You are on page 1of 7

UNIT I: INTRODUCTION TO GLOBALIZATION 5.

The Contemporary Period (from 1970 to


present) - The creation, expansion, and
Globalization - is the process in which people, acceleration of worldwide interdependencies
ideas and goods spread throughout the world, occurred in a dramatic way and it was a kind of
spurring more interaction and integration leap in the history of globalization.
between the world's cultures, governments and
economies(1). Dimensions of Globalization:

Globalization - is a process of interaction and 1. Economic Dimension - This refers to the


integration among the people, companies, and extensive development of economic relations
governments of different nations, a process across the globe as a result of technology and
driven by international trade and investment and the enormous flow of capital that has stimulated
aided by information technology trade in both sources and goods

Historical Periods of Globalization 2. Political Dimension - This refers to an


enlargement and strengthening of political
1. The Prehistoric Period (10000 BCE-3500 interrelations across the globe.
BCE) - In this earliest phase of globalization,
contacts among hunters and gatherers – 3. Cultural Dimension - This refers to the
who were spread around the world – were increase in the amount of cultural flows across
geographically limited. In this period due to the globe. Cultural interconnections are at the
absence of advanced forms of technology, foundations of contemporary globalization
globalization was severely limited.
4. Religious Dimension - Religion is a personal
2. The Pre-modern Period (3500 BCE- 1500 CE) or institutionalized set of attitudes, beliefs, and
- In this period the invention of writing and the practices relating to or manifesting faithful
wheel were great social and technological devotion to an acknowledged ultimate reality or
boosts that moved globalization to a new level. deity.
The invention of wheel in addition to roads made
the transportation of people and goods more Justice is divided in three (3) categories:
efficient. On the other hand writing facilitated
the spread of ideas and inventions. 1. Commutative justice - This aims at fulfilling
the terms of contracts and other promises on
3. The Early Modern Period (1500-1750) - It is both personal and social level.
the period between the Enlightenment and the
Renaissance. In this period, European 2. Distributive justice - This ensures a basic
Enlightenment project tried to achieve a equity in how both the burden and the goods of
universal form of morality and law. This with the society are distributed and that ensures that
emergence of European metropolitan centers every person enjoys a basically equal moral and
and unlimited material accumulation which led legal standing apart from differences in wealth,
to the capitalist world system helped to privilege, talent and achievements
strengthen globalization.
3. Social justice - This refers to the creation of
4. The Modern Period (1750-1970) - the conditions in which the first two categories
Innovations in transportation and of justice can be realized and the common good
communication technology, population identified and defended.
explosion, and increase in migration led to more
cultural exchanges and transformation 5. Ideological Dimensions - Ideology is a
in traditional social patterns. Process of system of widely shared ideas, beliefs, norms
ndustrialization also accelerated. and values among a group of people. It is often
used to legitimize certain political interests or to
defend dominant power structures. Ideology
connects human actions with some generalized
claims.
In the 16th century world system analysts
UNIT II: THE STRUCTURES OF GLOBALIZATION identify the origin of modernity and globalization
Economic globalization - refers to the through long distance trade in the 16th century.
increasing interdependence of world economies This best known example of archaic
as a result of the growing scale of cross-border globalization is the Silk Road, which started in
trade of commodities and western China, reached the boundaries of the
Parthian empire, and continued onwards
Two Major Driving Forces for Economic towards Rome. It also connected Asia, Africa,
Globalization: and Europe.

1. The rapid growing of information in all types In the 17th and 18th century global economy
of productive activities exists only in trade and exchange rather than
production as the world export to World GDP
2. Marketization (A restructuring process that did not reached 1 to 2 percent
enables state enterprises to operate as market-
oriented firms by changing the legal In the 19th century the advent of globalization
environment in whichthey operate and can be approaching its modern form is
achieved through reduction of state subsidies, witnessed. A short period before World War I is
organizational restructuring of management referred to as golden age of globalization
such as corporatization,decentralization, and characterized by relative peace, free trade,
privatization. financial and economic stability. Growth in
international exchange of goods accelerated in
Dimensions of Economic Globalization the second quarter of the 19th century. Global
economy in the 19th and 20th centuries grew
1. The globalization of trade of goods and by an average of nearly 4 percent per annum,
services which is roughly twice as high as growth in the
national incomes of the developed economies
2. The globalization of financial and capital since the late 19th century.
markets
International Monetary Systems and Gold
3. The globalization of technology and Standard
communication
International monetary system (IMS) - refers to
4. The globalization of production a system that forms rules and standards for
facilitating international trade among the
Difference between Economic nations. It helps in reallocating the capital and
Globalization from Internationalization: investment from one nation to another. It is the
global network of the government and financial
Economic globalization is a functional institutions that determine the exchange rate of
integration between internationally dispersed different currencies for international trade.
activities which means that it is a qualitative
transformation rather than a quantitative change Evolution of the International Monetary System
while internationalization is an extension of
economic activities between internationally Gold Standard (1870-1971) - with the help of
dispersed activities. gold and silver, trade was carried without any
institutional support. Monetary system during
Origin of Economic Globalization that time was decentralized while market
based and money played a minor role in
Economic globalization is a process that international trade in contrast to gold
creates an organic system of the world
economy.
Bretton Woods System (1971) – the aim of International trade- is the exchange of goods,
which is to create a stabilized international services and capital across national borders. It
currency system and ensure a monetary is a multi-million dollar activity, central to the
stability for all the nations. Gross Domestic Product (GDP) of many
countries, and it is the only way for many people
Flexible Exchage Rate Regime (Today) in many countries to acquire resources

European Monetary Integration Trade policies on the other hand refer to the
regulations and agreement of foreign countries.
European monetary integration refers to a 30- It defines standards, goals, rules, and
year long process that began at the end of the regulations that pertain to trade relation
1960s as a form of monetary cooperation between countries.
intended to reduce the excessive influence of
the US dollar on domestic exchange rates, and
led, through various attempts, to the creation of Focuses of Trade Policy in International Trade
a Monetary Union and a common currency. This
Union brings many benefits to Member States. Tariffs - These are taxes or duties paid for a
particular class of imports or exports. Imposing
The European Monetary System (EMS) - on the taxes on imported and exported goods is a right
other hand is a 1979 arrangement between of every country.
several European countries which links their
currencies in an attempt to stabilize the Trade barriers - Theses are measures that
exchange rate. This system was succeeded by governments or public authorities introduce to
the European Economic and Monetary Union make imported goods or services less
(EMU), an institution of the European Union competitive than locally produced goods
(EU), which established a common currency and services.
called the euro.
Safety - This ensures that imported products in
The European Monetary System originated in the country are of high quality. Inspection
an attempt to stabilize inflation and stop large regulations laid down by public officials ensure
exchange rate fluctuations between European the safety and quality standards of imported
countries. Then, in June 1998, the European products.
Central Bank was established and, in January
1999, a unified currency, the euro, was born Types of Trade Policies
and came to be used by most EU member
countries National Trade Policy - This safeguards the best
interest of its trade and citizen.
The European Financial Stability Mechanism
(EFSM) - is a permanent fund created by the Bilateral Trade Policy - To regulate the trade
European Union (EU) to provide emergency and business relations between two nations,
assistance to member states within the Union. this policy is formed. Under the trade
It raises money through the financial markets, agreement the national trade policies of both
and is guaranteed by the European the nations and their negotiations are
Commission. Fund raised through the markets, considered while bilateral trade policy is
use the budget of the European Union as being formulated.
collateral. The European Financial Stability
Facility (EFSF) on the other hand, is an International Trade Policy - This defines the
organization created by the European Union to international trade policy under their charter like
provide assistance to member states with the International economic organizations, such
unstable economies. as Organization for Economic Cooperation and
Development (OECD), World Trade Organization
International Trade and Trade Policies (WTO) and International Monetary Fund
(IMF).The best interests of both developed and
developing nations are upheld by the policies. Financial Market Integration - It is an open
market economy between countries facilitated
Trade Policy and International Economy - In by a common currency and the elimination of
most developed countries where open market technical, regulatory and tax differences to
economy prevails, the international economic encourage free flow of capital and investment
organizations support free trade policies. In the across borders. It occurs when lending rates in
case of developing nations partially-shielded several different markets begin to move in
trade practices are preferred to protect their tandem with one another.
local trade industries.
Global Corporation - is a business that operates
The World Trade Organization (WTO) - deals in two or more countries. It also goes by the
with the global rules of trade between nations name "multinational company" . Several
with the main function of ensuring that trade advantages are offered by global expansion of
flows smoothly, predictably and freely. It is the business over running a strictly domestic
only global international organization dealing company
with the rules of trade between nations with
WTO agreements, negotiated and signed by the Historical Periods of Global Corporation - An
bulk of the world’s trading nations and ratified approach to the study of globalization that
in their parliaments at its heart. locates the phenomenon itself in early patterns
of trade and exchange is known as historical
Global Economy Outsourcing - Outsourcing is globalization.
an activity that requires search for a partner and
relation-specific investments that are governed The Finance Function in a Global Corporation -
by incomplete contracts and the extent of As corporations go global, capital markets open
international outsourcing depends on the up within them, giving companies a powerful
thickness of the domestic and foreign market mechanism for arbitrage across national
for input suppliers, the relative cost of searching financial markets. Chief financial officers (CFOs)
in each market, the relative cost of customizing must balance the opportunities with the
inputs and the nature of the contracting challenges of operating in multiple
environment in each country. environments in managing their internal
markets in building an advantage.
MARKET INTEGRATION
These three functions can be created by CFOs
Market integration - refers to how easily two or through exploiting their
more markets can trade with eachother. It internal capital markets:
occurs when prices among different locations or
related goods follow similarpatterns over a long 1. Financing - A group’s tax bill can be reduced
period of time. by the CFO like borrowing in countries
with high tax rates and lending to operations in
Types of Related Markets where Market countries with lower rates.
Integration Occurs: 2. Risk Management - Global firms can offset
natural currency exposures through worldwide
Stock Market Integration - This is a condition in operations instead of managing currency
which stock markets in different countries trend exposures through financial markets.
together and depict same expected risk 3. Capital budgeting - Getting smarter on
adjusted returns. Two markets are perfectly valuing investment opportunities CFOs can add
integrated if investors can pass from one value.
market to another without paying any extra
costs and if there are possibilities of arbitration Foreign Direct Investment Foreign Direct
which ensures the equivalence of stock prices Investment (FDI) - was of corporate origin. It is
on both markets.
a major driver of extended global corporate century, the accompanying rise in transnational
development. enterprises, and the resulting disparities
between easy flows of money and commodities
BRICS Economies - Brazil, Russia, India, across international boarders and the legal
China and South Africa (BRICS) - is an acronym barriers and logistical hurdles that keep most
for the combined economies of Brazil, Russia, workers tied to their home communities are
India, China and South Africa. BRIC, without associated with globalization. The belief that
South Africa, was originally coined in 2003 by globalization imposes a forced choice upon
Goldman Sachs, which speculates that by 2050 states either to conform to free market
these four economies will be the most principles or run the risk of being left behind is
dominant. South Africa was added to the termed into a phrase called “Golden
list on April 13, 2011 creating "BRICS Straitjacket” by Thomas Friedman, a
neoliberalism journalist and advocate, to
General Agreement on Trade in Services illustrate the forcing of states into policies that
(GATS) - is the first multilateral agreement suit the preferences of nvestment houses and
covering trade in services which was negotiated corporate executives (Electronic Herd) who
during the last round of multilateral trade swiftly move money and resources into
negotiations, called the Uruguay Round, and countries favored as adaptable to the demands
came into force in 1995. of international business and withdraw even
more rapidly from countries deemed
General Agreement on Tariffs and Trade - uncompetitive.
(GATT) that deals with trade in goods. The two
primary objectives of GATTS are to ensure that Further, countries are compared to individual
all signatories are treated equitably when stocks where the states and their
accessing foreign markets; and second, to government are rewarded and punished similar
promote progressive liberalization of trade and to buying and selling shares of individual
services. companies. States also have lost an important
element of economic sovereignty and that neo-
liberalism is beyond contestation. There are two
Globalization and the Nation- States - things that will happen if a country is in Golden
Globalization in the early years of the 21st Straitjacket: the economy grows and politics
century has not displaced the state. Max Weber, shrinks. It is a straitjacket because it narrows
a German social theorist define state as a the political and economic policy choices of
compulsory political organization with a those in power to relatively tight parameters.
centralized government that maintains a This is the reason of the difficulty of finding any
monopoly of the legitimate use of force within a real differences today between ruling and
certain territory. Hedley Bull, a 20th century opposition parties in those countries that have
international philosopher stated that states are put on the Golden Staitjacket
independent political communities each of
which possesses a government and asserts Neoliberalism - is the intensification of the
sovereignty in relation to a particular portion of influence and dominance of capital. It is the
the earth’s surface and a particular segment of elevation of capitalism as a mode of production
the human population. This means that into an ethic, a set of political imperatives, and
government and constitutions come and go but a cultural logic. It is a project to strengthen,
states readily endure. restore, or, in some cases, constitute anew the
power of economic elites. It values market
Nation on the other hand is an imagined political exchange as an ethic in itself capable of acting
community and imagined as both inherently as a guide to all human action and substituting
limited and sovereign for all previous held ethical beliefs. It
The State and the Economic Interdependence emphasizes the significance of contractual
- The rising momentum of global free-market relations in the marketplace.
capitalism in the final decades of the 20th
Economic sovereignty - on the other hand is the elimination of trade barriers, and the
power or national governments to make coordination of monetary and fiscal policies.
decisions independently of those made by other
governments. Seven Stages of Economic Integration
1. Preferential trading area (PTA)
There are four different concepts of 2. Free trade area
sovereignty: 3. Customs union
4. Common market
International Legal Sovereignty - It refers to 5. Economic union
the acceptance of a given state as a member of 6. Eonomic and monetary union
the international community. 7. Complete economic integration

Westphalian Sovereignty - It is based on the Preferential Trade Areas (PTAs) - happens


principle that one sovereign state should not when there’s an agreement on reducing or
interfere in the domestic arrangements of eliminating tariff (tax or duty to be paid on a
another. particular class of imports or exports) barriers
on selected goods imported from other
Interdependence Sovereignty - It is the members of countries within the geographical
capacity and willingness to control flows of region or areas. Agreement can either be
people, goods and capital into and out of the bilateral (between two
country. countries), or multi-lateral (several countries).
Free Trade Agreements (FTAs) or Preferential
Domestic Sovereignty - It is the capacity of a Trade Tgreements (PTAs) - eliminate import
state to choose and implement policies within tariffs as well as import quotas between
the Territory signatory countries. These agreements can be
limited to a few sectors or can encompass all
Economic and Political Integration (European aspects of international trade. FTAs can also
Integration) include formal mechanisms to resolve trade
disputes. The North American Free Trade
European integration - is the process of Agreement (NAFTA) is an example of such
industrial, political, legal, economic, social and an arrangement.
cultural integration of states wholly or partially
in Europe. Economic and Monetary Union (EMU) -
involves a single economic market, a common
European Union (EU), is an international trade policy, a single currency and a common
organization comprising 28 European countries monetary policy. It represents a major step in
and governing common economic, social, and the integration of EU economies. EMU involves
security policies. In the early 21st century EU the coordination of economic and fiscal policies,
expanded into central and eastern Europe with a common monetary policy and a common
the following members: Austria, Belgium, currency, the euro.
Bulgaria, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Complete Economic Integration - is the final
Greece, Hungary, Ireland, Italy, Latvia, stage of economic integration in which member
Lithuania, Luxembourg, Malta, the Netherlands, states completely forego independence of both
Poland, Portugal, Romania, Slovakia, Slovenia, monetary and fiscal policies.
Spain, Sweden, and the United Kingdom.
Political integration refers to the integration of
Economic integration can be described as a components within political systems; the
process and a means by which a group of integration of political systems with economic,
countries strives to increase their level of social, and other human systems; and the
welfare. It is an arrangement between different political processes by which social, economic,
regions that often includes the reduction or and political systems become integrated.
A social movement - is a type of group action.
Theories of European Integration It refers to the organizational structures and
strategies that may empower oppressed
Neo-functionalism - This theory focuses on the populations to mount effective challenges and
supranational institutions of the EU of which the resist the more powerful and advantaged elites".
main driving forces of integration are interest
group activity at the European and national The global justice movement - describes the
levels, political party activity, and the role of loose collection of individuals and groups often
governments and supranational institutions referred to as a “movement of movements”,
who advocate fair trade rules and are negative
Intergovernmentalism - This theory provides a to current institutions of global economics such
conceptual explanation of the European as the World Trade Organization
integration process. The main concept of the
Intergovernmentalism is emphasizing on the The new transnational activism - is as
role of national states in the European multifaceted as the internationalism. Although
integration; in another words it argues that globalization and global neo-liberalism are
"European integration is driven by the interest frames around which many activists mobilize,
and actions of nation states" the protests and organizations are not the
product of a global imaginary but of
Liberal Intergovernmentalism - This a domestically rooted activists who are the
dominant political theory developed by Andrew connective tissue of the global and the local,
Moravsik in 1993 to explain European working as activators, brokers and advocates
integration. Application of rational for claims both domestic and international
institutionalism to the field of European
integration is the aim of this theory. Social Media and the State

New Institutionalism - This theory emphasized Social media is a computer-based technology


the importance of institutions in the process of that facilitates the sharing of ideas and
European integration. Its three key strands are: information and the building of virtual networks
rational choice, sociological and historical. and communities. By design, social media is
internet based and offers users easy electronic
Multi-level Governance (MLG) - This is a new communication of personal information and
theory of European integration. Writers Liesbet other content, such as videos and photos. Users
Hooghe and Gary Marks defined MLG as engage with social media via computer, tablet or
dispersion of authority across multiple levels of smartphone via web-based software or web
political governance. They stated that over the application, often utilizing it for messaging. It
last fifty years, authority and sovereignty has “empowers” individuals to have a voice
moved away from national governments in
Europe, not just to the supranational level with
the EU, but also to subnational levels such as
regional assemblies and local authorities

Transnational Activism in States

Transnational activism - can be defined as the


mobilization of collective claimsby actors
located in more than one country and/or
addressing more than one national government
and/or international governmental organization
or another international actor

You might also like