UNIT I: INTRODUCTION TO GLOBALIZATION
The Contemporary Period (from 1970 to
Globalization - is the process in which people,
ideas and goods spread throughout the world,
spurring more interaction and integration
between the world's cultures, governments and
economies(1).
Globalization - is a process of interaction and
integration among the people, companies, and
governments of different nations, a process
driven by international trade and investment and
aided by information technology
Historical Periods of Globalization
1. The Prehistoric Period (10000 BCE-3500
BCE) - In this earliest phase of globalization,
contacts among hunters and gatherers –
who were spread around the world – were
geographically limited. In this period due to
absence of advanced forms of technology,
globalization was severely limited.
2. The Pre-modern Period (3500 BCE- 1500 CE)
- In this period the invention of writing and the
wheel were great social and technological
boosts that moved globalization to a new level.
The invention of wheel in addition to roads made
the transportation of people and goods more
efficient. On the other hand writing facilitated
the spread of ideas and inventions.
3. The Early Modern Period (1500-1750) - It is
the period between the Enlightenment and the
Renaissance. In this period, European
Enlightenment project tried to achieve a
universal form of morality and law. This with the
emergence of European metropolitan centers
and unlimited material accumulation which led
to the capitalist world system helped to
strengthen globalization.
4. The Modern Period (1750-1970) -
Innovations in transportation and
communication technology, population
explosion, and increase in migration led to more
cultural exchanges and transformation
in traditional social patterns. Process of
ndustrialization also accelerated.
5.
present) - The creation, expansion, and
acceleration of worldwide interdependencies
occurred in a dramatic way and it was a kind of
leap in the history of globalization.
Dimensions of Globalization:
1. Economic Dimension - This refers to the
extensive development of economic relations
across the globe as a result of technology and
the enormous flow of capital that has stimulated
trade in both sources and goods
2. Political Dimension - This refers to an
enlargement and strengthening of political
interrelations across the globe.
3. Cultural Dimension - This refers to the
increase in the amount of cultural flows across
the globe. Cultural interconnections are at the
foundations of contemporary globalization
4. Religious Dimension - Religion is a personal
or institutionalized set of attitudes, beliefs, and
practices relating to or manifesting faithful
devotion to an acknowledged ultimate reality or
deity.
Justice is divided in three (3) categories:
1. Commutative justice - This aims at fulfilling
the terms of contracts and other promises on
both personal and social level.
2. Distributive justice - This ensures a basic
equity in how both the burden and the goods of
society are distributed and that ensures that
every person enjoys a basically equal moral and
legal standing apart from differences in wealth,
privilege, talent and achievements
3. Social justice - This refers to the creation of
the conditions in which the first two categories
of justice can be realized and the common good
identified and defended.
5. Ideological Dimensions - Ideology is a
system of widely shared ideas, beliefs, norms
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.
UNIT II: THE STRUCTURES OF GLOBALIZATION
Economic globalization - refers to the
increasing interdependence of world economies
as a result of the growing scale of cross-border
trade of commodities and
Two Major Driving Forces for Economic
Globalization:
1. The rapid growing of information in all types
of productive activities
2. Marketization (A restructuring process that
enables state enterprises to operate as market-
oriented firms by changing the legal
environment in whichthey operate and can be
achieved through reduction of state subsidies,
organizational restructuring of management
such as corporatization,decentralization, and
privatization.
Dimensions of Economic Globalization
1. The globalization of trade of goods and
services
2. The globalization of financial and capital
markets
3. The globalization of technology and
communication
4. The globalization of production
Difference between Economic
Globalization from Internationalization:
Economic globalization is a functional
integration between internationally dispersed
activities which means that it is a qualitative
transformation rather than a quantitative change
while internationalization is an extension of
economic activities between internationally
dispersed activities.
Origin of Economic Globalization
Economic globalization is a process that
creates an organic system of the world
economy.
In the 16th century world system analysts
identify the origin of modernity and globalization
through long distance trade in the 16th century.
This best known example of archaic
globalization is the Silk Road, which started in
western China, reached the boundaries of the
Parthian empire, and continued onwards
towards Rome. It also connected Asia, Africa,
and Europe.
In the 17th and 18th century global economy
exists only in trade and exchange rather than
production as the world export to World GDP
did not reached 1 to 2 percent
In the 19th century the advent of globalization
approaching its modern form is
witnessed. A short period before World War I is
referred to as golden age of globalization
characterized by relative peace, free trade,
financial and economic stability. Growth in
international exchange of goods accelerated in
the second quarter of the 19th century. Global
economy in the 19th and 20th centuries grew
by an average of nearly 4 percent per annum,
which is roughly twice as high as growth in the
national incomes of the developed economies
since the late 19th century.
International Monetary Systems and Gold
Standard
International monetary system (IMS) - refers to
a system that forms rules and standards for
facilitating international trade among the
nations. It helps in reallocating the capital and
investment from one nation to another. It is the
global network of the government and financial
institutions that determine the exchange rate of
different currencies for international trade.
Evolution of the International Monetary System
Gold Standard (1870-1971) - with the help of
gold and silver, trade was carried without any
institutional support. Monetary system during
that time was decentralized while market
based and money played a minor role in
international trade in contrast to gold
Bretton Woods System (1971) – the aim of
which is to create a stabilized international
currency system and ensure a monetary
stability for all the nations.
Flexible Exchage Rate Regime (Today)
European Monetary Integration
European monetary integration refers to a 30-
year long process that began at the end of the
1960s as a form of monetary cooperation
intended to reduce the excessive influence of
the US dollar on domestic exchange rates, and
led, through various attempts, to the creation of
a Monetary Union and a common currency. This
Union brings many benefits to Member States.
The European Monetary System (EMS) - on the
other hand is a 1979 arrangement between
several European countries which links their
currencies in an attempt to stabilize the
exchange rate. This system was succeeded by
the European Economic and Monetary Union
(EMU), an institution of the European Union
(EU), which established a common currency
called the euro.
The European Monetary System originated in
an attempt to stabilize inflation and stop large
exchange rate fluctuations between European
countries. Then, in June 1998, the European
Central Bank was established and, in January
1999, a unified currency, the euro, was born
and came to be used by most EU member
countries
The European Financial Stability Mechanism
(EFSM) - is a permanent fund created by the
European Union (EU) to provide emergency
assistance to member states within the Union.
It raises money through the financial markets,
and is guaranteed by the European
Commission. Fund raised through the markets,
use the budget of the European Union as
collateral. The European Financial Stability
Facility (EFSF) on the other hand, is an
organization created by the European Union to
provide assistance to member states with
unstable economies.
International Trade and Trade Policies
International trade- is the exchange of goods,
services and capital across national borders. It
is a multi-million dollar activity, central to the
Gross Domestic Product (GDP) of many
countries, and it is the only way for many people
in many countries to acquire resources
Trade policies on the other hand refer to the
regulations and agreement of foreign countries.
It defines standards, goals, rules, and
regulations that pertain to trade relation
between countries.
Focuses of Trade Policy in International Trade
Tariffs - These are taxes or duties paid for a
particular class of imports or exports. Imposing
taxes on imported and exported goods is a right
of every country.
Trade barriers - Theses are measures that
governments or public authorities introduce to
make imported goods or services less
competitive than locally produced goods
and services.
Safety - This ensures that imported products in
the country are of high quality. Inspection
regulations laid down by public officials ensure
the safety and quality standards of imported
products.
Types of Trade Policies
National Trade Policy - This safeguards the best
interest of its trade and citizen.
Bilateral Trade Policy - To regulate the trade
and business relations between two nations,
this policy is formed. Under the trade
agreement the national trade policies of both
the nations and their negotiations are
considered while bilateral trade policy is
being formulated.
International Trade Policy - This defines the
international trade policy under their charter like
the International economic organizations, such
as Organization for Economic Cooperation and
Development (OECD), World Trade Organization
(WTO) and International Monetary Fund
(IMF).The best interests of both developed and
developing nations are upheld by the policies.
Trade Policy and International Economy - In
most developed countries where open market
economy prevails, the international economic
organizations support free trade policies. In the
case of developing nations partially-shielded
trade practices are preferred to protect their
local trade industries.
The World Trade Organization (WTO) - deals
with the global rules of trade between nations
with the main function of ensuring that trade
flows smoothly, predictably and freely. It is the
only global international organization dealing
with the rules of trade between nations with
WTO agreements, negotiated and signed by the
bulk of the world’s trading nations and ratified
in their parliaments at its heart.
Global Economy Outsourcing - Outsourcing is
an activity that requires search for a partner and
relation-specific investments that are governed
by incomplete contracts and the extent of
international outsourcing depends on the
thickness of the domestic and foreign market
for input suppliers, the relative cost of searching
in each market, the relative cost of customizing
inputs and the nature of the contracting
environment in each country.
MARKET INTEGRATION
Market integration - refers to how easily two or
more markets can trade with eachother. It
occurs when prices among different locations or
related goods follow similarpatterns over a long
period of time.
Types of Related Markets where Market
Integration Occurs:
Stock Market Integration - This is a condition in
which stock markets in different countries trend
together and depict same expected risk
adjusted returns. Two markets are perfectly
integrated if investors can pass from one
market to another without paying any extra
costs and if there are possibilities of arbitration
which ensures the equivalence of stock prices
on both markets.
Financial Market Integration - It is an open
market economy between countries facilitated
by a common currency and the elimination of
technical, regulatory and tax differences to
encourage free flow of capital and investment
across borders. It occurs when lending rates in
several different markets begin to move in
tandem with one another.
Global Corporation - is a business that operates
in two or more countries. It also goes by the
name "multinational company" . Several
advantages are offered by global expansion of
business over running a strictly domestic
company
Historical Periods of Global Corporation - An
approach to the study of globalization that
locates the phenomenon itself in early patterns
of trade and exchange is known as historical
globalization.
The Finance Function in a Global Corporation -
As corporations go global, capital markets open
up within them, giving companies a powerful
mechanism for arbitrage across national
financial markets. Chief financial officers (CFOs)
must balance the opportunities with the
challenges of operating in multiple
environments in managing their internal
markets in building an advantage.
These three functions can be created by CFOs
through exploiting their
internal capital markets:
1. Financing - A group’s tax bill can be reduced
by the CFO like borrowing in countries
with high tax rates and lending to operations in
countries with lower rates.
2. Risk Management - Global firms can offset
natural currency exposures through worldwide
operations instead of managing currency
exposures through financial markets.
3. Capital budgeting - Getting smarter on
valuing investment opportunities CFOs can add
value.
Foreign Direct Investment Foreign Direct
Investment (FDI) - was of corporate origin. It is
a major driver of extended global corporate
development.
BRICS Economies - Brazil, Russia, India,
China and South Africa (BRICS) - is an acronym
for the combined economies of Brazil, Russia,
India, China and South Africa. BRIC, without
South Africa, was originally coined in 2003 by
Goldman Sachs, which speculates that by 2050
these four economies will be the most
dominant. South Africa was added to the
list on April 13, 2011 creating "BRICS
General Agreement on Trade in Services
(GATS) - is the first multilateral agreement
covering trade in services which was negotiated
during the last round of multilateral trade
negotiations, called the Uruguay Round, and
came into force in 1995.
General Agreement on Tariffs and Trade -
(GATT) that deals with trade in goods. The two
primary objectives of GATTS are to ensure that
all signatories are treated equitably when
accessing foreign markets; and second, to
promote progressive liberalization of trade and
services.
Globalization and the Nation- States -
Globalization in the early years of the 21st
century has not displaced the state. Max Weber,
a German social theorist define state as a
compulsory political organization with a
centralized government that maintains a
monopoly of the legitimate use of force within a
certain territory. Hedley Bull, a 20th century
international philosopher stated that states are
independent political communities each of
which possesses a government and asserts
sovereignty in relation to a particular portion of
the earth’s surface and a particular segment of
the human population. This means that
government and constitutions come and go but
states readily endure.
Nation on the other hand is an imagined political
community and imagined as both inherently
limited and sovereign
The State and the Economic Interdependence
- The rising momentum of global free-market
capitalism in the final decades of the 20th
century, the accompanying rise in transnational
enterprises, and the resulting disparities
between easy flows of money and commodities
across international boarders and the legal
barriers and logistical hurdles that keep most
workers tied to their home communities are
associated with globalization. The belief that
globalization imposes a forced choice upon
states either to conform to free market
principles or run the risk of being left behind is
termed into a phrase called “Golden
Straitjacket” by Thomas Friedman, a
neoliberalism journalist and advocate, to
illustrate the forcing of states into policies that
suit the preferences of nvestment houses and
corporate executives (Electronic Herd) who
swiftly move money and resources into
countries favored as adaptable to the demands
of international business and withdraw even
more rapidly from countries deemed
uncompetitive.
Further, countries are compared to individual
stocks where the states and their
government are rewarded and punished similar
to buying and selling shares of individual
companies. States also have lost an important
element of economic sovereignty and that neo-
liberalism is beyond contestation. There are two
things that will happen if a country is in Golden
Straitjacket: the economy grows and politics
shrinks. It is a straitjacket because it narrows
the political and economic policy choices of
those in power to relatively tight parameters.
This is the reason of the difficulty of finding any
real differences today between ruling and
opposition parties in those countries that have
put on the Golden Staitjacket
Neoliberalism - is the intensification of the
influence and dominance of capital. It is the
elevation of capitalism as a mode of production
into an ethic, a set of political imperatives, and
a cultural logic. It is a project to strengthen,
restore, or, in some cases, constitute anew the
power of economic elites. It values market
exchange as an ethic in itself capable of acting
as a guide to all human action and substituting
for all previous held ethical beliefs. It
emphasizes the significance of contractual
relations in the marketplace.
Economic sovereignty - on the other hand is the
power or national governments to make
decisions independently of those made by other
governments.
There are four different concepts of
sovereignty:
International Legal Sovereignty - It refers to
the acceptance of a given state as a member of
the international community.
Westphalian Sovereignty - It is based on the
principle that one sovereign state should not
interfere in the domestic arrangements of
another.
Interdependence Sovereignty - It is the
capacity and willingness to control flows of
people, goods and capital into and out of the
country.
Domestic Sovereignty - It is the capacity of a
state to choose and implement policies within
the Territory
Economic and Political Integration (European
Integration)
European integration - is the process of
industrial, political, legal, economic, social and
cultural integration of states wholly or partially
in Europe.
European Union (EU), is an international
organization comprising 28 European countries
and governing common economic, social, and
security policies. In the early 21st century EU
expanded into central and eastern Europe with
the following members: Austria, Belgium,
Bulgaria, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, the Netherlands,
Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden, and the United Kingdom.
Economic integration can be described as a
process and a means by which a group of
countries strives to increase their level of
welfare. It is an arrangement between different
regions that often includes the reduction or
elimination of trade barriers, and the
coordination of monetary and fiscal policies.
Seven Stages of Economic Integration
1. Preferential trading area (PTA)
2. Free trade area
3. Customs union
4. Common market
5. Economic union
6. Eonomic and monetary union
7. Complete economic integration
Preferential Trade Areas (PTAs) - happens
when there’s an agreement on reducing or
eliminating tariff (tax or duty to be paid on a
particular class of imports or exports) barriers
on selected goods imported from other
members of countries within the geographical
region or areas. Agreement can either be
bilateral (between two
countries), or multi-lateral (several countries).
Free Trade Agreements (FTAs) or Preferential
Trade Tgreements (PTAs) - eliminate import
tariffs as well as import quotas between
signatory countries. These agreements can be
limited to a few sectors or can encompass all
aspects of international trade. FTAs can also
include formal mechanisms to resolve trade
disputes. The North American Free Trade
Agreement (NAFTA) is an example of such
an arrangement.
Economic and Monetary Union (EMU) -
involves a single economic market, a common
trade policy, a single currency and a common
monetary policy. It represents a major step in
the integration of EU economies. EMU involves
the coordination of economic and fiscal policies,
a common monetary policy and a common
currency, the euro.
Complete Economic Integration - is the final
stage of economic integration in which member
states completely forego independence of both
monetary and fiscal policies.
Political integration refers to the integration of
components within political systems; the
integration of political systems with economic,
social, and other human systems; and the
political processes by which social, economic,
and political systems become integrated.

Theories of European Integration
Neo-functionalism - This theory focuses on the
supranational institutions of the EU of which the
main driving forces of integration are interest
group activity at the European and national
levels, political party activity, and the role of
governments and supranational institutions
Intergovernmentalism - This theory provides a
conceptual explanation of the European
integration process. The main concept of the
Intergovernmentalism is emphasizing on the
role of national states in the European
integration; in another words it argues that
"European integration is driven by the interest
and actions of nation states"
Liberal Intergovernmentalism - This a
dominant political theory developed by Andrew
Moravsik in 1993 to explain European
integration. Application of rational
institutionalism to the field of European
integration is the aim of this theory.
New Institutionalism - This theory emphasized
the importance of institutions in the process of
European integration. Its three key strands are:
rational choice, sociological and historical.
Multi-level Governance (MLG) - This is a new
theory of European integration. Writers Liesbet
Hooghe and Gary Marks defined MLG as
dispersion of authority across multiple levels of
political governance. They stated that over the
last fifty years, authority and sovereignty has
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
A social movement - is a type of group action.
It refers to the organizational structures and
strategies that may empower oppressed
populations to mount effective challenges and
resist the more powerful and advantaged elites".
The global justice movement - describes the
loose collection of individuals and groups often
referred to as a “movement of movements”,
who advocate fair trade rules and are negative
to current institutions of global economics such
as the World Trade Organization
The new transnational activism - is as
multifaceted as the internationalism. Although
globalization and global neo-liberalism are
frames around which many activists mobilize,
the protests and organizations are not the
product of a global imaginary but of
domestically rooted activists who are the
connective tissue of the global and the local,
working as activators, brokers and advocates
for claims both domestic and international
Social Media and the State
Social media is a computer-based technology
that facilitates the sharing of ideas and
information and the building of virtual networks
and communities. By design, social media is
internet based and offers users easy electronic
communication of personal information and
other content, such as videos and photos. Users
engage with social media via computer, tablet or
smartphone via web-based software or web
application, often utilizing it for messaging. It
“empowers” individuals to have a voice