Globalization

Introduction

Over many centuries, human societies across the globe have established progressively closer

contacts. Recently, the pace of global integration has dramatically increased. Unprecedented

changes in communications, transportation, and computer technology have given the process

new impetus and made the world more interdependent than ever. Multinational corporations

manufacture products in many countries and sell to consumers around the world. Money,

technology and raw materials move ever more swiftly across national borders. Along with

products and finances, ideas and cultures circulate more freely. As a result, laws, economies, and

social movements are forming at the international level.

The globalized world sweeps away regulation and undermines local and national politics, just as

the consolidation of the nation state swept away local economies, dialects, cultures and political

forms. Globalization creates new markets and wealth, even as it causes widespread suffering,

disorder, and unrest. It is both a source of repression and a catalyst for global movements of

social justice and emancipation.  The great financial crisis of 2008-09 has revealed the dangers of

an unstable, deregulated, global economy but it has also given rise to important global initiatives

for change. The term globalization encompasses a range of social, political, and economic

changes. Within the section Defining Globalization, we provide an introduction to the key

debates. The materials ask what is new, what drives the process, how it changes politics, and

how it affects global institutions like the UN.

Globalization expands and accelerates the exchange of ideas and commodities over vast

distances. It is common to discuss the phenomenon in highly generalized terms, but

globalization's impacts are often best understood at the local level. Cases of

Globalization explore the various manifestations of interconnectedness in the world, noting how

globalization affects real people and places. Globalization often appears to be a force of nature, a

phenomenon without bounds or alternatives. But peoples’ movements have shown that it is

neither unalterable nor inevitable. Citizens all over the world—ordinary people from the global

North and South—can work together to shape alternate futures, to build a globalization of

cooperation, solidarity and respect for our common planetary environment.

Globalization

Globalization (or globalisation) describes a process by which regional economies, societies,

and cultures have become integrated through a globe-spanning network of communication and

trade. The term is sometimes used to refer specifically to economic globalization: the integration

of national economies into the international economy through trade, foreign direct

investment, capital flows, migration, and the spread of technology. However, globalization is

usually recognized as being driven by a combination of economic, technological, socio cultural,

political, and biological factors. The term can also refer to the transnational circulation of ideas,

languages, or popular culture through acculturation.

The United Nations ESCWA has written that globalization "is a widely-used term that can be

defined in a number of different ways. When used in an economic context, it refers to the

reduction and removal of barriers between national borders in order to facilitate the flow of

goods, capital, services and labor though considerable barriers remain to the flow of labor...

Globalization is not a new phenomenon. It began in the late nineteenth century, but it slowed

down during the period from the start of the First World War until the third quarter of the

twentieth century. This slowdown can be attributed to the inward-looking policies pursued by a

number of countries in order to protect their respective industries... however, the pace of

globalization picked up rapidly during the fourth quarter of the twentieth century.

Saskia Sassen writes that "a good part of globalization consists of an enormous variety of micro-

processes that begin to denationalize what had been constructed as national — whether policies,

capital, political subjectivity, urban spaces, temporal frames, or any other of a variety of

dynamics and domains."

History

The historical origins of globalization are the subject of on-going debate. Though some scholars

situate the origins of globalization in the modern era, others regard it as a phenomenon with a

long history.

Perhaps the most extreme proponent of a deep historical origin for globalization was Andre

Gunder Frank, an economist associated with dependency theory. Frank argued that a form of

globalization has been in existence since the rise of trade links between Sumer and the Indus

Valley Civilization in the third millennium B.C. Critics of this idea point out that it rests upon an

overly-broad definition of globalization.

An early form of globalized economics and culture existed during the Hellenistic Age, when

commercialized urban centers were focused around the axis of Greek culture over a wide range

that stretched from India to Spain, with such cities as Alexandria, Athens, and Antioch at its

center. Trade was widespread during that period, and it is the first time the idea of a

cosmopolitan culture (from Greek "Cosmopolis", meaning "world city") emerged. Others have

perceived an early form of globalization in the trade links between the Roman Empire,

the Parthian Empire, and the Han Dynasty. The increasing articulation of commercial links

between these powers inspired the development of the Silk Road, which started in western

China, reached the boundaries of the Parthian empire, and continued onwards towards

Rome. With 300 Greek ships a year sailing between the Greco-Roman world and India, the

annual trade may have reached 300,000 tons.

The Islamic Golden Age was also an important early stage of globalization,

when Jewish and Muslim traders and explorers established a sustained economy across the Old

World resulting in aglobalization of crops, trade, knowledge and technology. Globally significant

crops such as sugar and cotton became widely cultivated across the Muslim world in this period,

while the necessity of learning Arabic and completing the Hajj created a cosmopolitan culture.

The advent of the Mongol Empire, though destabilizing to the commercial centers of the Middle

East and China, greatly facilitated travel along the Silk Road. This permitted travelers and

missionaries such as Marco Polo to journey successfully (and profitably) from one end

of Eurasia to the other. The so-called Pax Mongolica of the thirteenth century had several other

notable globalizing effects. It witnessed the creation of the first international postal service, as

well as the rapid transmission of epidemic diseases such as bubonic plague across the newly

unified regions of Central Asia. These pre-modern phases of global or hemispheric exchange are

sometimes known as archaic globalization. Up to the sixteenth century, however, even the largest

systems of international exchange were limited to the Old World.

The Age of Discovery brought a broad change in globalization, being the first period in which

Eurasia and Africa engaged in substantial cultural, material and biologic exchange with the New

World.[18] It began in the late 15th century, when the two Kingdoms of the Iberian

Peninsula - Portugal and Castile - sent the first exploratory voyages around the Horn of

Africa and to the Americas, "discovered" in 1492 by Christopher Columbus. Shortly before the

turn of the 16th century, Portuguese started establishing trading posts (factories) from Africa to

Asia and Brazil, to deal with the trade of local products like gold, spices andtimber, introducing

an international business center under a royal monopoly, the House of India.

Global integration continued with the European colonization of the Americas initiating

the Columbian Exchange, the enormous widespread exchange of plants, animals, foods, human

populations (including slaves), communicable diseases, and culture between

the Eastern and Western hemispheres. It was one of the most significant global events

concerning ecology, agriculture, and culture in history. New crops that had come from the

Americas via the European seafarers in the 16th century significantly contributed to the world's

population growth.

This phase is sometimes known as proto-globalization. It was characterized by the rise of

maritime European empires, in the 16th and 17th centuries, first

thePortuguese and Spanish Empires, and later the Dutch and British Empires. In the 17th

century, globalization became also a private business phenomenon when chartered

companies like British East India Company (founded in 1600), often described as the

first multinational corporation, as well as the Dutch East India Company (founded in 1602) were

established. Because of the large investment and financing needs and high risks involved in

international trade, the British East India Company became the first company in the world to

share risk and enable joint ownership of companies through the issuance of shares of stock: an

important driver for globalization.

The 19th century witnessed the advent of globalization approaching its modern

form. Industrialization allowed cheap production of household items using economies of scale,

while rapid population growth created sustained demand for commodities. Globalization in this

period was decisively shaped by nineteenth-century imperialism. After the Opium Wars and the

completion of British conquest of India, vast populations of these regions became ready

consumers of European exports. It was in this period that areas of sub-Saharan Africa and the

Pacific islands were incorporated into the world system. Meanwhile, the conquest of new parts of

the globe, notably sub-Saharan Africa, by Europeans yielded valuable natural resources such

as rubber, diamonds and coal and helped fuel trade and investment between the European

imperial powers, their colonies, and the United States.

The first phase of "modern globalization" began to break down at the beginning of the 20th

century, with the first world war. The novelist VM Yeates criticised the financial forces of

globalization as a factor in creating World War I. The final death knell for this phase came

during the gold standard crisis and Great Depression in the late 1920s and early 1930s.

In the middle decades of the twentieth century globalization was largely driven by the global

expansion of multinational corporations based in the United States and Europe, and worldwide

exchange of new developments in science, technology and products, with most

significant inventions of this time having their origins in the Western world according

to Encyclopedia Britannica. Worldwide export of western culture went through the new mass

media: film, radio and television and recorded music. Development and growth of

international transport and telecommunication played a decisive role in modern globalization.

In late 2000s, much of the industrialized world entered into a deep recession.[26] Some analysts

say the world is going through a period of deglobalization after years of increasing economic

integration.[27][28] Up to 45% of global wealth had been destroyed by the global financial crisis in

little less than a year and a half. China has recently become the world's

largest exporter surpassing Germany.

Modern globalization

Globalization, since World War II, is largely the result of planning by politicians to break down

borders hampering trade to increase prosperity and interdependence thereby decreasing the

chance of future war. Their work led to the Bretton Woods conference, an agreement by the

world's leading politicians to lay down the framework for international commerce and finance,

and the founding of several international institutions intended to oversee the processes of

globalization.

These institutions include the International Bank for Reconstruction and Development

(the World Bank), and the International Monetary Fund. Globalization has been facilitated by

advances in technology which have reduced the costs of trade, and trade negotiation rounds,

originally under the auspices of the General Agreement on Tariffs and Trade (GATT), which led

to a series of agreements to remove restrictions on free trade.

Since World War II, barriers to international trade have been considerably lowered through

international agreements — GATT. Particular initiatives carried out as a result of GATT and

the World Trade Organization (WTO), for which GATT is the foundation, has included:

Promotion of free trade:

elimination of tariffs; creation of free trade zones with small or no tariffs

Reduced transportation costs, especially resulting from development

of containerization for ocean shipping.

Reduction or elimination of capital controls

Reduction, elimination, or harmonization of subsidies for local businesses

Creation of subsidies for global corporations

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)

Cultural globalization, driven by communication technology and the worldwide marketing of

Western cultural industries, was understood at first as a process of homogenization, as the global

domination of American culture at the expense of traditional diversity. However, a contrasting

trend soon became evident in the emergence of movements protesting against globalization and

giving new momentum to the defense of local uniqueness, individuality, and identity, but largely

without success.

The Uruguay Round (1986 to 1994) led to a treaty to create the WTO to mediate trade disputes

and set up a uniform platform of trading. Other bilateral and multilateral 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.

World exports rose from 8.5% in 1970, to 16.2% of total gross world product in 2001.

Measuring globalization

Looking specifically at economic globalization demonstrates that it can be measured in different

ways. This center 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

Labor /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)

As globalization is not only an economic phenomenon, a multivariate approach to measuring

globalization is the recent index calculated by the Swiss think tank KOF. 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 is available on a yearly basis for 122

countries, as detailed in Dreher, Gaston and Martens (2008). According to the index, the world's

most globalized country is Belgium, followed by Austria, Sweden, the United Kingdom and the

Netherlands. The least globalized countries according to the KOF-index are Haiti, Myanmar,

the Central African Republic and Burundi.

Globalization of the World Economy

"Globalization" will be understood here to mean major increases in worldwide trade and

exchanges in an increasingly open, integrated, and borderless international economy. There has

been remarkable growth in such trade and exchanges, not only in traditional international trade in

goods and services, but also in exchanges of currencies; in capital movements; in technology

transfer; in people moving through international travel and migration; and in international flows

of information and ideas. One measure of the extent of globalization is the volume of

international financial transactions, with some $1.2 trillion flowing through New York currency

markets each day, and with the volume of daily international stock market transactions exceeding

this enormous amount.

Globalization has involved greater openness in the international economy, an integration

of markets on a worldwide basis, and a movement toward a borderless world, all of which have

led to increases in global flows. There are several sources of globalization over the last several

decades. One such source has been technological advances that have significantly lowered the

costs of transportation and communication and dramatically lowered the costs of data processing

and information storage and retrieval. The latter stems from developments over the last few

decades in electronics, especially the microchip revolution. Electronic mail, the Internet, and the

World Wide Web are some of the manifestations of this new technology, where today's $2,000

laptop computer is many times more powerful than a $10 million mainframe computer of twenty

years ago.

A second source of globalization has been trade liberalization and other forms of

economic liberalization that have led to reduced trade protection and to a more liberal world

trading system. This process started in the last century, but the two World Wars and the Great

Depression interrupted it. It resumed after World War II through the most-favored-nation

approach to trade liberalization, as embodied in the 1946 General Agreement on Tariffs and

Trade (GATT) and now in the World Trade Organization (WTO). As a result, there have been

significant reductions in tariffs and other barriers to trade in goods and services. Other aspects of

liberalization have led to increases in the movement of capital and other factors of production.

Some have suggested that globalization is little more than a return to the world economy of the

late nineteenth century and early twentieth century, when borders were relatively open, when

there were substantial international capital flows and migrations of people, and when the major

nations of Europe depended critically on international trade. This is particularly the view of some

British scholars, looking back to the period of British imperial dominance of the world economy.

While there are some similarities in terms of trade and capital movements, the period of a

century ago did not have some of the major technological innovations that have led to a

globalized world economy today that is qualitatively different from the international economy of

the last century.

A third source of globalization has been changes in institutions, where organizations have

a wider reach, due, in part, to technological changes and to the more wide-ranging horizons of

their managers, who have been empowered by advances in communications. Thus, corporations

that had been mainly focused on a local market have extended their range in terms of markets

and production facilities to a national, multinational, international, or even global reach. These

changes in industrial structure have led to increases in the power, profits, and productivity of

those firms that can choose among many nations for their sources of materials, production

facilities, and markets, quickly adjusting to changing market conditions. Virtually every major

national or international enterprise has such a structure or relies on subsidiaries or strategic

alliances to obtain a comparable degree of influence and flexibility. As one measure of their

scale, almost a third of total international trade now occurs solely within these multinational

enterprises. With the advent of such global firms, international conflict has, to some extent,

moved from nations to these firms, with the battle no longer among nations over territory but

rather among firms over their share of world markets. These global firms are seen by some as a

threat to the scope and autonomy of the state, but, while these firms are powerful, the nation state

still retains its traditional and dominant role in the world economic and political system.

Non-government organizations, the NGO's, have also taken a much broader perspective

that, as in the case of the global firms, is often multinational or global. Even international

organizations, such as the United Nations, the International Monetary Fund and World Bank, and

the new World Trade Organization have new global roles. Overall, multinational enterprises and

other such organizations, both private and public, have become the central agents of the new

international globalized economy.

A fourth reason for globalization has been the global agreement on ideology, with a

convergence of beliefs in the value of a market economy and a free trade system. This process

started with the political and economic changes that started in the 1978 reforms in China and

then involved a “falling dominoes” series of revolutions in Eastern and Central Europe starting in

1989 that ended with the dissolution of the Soviet Union in December 1991. This process led to a

convergence of ideology, with the former division between market economies in the West and

socialist economies in the East having been replaced by a near-universal reliance on the market

system. This convergence of beliefs in the value of a market economy has led to a world that is

no longer divided into market-oriented and socialist economies. A major aspect of this

convergence of beliefs is the attempt of the former socialist states to make a transition to a

market economy. These attempted transitions, especially those in the former Soviet Union and in

Eastern and Central Europe have, however, been only partially successful. The nations involved

and their supporters in international organizations and advanced western market economies have

tended to focus on a three-part agenda for transition, involving: 1) stabilization of the

macroeconomy, 2) liberalization of prices, and 3) privatization of state-owned enterprise.

Unfortunately, this “SLP” agenda fails to appreciate the importance of building market

institutions, of establishing competition, and of providing for an appropriate role for the

government in a modern mixed economy.

A fifth reason for globalization has been cultural developments, with a move to a

globalized and homogenized media, the arts, and popular culture and with the widespread use of

the English language for global communication. Partly as a result of these cultural developments,

some, especially the French and other continental Europeans, see globalization as an attempt at

U.S. cultural as well as economic and political hegemony. In effect, they see globalization as a

new form of imperialism or as a new stage of capitalism in the age of electronics. Some have

even interpreted globalization as a new form of colonialism, with the U.S. as the new metropole

power and with most of the rest of the world as its colonies, supplying it not only with raw

materials, as in earlier forms of European colonialization, but also with technology; production

facilities; labor, capital, and other inputs to the production process; and markets on a global

basis.

Whether one sees globalization as a negative or as a positive development, it must be

understood that it has clearly changed the world system and that it poses both opportunities and

challenges. It is also clear that the above technological, policy, institutional, ideological, and

cultural developments that have led to globalization are still very active. Thus, barring a radical

move in a different direction, these trends toward greater globalization will likely continue or

even accelerate in the future. One important aspect of these trends will be the growth in

international trade in services that has already increased substantially but promises even greater

growth in the future, especially in such areas as telecommunications and financial services. The

result will be continued moves toward a more open and a more integrated world as it moves

closer and closer to a planet without borders and to a more integrated, open, and interdependent

world economy. The result will be even greater worldwide flows of goods, services, money,

capital, technology, people, information, and ideas.

Foreign Direct Investment

Foreign direct investment (FDI) has increased tenfold over the last 20 years. This kind of

investment brings private overseas funds into a country for investments in manufacturing or

services (for example, General Motors building an auto factory in the Philippines). FDI can bring

impressive growth, as in China's coastal provinces, but also instability and economic distress, as

during the 1997-98 Asian financial crisis. Governments of many poor countries see foreign

capital as a means of economic growth, and they have taken steps to attract it. These steps often

include minimizing business regulation and weakening codes for labor, health, and the

environment. Such governments may also try to improve the investment climate by using

violence to silence opposition parties and movements. Rich countries, for their part, have sought

legal protection for investors, and have used the World Bank and the IMF to impose new

arrangements in this field. Bilateral and multilateral agreements, such as the North American

Free Trade Area, protect investments at the expense of environmental and health regulations.

The proposed Multilateral Investment Agreement (MIA), under negotiation at the WTO, would

replicate this imbalance at the global level.

Changes in Investment Regulations:

Dollarization

Traditionally, each independent nation had its own currency as a symbol of sovereignty, but in a

globalizing world national currencies have been weakening or even disappearing. The US dollar

has been taking over as the world's currency of account. Neo-liberal open markets and rapid

currency conversion have reinforced the dollar's role since the mid-1970s. Much trade is now

dollar-based, countries prefer to hold their central bank reserves in US dollars, and private

companies as well as wealthy citizens often hold dollars or dollar-denominated assets. The

United States derives great economic and political power from this dollar hegemony. During the

1990s, dollarization accelerated. A number of countries pegged their currencies to the dollar or

even adopted the dollar outright as their national currency, hoping that this would solve inflation

problems. Dollar-denominated notes, especially $100 bills, grew in popularity with individuals

as well as criminal networks, becoming the US's largest export. But huge US trade imbalances

and federal budget deficits undermined the dollar and eventually knocked down its value in

international currency markets. Further erosion of the dollar could undermine and reverse

decades of dollarization, but a globalizing world still needs a strong common currency. If the

dollar weakens further, alternatives might emerge. But for the moment, the (weaker) dollar still

is King.

Impacts of Globalization on National Economies

Globalization has had significant impacts on all economies of the world, with manifold

effects. It affects their production of goods and services. It also affects the employment of labor

and other inputs into the production process. In addition, it affects investment, both in physical

capital and in human capital. It affects technology and results in the diffusion of technology from

initiating nations to other nations. It also has major effects on efficiency, productivity, and

competitiveness.

Several impacts of globalization on national economies deserve particular mention. One

is the growth of foreign direct investment (FDI) at a prodigious rate, one that is much greater

than the growth in world trade. Such investment plays a key role in technology transfer, in

industrial restructuring, and in the formation of global enterprises, all of which have major

impacts at the national level. A second is the impact of globalization on technological

innovation. New technologies, as already noted, have been a factor in globalization, but

globalization and the spur of competition have also stimulated further advances in technology

and speeded up its diffusion within nations through foreign direct investment. A third is the

growth of trade in services, including financial, legal, managerial, and information services and

intangibles of all types that have become mainstays of international commerce. In 1970, less than

a third of foreign direct investment related to the export of services, but today that has risen to

half and it is expected to rise even further, making intellectual capital the most important

commodity on world markets. As a result of the growth of services both nationally and

internationally, some have called this "the age of competence," underscoring the importance of

lifelong education and training and the investment in human capital in every national economy.

The Costs of Globalization and Potential Conflicts

Globalization involves not only benefits, but also has costs or potential problems that

some critics see as great perils. These costs could lead to conflicts of various types, whether at

the regional, national, or international level. One such cost or problem is that of who gains from

its potential benefits. There can be substantial equity problems in the distribution of the gains

from globalization among individuals, organizations, nations, and regions. Indeed, many of the

gains have been going to the rich nations or individuals, creating greater inequalities and leading

to potential conflicts nationally and internationally. Some have suggested the possibility of

convergence of incomes globally based on the observation that the poor nations are growing at a

faster rate than the rich nations. The reality, however, is that a small group of nations, the "tiger

economies" of East Asia, have been growing at rapid rates, while the least developed nations of

Africa, Asia, and South and Central America have been growing at a slower rate than the rich

nations. These poor nations are thus becoming increasingly marginalized. The result has been not

a convergence but rather a divergence or polarization of incomes worldwide, with the rapid-

growth economies joining the rich nations, but with the poor nations slipping even further

behind. This growing disparity leads to disaffection and possibly even international conflicts as

nations seek to join the club of rich nations and have-not nations struggle with the have nations

for their share of world output. This issue of distribution is a major challenge in the process of

the globalization of the world economy.

A second cost or problem stemming from globalization is that of major potential regional

or global instabilities stemming from the interdependencies of economies on a worldwide basis.

There is the possibility that local economic fluctuations or crises in one nation could have

regional or even global impacts. This is not just a theoretical possibility as seen in the exchange

rate and financial crisis in Asia, starting in Thailand in 1998 and then spreading to other

Southeast Asian economies and even to South Korea. These linkages and potential instabilities

imply great potential mutual vulnerability of interconnected economies. A worldwide recession

or depression could lead to calls to break the interdependencies that have been realized through

the globalization process, as happened in the Great Depression of the 1930's, with competitive

devaluations, beggar-my-neighbor policies, escalating tariffs, other forms of protectionism, etc.

The result could be economic conflict, gravitating to economic warfare and possibly to military

conflict, repeating the history of the interwar period leading to the largest war in human history.

A third type of problem stemming from globalization is that the control of national

economies is seen by some as possibly shifting from sovereign governments to other entities,

including the most powerful nation states, multinational or global firms, and international

organizations. The result is that some perceive national sovereignty as being undermined by the

forces of globalization. Thus globalization could lead to a belief among national leaders that they

are helplessly in the grip of global forces and an attitude of disaffection among the electorate.

The result could be extreme nationalism and xenophobia, along with calls for protectionism and

the growth of extremist political movements, ultimately leading to potential conflicts.

It is sometimes alleged that a cost of globalization is unemployment in the high wage

industrialized economies. The low unemployment rates in many high wage nations and their high

rates in many low wage nations disprove this allegation. National policy and technological trends

are much more important determinants of employment than global factors. A related myth is that

globalization is threatening the social welfare provisions of some states, but other factors are

much more important, including domestic fiscal policy and demographic trends. In both cases,

globalization is a convenient scapegoat for failures of national policy.

It is important also to appreciate that the economic aspects of globalization are but one

component of its effects. There are potential noneconomic impacts of globalization involving

great risks and potential costs, even the possibility for catastrophe. One is that of security, where

the negative effects of globalization could lead to conflicts, as suggested above, or the very

process of globalization leading to integration of markets could make conflicts escalate beyond a

particular region or raise the stakes of conflict, for example, from conventional weapons to

weapons of mass destruction. A second noneconomic area in which globalization could lead to

catastrophic outcomes is that of political crises, that could escalate from local to large-scale

challenges and, if unresolved, to a catastrophic outcome. A third such area is that of the

environment and health, where the greater interconnectedness stemming from globalization

could lead again to catastrophic outcomes, such as those stemming from global environmental

impacts, such as global warming, and pandemics.

The Role of Global Cooperation in Dealing with Global Threats and

in Creating a New Post Cold War System

The last two sections have highlighted both the benefits and the costs stemming from

globalization. Some could see globalization as a very dangerous negative development by

focusing on the costs and the potential for conflict while others could see it as a positive

development offering unprecedented opportunities. Both of these views contain some elements

of truth, but each should be offset by the other in order to gain a full understanding of the

impacts of globalization. There are twin myths here, the optimistic one that globalization leads to

only positive outcomes and the pessimistic one that globalization leads only to negative

outcomes. Any objective treatment or net assessment, however, would have to recognize both the

benefits and costs of globalization.

What is the net result of globalization, when taking both benefits and costs into account?

The answer depends crucially on the nature of the world system. In a world beset by conflicts,

globalization would probably have a net negative impact. Conversely, in a cooperative world,

globalization would probably have a net positive impact. Thus, globalization represents a major

challenge and at the same time an unprecedented opportunity in terms of the possibilities for

conflict or cooperation. The challenge is to create a new world system in the aftermath of the

cold war and the movements toward globalization that would enhance its generally beneficial

effects and that would minimize its actual or potential costs. The key to such a world system will

be cooperation among the nations of the world and dynamic innovation, including the

establishment of new institutions.

The challenge of the present globalized and post cold war economy is comparable to the

challenge facing the winning nations in World War II. The old world had been destroyed and a

new world had to be created. Not one, but two world systems were created, one in the West and

the other in the East. Both involved the creation of new institutions that would replace the ones

that had been destroyed in the war. Each side had its own ideology and organization, that in the

West being market oriented and that in the East being socialist. Now, of course, the ideological

divide has dissolved where there is a convergence of ideology on the value of a market economy.

A small group of Americans helped create a new world system for the West during the

period from 1945 to 1955. One of the major participants was Dean Acheson, the U.S. Secretary

of State during part of this period. His memoirs are aptly named Present at the Creation, given

his role in creating this new world system. Another was Will Clayton, who developed the

blueprints for both the Marshall Plan and the General Agreement on Tariffs and Trade. These

people, together with President Truman, George Marshall, and others created the institutions that

brought the devastated nations of Europe into the world community. These institutions included

GATT, which evolved into the WTO; the United Nations; the World Bank and the IMF; the

Marshall Plan and OEEC (later to evolve into the OECD); NATO; and others. These institutions

and the new world system that they helped create was most successful in bringing the nations of

Europe, including both former enemies and devastated allies, into this new world system and in

promoting reconstruction and growth.

The present post Cold War period has some similarities to the one after World War II in

that a new world system must be created. Such a system that would have to take account of the

new situation of a world not divided by ideology and becoming increasingly integrated. The

sequence of revolutions that began in Eastern Europe in 1989 led directly or indirectly to the end

of the Cold War, the demise of the Warsaw Pact, the unification of Germany, the dissolution of

the Soviet Union, and the attempted transition of the former socialist states to democracy and a

market economy, with only mixed success. The West for its part has largely failed to establish

structures such as those developed after World War II to bring Russia, other former Soviet states,

and Central and Eastern Europe into the world economic and political system. In some respects

the treatment of Russia in the current period is similar to the treatment of Germany after World

War I rather than its treatment after World War II. NATO expansion is perhaps the most serious

error made in the post Cold War period, in that it isolated Russia and added little to European

security but at enormous expense. The total cost of NATO expansion will, in fact, be of the same

order of magnitude as the current value of the Marshall Plan, some $90 billion. A new Marshall

Plan for the former socialist nations of Europe could have promoted their transition and growth

through institution building, industrial restructuring, investment and capital inflows, their

integration into the world economy, and their cooperation. These would have contributed more

to European security than the acquisition of advanced fighter jets and other military equipment

by some of these nations that have been admitted into NATO.

Overall, the challenge of globalization will require truly cooperative efforts of the great

nations, especially among the new great powers of the European Union, the United States,

Canada, Japan, Russia, China, India, Brazil, and others. Their joint activity in establishing new

political arrangements and institutions could go a long way to solving global problems, including

the economic and other problems stemming from globalization. As was true in the earlier period

of the creation of a new world, it will be necessary to revamp existing institutions or to create

new ones so as to deal with economic challenges, such as the problems of distribution and

mutual vulnerability stemming from globalization. These institutions must have global

perspectives and responses and they will require substantial resources and enforcement

mechanisms, including some elements of supranational decision making and authority, along

with appropriate transparency and accountability.

Consider how global cooperation and new international institutions can treat the several

problems identified earlier as costs or problems of globalization. The first of these problems was

that of the distribution of income and specifically the gains from globalization both within and

between nations. A supranational institution based on global cooperation could address this

problem. It would, in effect, tax the nations gaining from globalization and use the proceeds to

provide financial and technical assistance to those losing from globalization. This is already

being done in a somewhat haphazard way through the World Bank and, in particular, its soft

lending arm, the International Development Association (IDA) that provides subsidized loans to

poor nations on more favorable terms than the World Bank could give. It should be done,

however, on a more systematic basis, which would require either a new international institution

or an expansion and change in the nature of the World Bank. The rich nations should be expected

to support the establishment of such an institution as an investment in global stability, if they

recognize the dangers of serious disparities in the worldwide distribution of income.

The second of the problems identified earlier as stemming from globalization was the

fragility of the international economic system, leading to mutual vulnerability. Again,

international cooperation and the development of new institutions or the expansion of existing

institutions could address this problem. The International Monetary Fund could be instrumental

in dealing with this problem. The IMF has played a key role in providing support to nations that

have experienced instabilities, as in its support for Mexico during the peso crisis and its

agreement to support South Korea during the East Asia financial crisis. A more credible

insurance against these risks would require a substantial augmentation of the resources of the

IMF, the assets of which have not grown at the same rate as international financial exchanges.

International cooperation could also lead to the implementation of the Tobin tax, a small tax on

foreign exchange transactions that could play a valuable role in limiting destabilizing currency

speculation and, at the same time, provide funding for international organizations.

The third of the problems identified earlier as stemming from globalization was that of

the perceived loss of sovereignty of national governments and political leaders. This

development could lead to fear of the loss of ability of nations to determine their economic

policies, political disaffection, and the rise of extremist politicians and political movements. The

process of globalization, however, need not lead to a loss of sovereignty. Once again,

international cooperation can play a role in ensuring the sovereignty of national governments and

the proper role for political leaders, drawing a firm line between what is in the province of these

governments and their leaders on the one side and what is in the province of international

organizations and multinational or global enterprise on the other. Participation in the

establishment of the needed institutions to deal with these and other problems stemming from

globalization will, by itself, help political leaders to regain a sense of control over their futures

and positions in the global community. For example, the regulatory regimes of nations and even

international organizations have become more porous and more easily overcome through

advances in technology. Examples include the lack of regulation of the global integrated capital

market, of trade in information services that is widely expected to grow enormously, and of labor

and environmental safeguards. Cooperation among nations and international organizations could

offset these developments by themselves taking advantage of recent technological advances and

using them to reassert control through cooperative activities.

Overall, there are several possible vehicles for cooperation as a way of responding to the

challenges of globalization. One is the strengthening of existing international institutions.

Another is the establishment of new institutions, as in the case of the World Trade Organization,

which has a binding dispute settlement mechanism of a supranational character. A third is the

establishment of larger entities, such as the European Union, or loose combinations of nations to

treat certain economic issues, such as the G-8 or the Asian Pacific Economic Cooperation

(APEC).

Global cooperation through formal or informal institutions provides an increasingly

important mechanism to ensure the proper treatment of global problems, including those

stemming from globalization. Through such global cooperation it should be possible to ensure

equity and stability in a globalized world, leading to economic growth for all, the transition to a

market economic for former socialist states, and economic development for the poorer nations.

Such cooperation is also the way to treat the noneconomic problems of globalization, including

those of environmental and health protection on a world-wide basis, freedom from political

crises or instability, and global peace and security for the planet.

Globalization For the Benefit of All

When your Secretary General asked me to participate in this session of entrepreneurs from

approximately 100 countries, I was delighted. Let me be candid from the outset: I’m reasonably

confident that many of your fellow citizens, like Canadians aplenty, fear globalization. Many say

it brings the decay of social values, cultures and the environment; I would argue that the main

challenge is not to decide whether globalization is good or bad, but rather to ensure that a

"walled-down world" provides more fulfilled lives for all. Globalization can be an agent for

good, a force to create unprecedented growth and opportunity for those who embrace it.

Economists have talked about globalization for many decades even if the term itself emerged

only recently. Many speak of a borderless world, but that is a far from today’s reality where

boundaries are still very real. Too often the term is thought of as synonymous with unbridled

capitalism where any entrepreneur can raise money anywhere in the world, make anything and

sell it anywhere. But globalization is also about the free flow of ideas, the exchange of culture

and values, the greater attention now being given to issues such as human rights, environmental

protection and technological advances which have brought people closer together than ever.

Benefits of Globalization

Virtually all economists agree that the large majority of residents of our shrunken planet are

considerably better off through the growth of markets and the efforts of the GATT and its

successor, the WTO, to keep them open. With ever expanding technology comes new markets,

increased demand for products but also greater competition. There are now more people with

computers connected to the world who are investing than ever before. As Klaus Schwab of the

Davos World Economic Forum observed: "We have moved from a world where the big eat the

small to a world where the fast eat the slow." More than $1.5 trillion is now exchanged in the

world’s currency markets each day, and nearly a fifth of the goods and services produced each

year are traded.

Consumers of goods and services in all countries are one huge community who benefit from

trade for reasons which include increased competition, comparative advantage, economies of

scale and access to a greater range of products and services. There are also those likely to gain

less than others from globalization.

Lower inflation is often cited as a favourable consequence of globalization because increased

competition makes businesses more reluctant to boost prices/wages unless warranted by

productivity increases. Another possible benefit is faster technological and productivity growth

because increased international competition has obliged business generally to innovate more

rapidly since the ’70s.

Social Tensions

Dani Rodrik of Harvard has singled out three sources of tension between global markets and

social stability:

1) Globalization makes the services of large segments of working populations more easily

substitutable across boundaries,

2) Trade can unleash forces that undermine norms in national practices, for example when child

labour in Honduras replaces workers in South Carolina or cuts in pension benefits in France are

called for in response to the requirements of the Maastricht treaty,

3) Globalization and its competitive pressures make it more difficult for governments to carry

out the important functions of providing the social programs which since World War II helped to

maintain social cohesion and domestic support for liberalization.

Successful Globalizers

Rodrik concludes from the experience of both Europe and Asia that successful globalizers have

had "market-friendly but pro-active governments, adequate social insurance and have integrated

into the world economy on their own terms. This lesson contradicts much of today’s

conventional wisdom that globalization requires small government, that welfare states have to be

cut down to size, and that there is a single (read Anglo-American) model on which all countries

will reasonably converge." He asserts that it is the overall quality of a society’s domestic

institutions - respect for the rule of law, human rights, good governance, social and political

stability, adequate infrastructure and a skilled labour force- rather than labour costs or taxes that

determines where most investments go.

Few question that unprecedented freedom in many markets has resulted in spectacular economic

growth; international trade since 1988 alone has doubled to almost US$7 trillion. Quite a number

of countries around the world are experiencing rapid overall growth, and some currently enjoy

record low unemployment rates. In the case of a uniquely export dependent country like Canada,

where about 43 per cent of our gross domestic output now is exports, I believe virtually all of us

have benefitted from more open economies worldwide.

NAFTA

When the North American Free Trade Agreement (NAFTA) began in 1994 for Canada the

United States and Mexico, there were more than few skeptics. Six years later, the figures speak

for themselves: total merchandise trade across North America surpassed $752 billion in 1998.

Canada’s merchandise trade with Mexico doubled over the same period, reaching $9 billion a

year. In the last four years an estimated 1.5 million new jobs have been created in Mexico alone.

Since NAFTA there were 15,883 new Mexican export firms created.

There was also fear that NAFTA would lead to environmental degradation in Mexico;

environmental regulations would be relaxed in an attempt to woo investors. Mexican President

Ernesto Zedillo put some of those fears to rest in comments earlier this year. Since 1994, he

explained, Mexico’s enforcement of environmental standards has become stricter; he added that

new employment opportunities offered by international trade have made it possible for highly

polluting activities to be replaced by environmentally friendly ones.

Developing World

Many are concerned about the impact globalization is having on developing countries. Consider

these statistics from the 1999 UN Human Development Report:

The income gap between the fifth of the world’s people living in the richest countries and

the fifth living in the poorest was 74 to 1 in 1997, up from 60 to 1 in 1990.

By the late 1990s the fifth of the world’s people living in the highest income counties

had:

86% of world GDP, while the bottom fifth, just 1%,

68% of foreign direct investment, and the bottom fifth, just 1%

and,74% of world telephone lines, the bottom fifth, just 1.5%

And most striking of all, the assets of the top three billionaires are more than the

combined GNP of all least developed countries and their 600 million people. This has

contributed to the perception that globalization benefits only the rich, leaving the poor

behind.

Recently, countries in Sub-Saharan Africa have begun to experience the benefits of

globalization, and some have led the world in percentage economic growth. Angola, Uganda and

Botswana already stand among the ten fastest growing economies globally. The IMF forecasts

that Africa’s overall GDP should grow by 5% in 2000, a significant improvement from 3.1% in

1999.

Botswana and Mauritius are shining examples of the positive effects of globalization. Both

experienced exponential growth as they embraced foreign investment on their own terms and

married their economic success with good governance and generous budget allocations for

education and health care. Botswana, often cited as a major African success story, was one of the

poorest countries in the world at independence, but has evidently been the fastest growing

economy on earth since 1965. While such successes may continue to be the exception rather than

the rule in Africa, other economies can do well too.

Much of what separates the developed and developing worlds today is the knowledge gap. In

many developing countries, resources and people are abundant; it is the relative lack of

experience in good economic, social and political structures that hurts their ability to compete. In

1998, the Internet had more than 140 million users and that number is expected to surpass 700

million by 2001. However South Asia, home to 23% of the world’s population, has less than 1%

of Internet users.

Dissemination of ideas through the Information Highway, television or satellites introduces ideas

about the environment, democracy, human rights and even wealth creation. I would suggest that

one of the best effects of globalization is that information technology has brought attention to the

need for more democratic development worldwide and the protection of human rights

everywhere. The BBC World Service, TV-5, CNN and other television broadcasters are the

principal vehicles of instant communication, which has revolutionized our understanding of the

world. At the same time, many worry about the growing exports of American films, music and

commercial television programs.

Whither Globalization?

The European financial problems of the early 90s, the Latin American crisis, beginning in

Mexico in the mid 90s, and the East Asian flu which also hit Russia and Brazil in 1998-99, were

highly destructive of many livelihoods. If the sudden removal of capital from these countries

caused financial instability, it should be added that their access to global investments helped

them to prosper earlier and for most of them to recover much faster then expected. Could not

these crises have been avoided through better regulation of financial markets by international

organizations and national governments?

In the case of the WTO, critics should note that its dispute settlement mechanism is much better

than the one in the GATT, which curiously required the unanimous agreement of all members,

including the offending member country itself. The WTO requires a unanimous decision to block

a dispute panel report. Even large countries have thus stopped dealing with important trade

complaints outside the GATT/WTO, which should benefit smaller economies.

Labour Standards/Environment

The WTO also promises to phase out over 10 years the Multi-Fibre Agreement, which limited

exports of textiles and apparels from developing countries to developed ones. Some initial steps

have been taken to include agriculture by converting market barriers to tariffs as a first stage in

negotiating them downwards. A parallel agreement on services (GATS) hopes to do for services

what the GATT has done for goods.

Three areas where the WTO has not extended its authority in a significant way is labour

standards, human rights and the environment. I understand that the WTO does permit some uses

of trade policies, including economic sanctions, for human rights abuses. The issue is more

complicated for labour standards. Prohibiting slave labour and exploitive child labour is obvious,

but what of issues such as minimum wage levels? If it is mostly better paid employees in OECD

countries who lose from the WTO’s present exclusion of labour standards from trade policy, is it

not understandable that developing countries see the issue as protecting job-holders in highly

developed countries?

The Future

The way ahead is certainly unclear judging from the fairly recent protests at the IMF and World

Bank meeting in Washington DC. The next US President will probably have to obtain fast track

legislation from the new Congress before any new trade negotiations can make substantive

progress. Greater participation by NGO’s in trade negotiations might help win public support.

Developing countries should be represented formally in WTO decision-making, perhaps through

a steering committee having permanent members from developed economies and rotating reps

from small/developing countries.

The alternative to managed globalization could be painful if we recall what happened to the pre-

1914 short-lived victory of free markets and liberal democracy over mercantilism and

nationalism. Globalization today must be complemented by social programs, safety nets and

more investments in education/ training. We ignore at our peril the challenge to build genuine

legitimacy in each of our countries for more open economies.

Many people I talk to in Canada and elsewhere think the momentum today is with the anti-

globalization forces. If Fred Bergsten of the Institute for International Economics is correct that

on trade matters you either move forward or fall over - the bicycle theory - there is real work to

be done by all of us. It is clear that globalization is a force of great change and not simply a

spectre on the horizon. Through technology, communications and economics, globalization and

our increasing interconnection with each other are inevitable. Time and distance are shrinking:

globalization is a reflection of that reality. That is why I question those who wholly condemn the

phenomenon. Countries cannot succeed in isolation today. A poor country that closes its borders

to investment is likely to stay poor. Globalization can champion stability, democracy and greater

sharing around the world.

Action Needed

Here are four areas in which Bergsten thinks you and I should be active in our own countries:

1. Public education above all, which will require better analyses of the real consequences of

globalization, including all of its benefits,

2. An honest admission that there are costs and losers with globalization, together with creating

better safety nets and education/training programs in many countries for those dislocated by

globalization or related factors,

3. Reviewing efforts to reform the international financial institutions to help prevent crises,

including approving capital controls in certain cases, more effective early warning systems,

better co-ordination of exchange rates among the big economies, and engaging the private sector

more systematically in rescue operations, and

4. Restarting the truly multilateral liberalization of the global trading system, which should

address the key issues of the critics, including food trade, labour agreements and the

environment.

As successful entrepreneurs, the world is counting on you to ensure that globalization is for the

benefit of people everywhere. I wish you every success. 

Effects of globalization

Globalization has various aspects which affect the world in several different ways such as:

Industrial - emergence of worldwide production markets and broader access to a range of

foreign products for consumers and companies. Particularly movement of material and

goods between and within national boundaries. International trade in manufactured goods

increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since

1955. China's trade with Africa rose sevenfold during 2000-07 alone.

Financial - emergence of worldwide financial markets and better access to external

financing for borrowers. By the early part of the 21st century more than $1.5 trillion in

national currencies were traded daily to support the expanded levels of trade and

investment.[40] As these worldwide structures grew more quickly than any transnational

regulatory regime, the instability of the global financial infrastructure dramatically

increased, as evidenced bYFinancial crisis of 2007–2010. Globalization of a global

common market, based on the freedom of exchange of goods and capital. The

interconnectedness of these markets, however, meant that an economic collapse in any

one given country could not be contained.

Health Policy - On the global scale, health becomes a commodity. In developing nations

under the demands of Structural Adjustment Programs, health systems are fragmented

and privatized. Global health policy makers have shifted during the 1990s from United

Nations players to financial institutions. The result of this power transition is an increase

in privatization in the health sector. This privatization fragments health policy by

crowding it with many players with many private interests. These fragmented policy

players emphasize partnerships, specific interventions to combat specific problems (as

opposed to comprehensive health strategies). Influenced by global trade and global

economy, health policy is directed by technological advances and innovative medical

trade. Global priorities, in this situation, are sometimes at odds with national priorities

where increased health infrastructure and basic primary care are of more value to the

public than privatized care for the wealthy.

Political - some use "globalization" to mean the creation of a world government which

regulates the relationships among governments and guarantees the rights arising from

social and economic globalization. Politically, the United States has enjoyed a position of

power among the world powers, in part because of its strong and wealthy economy. With

the influence of globalization and with the help of The United States’ own economy, the

People's Republic of China has experienced some tremendous growth within the past

decade. If China continues to grow at the rate projected by the trends, then it is very

likely that in the next twenty years, there will be a major reallocation of power among the

world leaders. China will have enough wealth, industry, and technology to rival the

United States for the position of leading world power.

Informational - increase in information flows between geographically remote locations.

Arguably this is a technological change with the advent of fibre optic communications,

satellites, and increased availability of telephone and Internet.

Language  - the most popular language is Mandarin (845 million speakers) followed by

Spanish (329 million speakers) and English (328 million speakers).

About 35% of the world's mail, telexes, and cables are in English.

Approximately 40% of the world's radio programs are in English.

About 50% of all Internet traffic uses English.[53]

Competition - Survival in the new global business market calls for improved productivity

and increased competition. Due to the market becoming worldwide, companies in various

industries have to upgrade their products and use technology skillfully in order to face

increased competition.

Ecological - the advent of global environmental challenges that might be solved with

international cooperation, such as climate change, cross-boundary water and air pollution,

over-fishing of the ocean, and the spread of invasive species. Since many factories are

built in developing countries with less environmental regulation, globalism and free trade

may increase pollution. On the other hand, economic development historically required a

"dirty" industrial stage, and it is argued that developing countries should not, via

regulation, be prohibited from increasing their standard of living.

Cultural - growth of cross-cultural contacts; advent of new categories

of consciousness and identities which embodies cultural diffusion, the desire to increase

one's standard of living and enjoy foreign products and ideas, adopt new technology and

practices, and participate in a "world culture". Some bemoan the

resulting consumerism and loss of languages. Also see Transformation of culture.

Spreading of multiculturalism, and better individual access to cultural diversity (e.g.

through the export of Hollywood and, to a lesser extent, Bollywoodmovies). Some

consider such "imported" culture a danger, since it may supplant the local culture,

causing reduction in diversity or even assimilation. Others consider multiculturalism

to promote peace and understanding between people. A third position gaining

popularity is the notion that multiculturalism to a new form of monoculture in which

no distinctions exist and everyone just shift between various lifestyles in terms of

music, cloth and other aspects once more firmly attached to a single culture. Thus not

mere cultural assimilation as mentioned above but the obliteration of culture as we

know it today.

Greater international travel and tourism. WHO estimates that up to 500,000 people

are on planes at any one time. In 2008, there were over 922 million international

tourist arrivals, with a growth of 1.9% as compared to 2007.

Greater immigration, including illegal immigration. The IOM estimates there are

more than 200 million migrants around the world today. Newly available data show

that remittance flows to developing countries reached $328 billion in 2008.

Spread of local consumer products (e.g., food) to other countries (often adapted to

their culture).

Worldwide fads and pop culture such as Pokémon, Sudoku, Numa

Numa, Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to

those who have Internet or Television, leaving out a substantial segment of the Earth's

population.

Worldwide sporting events such as FIFA World Cup and the Olympic Games.

Incorporation of multinational corporations in to new media. As the sponsors of

the All-Blacks rugby team, Adidas had created a parallel website with a

downloadable interactive rugby game for its fans to play and compete.

Social - development of the system of non-governmental organisations as main agents of

global public policy, including humanitarian aid and developmental efforts.

Technical

Development of a Global Information System, global telecommunications

infrastructure and greater transborder data flow, using such technologies as

theInternet, communication satellites, submarine fiber optic cable, and wireless

telephones

Increase in the number of standards applied globally; e.g., copyright laws, patents and

world trade agreements.

Legal/Ethical

The creation of the international criminal court and international justice movements.

Crime importation  and raising awareness of global crime-fighting efforts and

cooperation.

The emergence of Global administrative law.

Religious

The spread and increased interrelations of various religious groups, ideas, and

practices and their ideas of the meanings and values of particular spaces.

Cultural effects

"Culture" is defined as patterns of human activity and the symbols that give these activities

significance. Culture is what people eat, how they dress, beliefs they hold, and activities they

practice. Globalization has joined different cultures and made it into something different. As Erla

Zwingle, from the National Geographic article titled "Globalization" states, "When cultures

receive outside influences, they ignore some and adopt others, and then almost immediately start

to transform them."

One classic culture aspect is food. Someone in America can be eating Japanese noodles for lunch

while someone in Sydney, Australia is eating classic Italianmeatballs. India is known for

its curry and exotic spices. France is known for its cheeses. America is known for its burgers and

fries. McDonald's is an American company which is now a global enterprise with 31,000

locations worldwide. This company is just one example of food causing cultural influence on the

global scale.

Another common practice brought about by globalization is the usage of Chinese kanji in tattoos.

These tattoos are popular with today's youth despite the lack of social acceptance of tattoos in

China. Also, there is a lack of comprehension in the meaning of Chinese characters that people

get, making this an example of cultural appropriation.

The internet breaks down cultural boundaries across the world by enabling easy, near-

instantaneous communication between people anywhere in a variety of digital forms and media.

The Internet is associated with the process of cultural globalization because it allows interaction

and communication between people with very different lifestyles and from very different

cultures. Photo sharing websites allow interaction even where language would otherwise be a

barrier.

Negative effect

Globalization has been one of the most hotly debated topics in international economics over the

past few years. Globalization has also generated significant international opposition over

concerns that it has increased inequality and environmental degradation. In the Midwestern

United States, globalization has eaten away at its competitive edge in industry and agriculture,

lowering the quality of life in locations that have not adapted to the change.

Effect on disease

Globalization, the flow of information, goods, capital and people across political and geographic

boundaries, has also helped to spread some of the deadliest infectious diseases known to humans.

Starting in Asia, the Black Death killed at least one-third of Europe's population in the 14th

century. Modern modes of transportation allow more people and products to travel around the

world at a faster pace, they also open the airways to the transcontinental movement of infectious

disease vectors. One example of this occurring is AIDS/HIV. Approximately 1.1 million persons

are living with HIV/AIDS in the United States, and AIDS remains the leading cause of death

among African American women between ages 25 and 34. Due to immigration, approximately

500,000 people in the United States are believed to be infected with Chagas disease. In 2006,

the tuberculosis (TB) rate among foreign-born persons in the United States was 9.5 times that of

U.S.-born persons.

Brain drain

Opportunities in richer countries drives talent away from poorer countries, leading to brain

drains. Brain drain has cost the African continent over $4.1 billion in the employment of 150,000

expatriate professionals annually. Indian students going abroad for their higher studies costs

India a foreign exchange outflow of $10 billion annually.

Economic liberalization

The World today is so interconnected that the collapse of the subprime mortgage market in the

U.S. has led to a global financial crisis and recession on a scale not seen since the Great

Depression. Government deregulation and failed regulation of Wall Street's investment banks

were important contributors to the subprime mortgage crisis.

A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United

States, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in

recent decades. However, Chinese textile and clothing exports have recently encountered

criticism from Europe, the United States and some African countries. In South Africa, some

300,000 textile workers have lost their jobs due to the influx of Chinese goods. A total of 3.2

million – one in six U.S. factory jobs – have disappeared since the start of 2000.

Effect on Income disparity

A study by the World Institute for Development Economics Research at United Nations

University reports that the richest 1% of adults alone owned 40% of global assets in the year

2000. The three richest people  possess more financial assets than the poorest 10% of the world's

population, combined. The combined wealth of the 10 million millionaires grew to nearly $41

trillion in 2008. In 2001, 46.4% of people in sub-Saharan Africa were living in

extreme poverty. Nearly half of all Indian children are undernourished.

Effect on environmental degradation

The World watch Institute said the booming economies of China and India are planetary powers

that are shaping the global biosphere. In 2007, China overtook the United States as the world's

biggest producer of CO2. At present rates, tropical rainforests in Indonesia would be logged out

in 10 years, Papua New Guinea in 13 to 16 years. A major source of deforestation is the logging

industry, driven spectacularly by China and Japan. Thriving economies such as China and India

are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly

since 2002, doubling from 1996–2006. Crude oil prices in the last several years have steadily

risen from about $25 a barrel in August 2003 to over $140 a barrel in July 2008. State of the

World2006 report said the two countries' high economic growth hid a reality of severe pollution.

The report states:

The world's ecological capacity is simply insufficient to satisfy the ambitions of China,

India, Japan, Europe and the United States as well as the aspirations of the rest of the

world in a sustainable way

Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out

by 2017, and terbium could be gone before 2012.  It said that if China and India were to consume

as much resources per capita as United States or Japan in 2030 together they would require a full

planet Earth to meet their needs. In the longterm these effects can lead to increased conflict over

dwindling resources and in the worst case a Malthusian catastrophe.

Food security

The head of the International Food Policy Research Institute, stated in 2008 that the gradual

change in diet among newly prosperous populations is the most important factor underpinning

the rise in global food prices. From 1950 to 1984, as the Green

Revolution transformed agriculture around the world, grain production increased by over 250%.

The world population has grown by about 4 billion since the beginning of the Green Revolution

and most believe that, without the Revolution, there would be

greater famine and malnutrition than the UN presently documents (approximately 850 million

people suffering from chronic malnutrition in 2005).

It is becoming increasingly difficult to maintain food security in a world beset by a confluence of

"peak" phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish.

Growing populations, falling energy sources and food shortages will create the "perfect storm"

by 2030, according to the UK government chief scientist. He said food reserves are at a 50-year

low but the world requires 50% more energy, food and water by 2030. The world will have to

produce 70% more food by 2050 to feed a projected extra 2.3 billion people and as incomes rise,

the United Nations'Food and Agriculture Organization (FAO) warned. Social scientists have

warned of the possibility that global civilization is due for a period of contraction and economic

re-localization, due to the decline in fossil fuels and resulting crisis in transportation and food

production. One paper even suggested that the future might even bring about a restoration of

sustainable local economic activities based on hunting and gathering, shifting horticulture, and

pastoralist.

The journal Science published a four-year study in November 2006, which predicted that, at

prevailing trends, the world would run out of wild-caught seafood in 2048.

Drug and illicit goods trade

The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug

trade generates more than $320 billion a year in revenues. Worldwide, the UN estimates there

are more than 50 million regular users of heroin, cocaine and synthetic drugs. The international

trade of endangered species is second only to drug trafficking. Traditional Chinese

medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and

also ingredients from animals and minerals. The use of parts of endangered species (such

as seahorses, rhinoceroshorns, saiga antelope horns, and tiger bones and claws) has created

controversy and resulted in a black market of poachers who hunt restricted animals. In 2003,

29% of open sea fisheries were in a state of collapse.

Sweatshops

It can be said that globalization is the door that opens up an otherwise resource-poor country to

the international market. Where a country has little material or physical product harvested or

mined from its own soil, large corporations see an opportunity to take advantage of the "export

poverty" of such a nation. Where the majority of the earliest occurrences of economic

globalization are recorded as being the expansion of businesses and corporate growth, in many

poorer nations globalization is actually the result of the foreign businesses investing in the

country to take advantage of the lower wage rate: even though investing, by increasing

the Capital Stock of the country, increases their wage rate.

One example used by anti-globalization protestors is the use of sweatshops by manufacturers.

According to Global Exchange these "Sweat Shops" are widely used by sports shoe

manufacturers and mentions one company in particular – Nike. There are factories set up in the

poor countries where employees agree to work for low wages. Then if labour laws alter in those

countries and stricter rules govern the manufacturing process the factories are closed down and

relocated to other nations with more conservative, laissez-faire economic policies.

There are several agencies that have been set up worldwide specifically designed to focus on

anti-sweatshop campaigns and education of such. In the USA, the National Labor Committee has

proposed a number of bills as part of the The Decent Working Conditions and Fair Competition

Act, which have thus far failed in Congress. The legislation would legally require companies to

respect human and worker rights by prohibiting the import, sale, or export of sweatshop goods.

Specifically, these core standards include no child labor, no forced labor, freedom of association,

right to organize and bargain collectively, as well as the right to decent working conditions.

Tiziana Terranova has stated that globalization has brought a culture of "free labour". In a digital

sense, it is where the individuals (contributing capital) exploits and eventually "exhausts the

means through which labour can sustain itself". For example, in the area of digital

media (animations, hosting chat rooms, designing games), where it is often less glamorous than

it may sound. In the gaming industry, a Chinese Gold Market has been established.

Pro-globalization (globalism)

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.

Dr. Francesco Stipo, Director of the USA Club of Rome suggests that "the world government

should reflect the political and economic balances of world nations. A world confederation

would not supersede the authority of the State governments but rather complement it, as both the

States and the world authority would have power within their sphere of competence".

Proponents of laissez-faire capitalism, and some libertarians, 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.

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.

Some, such as former Canadian Senator Douglas Roche, O.C., simply view globalization as

inevitable and advocate creating institutions such as a directly-elected United Nations

Parliamentary Assembly to exercise oversight over unelected international bodies.

Anti-globalization

The "anti-globalization movement" is a term used to describe the political group who oppose

the neoliberal version of globalization, while criticisms of globalization are some of the reasons

used to justify this group's stance.

"Anti-globalization" may also involve the process or actions taken by a state or its people in

order to demonstrate its sovereignty and practice democratic decision-making. Anti-globalization

may occur in order to maintain barriers to the international transfer of people, goods and beliefs,

particularly free market deregulation, encouraged by organizations such as the International

Monetary Fund or the World Trade Organization. Moreover, as Naomi Klein argues in her

book No Logo, anti-globalism can denote either a single social movement or an umbrella

term that encompasses a number of separate social movements such as nationalists and socialists.

In either case, participants stand in opposition to the unregulated political power of large, multi-

national corporations, as the corporations exercise power through leveraging trade agreements

which in some instances damage the democratic rights of citizens,

the environment particularly air quality index and rain forests, as well as national government's

sovereignty to determine labor rights, including the right to form a union, and health and safety

legislation, or laws as they may otherwise infringe on cultural practices and traditions

of developing countries.

Some people who are labeled "anti-globalist" or "sceptics" (Hirst and Thompson) consider the

term to be too vague and inaccurate. Podobnik states that "the vast majority of groups that

participate in these protests draw on international networks of support, and they generally call for

forms of globalization that enhance democratic representation, human rights, and

egalitarianism."

Some members aligned with this viewpoint prefer instead to describe themselves as the "Global

Justice Movement", the "Anti-Corporate-Globalization Movement", the "Movement of

Movements" (a popular term in Italy), the "Alter-globalization" movement (popular in France),

the "Counter-Globalization" movement, and a number of other terms.

Critiques of the current wave of economic globalization typically look at both the damage to the

planet, in terms of the perceived unsustainable harm done to the biosphere, as well as the

perceived human costs, such as poverty, inequality, miscegenation, injustice and the erosion of

traditional culture which, the critics contend, all occur as a result of the economic

transformations related to globalization. They challenge directly the metrics, such as GDP, used

to measure progress promulgated by institutions such as the World Bank, and look to other

measures, such as the Happy Planet Index, created by the New Economics Foundation. They

point to a "multitude of interconnected fatal consequences–social disintegration, a breakdown of

democracy, more rapid and extensive deterioration of the environment, the spread of new

diseases, increasing poverty and alienation" which they claim are the unintended but very real

consequences of globalization.

The terms globalization and anti-globalization are used in various ways. Noam

Chomsky believes that

Poorer countries suffering disadvantages: While it is true that globalization encourages

free trade among countries, there are also negative consequences because some countries

try to save their national markets. The main export of poorer countries is usually

agricultural goods. Larger countries often subsidise their farmers (like the EU Common

Agricultural Policy), which lowers the market price for the poor farmer's crops compared

to what it would be under free trade.

Exploitation of foreign impoverished workers: The deterioration of protections for

weaker nations by stronger industrialized powers has resulted in the exploitation of the

people in those nations to become cheap labor. Due to the lack of protections, companies

from powerful industrialized nations are able to offer workers enough salary to entice

them to endure extremely long hours and unsafe working conditions, though economists

question if consenting workers in a competitive employers' market can be decried as

"exploited". It is true that the workers are free to leave their jobs, but in many poorer

countries, this would mean starvation for the worker, and possible even his/her family if

their previous jobs were unavailable.

The shift to outsourcing: The low cost of offshore workers have enticed corporations to

buy goods and services from foreign countries. The laid off manufacturing sector workers

are forced into the service sector where wages and benefits are low, but turnover is high.

This has contributed to the deterioration of the middle class which is a major factor in the

increasing economic inequality in the United States. Families that were once part of the

middle class are forced into lower positions by massive layoffs and outsourcing to

another country. This also means that people in the lower class have a much harder time

climbing out of poverty because of the absence of the middle class as a stepping stone.

Weak labor unions: The surplus in cheap labor coupled with an ever growing number of

companies in transition has caused a weakening of labor unions in the United States.

Unions lose their effectiveness when their membership begins to decline. As a result

unions hold less power over corporations that are able to easily replace workers, often for

lower wages, and have the option to not offer unionized jobs anymore.

Increase exploitation of child labor: for example, a country that experiencing increases

in labor demand because of globalization and an increase the demand for goods produced

by children, will experience greater a demand for child labor. This can be "hazardous" or

"exploitive", e.g., quarrying, salvage, cash cropping but also includes the trafficking of

children, children in bondage or forced labor, prostitution, pornography and other illicit

activities.

In December 2007, World Bank economist Branko Milanovic has called much previous

empirical research on global poverty and inequality into question because, according to him,

improved estimates of purchasing power parity indicate that developing countries are worse off

than previously believed. Milanovic remarks that "literally hundreds of scholarly papers on

convergence or divergence of countries’ incomes have been published in the last decade based

on what we know now were faulty numbers." With the new data, possibly economists will revise

calculations, and he also believed that there are considerable implications estimates of global

inequality and poverty levels. Global inequality was estimated at around 65 Gini points, whereas

the new numbers indicate global inequality to be at 70 on the Gini scale.

The critics of globalization typically emphasize that globalization is a process that is mediated

according to corporate interests, and typically raise the possibility of alternative global

institutions and policies, which they believe address the moral claims of poor and working

classes throughout the globe, as well as environmental concerns in a more equitable way.

The movement is very broad, including church groups, national liberation

factions, peasant unionists, intellectuals, artists, protectionists, anarchists, those in support of

relocalization and others. Some are reformist, (arguing for a more moderate form of capitalism)

while others are more revolutionary (arguing for what they believe is a more humane system

than capitalism) and others arereactionary, believing globalization destroys national industry and

jobs.

One of the key points made by critics of recent economic globalization is that income inequality,

both between and within nations, is increasing as a result of these processes. One article from

2001 found that significantly, in 7 out of 8 metrics, income inequality has increased in the twenty

years ending 2001. Also, "incomes in the lower deciles of world income distribution have

probably fallen absolutely since the 1980s". Furthermore, the World Bank's figures on absolute

poverty were challenged. The article was skeptical of the World Bank's claim that the number of

people living on less than $1 a day has held steady at 1.2 billion from 1987 to 1998, because of

biased methodology.

A chart that gave the inequality a very visible and comprehensible form, the so-called

'champagne glass' effect, was contained in the 1992 United Nations Development Program

Report, which showed the distribution of global income to be very uneven, with the richest 20%

of the world's population controlling 82.7% of the world's income.

Distribution of world GDP,

1989

Quintile of Population Income

Richest 20% 82.7%

Second 20% 11.7%

Third 20% 2.3%

Fourth 20% 2.4%

Poorest 20% 0.2%

Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with

more financial leverage (i.e. the rich) at the expense of the poor.

Americanization related to a period of high political American clout and of significant growth of

America's shops, markets and object being brought into other countries. So globalization, a much

more diversified phenomenon, relates to a multilateral political world and to the increase of

objects, markets and so on into each others countries.

Critics of globalization talk of Westernization. A 2005 UNESCO report showed that cultural

exchange is becoming more frequent from Eastern Asia but . 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. Related factors are the fact that Asia's population and area are several

times that of North America.

Some opponents of globalization see the phenomenon as the promotion

of corporatist interests. They also claim that the increasing autonomy and strength of corporate

entities shapes the political policy of countries.

International social forums

The first WSF in 2001 was an initiative of the administration of Porto Alegre in Brazil. The

slogan of the World Social Forum was "Another World Is Possible". It was here that the WSF's

Charter of Principles was adopted to provide a framework for the forums.It proved to be a

vibrant player in macro level.

The WSF became a periodic meeting: in 2002 and 2003 it was held again in Porto Alegre and

became a rallying point for worldwide protest against the American invasion of Iraq. In 2004 it

was moved toMumbai (formerly known as Bombay, in India), to make it more accessible to the

populations of Asia and Africa. This last appointment saw the participation of 75,000 delegates.

In the meantime, regional forums took place following the example of the WSF, adopting its

Charter of Principles. The first European Social Forum (ESF) was held in November 2002

in Florence. The slogan was "Against the war, against racism and against neo-liberalism". It saw

the participation of 60,000 delegates and ended with a huge demonstration against the war

(1,000,000 people according to the organizers). The other two ESFs took place in Paris and

London, in 2003 and 2004 respectively.

Recently there has been some discussion behind the movement about the role of the social

forums. Some see them as a "popular university", an occasion to make many people aware of the

problems of globalization. Others would prefer that delegates concentrate their efforts on the

coordination and organization of the movement and on the planning of new campaigns. However

it has often been argued that in the dominated countries (most of the world) the WSF is little

more than an 'NGO fair' driven by Northern NGOs and donors most of which are hostile to

popular movements of the poor.

Conclusion

According to the foregoing analysis, globalization is not merely an intensification of global

interconnectedness brought about by market forces and technological change. Rather, it is a

worldview shaped by capital and hegemonic power that aspires to establish a global system in

line with the interests of capital. Capitalism, as a market-oriented system of production, has an

inherent globalizing tendency. However, capitalism is not always characterized by the level of

adherence to the liberal principles that globalization represents. In E. M. Wood's penetrating

analysis, globalization represents a new phase of capitalism that is more universal, more

unchallenged, more pure, and more unadulterated, than ever before.

The financial crises affecting different countries have shaken the confidence of the advocates of

globalization. The World Bank, for example, in stark contrast to the minimalist state dictum it

advocated in the 1980s, in the early twenty-first century recognizes the importance of the role of

the state in protecting and correcting markets. There also has been a growing realization that

unfettered financial flows, especially from advanced countries to emerging markets, can create

profound instability. Some proponents of globalization have even admitted that Keynes's

skepticism about financial mobility may still be relevant today. The September 11, 2001, terrorist

attacks on the United States also (temporarily, at least) raised questions about the wisdom of

supporting globalization. Yet despite notable setbacks and shaken confidence, the advocacy for

globalization remains strong.