Globalization (or Globalisation) is the increasing interconnectedness of people and places as a result of advances in transport, communication, and information technologies that cause political, economic, and cultural convergence.
It should not be narrowly confused with economic globalization, which is only one aspect. While some scholars and observers of globalization stress convergence of patterns of production and consumption and a resulting homogenization of culture, others stress that globalization has the potential to take many diverse forms. In economics, globalization is the convergence of prices, products, wages, rates of interest and profits towards developed country norms. Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets. The International Monetary Fund notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread diffusion of technology. Theodore Levitt is usually credited with globalization's first use in an economic context. [1]
Historical precedents
The word "globalization" can be traced back to 1944. The term has been used by economists since 1981, however its concepts did not permeate popular consciousness until the latter half of the 1990s. Various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods.[2]. The first era of globalization (in the fullest sense) during the 19th century was the rapid growth of international trade between the European imperial powers, the European colonies, and the United States. Because of the first era of globalization, World War I was started. After World War II, globalization was restarted and was driven by major advances in technology, which led to lower trading costs. The term "globalization" has often been linked to the rise of corporate dominance, and is often used synonymously with the term "corporate giant", first coined by Charles Taze Russell in 1897. [4][not specific enough to verify][improper synthesis?]
Globalization is viewed as a centuries long process, tracking the expansion of human population and the growth of civilization, that has accelerated dramatically in the past 50 years. Early forms of globalization existed during the Roman Empire, the Arab Empire and Islamic Golden Age, when Muslim traders and explorers established an early global economy across the Old World resulting in a globalization of crops, trade, knowledge and technology; and later during the Mongol Empire, when there was greater integration along the Silk Road. Global integration continued through the expansion of European trade, as in the 16th and 17th centuries, when the Portuguese and Spanish Empires reached to all corners of the world after expanding to the Americas.
Globalization became a business phenomenon in the 17th century when the Dutch East India Company, which is often described as the first multinational corporation, was established. Because of the high risks involved with international trade, the Dutch East India Company became the first company in the world to share risk and enable joint ownership through the issuing of shares: an important driver for globalization.
Liberalization in the 19th century is sometimes called "The First Era of Globalization", a period characterized by rapid growth in international trade and investment, between the European imperial powers, their colonies, and, later, the United States. It is important to note that liberalization and globalization are distinct. The repeal of the British Corn Laws initiated a period of liberalization which accelerated globalization. However, as economic historian Jeffrey G. Williamson has shown, the transatlantic trade altered factor prices in both Europe and the Americas, threatening the interests of politically significant factions. New trade restrictions began to rise again. Obstacles to trade among the developed nations gave a fresh impetus to the search for markets for raw materials and finished goods overseas, and a new era of imperial expansion occurred. It was in this period that areas of subsaharan Africa and the Island Pacific were incorporated into the world system. The Asian nations were unable to match the industrialized warfare of Europe and were made into colonies.
The "First Era of Globalization" began to break down at the beginning with the first World War, and later collapsed during the gold standard crisis in the late 1920s and early 1930s. Austria Hungary, without access to the oceans as the basis for an overseas empire, expanded into the Baltics. The assassination of the archduke by a Serbian nationalist was the trigger that released many of the tensions built into the international economic and political system.Lenin's Imperialism, the Highest Stage of Capitalism (1916) provided a seminal critique of this period as being characterised by the exploitation of the third world by those in the first.
Recent evolutions
Curiously, the theme seen above (globalization would be economic imperialism), as well as the opposite one (developed countries would be now at an economic disadvantage), form the pretence of many recent critiques of globalisation. Actually, the present phase of globalization, which also is something much broader than a pure economic phenomenon, has many differences with the former ones, and historical comparisons are not really relevant.
Globalization in the era since World War II was first the result of planning by economists, business interests, and politicians who recognized the costs associated with protectionism and declining international economic integration. Their work led to the Bretton Woods conference and the founding of several international institutions intended to oversee the renewed processes of globalization, promoting growth and managing adverse consequences. These were the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund. It has been facilitated by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on free trade. The Uruguay round (1984 to 1995) led to a treaty to create the World Trade Organization (WTO), to mediate trade disputes and set up a uniform platform of trading. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade grand.
The world increasingly is confronted with problems that cannot be solved by individual nation-states acting alone. Examples include over-fishing of the oceans, water pollution, international terrorist networks, global warming, international terrorist networks, global trade, and international terrorist networks . Solutions to these problems necessitate new forms of cooperation and the creation of new global institutions. Since the end of WWII, following the advent of the UN and the Bretton Woods institutions, there has been an explosion in the reach and power of multinational corporations and the rapid growth of global civil society.[3]
Measuring globalization
Looking specifically at economic globalization, it can be measured in different ways. These centre around the four main economic flows that characterize globalization:
Goods and services, e.g. exports plus imports as a proportion of national income or per capita of population
Labour/people, e.g. net migration rates; inward or outward migration flows, weighted by population
Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population
Technology, e.g. international research & development flows; proportion of populations (and rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances such as the telephone, motorcar, broadband)
To what extent a nation-state or culture is globalised in a particular year has until most recently been measured employing simple proxies like flows of trade, migration, or foreign direct investment, as described above.
As globalization is not only an economic phenomenon, a multivariate approach to measuring globalization is the recent index calculated by the Swiss Think tankKOF. The index measures the three main dimensions of globalization: economic, social, and political. In addition to three indices measuring these dimensions, an overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated. Data are available on a yearly basis for 122 countries. According to the index, the world's most globalised country is Belgium, followed by Austria, Sweden, the United Kingdom and the Netherlands. The least globalised countries according to the KOF-index are Haiti, Myanmar the Central African Republic and Burundi.[4]. Other measures conceptualize Globalization as Diffusion and develop interactive procedure to capture the degree of its impact Jahn 2006.
According to a 2003 survey of teenagers from New York, Lebanon, Azerbaijan, and the Philippines, teenagers both in the United States and elsewhere are largely in favor of globalization. [5]
Conversely a CNN survey in 2007 found that only 5% of all people in America are in favor of globalization. The people involved cited major job insecurity as a big worry.
Pro-globalization (globalism)
Globalization advocates such as Jeffrey Sachs point to the above average drop in poverty rates in countries, such as China, where globalization has taken a strong foothold, compared to areas unaffected by globalization, such as Sub-Saharan Africa, where poverty rates have remained stagnant.[5]
Globalization has brought foreign companies to Bangalore, India
Supporters of free trade claim that it increases economic prosperity as well as opportunity, especially among developing nations, enhances civil liberties and leads to a more efficient allocation of resources. Economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment, higher output and a higher standard of living for those in developing countries.[5][6]
One of the ironies of the recent success of India and China is the fear that... success in these two countries comes at the expense of the United States. These fears are fundamentally wrong and, even worse, dangerous. They are wrong because the world is not a zero-sum struggle... but rather is a positive-sum opportunity in which improving technologies and skills can raise living standards around the world.
Libertarians and other proponents of laissez-faire capitalism say that higher degrees of political and economic freedom in the form of democracy and capitalism in the developed world are ends in themselves and also produce higher levels of material wealth. They see globalization as the beneficial spread of liberty and capitalism. Liberals see it as a tool for relieving poverty and providing the poor with a foothold in the global economy.[5]
Supporters of democratic globalization are sometimes called pro-globalists. They believe that the first phase of globalization, which was market-oriented, should be followed by a phase of building global political institutions representing the will of world citizens. The difference from other globalists is that they do not define in advance any ideology to orient this will, but would leave it to the free choice of those citizens via a democratic process [citation needed].
Supporters of globalization argue that the anti-globalization movement uses anecdotal evidence[citation needed] to support their protectionist view, whereas worldwide statistics strongly support globalization:
From 1981 to 2001, according to World Bank figures, the number of people living on $1 a day or less declined from 1.5 billion to 1.1 billion in absolute terms. At the same time, the world population increased, so in percentage terms the number of such people in developing nations declined from 40% to 20% of the population.[7] with the greatest improvements occurring in economies rapidly reducing barriers to trade and investment; yet, some critics argue that more detailed variables measuring poverty should be studied instead [8]. Furthermore, the above figures do not take monetary inflation of the dollar into account between 1981 and 2001 and are therefore not an accurate assessment of a relative global increase in economic prosperity.
The percentage of people living on less than $2 a day has decreased greatly in areas effected by globalization, whereas poverty rates in other areas have remained largely stagnant. In East-Asia, including China, the percentage has decreased by 50.1% compared to a 2.2% increase in Sub-Saharan Africa.[6]
Income inequality for the world as a whole is diminishing.[9] As noted below, there are others disputing this. The economist Xavier Sala-i-Martin in a 2007 analysis argues that this is incorrect, income inequality for the world as a whole has diminished. [6]. Regardless of who is right about the past trend in income inequality, arguably absolute poverty is more important than relative inequality. If everyone lived in abject absolute poverty, then relative income inequality would be very low.
Life expectancy has almost doubled in the developing world since World War II and is starting to close the gap between itself and the developed world where the improvement has been smaller. Even in Sub-Saharan Africa, the least developed region, life expectancy increased from 30 years before World War II to about a peak of about 50 years before the AIDS pandemic and other diseases started to force it down to the current level of 47 years. Infant mortality has decreased in every developing region of the world.[10]
Democracy has increased dramatically from there being almost no nations with universal suffrage in 1900 to 62.5% of all nations having it in 2000.[11]
Feminism has made great advances in areas such as Bangladesh through economically liberating and empowering women with jobs.[5]
The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s.[12]
Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000.[13]
The percentage of children in the labor force has fallen from 24% in 1960 to 10% in 2000.[14]
There are similar increasing trends toward electric power, cars, radios, and telephones per capita, as well as a growing proportion of the population with access to clean water.[15]
The book The Improving State of the World also finds evidence for that these, and other, measures of human well-being has improved and that globalization is part of the explanation. It also responds to arguments that environmental impact will limit the progress.
Supporters of globalization are highly critical of some current policies. In particular, the very high subsidies to and protective tariffs for agriculture in the developed world. For example, almost half of the budget of the European Union goes to agricultural subsidies, mainly to large farms and agricultural businesses, which form a powerful lobby.[16] Japan gave 47 billion dollars in 2005 in subsidies to its agricultural sector,[17] nearly four times the amount it gave in total foreign aid.[18] The US gives 3.9 billion dollars each year in subsidies to its cotton sector, including 25,000 growers, three times more in subsidies than the entire USAID budget for Africa’s 500 million people.[19] This drains the taxed money and increases the prices for the consumers in developed world; decreases competition and efficiency; prevents exports by more competitive agricultural and other sectors in the developed world due to retaliatory trade barriers; and undermines the very type of industry in which the developing countries do have comparative advantages. Tarrifs and trade barriers, thereby, hinder the economic development of developing economies, adversely affecting living standards in these countries.[20]
Although critics of globalization complain of Westernizaion, a 2005 UNESCO report[21] showed that cultural exchange is becoming mutual. In 2002, China was the third largest exporter of cultural goods, after the UK and US. Between 1994 and 2002, both North America's and the European Union's shares of cultural exports declined, while Asia's cultural exports grew to surpass North America.
Anti-globalization
Industrial (alias trans nationalization) - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies
Financial - emergence of worldwide financial markets and better access to external financing for corporate, national and subnational borrowers
Economic - realization of a global common market, based on the freedom of exchange of goods and capital.
Political - political globalization is the creation of a world government which regulates the relationships among nations and guarantees the rights arising from social and economic globalization. [45]
Informational - increase in information flows between geographically remote locations
Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities such as Globalism - which embodies cultural diffusion, the desire to consume and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture"
Ecological- the advent of global environmental challenges that can not be solved without international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Many factories are built in developing countries where they can pollute freely.
Social - the achievement of free circulation by people of all nations
Transportation - fewer and fewer European cars on European roads each year (the same can also be said about American cars on American roads) and the death of distance through the incorporation of technology to decrease travel time.[clarify]
Greater international cultural exchange
Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood and Bollywood movies). However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures has taken place over most of Asia for many centuries.
Since World War II, barriers to international trade have been considerably lowered through international agreements - General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the World Trade Organisation (WTO), for which GATT is the foundation, have included:
Promotion of free trade:
Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs
Reduced transportation costs, especially from development of containerization for ocean shipping.
Reduction, elimination, or harmonization of subsidies for local businesses
Restriction of free trade:
Harmonization of intellectual property laws across the majority of states, with more restrictions.
Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States)
Globalization is also defined as the internationalization of everything related to different countries; Internationalization however, is a contrasted phenomenon to globalization.
. 2006. Globalization as Galton's Problem: The Missing Link in the Analysis of the Diffusion Patterns in Welfare State Development. International Organization 60: (2): 401-431.
Hans Köchler, "Philosophical Aspects of Globalization. Basic Theses on the Interrelation of Economics, Politics, Morals and Metaphysics in a Globalized World," in: Globality versus Democracy?, pp. 3-18.
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