GlobalizationLele MathisPeriod 7Comparative Government

Globalization•the process of increasing

interdependence of economies, political systems, and societies on a global scale▫the movement of people, ideas, and social

customs and products across borders▫technological innovations▫interconnectedness between and among

peoples, groups, countries, and international and transnational organizations

▫a single global market

Interconnectedness

•Sensitivity▫Actors respond to the decisions or actions

of others•Vulnerability

▫Actors are affected by others’ decisions or behavior

•International consequences of domestic policies

•Nations are “no longer free agents”

Barriers to Prevent Interconnectedness•Tools for isolation

▫tariff or other barriers impeding international trade

▫official controls on international capital movements

▫immigration laws that prevent workers from working in foreign countries

▫deny access to international investors▫censor the Internet

•Generally beneficial to be part of the network

Economic Globalization

•Global market, benefits of free trade•reduction in official obstacles to cross-

border economic transactions▫inexpensive to do business with foreigners,

reduces advantages of domestic business•foreign companies moving to developing

countries bring higher wages and better working conditions compared with domestic companies

Neoclassical Liberal Economic Theory

•Reducing impediments to the free movement of goods and capital lifts the wealth of all states by allowing them to concentrate on things in which they have greatest expertise

•Comparative Advantage

Foreign Direct Investment (FDI)

•Corporations based in one country making investments to establish and run business operations in other countries

•brings technical information, jobs, and transmission of ideas

•Globalization has most direct effect on people through their work and employment

•Most important source of FDI...

Multinational Corporations (MNCs)•MNCs – firms with business operations

physically located in more than one country

•43,500 from developed countries, only 9,500 from developing world

•1/3 of the world’s exports•The top 10 MNCS have sales figures

greater than the GDP of 170 countries

MNCs and Inequality•Search for new markets, more resources,

better investments, and cheaper labor in foreign host countries

•Can create competition between countries vying for investment

•MNCs’ wealth and strong bargaining position relative to poorer and weaker developing countries

•FDI can cause regional inequality which causes unrest

“Race to the Bottom”

•Accelerated by globalization• Companies seek the lowest level of regulation

and taxation, forcing competing governments to lower their standards of labor, human rights, and environmental protection, taxation, and other regulation

• Leads to less strict regulations and lower wages in countries seeking FDI

The Worst Off

•Countries excluded from globalization▫impossible to catch up with rapidly

growing developing economies ▫cannot benefit in any way from a

globalized, information-based economy without education and access to technology

Globalization and the Environment•industrialization leads to more emissions•resource-based industries exploit

resources of countries with low regulation•market failure – occurs when those who

are producing or consuming goods or services do not have to bear the full costs of their actions, such as pollution

Global Governance

•At the end of WWII, Allied nations at a UN Monetary and Fiscal conference set up the global institutional infrastructure to allow for global governance

•International Monetary Fund (IMF), the World Bank, and International Bank for Reconstruction and Development (IBRD) and eventually the World Trade Organization (WTO) were set up

•Regulate the global economy

Global Institutions

•International Monetary Fund (IMF)•The World Bank

▫International Bank for Reconstruction and Development (IBRD)

▫The International Development Association (IDA)

•The World Trade Organization (WTO) •The World Health Organization (WHO)•Multiple for nearly every major global

issue

Structural Adjustment Policies•Structural Adjustment Policies

▫implemented by the IMF and the World Bank▫set of conditions required for countries to

get loans or reduce their interest rates on existing loans

▫conditions focus on direct export and resource extraction, balancing budgets, privatization of industries, enhancing the rights of foreign investors, improving governance and fighting corruption

Criticisms of Global Governance•“democratic deficit” – the idea that

international institutions of governance represent elites and governments rather than individuals or groups

•Global governance created and run by the governments of wealthy, developed countries

Regional Integration

•Cooperation through shared institutions make dealings more efficient▫transboundary issues▫economic transactions

•The European Union

Decrease in Power of States•Weakening ability of countries to control

both what crosses their borders and what goes on inside them

•home countries have little direct influence over their MNCs in other countries

•host country finds it difficult to affect the actions or policies of the MNCS even within their borders

•harder time controlling the flow of information and ideas – harder to hide human rights abuses

Transboundary Problems•Lack of control over the flow of people,

communicable diseases, pollution, drugs, arms, hazardous materials, and even terrorist activity

•Terrorists, arms dealers, and drug cartels are all underground cross-border networks, moving money, people, or contraband across borders

•Tradeoffs between security and civil liberties•countries that host hubs of these networks find

themselves hostage to sanctions from these activities

Retaining Human Capital• In developing countries, reduced cost of movement

across orders can be beneficial, but can lead to “brain drain”▫best minds and most educated leave their country

for greater opportunities or rewards elsewhere• how to keep borders open to flow of ideas, information,

and monetary capital while retaining human capital • pressure on developed countries to restrict migration

as a result of economic competition associated with free markets

• when under pressure, governments and populations react with suspicion to those culturally different

Fragmentation

•forces of fragmentation are less likely to devastate states with a long history rather than new states

•Globalization can lead to state disintegration and often to violence, ethical conflict, civil war, secessionism

•Disintegration dealt with through devolution of power (UK) or federal structure of government (Mexico, Russia, and Nigeria)

Global Citizenship•Citizen groups closely scrutinize labor

and environmental records of multinationals▫Bad publicity can impose significant costs

and even change the behavior of MNCs•groups of concerned people have created

worldwide networks of information and activists and have become more effective

Global Citizenship•globalization of media

▫public awareness ▫facilitated a sense of connectedness –

global citizenship•the means through which individuals can

find common causes across geographic boundaries and mobilize to react to processes of globalization

Antiglobalization Protests

•Mass protests against the World Trade Organization, the IMF, and the World Bank

•Aimed to change national policies and the policies of international governmental organizations

•Global “scaling up” of violence by individuals and substate actors

International Non-Governmental Organization (INGO) •Political actors that are not

governments that operate in the international political environment

•A vehicle for global citizens to act▫Amnesty International▫Greenpeace▫Doctors Without Borders▫the International Red Cross

Role of INGOs

•Give aid, provide services that countries might be unwilling or unable to do on their own

•Serve as watchdogs especially for MNCs, increasing accountability▫Transnational Corporation Watch

publicizes poor labor practices of MNCs such as Nike to hold them accountable and change their policies

UK•British Empire, imperial power spread

across the world – economically driven expansion

•Small trading nation with little natural resources▫Industry in high-tech or research-based

fields such as aerospace engines and pharmaceuticals

•Outsourcing and offshoring•One of the most open among the big rich

countries

UK•Devolution of Power to deal with

disintegration•EU and the Euro – Economic isolation to

avoid recession•Halfway between the US and European

countries▫Belief in capitalism and market economy

but also in social safety nets

Russia•Transition economy from centrally-planned

to open, market economy? Decide whether to open up

•Natural resources in north and far east – FDI•Current economic recovery partly driven by

high world oil prices•Secessionist war in Chechnya – increased

nationalism from Globalization•Centralizing power in the office of the

president

China•Entered WTO in 2001, decreased trade

barriers▫Led to influx of FDI, became “factory of the

world”▫Forced to liberalize economy by the WTO

•foreign direct investment (FDI) has controlled over half of China’s international trade and 85% of its total high-tech exports

•Low added value (assembly)

China

•Liberalization of economy, increase in inequality

•Wants foreign trade and FDI but doesn’t want influence of western ideas

•Loss of the “China price” to countries like Bangladesh

•Amnesty international - repression in Tibet and Xinjiang Province in China

Mexico•Manufacturers attracted to Mexico because of

proximity to the US, cheap labor, and relaxed rules

•Drop in agricultural production due to large-scale sale of agricultural land to develop factories

•Rich invest in manufacturing, poor are exploited

•Regional recipients of FDI create regional inequality, North receives most FDI, south does not

•Opportunities for economic growth, greater disparity in living standards

Nigeria•History as supplier of natural resources to

Europeans•“Nigerianize” the oil industry – prevent

foreign takeover, spur industry to add value to crude oil

•Protectionist policies ▫Tariffs, import restrictions, not letting domestic

businesses integrate into the world economy•Nigeria's crude oil and gas deposits – other

countries interested in the internal affairs of Nigeria, could be used as bargaining chip

Nigeria

•Lack of infrastructure•Regionalism, tribalism, corruption•Environmental destruction from

exploitation of oil and gas

Iran

• Oil, gas and electronics exports – buy luxury goods, influence from the West

•Cultural influences: Shiite theocracy loses control• “Guidance Patrols” –the police’s morality

squads•Economic Sanctions against Iran

(Uranium Enrichment Program)•Amnesty international - restrictions on

women in Iran

Making of a T-Shirt

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