Transcript Globalization

Globalization
 Globalization:
 the process of increasing interconnectedness between
societies such that events in one part of the world
increasingly have effects on peoples and societies far away
 A globalized world is one in which political, economic,
cultural, and social events become more and more
interconnected.
I. Birth of the Modern Globalized World
 Post WWI:
 U.S. Pres. Woodrow Wilson proposed a international peace-keeping
organization (League of Nations)
 U.S. failed to joined & entered into a period of isolation
 Many countries enacted protectionist policies (tariffs & quotas)
 WWII:
 U.S. was forced out of isolation (Pearl Harbor)
 U.S. Foreign Policy = From Isolationism to Internationalism
 Post WWII:
 Bretton Woods System est. the Liberal International Economic Order (LIEO)
that created the foundation upon which the modern global economy is built
 Post Cold War:
 Global spread of liberal political & economic policies
A. Liberal International Economic Order
(LIEO):
 The set of regimes designed to promote monetary stability & reduce
barriers to the free flow of trade & capital (free market economic policies)
 World Trade Organization (WTO):
 promotes trade liberalization & oversees trade agreements
 International Monetary Fund (IMF):
 ensures international monetary cooperation (oversees exchange rates)
 World Bank:
 promotes economic development of the Global South through low-interest
loans
 Together, these IGOs have worked to stabilize the world economy by
regulating international commerce, promoting free trade, and ultimately,
creating a more interconnected and globalized world.
B. The Cold War
 1945-1989 (USA vs USSR):
 World split between Democratic & Capitalist countries of the West
and the Totalitarian & Socialist countries of the Soviet Union:
 9/11/89: Fall of the Berlin Wall:
 Global spread of liberal political & economic policies through
multilateral trade agreements
 Satellite countries of Eastern Europe became independent
 Spread of European Union & NATO into Eastern Europe has caused
tension with Russia.
 “Big Bang” of 2004 = 10 Eastern European countries admitted into EU
 The West has used Soft Power to spread liberal political & economic policies
EU (28)
Cold War Division
Of Europe
NATO (28)
C. Development of Modern
Communication & Transportation
Technologies
 The world has become more interconnected due to the
cheapening advances in both global transportation &
communication.
 Transportation:
 Maritime shipping costs have fallen over two-thirds since 1920
 Operating costs per mile for world’s airlines have fallen over 60%
 Communication:
 Since 1960: the cost of an international phone call has dropped >90%
 Mid-1990s: international comm. is practically free b/c of the Internet
 Advanced global integration due to cheapening effects of global
communication & transportation
D. Rise of the Multinational
Organizations (MNCs)
 MNC = a corporation with operations in multiple countries
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Ex: Walmart, Nike, IBM, Google, Coca Cola, Disney, GM, McDonalds, Levi’s, etc.
Responsible for over 90% of international trade
International influence causes global diffusion of American culture (Good? Bad?)
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Purchasing goods and/or services from an outside supplier
Example: the production of a Dell computer:
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Today, HP has over 150,000 employees spread across at least 170 countries
Why?
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Pros:
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Cons:
 Outsourcing:
 “…the total supply for my computer, including suppliers of suppliers, involved about 400 companies in N. Amer.,
Europe, and primarily Asia, but with 30 key players” (Friedman 2006, 520).
 Relaxed environmental & labor policies, low costs of living and operating costs, favorable governmental tax
breaks & incentives, & the practicality of modern-day communication & transportation = MORE $$$$$$$
 Increases profit margins of MNCs & shareholders
 Promotes development of LDCs through Foreign Direct Investment (FDI)?
 Job loss--- Through the outsourcing trend, between 1999 and 2008, foreign affiliates of U.S. parent corporations
increased their employment abroad by 2.4 million jobs, or 30%.
 Promotes development of domestic and international wealth gaps
1. Power of the MNC & the Wealth
Gap it creates
 Most of the world’s international commerce is controlled not by
the governments, but by top business officials consisting of
“corporate executives, leading investors, top bankers, media
moguls, heads of state, generals, religious leaders, heads of
terrorist and criminal organizations and a handful of important
cultural and scientific figures” (Rothkopf 2008, 1).
 International commerce has fallen under the control and direction
of 50 or so of the world’s top financial institutions whose assets
exceed $50 trillion, or one-third of all assets worldwide.
 The world’s 1,100 richest people control twice the wealth of the
world’s poorest 2.5 billion people.
2. Loss of National Sovereignty?
 National governments have limited regulatory authority over
global markets because financial flows have become so large
that the real power lies with the biggest players. These financial
juggernauts are more influential in world markets in that they
are able to reach the masses in ways that national governments
cannot.
 The people who run these big international organizations can have
much more power over key aspects of your daily life and over global
trends than most officials in Washington. These MNCs can affect
financial investments & job creation by influencing government
decisions through their financial support of Washington politicians
(lobbying is king).
3. Death of the “American Dream?”
 MNCs promote moderate development throughout the Global
South (LDCs), while there is drastic unemployment & decay of
the secondary industries throughout the Global North (MDCs).
 Ex: Today’s top 1% of Americans control 40% of the country’s GDP.
This figure is higher than 25 years ago in which 12% of Americans
controlled 33% of U.S. wealth. People in the top 1% have seen their
incomes rise 18% over the past decade, while the incomes of those
in the middle have actually fallen.
 VIDEO ON GLOBALIZATION