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GLOBALIZATION
GLOBALIZATION
Defining Globalization
Components of Globalization
Thinking About Globalization—Globalists
vs. Skeptics
Major Questions and Dilemmas of
Globalization
Definitions of Globalization
1.Joseph Nye and John Donahue:
“Globalism is a state of the world involving
networks of interdependence at
multicontinental distances.”
2. World Bank: Globalization is the growing
integration of economies and societies
around the world.
Thomas Friedman, “The Lexus and
the Olive Tree”
A globalist system has replaced the Cold War system
The new system has unique rules, logic, pressures and
incentives driven by international capitalism
Features integration: free flow of capital, goods, ideas
more broadly, faster, deeper than anytime in the past.
The “Golden Straightjacket”: must abide by goals of free
market principles, efficiency. Rewarded if you do.
New key players: The “Electronic Herd.”
Globalization promotes cultural homogenization, the “Big
Mac.”
Friedman: Globalization’s new
structure and balance of power
Traditional balance between states (countries),
U.S. is the paramount player
Balance between states and global markets:
states can’t ignore the market any longer without
costs
Balance between individuals and states: people
influence governments through the market at
home and abroad (for good and evil).
Globalization produces “super-empowered
individuals
Important Conclusions from
Friedman’s argument
1. Rewards. Those who participate in
globalization are rewarded, though there are
winners and losers.
2. Peace Dividend. Those engaged in
globalization have too much to lose with war.
3. Democratic Dividend. Free movement of
information with markets produces drive for
freedom and liberty—seeds of democracy.
Components of Globalization?
Economic globalization
Political globalization
Cultural globalization
Q: Is there a global economy?
If so, is this good?
Globalizers (Integrationists) : Yes!
1. Increased integration has brought a
higher volume of trade. This means
more goods and services for most of the
world.
2. Increased GDPs and overall standard of
living for those that participate
Increasing World Trade (Billions of
US$)
8 ,0 0 0 7,465
World Exports (US$
7 ,0 0 0
6 ,0 0 0
Billions)
5 ,0 0 0
3,824
4 ,0 0 0
3 ,0 0 0
1,972
2 ,0 0 0
1 ,0 0 0 574
20 33 21 53 94 154
0
1913 1933 1958 1973 1993
Year
Merchandise Exports as percentage of GDP in 1990
prices, world and major regions, 1870-1998
______________________________________________
1870 1913 1950 1773 1998
______________________________________________
Western Europe 8.8 14.1 8.7 18.7 35.8
Eastern Europe &
former USSR 3.3 4.7 3.8 6.3 12.7
Latin America 9.7 9.0 6.0 4.7 9.7
Asia 1.7 3.4 4.2 9.6 12.6
Africa 5.8 20.0 15.1 18.4 14.8
World 4.6 7.9 5.5 10.5 17.2
______________________________________________
“Development cycle” working well
Country/bloc
Number of MNEs in 1999
United States 179
European Union 148
Japan 107
Canada 12
South Korea 12
Switzerland 11
China 10
Australia 7
Brazil 3
Other 11
2 5 0 0 0
2 0 0 0 0
1 5 0 0 0
South
North
1 0 0 0 0
5 0 0 0
0 1 9 7 0 1 9 8 0 1 9 9 0 2 0 0 0
6. Gap between the rich and the poor
within countries has increased. Good
example? China! Top 10 percent to
bottom 10 percent income ratio: 1:35.