Economic Globalisation

8 Key excerpts on "Economic Globalisation"

• 

  eBook - ePub

  Global Covenant

  The Social Democratic Alternative to the Washington Consensus

  • David Held(Author)
  • 2013(Publication Date)
  • Polity

    (Publisher)

  Part I

  ECONOMICS

  Passage contains an image

  1

  Economic Globalization

  The nature and extent of global economic integration is subject to intense dispute (Held and McGrew, 2003, part 4). At issue is whether it is accurate to talk of the emergence of a single borderless global economy; how far such an economy is driven by the new processes of the electronic, information order; and the degree to which the new global economy places constraints on progressive economic and social policy. For some, the new geography of the world economy heralds the emergence of a ‘single, planetary scale worldwide economy’ (see Dicken, 1998). Led by the growing interlinking of global and local production systems, the new economic order is increasingly integrated across space, real and virtual. Multinationals and global production networks, working on products as diverse as cars, computers and clothes, are reshaping economic activity. The result is a novel form of economic globalization, mediated by the global infrastructures of information and communication, functioning as a unit in real or chosen time (Castells, 2000). Regional differences still matter, and many are marginalized and excluded. But, according to the theorists of the global economy, the current world economic order operates with a different form and logic from those found in earlier centuries.

  This view is challenged by those who argue that economic globalization is far more limited than is often realized (Hirst and Thompson, 1999; Gilpin, 2001). While they accept that the links between national economies have become more marked, they find that the ‘new global economy’ is less integrated and inclusive than in the late nineteenth century. Distance and national borders are still ‘powerful barriers to economic interaction’ (CEPR, 2002). In addition, governments are not as constrained by the open world economy as is often claimed. Macroeconomic policy, along with the social policies underpinning the welfare state, remains the preserve of government. Global markets have not triumphed over states.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Emerging Markets in an Upside Down World

  Challenging Perceptions in Asset Allocation and Investment

  • Jerome Booth(Author)
  • 2014(Publication Date)
  • Wiley

    (Publisher)

  Chapter 1

  Globalisation and the Current Global Economy

  ‘Globalisation should not be just about interconnecting the bell jars of the privileged few.’ De Soto (2000, p. 219)

  ‘The benefits of globalization of trade in goods and services are not controversial among economists. Polls of economists indicate that one of [the] few things on which they agree is that the globalization of international trade, in which markets are opened to flows of foreign goods and services, is desirable. But financial globalization, the opening up to flows of foreign capital, is highly controversial, even among economists…’

  Mishkin (2006)

  In this chapter we discuss some of the background to attitudes towards money and debt. We explore the historical erosion of despotic power. We aim to understand globalisation, both ancient and modern, identifying the trends most important for current events and policy actions.

  1.1 WHAT IS GLOBALISATION?

  Globalisation has been through a number of cycles including in the nineteenth century period of free trade.1 The term requires careful use: its range and ambiguity in common parlance can cause misunderstanding.

  Globalisation is both a state and a process. It has an economic facet, perhaps best described as the greater interconnectedness of trade and investment as transactions costs and barriers reduce, but also the idea of lack of constraint on markets by government. It is this element that investors are ultimately most interested in. But globalisation also has a technological aspect (not distinct from the economic aspect), notably as represented recently by innovations and speed in modern communications. And it has a cultural facet, as exposed in the spread of common means of entertainment and ideas. It homogenises, and through standardisation commodities, but also creates diversity of choice; complicates and simplifies; brings benefits and conflicts; produces winners and losers.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Economic Geography

  • William P. Anderson(Author)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  1 Our objective here is more modest. Essentially, the next three chapters address the following question: how does the transition to a global knowledge economy affect the principles of economic geography as set forth in the first five sections of this book? Some observers argue that globalization and the proliferation of information and communications technology means that space is becoming irrelevant, distance is disappearing, so economic geography as we know it is out the window. But the fact that distance is getting easier to overcome does not mean it no longer matters. As we have already seen, reductions in the friction of distance lead to predictable changes such as increased scale of production and more spatial interaction. Perhaps most importantly, cheaper transportation and better communication make it easier for firms to exploit spatial differentiation at a global scale.

  These issues will be addressed in detail later, but at the outset some basic definitions are needed. The term “globalization” seems to have as many definitions as there are books and articles written about it. For the moment, let’s settle for a very simple definition of globalization as the integration of economic activity at a global scale. Of course, this begs the question: what do we mean by integration? International trade and foreign direct investment are both forms of economic integration that can be measured in terms of flows of goods or funds between nations. In these cases, production is still conducted within national borders. At a deeper level of integration, the production process itself involves tasks performed by different actors at different locations around the globe who are closely coordinated via information and communications networks. As we will see, people from a dozen or more countries may have been involved in the design, production, distribution and marketing of the shirt you are wearing right now. It is this more complex type of integration that most people have in mind when they speak of globalization. To make this distinction clear, we will use the term internationalization to refer to integration across national borders that involves goods that are produced in a single country but sold in to an international market. Internationalization is not distinct from globalization; rather, it is a limited form of globalization.

  The knowledge economy is not quite so easily defined. A precise definition, including an explanation of the distinction between information and knowledge, is deferred until chapter 26

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Introduction to Sociological Theory

  Theorists, Concepts, and their Applicability to the Twenty-First Century

  • Michele Dillon(Author)
  • 2013(Publication Date)
  • Wiley-Blackwell

    (Publisher)

  Much of what we hear about globalization focuses on its economic aspects. The word was first used in 1983 in an article discussing marketing and the expansion of global economic markets (Eckes and Zeiler 2003: 1) – the expansion of the world economy such that trade in consumer products increasingly extends beyond a particular country’s or region’s borders. This was precisely the process predicted by Karl Marx when he spoke of the ever-increasing pressure on capitalists to expand profits by finding and conquering new world markets for their products (see chapter 1).

  Economists focus primarily on the economic mechanisms and consequences of expanding globalized trade in commodity, labor, and capital markets, and generally do so without regard to its social and cultural implications (e.g., Bordo et al. 2003). They tend to regard capitalism as effectively regulated by natural forces of demand and supply and many see globalization through this same lens. For example, the deputy editor of the influential weekly magazine

  The Economist

  states: “Globalization has a powerful economic momentum of its own. Technological progress, left to its own devices, promotes [economic] integration … [Economic] integration seems in many ways a natural economic process, which can only be reversed, if at all, when policies are deliberately framed to that end” (Cook 2003: 549).

  Further, economists see global trends in intra -national (within-country) inequality as a result of “the fact that the opening to trade and foreign investment was incomplete,” concentrated, for example, in select cities and provinces at the expense of rural and other areas (Lindert and Williamson 2003: 255). By extension, in this view, global inequality is a result of “differential access to the benefits of the new economy” and of particular countries’ and regions’ failures to participate in globalization (2003: 263).

  Sociologists apply a different framework to the economic aspects of globalization. They fully recognize the expansion of new markets that is entailed in globalization, emphasizing in particular, as Giddens notes (1990: 76), the many advances made post-World War II in expanding global relations of economic interdependence, and opening up new geographical centers of industrial production, including the emergence of newly industrializing countries in the third world (1990: 76). Subsequently, the rise of a post-industrial information and service economy (see chapter 6), and what today can be called a transnational informational economy (e.g., Fuchs 2008) further expanded world markets and the transnational social and political relationships that this expansion necessitates. But, in highlighting these globalizing forces, sociologists also highlight the historical, geographical, and structural unevenness

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Business Economics

  • Rob Dransfield(Author)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  There are a number of key players in the global economy and the interaction between consumers, producers, financiers, governments and international institutions tends to nudge the world towards greater levels of interdependence so that globalization is a growing reality. The growth of FDI means that investors are increasingly taking a longer-term interest in the economies of other nations. A key characteristic of the global economy is that today it isn’t just dominated by the United States and Europe, but that there are newly emerging markets that are playing a substantially more significant part in the global economy – particularly the BRIC economies. From a business perspective there are a number of stages of involvement in a global economy each based on an increased commitment, ranging from exporting and licencing to large-scale ownership of factories and other units of operations.

  Key Ideas The nature of globalization

  • Economic globalization involves increased levels of trade, the flow of capital and the movement of people as well as the development of international means of exchange.
  • Globalization has been viewed in different ways ranging from:
    1. first wave – a move to growing integration driven by multinational enterprises and rising living standards;
    2. second wave – a sceptical perspective, that globalization isn’t actually as extensive as claimed, that national governments are still important and influential, and that globalization brings with it problems as well as benefits; and
    3. third wave – that the evidence does point to globalization as a real process that is taking place, but that we need to study the downsides as well as the benefits.

  The participants in globalization

  • Globalization is made up of a cast of billions – including global consumers and producers as well as providers of finance, governments and international institutions.
  • Transnationality indexes reveal that a number of major multinationals carry out substantial parts of their operations globally with often only a relatively small concentration in their home markets.
  • The WTO, World Bank and IMF have been key drivers of globalization, encouraging trade and providing liquidity but also creating stipulations that actually make some countries more dependent on market mechanisms.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  From Walmart to Al Qaeda

  An Interdisciplinary Approach to Globalization

  • David Murillo(Author)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  3Economic globalization

  3.1 A sociological approach to economics: definitions and concepts

  If there is one single issue that usually predominates in the debate on globalization it is that of the economy. Its central role is due to the fact that it is considered to be the main driving force of change and the foundation on which lie the whole series of technological, cultural and political changes that help to describe the phenomenon of globalization. This said, we need to bear in mind that the present economic analysis of globalization in recent decades has developed characteristics of its own, different from those of previous decades, that force us to analyse it from two angles: first that of the productive economy, and then that of finance, which we will address in the next chapter. In the following pages we aim to arrive at an understanding of the specific nature of economic globalization, lending special attention to its most recent historical development: its phases and the elements that characterize it. We will then go on to explore its consequences from the viewpoint of the redistribution of political and economic power, particularly with regard to large corporations and states. Lastly, we will examine its impacts and reactions to it on a global scale, and tackle one of the key discussions at present: its impact on planetary inequality.

  The approach that interests us, however, is not that taken by economists but for the most part that which is defended by economic sociology. The chief difference between these two disciplines lies in the methodology used and the importance of the role of institutions in accounting for a particular economic phenomenon.1 Economics tends to proceed deductively , on the basis of premises that explain human behaviour. In neoclassical economics, currently predominant in universities, these premises are erected around an abstraction, the economic anthropology of Homo economicus , according to which, broadly speaking, all individuals are selfish, materialistic, individualistic, rational and out to maximize our preferences in a market (of goods and services) in which there are suppliers and demanders. This abstraction may be accompanied by others, such as the notion of perfectly competitive markets or the efficient market hypothesis. We will discuss this later on, but not yet. All we are interested in here is to point out the deductive approach of economics and alongside this the disdain this discipline shows for the effects of theories on the world around us. In the words of Nobel economics prize laureate Milton Friedman, the interest of a theory lies not in the goodness or veracity of its assumptions but in its ability to predict the outcome of a particular action.2

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Globalisation and its Economic Consequences

  Looking at APEC Economies

  • Shujiro Urata, Ha Thi Thanh Doan, Shujiro Urata, Ha Thi Thanh Doan(Authors)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  8 The economic consequences of globalisation in the United States Peter A. Petri and Meenal Banga

  DOI: 10.4324/9781003138501-8

  1 The globalisation debate

  In 1999, Merrill Lynch, a leading wealth manager in the US, took out full-page ads in major US newspapers to celebrate the era of globalisation: ‘The World Is 10 Years Old. It was born when the Wall fell in 1989.’ The ads argued that the ‘spread of free markets and democracy around the world is permitting more people everywhere to turn their aspirations into achievements. And technology, properly harnessed and liberally distributed, has the power to erase not just geographical borders but also human ones.’

  The current era of globalisation began in the 1970s, when the share of trade in world output was around 10% (Figure 8.1 ). Globalisation accelerated in the 1980s, when the share of world trade in output surpassed historical records, eventually climbing to about 25% by 2009. Since then, the trade share of GDP has flattened. For reasons ranging from trade policy to technological changes and the maturation of international supply chains, trade intensity is not likely to rise as fast in the future as it did in recent decades.

  Figure 8.1  Value of Exported Goods as a Share of Gross Domestic Product.

  Source: Fouquin and Hugot (2016) .

  Note: GDP = gross domestic product.

  The unprecedented rise in global interdependence has been very productive. World GDP growth, which hovered in the 2% per year range in the 1970s and early 1980s, doubled to reach the 4% range before the global financial crisis. Growth spread to the world’s largest countries and lifted more than a billion people out of extreme poverty. New global supply chains brought emerging, trade-oriented economies into the network of global expansion. However, the fragility of rapid, interdependent growth also became apparent. In 2008, Merrill Lynch succumbed to the global financial crisis. Meanwhile, criticism of the distributional effects of globalisation, particularly in advanced countries, intensified as Piketty (2015)

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Globalization in Question

  • Paul Hirst, Grahame Thompson, Simon Bromley(Authors)
  • 2015(Publication Date)
  • Polity

    (Publisher)

  2

  Globalization and the History of the International Economy

  The ‘globalization’ of economic activity and the governance issues it raises are often thought to have appeared only after the Second World War, and particularly during the 1960s. The post-1960 era saw the emergence of MNC activity on the one hand and the rapid growth of international trade on the other. Subsequently, with the collapse of the Bretton Woods semi-fixed exchange-rate regime in the 1971–3 period, the expansion of international securities investment and bank lending began in earnest as capital and particularly money markets rapidly internationalized, adding to the complexity of international economic relations and heralding what is often thought to be the genuine globalization of an integrated and interdependent world economy.

  Figures 2.1 and 2.2 indicate the nature of this popular history. In figure 2.1 an index of globalization has been constructed which combines a number of economic, social and political indicators to represent a composite indicator of the overall process. This shows a more or less continuous growth of globalization over the entire period since 1970. The data on financial globalization from figure 2.2 provide a similar overall picture: the relentless increase in financial integration since 1970. Note, however, that this has been much more intense in the case of the traditional industrialized countries than for the emerging and developing economies.

  We will have occasion to question this popular history later in chapters 3, 4 and 6 in particular. The exact nature of the globalization indicated by these graphs is often disguised by the level of aggregation they contain and by the lack of attention to its geographical specificity. These are issues taken up in other chapters.

  In this chapter we first of all scrutinize this history by tracing the main periods of the internationalization of economic activity over a much longer period than just since the 1970s. This is shown to have developed in a cyclical and uneven fashion. The key issue at stake in our assessment is the changing autonomy of national economies in the conduct of their economic activity.1

  Sign up to read

  Learn more about book