modern
times/world, present times.
GLOBALIZATION
Manfred Steger
HISTORICAL FOUNDATION
1. Economic Globalization
2. Cultural Globalization
3. Political Globalization
NATURE OF GLOBALIZATION
DIMENSIONS OF GLOBALIZATION
REASONS OF GLOBALIZATION
a. Rapid Shrinking of Time and Distance across the Globe – can easily
cross the bridge going to the other side of the market place due to
advance tools of technology than before.
b. Domestic Markets are no longer rich as a consequence of many
interlocking factors.
c. Companies and Institutions go global to find political and economic
stability which is relatively good in other Countries than the country of
origin.
d. To get technological and managerial know-how of other countries due
to their advancement in science, technology, education, health, and
other fields of discipline.
e. To reduce high transportation costs if one goes globally using the
advance tools of communication and information.
f. To be close to raw materials and to markets for their finished products
which are not available in the country of origin.
g. The creation of World Trade Organization (WTO) had made it possible
in stimulating increased cross border trade. There are other world
bodies like the UN and several arbitration bodies where countries
agree.
STAGES OF GLOBALIZATION
Stage 1 The arm’s length service activity of an essentially domestic
company/institution which moves into new market overseas by linking
up with local dealers and distributors.
Stage 2 The company/institution takes over these activities on its own.
Stage 3 The domestic-based company institution begins to carry out its own
manufacturing marketing and sales in key foreign markets.
Stage 4 The company/institution moves to a full insider position in these markets
supported by a complete business system including Research and
Development (R&D) and engineering. However, the headquarters
mentality continues to dominate.
Stage 5 The company/institution moves towards a genuinely global mode of
operation. Global localization (serves local customers in markets
around the globe responding to their needs) happens. It requires an
organizational transition – the company must denationalize its
operations and create a system of values shared by global managers.
MERITS OF GLOBALIZATION DEMIRITS OF GLOBALIZATION
Global Competition and imports keep ▪a Several people lose their jobs when
lid on prices such that inflation is less companies import cheap labor or
likely to derail economic growth. materials or shift production abroad.
▪
An open economy spur fast innovation ▪ Workers face pay cut demands from
with fresh ideas from abroad. employees who often threatens to export
jobs.
▪
Export jobs often pay more than other
jobs. ▪ Unregulated globalization can cause
serious problems to poor and developing
Unfettered capital flow keeps interest countries in terms of labor, wages,
rates low. benefits, job, termination, and others.
▪
Living standards go up faster. ▪ High foreign stake on industries here it is
not necessarily needed could affect the
Productivity grows more quickly when economic growth of domestic enterprise.
countries produce goods and services ▪in
which they are of comparative ▪ Sovereignty of a country and
advantage. company/institution may be at stake.
COMPETITION
The rising number of foreign competitors (in US) limits the number of companies
in some industries that can succeed domestically. If competitors expand
globally, as a business, you have to consider following such suit. Any money
other companies make in foreign markets, they affect the products and services
domestically.
DIVERSE POPULATION
Business trends mirror broader societal trends. The world has become very
diverse as people move to different parts of the world and spread different ideas,
perspectives, and customs.
THEORY OF COMPARATIVE ADVANTAGES
- Countries that are good of producing particular good are better off
exporting it to countries that are less efficient at producing such good.
In the same way, the latter country can also export the goods it
produces to the former country which might be deficient in the same.
- The underlying assumption – not all countries are good at producing all
sorts of goods, which they benefit by trading with each other. Because
of the wage and resources differential, countries stand to gain by trading
with each other.
Globalization is one of the most widely spread recent cultural, social, economic,
and political phenomenon which has strongly marked the discourse of the
humanities and social sciences. This new (not-yet) constituted era poses
multiple challenges, which creates room for novel theoretical paradigm in this
new emerging world.
GLOBAL ECONOMY
ECONOMIC SYSTEMS
▪ Objective = mobilize resources for the common good of the public and
for the interest of the nation. Thus, private individuals has no say on
economic operation where it abolishes private economic competition
and innovation.
Mixed Economy – market driven economies (US, Great Britain, and France).
A combination of market and command systems of economic planning and
decision making. Some sectors are held by private individuals while other
aspects are held within the interest and guidance of the government. There are
times when the state has to take over the ownership and operation of a troubled
private firm for the purpose of maintaining the interest of the nation. Just like
how the government took over some collapsing financial corporations when the
American Market was hit bu the 2008 – 2009 financial markets.
It is the process and system when goods and commodities, services cross
national economy, and boundaries in exchange for money/goods of another
country (Balaam and Vesth, 2008).
Global Trade has grown since post old-war era as a result of increasing demand
of goods and services of countries. The ending of World War II started the trade
facilitation around the globe. Economies set rules and guidelines for
international trade, which led to the formation General Agreement on Tariffs and
Trade (GATT) – developed through series of rounds and meetings of member
economies. This global norm reflects the growing practice of internationalizing
and globalizing local products and services.
Exchanges of Goods and Commodities (more accessible) Open and free flow of
Trade Barriers (reduced) goods and services where
Specialization and Product Innovation (increased) exchanges were seen
Competitive Prices (offered in major industries) between developed and
less developed economies.
TRADE THEORIES
Economic Liberals
Mercantilists
Structuralists
Other scholars study International Relations – where they study the interactions
between two or more countries. Moreover, when they explore the deepening of
interactions between states, they refer it as Internationalization.
1. There are countries or states that are independent and govern themselves.
2. These countries interact with each other through diplomacy.
3. There are international organizations (UN) that facilitate these interactions.
4. These international organizations also takes on lives on their own.
INTERSTATE SYSTEM
Internationalism – desire for greater cooperation and unity among states and
peoples. It is divided on two broad categories:
Liberal Internationalism
On World War 2, there was Axis Powers (Hitler’s Germany, Mussolini’s Italy,
Hirohito’s Japan) – who despise internationalism and prefers to violently impose
their dominance over other nations – and Allied Powers (US, UK, France,
Holland, and Belgium) that made internationalism eclipsed.
Socialist Internationalism
Socialist International (SI) – union of European Socialists and labor parties that
was established in Paris (1889). Their achievements includes:
SI collapsed during World War 1 as the member parties refused or were unable
to join the internationalist efforts to fight for the war. Many of these sister parties
ended up fighting each other. It was a confirmation of Marx’s Warning: when
workers and their organizations take side of their countries instead of each
other, their long-term interest are compromised.
Russian Revolution of 1917, Czar Nicholas was overthrown and replaced by the
Bolshevik Party and its leader, Vladimir Lenin. Which resulted a new stated: