Globalization

Opportunities and Challenges

Globalization
Defined What it means to you Why the debate?

Globalization Definition
Globalization can be defined as the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa. (Anthony Giddens, 1990) Globalization can be conceived as a process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions, expressed in transcontinental or interregional flows and networks of activity, interaction and power Globalization, in short, can be thought of as the widening, intensifying, speeding up, and growing impact of world-wide interconnectedness The process by which different parts of the world interact economically, politically, and culturally.

A brief survey

Clicker questions

Globalization as diversification within territorial communities

Globalization takes place when there is a territorial redistribution of the diversity of the world as a whole. Thus, the higher the share of the overall global diversity, present or accessible within the territorial community, the higher the degree of globalization.

Globalization as diversification within territorial communities

proportions of various ethnic groups are to be found among the inhabitants of the big "global cities", such as New York, London, Paris and Tokyo. the proportion of the world-known diversity of "national cuisines" in the restaurants of these big cities? how easily information from wherever and about whatever is available everywhere (at every point in space or within each territorial unit). The World is Flat, Thomas L. Friedman

Criteria For Measuring Globalization

Political Engagement Personal Contact Technological Connectivity Economic Integration

Raymond Tang Benny Vazquez

One more thing: TAG check

Outer jacket/ coat country of origin? Write on flip chart Find an American made garment: 2 minutes prize for each one

Anyone wearing ALL American made clothing!

Big prize

Consider:
Why is there so little American made clothing being worn?

Is it a conscious part of your purchase decision to know where the clothing is made that you wear?

The Travels of a T-Shirt in the Global Economy, 2005 Peitra Rivoli

Discussion: Consider more broadly:

Advantages, benefits, winners of globalization Disadvantages, costs, losers of globalization Handout

Globalization is not new

19th Century: 20th Century
Europeans discover the Americas European Imperialism Industrial Revolution Inventions Transportation Telephone Telegraph Free market capitalism End of the Cold War THE INTERNET Exchange ideas Transfer $$ Share culture 24/7

But What does it look like today?

Winners/losers? Benefits/costs? Economically On the poor? Socially culturally? Politically? Environmentally?

Globalization
Distance, time-space Boundaries are increasingly permeable. Territorial boundaries more or less kept things in and out v territory eroding e Society and culture had spatial references non-physical place

A visual summary

biz/ed 2007

Process of globalization
Expansion of international commerce Rising importance of private capital flows Increasing travel and migration Increased communication and interaction between peoples Technology Communication networks Internet access Growth of economic cooperation trading blocs (EU, NAFTA, etc.) Collapse of communism Movement to free trade

Globalization
Characterized by four types of change. 1. a stretching of social, political and economic activities across frontiers, regions and continents. 2. intensification of interconnectedness and flows of trade, investment, finance, migration, culture, etc. 3. a speeding up of global interactions and processes,
world-wide systems of transport and communication increases the velocity of the diffusion of ideas, goods, information, capital and people

4. The growing extensity, intensity and velocity of global interactions

the effects of distant events can be highly significant elsewhere specific local developments can have considerable global consequences. the boundaries between domestic matters and global affairs become increasingly fluid.

Drivers of globalization
Over the past decade globalization has been driven by technological advances..But globalization has also been driven by policies and ideas Bosworth & Gordon

Growth in trade: World GDP today is nearly 9 times greater than it was at the end of World War II World trade has increased to more than 28 times what it was in 1950

World Trade Flows:

U.S. Imports added up to barely 4% of annual U.S. GDP in 1950 Today they account for almost 16%

The Percentage of World Trade Within Regional Trade Blocs

Tariff Rates in the United States Since 1820

The Relationship Between Economic Growth and Tariff Barriers to International Trade

But what does it look like today?

What are the benefits? Who wins ?
Multinational Corporations Expanding revenue Lowering costs Sourcing raw materials Controlling key supplies Control of processing Global economies of scale

What are the costs? Who loses?

Exploitation of labor, Child labor Third World Poverty Protectionism Environmental hazards NONRENEWABLE RESOURECES Environmental degradation Pollution THIRD WORLD Destruction of indigenous cultures Destruction of small farmers Genetically engineered foods Poor People in Poor Countries Poor People in the US Non-technical people in the US Manual Labor in the US The Environment Small Farms and Businesses

World Economic Relationships New goods, services spread New processes transmitted Intellectual property introduced

Free Trade cheap goods Corporations Real smart people who invent things Real aggressive people who start large companies Communist Governments like China

Capital Goods and Economic Growth

Access to credit matters 2006 Nobel Peace Prize winner Muhammad Yunus of Bangladesh contends that access to private credit is vital for promoting economic growth in poverty-stricken countries Microlenders are banking institutions that specialize in making very small loans to entrepreneurs trying to lift themselves from poverty

Arguments Against Free Trade (cont'd)

The cost of protecting U.S. jobs Restrictions on textiles and apparel goods cost U.S. consumers $9 billion a year Cost $50,000 a year for each $20,000 job saved Restriction on imports of Japanese cars Cost $160,000 per year for each job saved in the auto industry The cost of protecting U.S. jobs Glass industry restrictions Cost $200,000 per year per job saved Steel industry restrictions Cost $750,000 per year per job saved

Globalization
Continuing poverty: worlds population below $1 a day; over below $2 a day Inequality between rich and poor is rising Environmental concerns and conflict over global governance Open borders and their effects

Proponents
Increased Employment? Lower Wages More Service Jobs Cheaper Goods (like gas? like cars? like food? like textbooks?)

Opponents: protests at the G8 summits; WTO meetings

USA Corporate greed Trade imbalance Retirement loss Trade imbalance Loss of small farms Loss of small businesses

Freer trade
pros
Benefits of Trade: Increased choice Greater potential for growth Increase international economies of scale Greater employment opportunities

Cons
Disadvantages of trade: Increase in gap between the rich and the poor Dominance of global trade by the rich, northern hemisphere countries Lack of opportunities for the poor to be able to have access to markets Exploitation of workers and growers

Positive potential
The Solar Economy; Renewable Energy For a Sustainable Global Future. America's ideal of freedom, citizens find the dignity and security of economic independence. Worldwide education and health.

International Example: How Cellphones Are Fueling Economic Development In many developing nations, firms have trouble communicating effectively with customers and employees because postal and telecommunications services are inefficient. World Bank economists have found that business communications flourish once cellular networks have been established. A recent World Bank study further found that adding an extra 10 cellphones per 100 people in a typical developing country raises the nations average annual rate of economic growth by 0.8 percentage point.