Globalization

Globalization: the process of increasing interconnectedness

between societies such that events in one part of the world increasingly have effects on peoples and societies far away

A globalized world is one in which political, economic, cultural, and social events become more and more interconnected.

Post WWI: U.S. Pres. Woodrow Wilson proposed a international peace-keeping

organization (League of Nations) U.S. failed to joined & entered into a period of isolation

Many countries enacted protectionist policies (tariffs & quotas) WWII:

U.S. was forced out of isolation (Pearl Harbor) U.S. Foreign Policy = From Isolationism to Internationalism

Post WWII: Bretton Woods System est. the Liberal International Economic

Order (LIEO) that created the foundation upon which the modern global economy is built

Post Cold War: Global spread of liberal political & economic policies

I. Birth of the Modern Globalized World

The set of regimes designed to promote monetary stability & reduce barriers to the free flow of trade & capital (free market economic policies) World Trade Organization (WTO):

promotes trade liberalization & oversees trade agreements International Monetary Fund (IMF):

ensures international monetary cooperation (oversees exchange rates) World Bank:

promotes economic development of the Global South through low-interest loans

Together, these IGOs have worked to stabilize the world economy by regulating international commerce, promoting free trade, and ultimately, creating a more interconnected and globalized world.

A. Liberal International Economic Order (LIEO):

1945-1989 (USA vs USSR): World split between Democratic & Capitalist countries of

the West and the Totalitarian & Socialist countries of the Soviet Union:

9/11/89: Fall of the Berlin Wall: Global spread of liberal political & economic policies

through multilateral trade agreements Satellite countries of Eastern Europe became independent Spread of European Union & NATO into Eastern Europe has

caused tension with Russia. “Big Bang” of 2004 = 10 Eastern European countries admitted

into EU The West has used Soft Power to spread liberal political &

economic policies

B. The Cold War

EU (28)Cold War DivisionOf Europe

NATO (28)

The world has become more interconnected due to the cheapening advances in both global transportation & communication. Transportation:

Maritime shipping costs have fallen over two-thirds since 1920 Operating costs per mile for world’s airlines have fallen over 60%

Communication: Since 1960: the cost of an international phone call has dropped

>90% Mid-1990s: international comm. is practically free b/c of the Internet

Advanced global integration due to cheapening effects of global communication & transportation

C. Development of Modern Communication & Transportation Technologies

MNC = a corporation with operations in multiple countries Ex: Walmart, Nike, IBM, Google, Coca Cola, Disney, GM, McDonalds, Levi’s, etc. Responsible for over 90% of international trade International influence causes global diffusion of American culture (Good? Bad?)

Outsourcing: Purchasing goods and/or services from an outside supplier Example: the production of a Dell computer:

“…the total supply for my computer, including suppliers of suppliers, involved about 400 companies in N. Amer., Europe, and primarily Asia, but with 30 key players” (Friedman 2006, 520).

Today, HP has over 150,000 employees spread across at least 170 countries Why?

Relaxed environmental & labor policies, low costs of living and operating costs, favorable governmental tax breaks & incentives, & the practicality of modern-day communication & transportation = MORE $$$$$$$

Pros: Increases profit margins of MNCs & shareholders Promotes development of LDCs through Foreign Direct Investment (FDI)?

Cons: Job loss--- Through the outsourcing trend, between 1999 and 2008, foreign affiliates of U.S. parent

corporations increased their employment abroad by 2.4 million jobs, or 30%. Promotes development of domestic and international wealth gaps

D. Rise of the Multinational Organizations (MNCs)

Most of the world’s international commerce is controlled not by the governments, but by top business officials consisting of “corporate executives, leading investors, top bankers, media moguls, heads of state, generals, religious leaders, heads of terrorist and criminal organizations and a handful of important cultural and scientific figures” (Rothkopf 2008, 1).

International commerce has fallen under the control and direction of 50 or so of the world’s top financial institutions whose assets exceed $50 trillion, or one-third of all assets worldwide. The world’s 1,100 richest people control twice the wealth of the

world’s poorest 2.5 billion people.

1. Power of the MNC & the Wealth Gap it creates

National governments have limited regulatory authority over global markets because financial flows have become so large that the real power lies with the biggest players. These financial juggernauts are more influential in world markets in that they are able to reach the masses in ways that national governments cannot. The people who run these big international organizations

can have much more power over key aspects of your daily life and over global trends than most officials in Washington. These MNCs can affect financial investments & job creation by influencing government decisions through their financial support of Washington politicians (lobbying is king).

2. Loss of National Sovereignty?

MNCs promote moderate development throughout the Global South (LDCs), while there is drastic unemployment & decay of the secondary industries throughout the Global North (MDCs). Ex: Today’s top 1% of Americans control 40% of the

country’s GDP. This figure is higher than 25 years ago in which 12% of Americans controlled 33% of U.S. wealth. People in the top 1% have seen their incomes rise 18% over the past decade, while the incomes of those in the middle have actually fallen.

VIDEO ON GLOBALIZATION

3. Death of the “American Dream?”