Globalization Theory

• Prof George Ritzer

• Keele Programme
• Feb 2010

1
 Globalization

The spread of worldwide practices,

relations, consciousness, and
organization of social life
(Ritzer, 2008, p. 447).
• Sociology: the systematic and scientific
study of human groups, social
systems and institutions.
4
 Bureaucracies: Max Weber
• A bureaucracy is a large hierarchical
organization that is governed by formal
rules and regulations and that has a clear
specification of work tasks.
• Needed to accomplish feats such as
building cities, governing large populations
etc.

©Pine Forge Press, an

imprint of Sage
 Characteristics of Bureaucracies
• Division of labor: Specialization of different
people or groups in different tasks,
characteristic of most bureaucracies
• hierarchy of authority: Ranking of people
or tasks in a bureaucracy from those at the
top, where there is a great deal of power and
authority, to those at the bottom, where there
is very little power and authority
• Impersonality

• How does a university provide an example of

these 3 characteristics?
©Pine Forge Press, an
imprint of Sage
 TRANSFORMATIONALISTS
Globalization:
 Main force of changes
on political, economical
and social levels
 New world order
which needs some
adaptation and
transformation Anthony Giddens
 TRANSFORMATIONALISTS
• Globalization determines new international order
• International relations are influenced by
globalization
• States have to adjust their role to the new
situation
• New institutions come into picture and new
regulations must be applied
9
 Criticisms – Anthony Giddens
• Argued globalization is very real.
• Critical globalization treated as primarily
an economic phenomenon.
• Globalization influenced by
communication.
• Critical people treat globalization as an out
there phenomenon, far removed from the
individual.
 Criticisms – Ulrich Beck
• Work centered on his critique of globalism.
• Globalism: the view that the world market eliminates or
suppliants political action – that is, the ideology of rule by
the world market, the ideology of neoliberalism (Gane,
2001, p. 84).
• Reduction of globalization to one dimension – economics.
• Proposed a reflexive theory of globalism based on two
main concepts: globality and globalization.
• Globality: refers to the collision of economic, cultural, and
political forms in world society (Gane, 2001, p. 84).
• Globalization: denotes the processes through which
sovereign national states are criss-crossed and
undermined by transnational actors with varying prospects
of power, orientations, identities, and networks (Gane,
2001, p. 84).
 The Cosmopolitan Perspective
• An alternative to exclusively economic and security
concerns
• Suggests an alternative to internationalism,
globalization as well as nationalism
• A key element is the value of global justice
• Recognition of the perspective of the other
• Concern with overlapping allegiances
• Related to the capacity for self-transformation in the
cultural and political resources of a society
• Self-problematization and pluralization
• Normative implications of globalization
 Criticisms – Zygmunt Bauman
• Adopted a more critical stance than Giddens or
Beck.
• Argued globalization gives rise to new forms of
class polarization and uncertainty.
• Believed globalism engendered new forms of
social exclusion and formed a new hierarchy of
social mobility.
• Felt the winners are new elites who have the
freedom to move. The losers are those who
remain bound to their locality.
 Major Types
• Cultural Theory

• Economic Theory

• Political Theory
 Cultural Theory - Variations
• In homogeneity, seen either as the
transnational expansion of common codes
and practices.
– Example - cultural imperialism.
• In heterogeneity, global and local cultural
inputs interact.
 Cultural Theory - Pieterse
• Cultural differentialism – cultures unaffected by
globalization & closed.
• Cultural convergence - increasing sameness in the
direction of dominant groups.
– Example – McDonalization, influenced by Weber.
• Cultural hybridization - mixing of cultures,
producing new and unique cultures. A key
concept is glocalization.
– Hybridization: emphasizes increasing diversity associated
with the unique mixtures of the global and the local (Ritzer,
2008, p. 462).
– Glocalization: the interpenetration of the global and the local
resulting in unique outcomes in different geographic areas
(Ritzer, 2008, p. 461).
17
18
19
 McDonaldization
The idea of McDonaldization is associated with the
work of George Ritzer

This does not mean that the world is dominated by

McDonalds restaurants

It suggests that economic activity is becoming

standardized and homogenized and organized for
efficiency along the lines of fast food outlets

By the ‘McDonaldization of society’ Ritzer means that

other sectors, including hospitals and universities are
being organized along similar lines
The Four Pillars of
McDonaldization
(Ritzer, 2000)

• Efficiency
• Calculability
• Predictability
• Control (via technology)
The McDonaldization of Society

Read a short excerpt from Ritzer’s book

http://myweb.stedwards.edu/mikef/dimenz.htm
 McDonaldization
• ...McDonaldization,...is the process by which the principles of the
fast-food restaurant are coming to dominate more and more sectors
of American society as well as of the rest of the world. (George
Ritzer)
 McDonaldization
• ...McDonaldization,...is the process by which the principles of the
fast-food restaurant are coming to dominate more and more sectors
of American society as well as of the rest of the world. (George
Ritzer)
• The McDonaldization of culture refers to the blending of elements of
cultures due to the effects globalization and technology
 McDonaldization of Society
• M c D o n a ld iz a t io n : The process by which the
characteristics and principles of the fast food
restaurant come to dominate other areas of social
life.
– Streamlined processes
– Uniform goods or services
– Speeded up transactions
• George Ritzer used idea as metaphor for harmful
effects of bureaucratization on society.
• Likely to continue because:
– Impelled by economic interests
– Efficiency has become culturally desirable
– Parallels other changes in society
©Pine Forge Press, an
imprint of Sage
 Economic Theory - Variations
• Generally see globalization as the spread
of neoliberalism, capitalism, and the
market economy.
• Some heterogeneity does exist, such as
the commodification and the existence of
flexible specialization. Interaction of the
global with local markets leads to the
creation of unique glocal markets.
 Economic Theory –
Transnational Capitalism: Leslie Sklair
• Distinguished two systems of globalization
– Capitalist – is the one that is now predominant
– Socialist – is not yet in existence
• Focused on transnational practices that are able
to cut across boundaries with the implication that
territorial boundaries are of declining importance
in capitalist globalization.
• Argued transnational capitalism is providing the
basis for the emergence of socialist
globalization.
 Economic Theory –
Empire: Michael Hardt & Antonio Negri
• Empire: a postmodern reality in which
dominance exists but no single nation (or any
other entity) is at its center (Ritzer, 2008, p.
466).
• Has no center and is based on juridical power.
• It is everywhere; it is omnipresent.
• Doesn’t exist yet, we’re in the midst of a
transition from capitalist imperialism to the
dominance of empire.
• Seeks to suspend history so it can exist for
eternity, to use biopower to control human
nature and population.
 Political Theory - Variations
• Homogenization perspective focus on the
worldwide spread of models of the nation-
state and the emergence of similar forms
of governance throughout the globe.
– Benjamin Barber’s McWorld.
• Barber’s Jihad - localized, ethnic, and
reactionary political forces that involve an
intensification of nationalism and that lead
to greater political heterogeneity.
 Political Theory - Examples
• Liberal theory - from John Locke & Adam Smith.
– Liberal theory: belief in the importance of the free
market and the need to allow it to operate free of any
impediments, especially those imposed by the nation-
state and other political entities (Ritzer, 2008, p. 468).
• Realist theory- states aggressively pursuing their
own interests.
• James Rosenau focused on fragmegration
– Fragmegration: the idea that the world is both
fragmenting and integrating at the same time (Ritzer,
2008, p. 469).
– World is localizing, decentralizing, and fragmenting
while it is simultaneously globalizing, centralizing, and
integrating.
– Example: the federal government.
 Human Nature & Society
• Much academic attention has been on
globalization.
• Every nation and every person’s life in this
world are transformed by globalization.
• Globalization has worked to the
advantage of the wealthy nations. The
gap between the rich and poor has
actually increased.
 Scientific Scrutiny
• Albert (2007) defined four strands of research
that have developed on globalization theory:
1. understanding of globalization as inherently varied
globalization,
2. global governance research,
3. global history, and
4. global/world society research.
• Albert argued necessary to build on these four
strands and merge them with the traditional
sociological concepts.
 Substantive Area
• In general, can help all.
• Cultural theory can help me, Bryan, &
Jen.
• Economic and political theory may be
relevant to Johnnie and David’s
areas.
 Ritzer’s Continuums

ic Globalization Ma
cop c ro
i c ro s Theory sc o pi
M c

Globalization S ub
c t iv e je c
O b je Theory t iv e
Burrell & Morgan’s Paradigm
Radic al Chang e
Radical Humanism Radical Structuralism
Empire by Hardt & Negri
McWorld & Jihad by Barber
Transnational Capitalism by Sklair
Cultural Theory
Globalization Theory

Obje c tive
Subjective

Fragmegration by Rosenau
Cultural Theory
Globalization Theory

Interpretive Functionalist
Order
 References
• Albert, M., & ALBERT. (2007). " Globalization theory": Yesterday's
fad or more lively than ever? International Political Sociology, 1(2),
165.
• Burrell, G., & Morgan, G. (1994). Sociological paradigms and
organisational analysis. Brookfield, VT: Arena.
• Gane, N. (2001). Chasing the 'runaway world': The politics of recent
globalization theory. Acta Sociologica, 44(1), 81.
• Kiely, R. (2005). Globalization and poverty, and the poverty of
globalization theory. Current Sociology, 53(6), 895.
• Martell, L. (2007). The third wave in globalization theory.
International Studies Review, 9(2), 173.
• Ritzer, G. (2008). Modern sociological theory (7th ed.). Boston:
McGraw Hill.
• Yeung, H. W. (2002). The limits to globalization theory: A
geographic perspective on global economic change. Economic
Geography, 78(3), 285.
Globalization and McDonaldization
• George Ritzer (2004), defines McDonaldization
as the process by which the principles of the fast
food restaurant are coming to dominate more
and more sectors of American society as well as
the rest of the world (p.1).
• The principles of this system, Ritzer (2004), are
Efficiency, Calculability, Predictability, and
Control through Nonhuman Technology (p.6 –
15).
• In essence, it’s fast and reliable. McDonalds is a
global icon that is used but can also be replaced
with Starbucks or for our purposes
Globalization and McDonaldization
• Ritzer (2004), stated that McDonaldization
is “one of many Globalization processes”
where he defines Globalization as a
“diffusion of practices, expansion of
relations across continents, organization
of social life on a global scale, and growth
of a shared global consciousness” (p.160).
 Glocalization and Grobalization
• . Ritzer (2004) utilized the globalization theorist,
Roland Robertson’s term, Glocalization, the
interpenetration of the global and the local,
resulting in unique outcomes in different
geographic areas, and Ritzer offers his own
coined term, Grobalization, the imperialistic
ambitions of nations, corporations,
organizations, and the like and their desire,
indeed need, to impose themselves on various
geographic areas (p. 163 - 165.)
 Glocalization and Grobalization
• Ritzer, further, separates them into 4 distinct
types of these Globalizations:
2. Glocalization of Something such as Local
Crafts or Craftsperson
3. Glocalization of Nothing such as Tourist
Trinkets or Souvenir Shop Clerk
4. Grobalization of Something such as Museum or
Touring Art Exhibit
5. Grobalization of Nothing such as McDonald’s
restaurant and Big Mac
Drivers of change:
• Globalisation and the deregulation of
interconnected, global financial
markets
• Technological innovation leading to the
democratisation of Information
• Decline of heavy industries and the rise
of the service sector
 PR 1450
Introduction to Globalization

Lecture 13

Americanization

Chris Rumford
 Introduction
In the first week of the course I said that the idea that
globalization and Americanization are synonymous is one of
the myths often associated with globalization

Nevertheless, the idea that globalization leads to the

homogenization of culture is a powerful one …

… and many people see Americanization as the best

example of this homogenization

Put simply, the argument runs that American culture

(Hollywood movies, McDonald's, Coca Cola, Disney) exerts a
very powerful influence across the world
 Americanization

Americanization can be defined as;

‘propagation of American ideas,
customs, social patterns, industry and
capital around the world’ (Williams,
quoted in Ritzer, 2003, 36)
 Fear of Americanization
In the post-WWII period concerns about
Americanization were particularly strong in France

When Coca-Cola first applied for a bottling licence in

1948 the French Communist Party argued that Coca-
Cola should be kept out of France because the
company acted as a US spy network

Others argued that it represented a threat to French

civilization, or that coke advertising brainwashed the
masses (Cohen and Kennedy, 2000: 239)
 Starbucks arrives in France

Read the article, ‘Starbucks invades Parisian cafe culture’

http://news.bbc.co.uk/1/hi/world/europe/3401637.stm

Now read what happened when Starbucks opened in Vienna:

‘Viennese in a froth over Starbucks’
http://news.bbc.co.uk/1/hi/business/1698961.stm

• In what way were the responses of the French and Austrians similar?
• Does Starbucks threaten European ‘café culture’?
 The influence of American
culture
So, it must be true that American culture
exerts a massive influence across the world

Perhaps, but it’s only part of the story

In many respects the US is out of step with

global norms and values:
– US sports are home-grown not
global (baseball, American football)
– gun culture and gun ownership
– non-abolition of the death penalty
– 20 % of US citizens own a
passport
 Roland Robertson on
Americanization
As Robertson reminds us (2003: 261), it
would be perverse to argue that the
Guggenheim museum in Bilbao should fall
into the same category of Americanization as
Sylvester Stallone movies

‘The world is certainly not being Americanized

with respect to its religiosity, … rituals of
greeting, expressions of the erotic (where the
USA still stands for its puritanism), loudness
of verbal interaction, and so on’ (Robertson,
2003: 262)
 Globalization is not
Americanization
Read ‘Globalization is not Americanization’ by
Joseph Nye

He argues that ‘Contrary to conventional

wisdom, globalization is not “Americanizing” the
world
www.taipeitimes.com/News/editorials/archives/2004/10/22/2003207970

In what ways does Nye think that globalization

can transform America?
 Global America?: The Cultural
Consequences of Globalization
This important book takes a critical look
at the relationship between America and
globalization

Read my review of this book (and

Ritzer’s book The Globalization of
Nothing) in my article, ‘Dude, where's my
country? from global America to global
nothingness’

www.chrisrumford.org.uk/from_global_america.html
 Who is the greatest ever
American?
Who do you think was voted the ‘greatest American’ in a
recent BBC poll?

Read the article, ‘Your greatest American’

http://news.bbc.co.uk/1/hi/programmes/wtwta/2997144.stm

The winner was not:

• Elvis Presley
• Tiger Woods
• Madonna
• President Kennedy
• Martin Luther King
• Oprah Winfrey
The winner is …
1. Homer Simpson
47.17%
2. Abraham Lincoln
9.67%
3. Martin Luther King Jnr
8.54%
4. Mr T
7.83%
5. Thomas Jefferson
5.68%
6. George Washington
5.12%
7. Bob Dylan
4.71%
8. Benjamin Franklin
4.10%
9. Franklin D Roosevelt
3.65%
10. Bill Clinton
3.53%
(BBC poll: 37,102 votes cast)
 McDonaldization

In week 4 we looked briefly at George Ritzer’’s McDonaldization

thesis … which does not simply mean that the world is
dominated by McDonald’s restaurants

Ritzer suggests that economic activity is becoming

standardized and homogenized and organized for efficiency
along the lines of fast food outlets

By the ‘McDonaldization of society’ Ritzer means that other

sectors, including hospitals and universities are being
organized along similar lines
 McDonaldization of society
McDonaldization consists of 4 processes of
rational organization:

– efficiency
– predictability
– calculability
– replacement of human with non-human
technology (Ritzer, 2003, 34)

For Ritzer, McDonald’s restaurants represent

the ‘paradigm case’ of a much wider
phenomenon
 McDonaldization and
Americanization

According to Ritzer (2003, 35) Americanization

involves the following:

• worldwide diffusion of US industrial model post-WWII

• worldwide diffusion of US consumption model in 1990s

• global marketing of US media (TV, Hollywood)

• global marketing of US commodities (Coca Cola, clothes)
• US diplomatic support of democratization
• training of foreign elites in US universities
• use of international labour market and natural resources
 McDonaldization of America?
Ritzer says that, ‘it seems odd, to say the
least, to think of the Americanization of
America. However, we can clearly think in
terms of the McDonaldization of America’
(Ritzer, 2003: 41)

The McDonaldization of America involves

‘driving out cultural and regional traditions
and replacing them with a single,
homogenous system’ (Ritzer, 2003: 41)
The McDonaldization of Society

Read a short excerpt from Ritzer’s book

http://myweb.stedwards.edu/mikef/dimenz.htm
 Europe versus America?
In recent years there has been much talk of the major
differences between America and Europe

The US-led invasion of Iraq in 2003 divided Europe

In addition to the UK, Spain, Portugal, Poland, Hungary, the

Czech Republic, Italy and Denmark also pledged support for
the US

This caused France and Germany to propose the idea of a

‘core Europe’ which could, by embracing European values,
provide an alternative model for acting in the world
 Old Europe versus New Europe
In the short-term however, it led to the idea that Europe was
divided between ‘old’ and ‘new’ Europe

‘Old’ Europe was associated with France and Germany and

opposition to the war

‘New’ Europe was more pro-American and pro-invasion

US Secretary of State, Donald Rumsfeld said, ‘if you look at

vast numbers of other countries in Europe, they’re not with
France and Germany … they’re with the US’
 Are Americans from Mars and
Europeans from Venus?
European values: American values:

– secularization – free enterprise

– trust in the state – laissez faire ideology
– social solidarity – limited role of government
– welfare state – social inequality (American
– desire for multilateral dream)
world order based – role of military
international law
– human rights
(Pieterse, 2003)
(Habermas and Derrida,
2003)
 Living in different worlds

According to Beck (2007: 47), ‘Europeans

and North Americans are living in different
worlds. The way it looks to the Americans,
the Europeans are suffering from a form of
hysteria in relation to the environment,
[climate change] while, to many
Europeans, US Americans are paralysed
by an exaggerated fear of terrorism’
 American exceptionalism?
The USA alone represents approximately a third of the world
military spending (Heisbourg, quoted in Pieterse, 2003: 76)

The USA ranks first in the number of incarcerations among

nations … and stands alone among wealthy countries in its
extensive use of the death sentence (Pieterse, 2003: 76)

The USA transfers around 0.1% of GNP to developing

countries annually (UN target is 0.7%) (Pieterse, 2003: 86) …
of which a third goes to Israel, and a fifth to Egypt
 The US and global governance
According to Pieterse (2003: 87-90):

– USA treats the UN as a rival for world

leadership
– The UN is perceived as un-American in that it
follows a different conception of world order
– ‘global governance’ is a non-starter in
conservative American circles
 Concluding comments
The relationship between Americanization and
globalization is far from straightforward

The US drives globalization in many ways

(e.g. Washington consensus, cultural exports)

But the US is also out of step in other

respects (unilateralism, human rights)

The same processes of globalization that act

on the rest of the world also act on the US
 References
Beck, U. 2007: ‘Reinventing Europe – a cosmopolitan vision’ in C.
Rumford (ed) Cosmopolitanism and Europe (Liverpool University Press)

Cohen, R. and Kennedy, P. 2000: Global Sociology (Palgrave)

Habermas, J. andDerrida, J. 2003: ‘February 15, or, what binds European
together’ in D. Levy, M. Pensky and J. Torpey (eds), Old Europe, New
Europe, Core Europe: Transatlantic Relations after the Iraq War (Verso)

Pieterse, J. 2003: ‘Hyperpower exceptionalism: globalization the American

way’ in Beck, Sznaider and Winter (eds) Global America?: The Cultural
Consequences of Globalization (Liverpool University Press)

(cont.)
 References (cont.)

Ritzer, G. 1996: The McDonaldization of Society. (Pine Forge

Press)

Ritzer, G. and Stillman, T. 2003: ‘Assessing McDonaldization,

Americanization and globalization’ in Beck, Sznaider and Winter
(eds) Global America?: The Cultural Consequences of Globalization
(Liverpool University Press)

Robertson, R. 2003: ‘Rethinking Americanization’ in Beck, Sznaider

and Winter (eds) Global America?: The Cultural Consequences of
Globalization (Liverpool University Press)
• We’re hoping from this presentation you
will:
– Learn a bit about the history of McDonald’s.
– Understand just how much international
expansion McDonald’s is partaking in.
– Criticism/Opposition to McDonald’s
– SWOT Analysis
– Few small legal cases involving McDonald’s
– McDonald’s in India and China
• Infrastructure
• Politics
• Began in 1940
• Located in 122 Countries
• 51 million people are served a day at
30,000 different locations
• Independent local business people own and
operate more than 70% of McDonald’s globally
• In 2004, Morgan Spurlock came out with a
documentary titled Super Size Me that looked
at the fast food corporation as a contributor to
obesity
• In about 30 markets outside the U.S.,
McDonald’s restaurants are operated by
developmental licensees who own the
business and pay McDonald’s royalties based
on a percentage of sales.
• Began by two brothers:
– Dick McDonald
– Mac McDonald
• Started off as a hot dog stand in CA [1937]
• Hot Dog stand moves to Rt.66 and becomes a
Hamburger Joint.
– Offers 25 menu items
1st
– Becomes car hop McDonald’s
– Highly profitable teen hang Hamburger
out Cost $.15
• Brothers realize Burgers were most
profitable
• Close down restaurant and reopen as a
“Speedy Service System”
– Offer only burgers, shakes, and fries
• McDonald’s is franchised to several locations[1953]
– First McDonald’s to feature the Golden Arches
A McDonald’s in
• Ray Kroc discovers McDonald’s [1954] Downey, CA is the
oldest operating
– Creates “McDonald’s System’s Inc” to start McDonald’s today
[opened in 1953]
franchising [1955]
– Renamed to “McDonald’s Corporation” [1960]
• In 1967 the first McDonald’s outside of the US opens up
– Richmond, British Columbia
• Big Mac and Apple Pie introduced [1968]
• 1971 McDonalds really starts going global
» Asian: Tokyo Ginza District, Japan
» European: Netherland, Munich, Germany
• 1974 – McDonald’s Starts the Ronald McDonald House Charities as
a non-profit organization to improve the health and well being of
children. In 1985 the first RMHC opened internationally in the
Netherlands.

McDonald’s in
Germany
offered Beer as
a part of their
menu
• 1967 - Canada & Puerto Rico (first restaurants outside the U.S.)
• 1971 - Tokyo, Japan, Amsterdam, Netherlands & Sydney, Australia
• 1979 - Rio de Janeiro, Brazil
• 1990 - Moscow, Russia & China
– The Chinese characters "Mai Dang Lao" are used to phonetically
approximate the word "McDonald's“.
• 1992 - Casablanca, Morocco & Czech Republic
• 1993 - The first McDonald's at sea opens aboard the Silja Europa,
the world's largest ferry sailing between Stockholm and Helsinki.
• 1994 - Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman,
New Caledonia, Trinidad and United Arab Emirates.
• 1996 - First restaurant opens in India.
– 50-50 joint venture partnership between McDonald’s Corporation (USA) and two
Indian businessmen.
– Two separate operations in Northern & Western India.
– Partners and their management teams trained extensively in Indonesia & the
U.S.
• India: Sandwich sauces, shakes and soft-serve products
do not contain eggs in order to offer more variety to
vegetarian customers.
• Uruguay: McHuevo (hamburger with a poached egg on
top)
• Norway: McLaks (grilled salmon sandwich
with dill sauce)
• Germany: Beer
• Thailand: Samurai Pork Burger (sausage patty in teriyaki
sauce)
• Taiwan: Rice Burger
• U.S. fast food market showed signs of
saturation by early 1980’s after 3 decades of
rapid growth.
• Foreign revenues and profit have grown 22%
annually since early 1980’s.
• By end of 2000, the foreign restaurants
generated $21B (53%) of the corporation’s
$40B in revenues.
• Foreign markets are sources of valuable new
ideas.
• Dutch
– Prefabricated modular restaurants
(temporary & easily moved)
– Widely used for big outdoor events
• Sweden
– Enhanced meat freezer now used throughout entire firm
• Singapore
– Small, limited menu satellite restaurants (low overhead)
– Now in hospitals and sports arenas in the U.S.
• Expansion rate slowed in the last few years due to declining operating
margins and focus on improving existing restaurants and menu
offerings.
• International expansion was led by late CEO, Jim Cantalupo, who
passed away of a heart attack in April 2004, age 60.
• By the late 1990‘s, McDonald’s aggressive expansion resulted in
cannibalization of its own sales because stores were built too close to
each other.
• In 2003,the focus changed from adding new restaurants to
building sales at existing restaurants.
– Struggling European and South Korean restaurants
• U.K. - public concerns over unhealthy menu items
• Germany & South Korea - adverse economic conditions
– Between 2003 and 2004, underperforming restaurants were
closed in the U.S., Japan, Latin America and Jamaica.
– SARS concerns had a negative impact on sales in 2003 in many
Asian countries. Jim Cantalupo
• McDonald's has most certainly had a profound effect on
China.
• When the first McDonald's opened in Beijing more than a
dozen years ago, 40,000 people lined up to observe a
Big Mac and get their picture taken with the infamous
Ronald McDonald.
• McDonald's is growing faster in China than in the United
States.
• McDonald’s owns & operates more than
600 stores across 105 cities in China.
• More than 100 more McDonald's stores
will be added annually to Chinese cities
within the coming years.
• While offering the basic burger and fries,
McDonald’s in China also offers:
– Szechuan-style spicy chicken wings
– Seafood Soup
– Rice
– Oriental Sauces
– Taro and Red Bean Dessert

Red Bean Dessert

• In 1992, McDonald’s opened its first restaurant in Beijing
and the restaurant enjoyed good sales.
• 2 years into the 20-year lease, the city government told
McDonald’s to move the restaurant.
• The location would be used for another complex planned
by a developer from Hong Kong.
• McDonald’s tried to enforce its contract by taking the
government to court, but it lost the case.
• In the West, contract law governs business transactions.
• In China, personal power and relationships/connections
determine how business is conducted.
• Guanxi literally means relationships
• Concept is deeply rooted in Chinese culture (based on
2000-year-old Confucian ideology).
• Guanxi is crucial for building long-term relationships and
doing business in China.
• McDonald’s did not have the same connections as the
Chinese developer.
• By not accepting the government’s
decision gracefully and taking it to
court, McDonald’s damaged its
reputation with the city government

Chinese Symbol for Guanxi

• In 1997 China passes first franchise law.
Prior to this, all McDonald’s restaurants
were corporately owned and operated.
• Demand for western style conveniences is
increasing as China’s middle class grows.
– Drive-through fast food windows In December 2005,
China got it’s first
drive thru in the heart
of the central
business district of
Dongguan
Guangdong
Province, thirty
years after the first
McDonald’s US drive
thru was established
 •Limited menu, fresh food, fast service
and affordable prices have been the
pillars behind McDonald’s success in
India. Intense competition and demands
for a wider menu, drive-through and sit-
down meals - encouraged the fast food
giant to customize product variety
without hindering the efficacy of its
supply chain
McDonald’s in India offers
home delivery. Also if you
•While there are some 150-200 go to a McDonald’s
million middle-class people in restaurant and order food,
India that can afford McDonald’s you take a seat and they
bring it to your table.
there is also a vast majority of the
Indian population that is still too
poor to afford it
• For thousands of years, India's Hindu culture has
revered the cow and does not eat the meat of the
scared cow. In addition there are some 140 million
Muslims in India, who do not eat pork.

• To respect and adapt to Indian culture,

McDonald's created an Indian version
of burgers which are made from mutton and
chicken. All foods are segregated vegetarian and
non-vegetarian, due to the fact that many Hindus
are vegetarians.
• Vegetarian Menu
– Veg McCurry
– McAloo Tikki
– McVeggie
– Pizza McPuff
– Crispy Chinese
– Paneer Salsa Wrap
• Non-Vegetarian Menu
– Chicken Maharaja Mac
– McChicken
– Filet-O-Fish
– Chicken Mexican Wrap
– Chicken McGrill
– Chicken McCurry Pan
“McDonald’s strategy of positioning itself as a family restaurant with
an emphasis on local menus and local values seems to be
working well in India. But to what extent McDonald’s can
continue its growth in India remains uncertain. McDonald’s is
more than just another American fast food chain. It carries a
symbolic load of Americanness—American variant of capitalism
and its overwhelming domination over the global economy. It is
also a symbol of American cultural imperialism. For this reason,
McDonald’s operations in India, like other parts of the world, will
continue to face opposition from religious fundamentalists,
environmentalists, protectionists, animal rights activists, and anti-
globalization protestors. “

Quoted from:
http://www.thunderbird.e
• New menu items specifically for
vegetarians are introduced.
• It is made aware that the food is produced
locally to show investment in Indian
Infrastructure.
• McDonald’s developed and maintains
community parks to prevent public
resentment.
• Unique supply chain created:
• Operates best when chain is balanced
• Necessary to maintain food freshness

McDonald’s
transferred its
food processing
centers to India to
increase
efficiency
• In Mumbai, there is an event called
McDonald’s Spotlight. This is an annual
interschool performing arts competition.
This competition is open to all secondary
school students.
• Since 2002, McDonald’s has participated
in World Children’s Day. On this day,
McDonald’s raises money for any charity
of their choice. [Usually educational
programs]
• Sociologist George Ritzer, author of “The McDonaldization of
Society”, states that McDonaldization is a transformation of
rationalization, moving away from traditional to rational modes
of thought, and scientific management.
• Ritzer has highlighted 4 major concepts of McDonaldization:
– Efficiency - the optimal method for accomplishing a task
– Calculability - objective should be quantifiable (i.e. sales)
rather than subjective (i.e. taste)

– Predictability - standardized and uniform services

– Control - standardized and uniform employees
• These concepts have led to the stability and expansion
of McDonald’s in the overseas market, especially in East
Asia, where more and more McDonald’s franchises are
opening constantly, leading to the belief that maybe one
day every restaurant will be taken over by McDonald’s
itself.
• McDonald’s franchises in various countries also offer a
variety of meals to better help customers in choosing
food that is best accustomed to people’s beliefs.
• For example, various faiths don’t permit people eating pork or
beef. The substituting of an existing meal with an alternative
food can lead to the creation of new menu items, therefore,
keeping the volume of customers high at all times as long as the
expectations of customers are met with the outcome of higher
revenues.
• Declining market share
• Weak product development
• Disgruntled franchisees
• Quality and taste of products
• Slowed revenue and income growth
• McJobs Program:
– McDonald’s is one of the top 25 companies that has
focused in hiring people with disabilities, giving them a
chance to make a living like everyone else, leading to the
creation of the McJobs Program.
– Looking to employ disabled people is what McDonald’s
focuses on because, according to John Yeh, “employment
of persons with disabilities is a win-win situation for
employers, persons with disabilities, and service
providers.”
– Considered the best employer for Asians
• McDonald’s worldwide willingly hires people constantly in
order to supplement the growing need of employees for its
growing franchise in over 101 countries.
• The American fast-food market has become
increasingly competitive as rivals such as Burger
King, Wendy's and Taco Bell fight to maintain their
market share.
• Strength of competition
• More health-conscious consumers
• Changing demographics
• Fluctuation of foreign exchange rates; Economies
• Focus on already existing operations
before continuing expansion in order to
increase their profit margin.
• Continue focusing on expanding in India
and China because they are both
developing countries with increasing
economies and high populations.
• Add more menu choice and variety to
promote healthier lifestyles.
• Today, the company operates more than 30,000 restaurants in
approximately 120 countries on five continents
• Since its founding in 1955, McDonald’s has sold well over 100 billion
hamburgers
• McDonald’s prepares more than 6.8 million pounds of French fries every
day
• Advertisting Age named McDonald’s marketer of the
year for 2004
• Ranked 5th for Social Responsibility by Fortune
magazine
• All franchisees are independent, full-time operators
• Approximately 70% of McDonald’s restaurant
businesses world-wide are owned and operated by
franchisees
• Often blamed for Obesity
• Blamed for excessive packaging waste
• Anti-Globalization protests
• Seen as American symbol of economical
resource dominance
• Exploitative advertising
• Suffering and exploitation of livestock
• High calorie foods
• “In 1994, McDonald's successfully forced Elizabeth McCaughey of the San
Francisco Bay Area to change the trading name of her coffeeshop McCoffee,
which had operated under that name for 17 years.
• In 1994, McDonald's sued a restaurant in Kingston, Jamaica, because of
trademark infringement, although it had opened in 1971, before McDonald's
entered the Jamaican market.
• In 1996, McDonald's lost a legal battle at the Danish Supreme Court to force
Allan Pedersen, a mincemeat sandwich vendor, to drop his shop name McAllan.
• In 1996, McDonald’s forced Scottish sandwich shop owner Mary Blair of Fenny
Stratford, Buckinghamshire to drop McMunchies as her trading name.
• In 2001, McDonald's lost a 9-year legal action against Frank Yuen of McChina
Wok Away, Chinese takeway outlets in various part of the UK.
• In South Africa, however, McDonald's had to battle against the country's
trademark laws, which stated that a registered trademark had to be used within
a certain period of time. This resulted in a local company announcing plans to
launch its own fast-food chain using the McDonald's name, although the South
African High Court eventually ruled in McDonald's favor. “

wikipedia.com
• In 2005 McDonald’s had some opposition
when they decided to name one of their
burgers in Africa the “McAfrika”
– Believed to have a negative connotation
– Improper to the starving people of Africa

“"It's inappropriate and

distasteful to launch a
hamburger called
“McAfrika' when large
portions of southern
Africa are on the verge of
starvation"
• To extend the shelf life of carrots that
come with a happy meal, McDonald’s was
dipping their carrots in hydrogen peroxide
and mixing it with acetic acids
• It is said by some that this is not
necessarily unhealthy, but still, would you
want to be eating hydrogen
peroxide?
• In 2001 McDonald’s was sued by three
vegetarians, including two Hindus,
claiming that McDonald’s used beef fat in
the oil to make their fries despite
McDonald’s claim that it was using 100%
vegetable oil.
• In 2002, McDonald’s conceded by offering
$10 million in compensation to the
plaintiffs and offered an apology for
misleading the public about the
ingredients used for their fries and hash
browns.
• According to Fast Food Nation by Eric
Schlosser (2001), nearly one in eight
workers in the US
has at some time been employed by
McDonald's. The book also
states that McDonald’s is the
largest private operator of playgrounds
in the U.S., as well as the
single largest purchaser of
beef, pork, and potatoes.
• www.mcdonalds.com
• www.mcdonaldsindia.com
• http://en.wikipedia.org/wiki/Mcdonalds
• http://www.cbsnews.com/stories/2002/06/05/national/main511109.shtml
• http://www.mcspotlight.org/media/press/mcds/aftenposten180405.html
• http://www.mcspotlight.org/media/press/mcds/dailymail150304.html
• http://www.ithaca.edu/ithacan/articles/0311/13/opinion/1dont_blame_.htm
• http://www.ntac.hawaii.edu/products/Vol4%20Emp.Briefs/EB-Vol4-Iss07-
Employer
• http://en.wikipedia.org/wiki/McDonaldization
• http://www.mcdonaldsindia.com/aboutus/supplychain/index.html
• http://www.rajluhar.com/raj/finalproject.htm
• http://www.franchisetochina.com/f13.htm
• www.licenseenews.com
• “McDonald’s Everywhere” Management Focus Article
• Hill, Charles (2005). Global Today. McGraw Hill College, NY. p.90-92
 Economics

Media and
Technologies
communication

Globalization

Culture Democracy and

politics
Measuring Globalization and its
Consequences
Axel Dreher

Globalisation and the Labour Market, Department for Business

Enterprise and Regulatory Reform, December 13, 2007
 Structure

• Measuring Globalization: the KOF index

– Concept, measurement, results
• Globalization and inequality
– Hypotheses
– Data and Method
– Results
• The impact of globalization on policy and
performance
• Policy implications
 Measurement of “ Globalization”

• Trade Openness
• FDI
• Capital Account Restrictions
• Barriers to Trade

 Only Economic Globalization

 Drawbacks of previous attempts to measure
globalization

– Most studies focus on economic dimension only

Exception: A.T. Kearny/ Foreign Policy Magazine
– Ad hoc determinants of weights
– Trade/Capital restrictions missing
– Lack of time dimension/comparability
 Definition of Globalization

“ Globalization” includes social, political as well as

economic factors. It may be defined as the
intensification of cross-national economic, political,
cultural, social and technological interactions that lead to
the establishment of trans-national structures and the
integration of economic, political and social processes
on a global scale.
(Dreher, Gaston, Martens 2008)
 Definition of Globalization
– economic globalization, characterized as long
distance flows of goods, capital and services as
well as information and perceptions that
accompany market exchanges
– social globalization, expressed as the spread of
ideas, information, images, and people
– political globalization, characterized by a
diffusion of government policies
 KOF-Index
– Broad focus
– Much wider sample
– Weights determined by objective statistical method
– Trade/Capital restrictions included
– Comparability over time
 Calculation of the KOF-Index
– Variables transformed on 1-100 scale, where higher
values represent more globalization
– Weights determined by PCA (panel normalization)
– Missing values linearly interpolated
– Overall Index reported as missing if more than 1/3 of its
data (weight) is missing
– Results in data for 122 countries, 1970-2004
 2007 Index of Globalization
A. Economic Globalization [36%]
i) Actual Flows (50%)
Trade (percent of GDP) (16%)
Foreign Direct Investment, flows (percent of GDP) (21%)
Foreign Direct Investment, stocks (percent of GDP) (23%)
Portfolio Investment (percent of GDP) (19%)
Income Payments to Foreign Nationals (percent of GDP) (22%)
ii) Restrictions (50%)
Hidden Import Barriers (24%)
Mean Tariff Rate (28%)
Taxes on International Trade (percent of current revenue) (28%)
Capital Account Restrictions (20%)
 2007 Index of Globalization
B. Social Globalization [38%]
i) Data on Personal Contact (29%)
Outgoing Telephone Traffic (14%)
Transfers (percent of GDP) (8%)
International Tourism (27%)
Foreign Population (percent of total population) (25%)
International letters (per capita) (27%)

ii) Data on Information Flows (35%)

Internet Hosts (per 1000 people) (20%)
Internet Users (per 1000 people) (24%)
Cable Television (per 1000 people) (20%)
Trade in Newspapers (percent of GDP) (14%)
Radios (per 1000 people) (23%)

iii) Data on Cultural Proximity (37%)

Number of McDonald's Restaurants (per capita) (40%)
Number of Ikea (per capita) (40%)
Trade in books (percent of GDP) (20%)
 2007 Index of Globalization
C. Political Globalization [26%]
Embassies in Country (35%)
Membership in International Organizations (36%)
Participation in U.N. Security Council Missions (29%)
1. Luxembourg
2007
98.49
Economic
21. Spain
index of Globalization
82.36 90. Madagascar 45.90
2. Singapore 95.14 22. Switzerland 82.02 91. Fiji 45.82
3. Ireland 94.88 23. New Zealand 81.21 92. Zimbabwe 44.96
4. Belgium 92.33 24. Italy 79.17 93. Egypt, Arab Rep. 44.53
5. Estonia 92.05 25. Latvia 78.65 94. Cote d'Ivoire 44.00
6. Netherlands 90.18 26. Panama 78.38 95. Algeria 43.92
7. Austria 88.65 27. Australia 77.89 96. Kenya 43.53
8. Sweden 88.52 28. Lithuania 77.29 97. Pakistan 42.30
9. Portugal 86.81 29. Cyprus 77.28 98. Cameroon 42.05
10. United Kingdom 86.12 30. Denmark 77.04 99. Morocco 41.57
11. Bahrain 85.21 31. Slovenia 76.08 100. Haiti 41.51
12. Finland 84.62 32. Trinidad and Tobago 75.58 101. Mauritius 40.36
13. Czech Republic 84.46 33. Jamaica 75.02 102. Benin 40.22
14. Hungary 84.34 34. Croatia 74.82 103. Senegal 39.93
15. Chile 83.97 35. Malaysia 74.70 104. Rwanda 37.71
16. France 83.95 36. Greece 74.09 105. India 36.17
17. Malta 83.41 37. Poland 73.64 106. Burundi 31.92
18. Canada 83.09 38. Botswana 73.43 107. Niger 30.80
19. Israel 83.07 39. United States 73.00 108. Bangladesh 29.52
20. Iceland 82.54 40. Germany 72.58 109. Iran, Islamic Rep. 25.34
1. Austria
2007
93.10
Social index of
21. Slovak Republic
Globalization
79.17 103. Albania 31.94
2. Singapore 92.49 22. Portugal 77.86 104. Guinea-Bissau 31.52
3. Belgium 90.66 23. United States 77.82 105. Rwanda 31.23
4. Netherlands 89.98 24. Ireland 77.65 106. Syrian Arab Republic 30.07
5. Denmark 88.92 25. Hungary 77.65 107. Cameroon 29.36
6. Sweden 88.52 26. Spain 77.59 108. Nigeria 29.20
7. Switzerland 88.43 27. M alta 76.22 109. M adagascar 29.01
8. United Kingdom 87.88 28. Poland 74.92 110. Burundi 28.96
9. United Arab Emirates 86.91 29. Estonia 73.75 111. Chad 28.94
10. Canada 86.64 30. Italy 73.16 112. Central African Republic 28.46
11. Czech Republic 85.52 31. New Zealand 73.13 113. Nepal 28.20
12. Iceland 84.98 32. Bahamas, The 71.92 114. Sierra Leone 26.74
13. Norway 84.64 33. Slovenia 71.78 115. Algeria 26.52
14. France 84.22 34. Saudi Arabia 71.33 116. Iran, Islamic Rep. 25.00
15. Finland 83.91 35. Cyprus 70.39 117. Congo, Dem. Rep. 24.92
16. Germany 83.56 36. M alaysia 70.36 118. Niger 24.19
17. Australia 82.78 37. Greece 70.04 119. M ali 23.91
18. Kuwait 79.75 38. Latvia 69.51 120. Haiti 21.83
19. Luxembourg 79.29 39. Russian Federation 66.23 121. Bangladesh 18.63
20. Israel 79.28 40. Croatia 65.15 122. M yanmar 10.24
1. France
2007
98.06
Political
21. Finland
index86.51
of Globalization
103. Panama 28.50
2. United States 96.11 22. Brazil 86.41 104. Nicaragua 28.15
3. Russian Federation 96.04 23. Korea, Rep. 86.27 105. Latvia 26.43
4. United Kingdom 95.76 24. Switzerland 86.13 106. Bahrain 26.28
5. Canada 94.85 25. Nigeria 85.79 107. Oman 23.41
6. Germany 94.61 26. Portugal 85.50 108. Trinidad and Tobago 22.50
7. Sweden 93.82 27. Malaysia 85.39 109. Iceland 21.90
8. Italy 93.55 28. Pakistan 85.12 110. Haiti 20.71
9. Austria 93.51 29. Romania 83.57 111. Congo, Rep. 20.71
10. Belgium 93.37 30. Greece 83.32 112. Guyana 20.11
11. China 92.06 31. Czech Republic 82.90 113. Malta 18.26
12. Egypt, Arab Rep. 91.81 32. Australia 82.35 114. Myanmar 18.06
13. India 90.24 33. South Africa 82.12 115. Papua New Guinea 17.86
14. Spain 89.99 34. Hungary 81.88 116. Botswana 17.11
15. Poland 89.41 35. Jordan 79.37 117. Central African Republic 16.08
16. Denmark 87.47 36. Morocco 77.88 118. Belize 14.68
17. Argentina 87.47 37. Indonesia 77.48 119. Rwanda 14.60
18. Japan 87.37 38. Norway 77.19 120. Barbados 13.96
19. Turkey 86.72 39. Ukraine 76.97 121. Burundi 12.50
20. Netherlands 86.51 40. Kenya 75.90 122. Bahamas, The 11.44
1. Belgium
2007 21.KOF
91.96 Poland
index of78.22Globalization
103. Benin 41.73
2. Austria 91.60 22. Norway 77.75 104. Papua New Guinea 41.55
3. Sweden 89.89 23. Malaysia 75.81 105. Cameroon 41.32
4. United Kingdom 89.29 24. Greece 74.94 106. Guinea-Bissau 40.68
5. Netherlands 89.15 25. Luxembourg 74.18 107. Zimbabwe 40.06
6. France 87.71 26. New Zealand 73.46 108. Chad 39.56
7. Canada 87.49 27. Slovak Republic 72.58 109. Syrian Arab Republic 39.09
8. Switzerland 85.53 28. Estonia 72.11 110. Congo, Rep. 38.78
9. Finland 84.84 29. Israel 70.83 111. Madagascar 37.45
10. Czech Republic 84.46 30. United Arab Emirates 70.39 112. Bangladesh 36.01
11. Denmark 84.27 31. Russian Federation 69.91 113. Congo, Dem. Rep. 35.49
12. Ireland 83.09 32. Chile 69.91 114. Nepal 35.27
13. Portugal 83.06 33. Croatia 69.30 115. Iran, Islamic Rep. 35.19
14. Spain 82.52 34. Slovenia 68.82 116. Niger 34.28
15. Germany 82.48 35. Iceland 67.75 117. Sierra Leone 33.27
16. Singapore 82.14 36. Bulgaria 65.51 118. Rwanda 29.25
17. Hungary 81.15 37. China 65.26 119. Haiti 28.61
18. Australia 80.91 38. Korea, Rep. 64.82 120. Myanmar 27.29
19. United States 80.83 39. Jordan 64.74 121. Central African Republic 26.79
20. Italy 80.61 40. Japan 64.22 122. Burundi 25.75
 2007 KOF index, world average
KOF Index of Globalization 2007

40 45 50 55 60 65
60

Economic Globalization (2007)

30 40 50

1970 1975 1980 1985 1990 1995 2000 2005 1970 1975 1980 1985 1990 1995 2000 2005
year year

60
60

Political Globalization (2007)

Social Globalization (2007)
50

50
40

40
20 30

30

1970 1975 1980 1985 1990 1995 2000 2005 1970 1975 1980 1985 1990 1995 2000 2005
year year
 Index of Globalization by regions
East Asia & Pacific East Europe & Central Asia Latin America & Caribbean

80
80

80
50
50

50
2007 KOF Index of Globalization

20
20

20
1970 2004 1970 2004 1970 2004

Middle East & North Africa 80 South Asia Sub-Saharan Africa

80

80
50
50

50
20
20

20
1970 2004 1970 2004 1970 2004

Western Europe and Industrialized

80
50
20

1970 2004
Year
 Index of Globalization by income
High income: OECD High income: nonOECD Low income

80

80
80
2007 KOF Index of Globalization

50

50
50

20
20

20
1970 2004 1970 2004 1970 2004

Lower middle income Upper middle income

80
80

50
50

20
20

1970 2004 1970 2004

Year
 Index of Globalization, UK
KOF Index of Globalization 2008

Economic Globalization (2008)

90

80 90
80

70
70

60
60

50
1970 1975 1980 1985 1990 1995 2000 2005 1970 1975 1980 1985 1990 1995 2000 2005
year year

100
40 50 60 70 80 90

Political Globalization (2008)

Social Globalization (2008)

80 85 90 95

1970 1975 1980 1985 1990 1995 2000 2005 1970 1975 1980 1985 1990 1995 2000 2005
year year
 Application:
Has globalisation increased inequality?

• Dreher and Gaston, Does globalisation increase

inequality? Forthcoming, Review of International
Economics.
 Trade and labour markets

• Rising inequality has coincided with the “second

wave” of globalisation
– Trade liberalisation has progressed;
concerns about imports from LDCs have
been prominent. Stolper-Samuelson?
– FDI increases demand for skilled labour in
developed and less-developed economies
– A few authors have found significant labour
market effects attributable to increasing
import penetration
• Rodrik (1997) argues that if liberalising trade is
 McDonaldization of the global economy?

• Kuznets (1955) argued that industrialisation should

witness an eventual declines in inequality. The
“inverted-U” hypothesis
• Political and social integration are also important for
income inequality
– Atkinson (1997): Social norms are very important!
– Moreover, trade liberalising policies often bundled with
privatisation and deregulation measures as well as changes to
social policies (Lindert and Williamson, 1991)
– Globalisation is sometimes equated with “Americanisation”
– Political globalisation
• A race-to-the-bottom (or a race-to-the-top)?
 Hypotheses
Predicted effects of globalisation on inequality

Dimension of globalisation OECD LDC’s All

Economic + +/- ?

Political +/- +/- ?

Social +/? ? ?

Overall +? ? ?

Key: Theory predicts: +/-/? = positive/negative/unknown effect.

 Towards an empirical Model
– Up to 100 countries; 5 year averages, 1970-2000
– yit = α + βyit −1 + γ ' Git + η' X it + ηi + η t + ε it
– Dependent variables:
• Industrial Wage Inequality measured by Theil’ s T-statistic (UTIP)
• Household Income Inequality measured by Gini coefficient
(Francois and Rojas-Romagosa, 2005)
– Explanatory variables: Lagged endogenous variable;
Democracy Index; GDP per capita (and its square); Age-
dependency ratio; Population growth; Government
consumption
 (log) wage inequality over time
-3
-3.1
log (wage inequality)
-3.2
-3.3
-3.4
-3.5

1975 1980 1985 1990 1995 2000

year
 (log) income inequality over time
3.75
log (Gini coefficient)
3.7
3.65
3.6

1975 1980 1985 1990 1995 2000

year
 Results for overall index, OLS
wage income wage income wage income
all all OECD OECD Non-OECD Non-OECD
Globalisation, index 0.162 0.043 0.256 0.028 0.110 0.047
(2.01**) (3.40)*** (2.57**) (2.11)** (0.96) (2.57)**
Democracy, index 0.039 0.006 0.087 0.005 0.021 0.005
(2.66***) (2.48)** (2.74***) (1.24) (1.44) (1.62)
GDP per capita -9.83E-05 -1.61E-05 -4.51E-05 -1.12E-05 -2.49E-04 -5.04E-05
(2.53**) (3.40)*** (0.67) (1.60) (3.89***) (4.50)***
GDP per capita (squared) 2.18E-09 3.75E-10 1.08E-09 1.53e-10 6.39E-09 1.36e-09
(2.97***) (4.01)*** (1.06) (1.29) (3.26***) (4.37)***
Lagged dependent 0.202 0.192 0.505 0.628 0.178 0.079
(2.50**) (2.52)** (3.30***) (5.26)*** (1.98**) (1.05)

Number of countries 100 100 27 26 73 74

Number of observations 411 351 129 113 282 238
Period dummies (Prob > F) 0.02 0.00 0.18 0.00 0.00 0.00
Country dummies (Prob > F) 0.00 0.00 0.00 0.00 0.00 0.00
R squared (within) 0.32 0.93 0.55 0.93 0.31 0.89
 Results for overall index, GMM
wage income wage income wage income
all all OECD OECD Non-OECD Non-OECD
Globalisation, index 0.287 0.056 0.327 0.049 0.197 0.031
(1.79)* (2.61)** (1.06) (2.83)*** (1.15) (0.94)
Democracy, index 0.007 0.000 0.051 0.006 0.008 0.000
(0.49) (0.13) (2.36)** (2.67)** (0.74) (0.10)
GDP per capita -9.58E-05 -1.68E-05 -1.35E-04 -2.08E-05 -7.34E-05 -5.58E-06
(2.19)** (2.67)*** (2.12)** (6.20)*** (1.55) (0.59)
GDP per capita (squared) 2.02E-09 3.10E-10 2.75E-09 3.90E-10 2.85E-09 1.30E-10
(2.00)** (2.35)** (2.45)** (5.90)*** (1.38) (0.37)
Lagged dependent 0.807 0.816 0.895 0.715 0.663 0.937
(4.54)*** (5.88)*** (5.50)*** (10.66)*** (3.30)*** (5.16)***
Constant -0.986 0.607 -0.691 1.003 -1.298 0.228
(1.77)* (1.10) (0.67) (3.99)*** (2.18)** (0.32)

Number of countries 100 100 27 26 73 74

Number of observations 380 342 120 111 260 231
Period dummies (Prob > F) 0.00 0.02 0.00 0.00 0.02 0.01
Hansen test (prob>chi2) 0.40 0.18 0.26 0.92 0.66 0.53
Arellano Bond test (pr>z) 0.18 0.75 0.15 0.61 0.08 0.87
 Results for sub-indices, OLSwage income wage income wage income
all all OECD OECD Non-OECD Non-OECD
Economic globalisation, index 0.084 0.018 0.179 0.020 0.058 0.016
(2.05**) (2.57)** (1.93*) (1.46) (1.26) (1.98)**
Social globalisation, index -0.004 0.011 0.096 0.007 -0.204 0.010
(0.08) (1.32) (1.95*) (1.15) (1.58) (0.49)
Political globalisation, index 0.053 0.012 0.071 0.008 0.041 0.014
(1.66*) (2.69)*** (1.94*) (1.76)* (0.78) (2.11)**
Democracy, index 0.037 0.006 0.078 0.003 0.019 0.005
(2.53**) (2.48)** (2.20**) (0.77) (1.32) (1.73)*
GDP per capita -8.90E-05 -1.55E-05 -4.54E-05 -8.88E-06 -1.68E-04 -4.84E-05
(2.14**) (3.00)*** (0.70) (1.26) (2.03**) (3.87)***
GDP per capita (squared) 2.11E-09 3.80E-10 1.10E-09 1.10E-10 4.66E-09 1.32E-09
(2.63***) (3.58)*** (1.05) (0.90) (2.13**) (3.87)***
Lagged dependent 0.206 0.197 0.520 0.650 0.174 0.083
(2.53**) (2.59)** (3.08***) (5.44)*** (1.93*) (1.09)

Number of countries 100 100 27 26 73 74

Number of observations 410 349 128 112 282 237
Period dummies (Prob > F) 0.02 0.02 0.03 0.00 0.00 0.00
Country dummies (Prob > F) 0.00 0.00 0.00 0.00 0.00 0.00
R squared (within) 0.32 0.93 0.55 0.93 0.33 0.89
 Results for sub-indices, GMM wage income wage income wage income
all all OECD OECD Non-OECD Non-OECD
Economic globalisation, index 0.039 0.007 0.128 -0.007 -0.019 -0.001
(0.49) (0.70) (1.15) (0.40) (0.23) (0.10)
Social globalisation, index 0.069 0.015 0.093 0.016 -0.140 0.007
(0.76) (1.04) (1.12) (1.91)* (0.79) (0.23)
Political globalisation, index 0.056 0.017 0.006 0.000 0.080 0.019
(1.49) (3.82)*** (0.14) (0.03) (1.64) (2.22)**
Democracy, index 0.008 0.000 0.031 0.012 0.013 0.000
(0.56) (0.25) (1.58) (2.15)** (1.04) (0.29)
GDP per capita -7.20E-05 -1.28E-05 -1.01E-04 -1.20E-05 -2.23E-05 1.26E-06
(1.49) (1.51) (2.14)** (3.42)*** (0.34) (0.10)
GDP per capita (squared) 1.42E-09 2.10E-10 1.98E-09 1.90E-10 2.55E-09 -5.00E-11
(1.38) (1.25) (2.31)** (2.24)** (0.96) (0.12)
Lagged dependent 0.737 0.799 0.823 0.562 0.612 0.916
(4.42)*** (5.26)*** (4.43)*** (4.97)*** (3.28)*** (6.97)***
Constant -0.890 0.703 -0.795 1.636 -1.053 0.275
(1.70)* (1.21) (0.88) (3.85)*** (1.52) (0.53)

Number of countries 100 100 27 26 73 74

Number of observations 379 340 119 110 260 230
Period dummies (Prob > F) 0.00 0.00 0.36 0.00 0.04 0.00
Sargan test (prob>chi2) 0.70 0.30 0.78 0.81 0.75 0.86
Arellano Bond test (pr>z) 0.23 0.59 0.16 0.52 0.10 0.75
 Is there a bottom line?
– Globalization exacerbated inequality; in
particular:
• income inequality in OECD countries
– No robust impact in less developed countries
– Not obvious which dimension of globalization
drives the result
The impact of Globalization on policy and outcomes

– Economic growth? (Dreher, 2006, Applied

Economics)
– Government policies? (Dreher, 2006, EJPE)
– Expenditure composition? (Dreher, Sturm,
Ursprung, 2007, Public Choice)
– Union density (Dreher and Gaston 2007,
Kyklos)
The impact of Globalization on
policy and outcomes

2
5
Economic Growth

Unionization
-5 0 -10

-2
-10 -5 0 5 10 -15 15
Index of Globalization Index of Globalization
2

6
Government social spending

4
Taxes on capital
1

2
0

0
-1

-2 -4
-2

-4 -2 0 2 4 -4 -2 0 2 4
Index of Globalization Index of Globalization
 Policy implications?
– Globalization not universally good or bad
• increases economic growth, but also inequality
• beneficial to the natural environment in the medium term, but
harmful in the longer run
• deunionization increases
– Seems to be positive in net terms
– But also produces losers
– Compensation possible? Transfers more difficult to
implement in practice than in theory
• First, the losers have to be identified
• Second, they have to be compensated without producing adverse
incentives to the economy as a whole
– Index is first step in helping to address the first of these
issues. The second, more pressing one, remains as one of
the most challenging research questions for social
scientists
 Globalization
Lecture 2 - Dimensions
What is it? Global capitalist
economy & diminishing
political power of nation-state
governments (Marxists &
Right-wingers)
Social relations- “stretching”
(Giddens)
Culture – a sense of “global
consciousness” (Robertson)
1) Globalization of Politics
- The end of the nation-state?

2) Globalization of Social Relations

- The stretching of social relations

3) Globalization of Culture
- Homogenization: Cultural imperialism
- Culture clashes
- Heterogenization
 Globalization of Politics
Nation-state has sovereign power:
- Treaty of Westphalia (1648)
- Draws up defined borders
- Each state controls affairs in its own
territory. SOVEREIGNTY
- Other states cannot interfere in a
state’s business

Globalization undermines sovereignty

of states i.e. undercuts power of a
state to control things in its territory

Martin Albrow: the nation-state is rapidly

losing power
Nation-state IS losing power
Economically:
1) power of TNCS
2) forces of world market
Politically:
1) International bodies and law
e.g. United Nations, European Union
2) Global protest movements e.g. Greens
Culturally:
1) Cultural influences from all over world
2) Trans-national media – public opinion
Nation-state IS NOT losing power

Hirst & Thompson:

- TNCs do not have total control of

national economies
- States still have primary control
over taxes & welfare spending
- International bodies like UN made
up of, and dependent on, nation-
states
- States developing increasing
control of borders and migration
 Globalization of Social
Relations
Giddens: “the disembedding of social
relations”

- social relations transformed from purely

local or national to more “global”

- communications technologies; travel

technologies

- dispersal of populations across globe:

migrations and diasporas
Ulrich Beck:
Trans-national social connections
- public life: trans-national business
relationships
- private life: relatives & friends in
different countries; inter-marriage
between national groups, etc.
Multiple, non-national affiliations and
identities
Cosmopolitanism: a person’s identity
is decoupled from the nation-state
 Undermining the idea of
“Society”
John Urry, Ulrich Beck, Roland
Robertson

1) Cannot use the idea of “society” any

more
2) Invented in later 19th century: Durkheim
3) Society = bounded unit; a thing
Society = nation-state
e.g. “British society”, “German society”,
etc
4) Reflects out-dated social conditions
 Undermining the idea of
“Society”
Drop idea of “society”

Use other ideas from classical sociology

Max Weber: Sociality (social relations)

Georg Simmel: Social networks
(Norbert Elias: social chains)

“Global networks”
– facilitated through electronic
communications networks
 Undermining the idea of
“Society”
Ulrich Beck: Cosmopolitan sociology
1) The main focus is not “society” but the “whole world”
2) Examine multiple, intersecting world-spanning
processes
3) Avoid West-centric outlooks

John Urry: Sociology Beyond Societies

1) Global flows
2) Social processes like liquids
3) Liquids pouring rapidly across the world
- Flows unpredictable and uncontrollable
4) Unconstrained cross-border mobility of people and
things
Zygmunt Bauman:

Free & chosen mobility for wealthy

- transnational business-people
- global tourism

Forced mobility for poor:

- migrant workers, refugees
- ever more controls on mobility of poor

Information mobility: world divides into

“information rich” and “information poor”
 Globalization of Culture
Emergence of a “global
culture”?
What might this look like?

Positive: whole world shares

same ideas and values?
World Cup, Olympic Games
Negative: local cultures
destroyed?

Cultural homogenization?
 Cultural Imperialism
Westernisation / Americanisation of
the world

Domination of American consumer

brands:
McDonalds, Nike, Coca-Cola, Gap
(“McWorld” - Benjamin Barber)

Global cultural homogenisation

- Same consumer goods everywhere
- Same ways of thinking everywhere
This is bad (left-wing critics e.g. Noam
Chomsky)
This is good (right-wing critics e.g.
Francis Fukuyama)
 Cultural Imperialism
Dominance of American mass
media

Oligopoly of big media companies:

- Disney, Warner, Sony

Imbalance of cultural flows:

from ‘core’ to ‘periphery’,
not vice versa
 Culture Clashes
Benjamin Barber – Jihad vs.
McWorld
- Local identities, nationalisms, religious
traditions
- Develop in opposition to McWorld
- McWorld creates Jihad

Samuel Huntington – Clash of

Civilizations
- European-Christian, Russian-
Christian, Arabic-Muslim, Chinese,
etc.
 Cultural heterogenization
Roland Robertson
1) People in local cultures reinterpret global culture
products in light of their own values & interests
2) Global culture is always limited by local cultures
3) Mixtures of global and local cultures:
- process of glocalization
- local becomes global; global becomes local

4) Perceived threats to local identity:

- strong assertion of local identity

Globalization reinforces local cultures

Globalization produces new “local” cultures
 Hybridization & Creolization
Anthropologists: Ulf Hannerz

1) No culture is ever ‘pure’

- Always a mixture of influences

2) Previously (relatively) separate cultures

come into contact with each other

3) Globalization = Complex mixtures of

cultures
- ‘creole cultures’, ‘hybrids’
Globalization of religion:
- other options than the “local” religion
- religious syncretism: mixing and matching
- New Age religions: bits of Christianity,
Hinduism, Buddhism, Taoism, Celtic paganism
& witchcraft, etc.

Globalization of food:
- “fusion cuisine” e.g. French-Japanese, Anglo-
Indian

Globalization of music:
- “World music”
- Buddhist-techno, Spanish rap, Hungarian rock

Relativization of one’s own cultural traditions

 Limits of Hybridization Ideas
1) Local cultures commercialised:
Sold to Westerners by media and
big business; fashion trends
2) Enforced hybridization
- Western culture imposed on non-West
- Westerners choose non-Western
cultures
3) Most people still primarily
enmeshed in local culture?
Global culture has superficial effects?
 Points to Consider
Economic Globalization: spread of global
capitalism. Effects?
Political Globalization: decline of nation-
state’s power. True?
Social Globalization: stretching of social
relations across world. Everyone,
equally?
Cultural Globalization: homogenization,
culture clashes, heterogenization.
Which?
Which is most important?