Introduction and Defining Globalization

Why this course?

 Avoid parochialism

 World teaches us more about our society

 Filipinos increasingly interacting with the world

– OFW 4,018 Filipinos per day in 2009, 6,092 in 2015

– Internet, cheaper travel, presence of MNCs

The course’s approach: The Study of Globalization

 Globalization: inherently interdisciplinary

 See contemporary world through a broad lens –in different lenses

 Allows us to examine various globalizing processes

 Forces us to ask questions re. global citizenship

Academic definition

 As opposed to popular/activist definition:

 Not “neoliberal globalization”/ “market globalism”

The need for an interdisciplinary approach

– We need to transcend to disciplinary boundaries… Otherwise, we won’t talk!

For a political scientist

 Political scientist: “Challenge to the nation state.”

– Emergence of corporations

– Strength of regional blocks

– Emergence of global political norms

For the economist…

 Increased free trade

 Speed of trade (HFT – milliseconds to trade shares)

 Global economic organizations

 Regional economic blocs

For the scholar of culture and communication

 Global village”
  Communications technology as “shrinking” our world

 “Cultural imperialism”

How do we bring these various perspectives together?

 Working definition of globalization:

Steger: “Globalization refers to the expansion and intensification of social relations and consciousness
across world-time and world-space”

1. Various forms of connectivity”

They are diverse (can be economic, political, cultural, etc.)
They are enabled by various factors, pressures, media, etc.
They are uneven (different degrees of interconnection)
2. Expansion and Stretching of Social Relations
1. NGOs
2. Friendships/Relationships
3. Government associations
4. MNCs

3. Intensification and Acceleration of Social Exchanges and Activities

 1. From snail mail to Facebook

 2. Live television

 3. Increased travel (cheap flights)

4. Occurs Subjectively
1. We think about the world (#PrayforParis for example)
2. We associate ourselves with global trends (fan of K-Pop)
3. Hopefully, we feel some sense of responsibility (climate change)

THIS PROCESS IS UNEVEN

Helpful question: What is being globalized?

 The different forms of connectivity and flows are different facets of globalization

 Different “globalities” represent different forms of globalization – Flusty (2004)

 Depending on the globality, you see a different dynamic

THE CONTEMPORARY WORLD

WHAT IS GLOBALIZATION?

VARIOUS DEFINITIONS

 Globalization means to designate an overview of the human experience in education. Cuturela

(2012) cited in a published work, Towards New Education.
  Globalization means to designate an overview of the human experience in education.

GLOBALISATION AND EDUCATION

Definitions

 Globalization is the development of an increasingly integrated global economy marked by free

trade, free flow of capital, and the tapping of cheaper foreign labor markets. Webster

FREE TRADE

 Robertson (1992), in his article, Globalization: Social Theory and Global Culture, defined
globalization as the “understanding of the world and the increased perception of the world as a
whole.”

CULTURAL GLOBALISATION
  Albrow and King (1990) defined globalization as “all those processes by which the people of the
world are incorporated into a single world society. This only means that peoples around the
globe live in a borderless community.

Giddens (1991)

 Globalization is the process of intensifying social relationships among countries around the
world connecting separate localities in a manner in which local events are formed as a result of
happenings that have occurred from afar.

 There is a rapid interconnection worldwide that links among people in the local, national and
even in regional context. This interconnectedness is created because of social and economic
relationships and networks which are relevant in the global interactions.

 Steger (2005) cited Freeden (2003) who pointed out that globalization denotes not an ideology,
but ‘a range of processes nesting under one rather unwieldy epithet. He furthered that global
flows occur in different physical and mental dimensions.

 Globalization should be confined to a set of complex, social processes that are changing out
current social condition derived from the modern independence of nation-states.

 He furthered that key concepts of globalization have been defined such as multidimensional set
of social processes that create, multiply, stretch, and intensify worldwide social
interdependencies and exchange while making people aware of connections between the local
and the distant.

GLOBALISATION

 The term globalization should be confined to a set of complex, sometimes contradictory, social
processes that are changing our current social condition based on the modern system of
independent nation-states.

 Most scholars of globalization have defined their key concept along those lines as a
multidimensional set of social processes that create, multiply, stretch, and intensify worldwide
social interdependencies and exchanges while at the same time fostering in people a growing
awareness of deepening connections between the local and the distant.

IMF

 IMF (2000) noted that globalization refers to an extension beyond national borders of the same
market forces that have operated for centuries at all levels of human economic activity which
includes village markets, urban industries, or financial centers.

Hutton & Giddens

 Globalization is the interplay of extraordinary technological innovation mixed with influence of

the world that gives today’s changing its complexity. They expressed that the balance between
science or knowledge and resources has changed in such a way that science and knowledge
have become perhaps the most significant factor in the determination of the country/s standard
of living.
THE FIVE CORE CLAIMS OF MARKET GLOBALISM

1. Globalization is about the liberalization and global integration of market.

2. Globalization is inevitable and irreversible.

3. Nobody is in charge of globalization

4. Globalization benefits everyone

5. Globalization furthers the spread of democracy in the world

Teaching-Learning Strategy

The Global Economy

MOTIVATION

Show and Tell

Select students will bring personal care products or consumable goods and will tell the origin and
reasons for patronizing the product.

PROCESSING

From the show and tell exercise, the teacher brainstorms with the students the concept of economic
globalization.

Learning Outcomes

• Conceptualize the meaning of economic globalization by using examples

• Create a matrix highlighting the actors and their contributions in facilitating economic
globalization

• Create a matrix highlighting the actors and their contributions in facilitating economic
globalization

• Defend or refute an issue on global economic integration through Asian Parliamentary debate

THE GLOBAL ECONOMY

Why are the regions around the globe have glaring differences when it comes to economy?”

Changes in the Global Economy

 For the past centuries, the global economy has significantly changed.

 In the 11th century, the long distance trading flourished between Venice and the Netherlands.

 The wool industry in the 13th century in Flanders and in 14th century in Florence can also be an
example of a sustained economic growth throughout history.

 Those global changes have contributed much to the economy of the world.
 There was the birth of capitalism.

 In Gary Gereffi’s journal, The Global Economy: Organization, Governance, and Development, he
mentioned that the global changes are attributed to how the global economy is organized and
governed. He furthered that these changes give impact not only to the flow of goods and services
across national borders, but also the implications of these processes for how a particular country
move up or down in the international scene.

 Nowadays, the various countries’ strategies on development are influenced by the new degree on
how industries are organized.

 These development strategies are manifested in a shift in theoretical frameworks from those
centered on the legacies and actors of nation-states to a greater concern with supranational
institutions and transnational organizations.

 Developed countries and developing countries like the Philippines have to fully understand the
impact of the contemporary global economy to improve their position in the global system.

 There is no singular academic field that can completely explain the topic of global economy because
it is inherently interdisciplinary.

 According to Gereffi, the global economy can be studied at different levels of analysis.

The three level

the macro level

 This includes the international organizations and regimes that establish rules and norms for the
global community.

 The World Bank, the International Monetary Fund, the World Trade Organization, and the
International Labor Organization are the existing international organizations that make impact
to the economy of the world.

 The regional integration schemes like the European Union and the North American Free Trade
Agreement are also part of these organizations.

 Since these regimes blend both the rules and resources, they substantiate the widest
parameters within which the global economy operates.

the meso level

 It is believed that the building blocks for the global economy are the countries and firms.

 The global economy is seen as the arena in which countries compete in different product
markets.

the micro levelthe micro level

 The development of a world trading system over a period of several centuries helped to create
the tripartite structure of core, semi peripheral, and peripheral economic areas.

 According to world-systems theory, the upward or downward mobility of nations in the core,
semi periphery, and periphery is determined by a country’s mode of incorporation in the
capitalist world-economy, and these shifts can only be accurately portrayed by an in-depth
analysis of the cycles of capitalist accumulation in the longue durée of history

 The foundation for a process of industrialization and new international divisions of labor on a
global scale is attributed to the dynamics of the capitalist world-system.

 Adam Smith, an eighteenth-century political economist, defined “division of labor” as the

specialization of workers in different parts of the production process, usually in factory setting.

 Gereffi stressed that the division of labor also acquired a geographical dimension during the
influx of industrial economies as evolved.

 In a global scope, the “classic” international division of labor was between the industrial
countries producing manufactured goods and the non-industrialized economies that supplied
raw materials and agricultural products to the industrial nations which became a market for
basic manufacturers.
CONTEMPORARY GLOBAL GOVERNANCE

 Read the News Article: ICC Is Investigating Duterte, Who Suddenly Wants OutAnswer the check
up questions:

1. What did you feel after reading the news article?

2. Is the move of President Duterte relevant to the country? Why or why not?

3. Share with the class your impressions with the news article presented.

4. As a Filipino citizen, would you support Duterte’s move of withdrawing Philippines from ICC?
Defend your answer.

 Globalization is a rich and a broad concept and may be defined in various perspectives.

 It cannot be denied that globalization has made a tremendous impact on the sovereign state.

 Fowler and Bunck (1996) emphasized that a sovereign state has a territory, the people, and a
government.

 Any state admitted as a member of the United Nations will be upon the decision of the General
Assembly as recommended by the Security Council.

 The United Nations membership requirements are (1) the state must be a peace-loving state
which accepts the obligations contained in the present Charter, and (2) in the judgment of the
Organization, must be able and willing to carry out these obligations.

 Chapter 2, Article 4 of the United Nations Charter states that only sovereign states can become
members of the United Nations.

 Although all UN members are fully sovereign states at the present, the Belarus, India,
Philippines, and Ukraine- four of the original members- were not independent at the time of
their admission in the organization.

 Even from the seventeenth century, the legal framework of a sovereign state has served as a
definitive ground for political governance and economic system.

 Sovereignty has been constitutionally used both on national and international levels. The
intercontinental spread of capital and the formation of global markets have eventually
substituted the fragmented national economies.

 Sovereign states are experiencing increased difficulties in supplying regulatory and redistributive
public goods and establishing and enforcing property rights in the face of relatively open trade,
rapid information-technology advances, and considerable financial deregulation.

 Moreover, both market relations and political discontent with economic policies have virtually
become “borderless.”

 The international system has now become less state-centric that makes a way into the political
constitution of domestic policies.
 Notably, the advancements in technology and its innovations have increased the speed of the
migration and transplantation of legal rules and policies.

 The transnational actors, which are non-state, such as the intergovernmental organizations
(IGOs), international nongovernmental organizations (INGOs), and transnational corporations
(TNCs) have assumed relevant roles in global governance.

 They have created transnational law that runs many dimensions of the political economy that
was once governed by the sovereign states.

 Sovereignty is at the heart of both public international law and the legal constitution of the
state. Relevant changes in the international system definitely affect the shape of sovereignty
and the future of the state law.

 However today, any sovereign state cannot just neglect issues that are related to the interests
of the humanity, may they be within the borders or outside the borders of the state.

 Individuals and groups enjoy greater recognition as subjects of international law, as seen in the
expansion of legal regimes and enforceable mechanisms in the fields of international human
rights law, international refugee law, international criminal law, and the like.

 Victor Peskin observes that the United Nations Security Council's ad hoc tribunals for the former
Yugoslavia and Rwanda continued to trump state sovereignty insofar as targeted states and all
other UN members were legally bound to comply. However, the development of international
criminal tribunals suggests a changing balance of tribunal authority and state sovereignty.

 He criticizes the next generation of war crimes tribunals as supporting the expansion of the
influence of state judicial actors as well as the strengthening of the doctrine of sovereignty.

 The Rome statute of the International Criminal Court (ICC) upholds the principle of
complementarities and recognizes that states do not have to collaborate with the court unless
they have ratified the statute. However, this is only part of the picture.

 The decisions of international judges and prosecutors now permeate and shape the domestic
criminal law of these countries.

 William Burke-White further asserts that the ICC has become part of a system of multilevel
global governance through its alteration of state preferences and policies and its deterrence of
future crimes through judicial and prosecutorial pronouncements.

 International law has evolved into a central framework for the emergent system of global
governance.

 This system supplies the normative mechanisms for the establishment of IGOs and the
facilitation of the international response to issues as diverse as nuclear proliferation, climate
change, ocean use, and the functioning of the world trade system.

 Alexandra Khrebtukova insightfully points out, “[n]ational borders no longer confine the diverse
views that prioritize subjects of international law … . different perspectives are often less
 identifiable with specific states than with discrete branches of the law, each manifesting
separate functional perceptions of what that law should take as its primary focus.

 A sovereign state and its laws are changing; they are transforming according to their relevance
to the international system.

 A state may, in some point in time, opt to comply with the international and transnational
standards.

 However, the adaptive power of the state law should not be underestimated.

 Generally speaking, the laws that govern the sovereign state are strong and flexible enough to
endure the many challenges along the way.

 Even with globalization around, the laws are here to stand firm on the political influence over
the lives of sovereign state’s people and the majority of peoples around the globe.

UNDERLYING PHILOSOPHIES OF THE STUDY OF Globalization

The students are expected to:

 Define globalization

 Identify the underlying philosophies of the varied definitions of globalization

KFC LOOKS TO CONQUER AFRICA with FRIED CHICKEN

Chain to open hundreds of restaurants in a dozen countries

• NEWSER)- Kentucky Fried Chicken wants to take over Africa.

 Like Mcdonald’s & other fast-foods giants, KFC parent Company Yum Brands has been
countering the slowdown in American spending with expansion overseas.

 Yum now plans to double the number of stores in Africa to 1,200, the Wall Street Journals
report.

 KFC has had an outlet in South Africa since 1971, but Yum plans to open them,& sister
restaurants, in Nigeria, Namibia, Mozambique, Ghana, Zambia, & elsewhere.

 Yum is betting that its expansion will be supported by a growing African middle class- more than
40% of Africans now live in urban areas, & the number of families with disposable income is
surging.

GLOBALIZATION defined

 The term globalization is not new in modern context.

 Many researches, debates & discussions were made as to the meaning of the word.
 Cuturela (2012) cited a published work, Towards New Education, “Globalization” (1930) means
to designate an overview of human experience in education.

 Inosemtsev(2008) distinguished globalization as one of the most known social studies, but is still
a hollow terminology.

 Webster, globalization is the development of an increasingly integrated global economy marked

by free trade, free flow of capital, & the tapping of cheaper foreign labor markets.

 Robertson (1992), in his article, Globalization: Social Theory & Global Culture, defined
Globalization as the “Understanding of the world & the increased perception of the world as a
whole.”

 Albrow & King (1990) defined Globalizations as “all those processes by which the people of the
world are incorporated into single world society. Simply means, peoples around the globe live in
a borderless community.

 The work of Giddens (1991) has supported his claim when he highlighted in his definition that
Globalization is the process of intensifying social relationships among countries around the
world connecting separate localities in a manner in which local events are formed as a result of
happenings that have occurred from afar.

 Steger (2005) cited Freeden (2003) who pointed out that Globalization denotes not an ideology,
but ‘a range of processes nesting under one rather unwieldy epithet.

 Steger (2005) on the other hand, opined the Globalization should be confined to a set of
complex, social processes that are changing out current social condition derived from the
modern independence of nation-states.

 Furthered, that key Concept of Globalization have been defined such as multidimensional set of
social processes that create, multiply, stretch, & intensity worldwide social interdependencies &
exchange while making people aware of connections between the local &the distant.

 The term Globalization should be confined to a set of complex, sometimes contradictory, social
processes that are changing our current social condition based on the modern system of
independent nation-states.

 Indeed, most scholars of Globalization have defined their key concept along those lines as a
multidimensional set of social processes that create, multiply, stretch, & intensify worldwide
social interdependencies & exchanges while at the same time fostering in people in growing
awareness of deepening connections between the local & the distant.

 International Monetary Fund (IMF, 2000) Identified some overviews of various areas of
globalization.

 Globalization ‘offers extensive opportunities for truly worldwide development, but it is not
progressing evenly.

 To reiterate, globalization is not a recent phenomenon & there is nothing mystifying about it.
  1980’s, the term Globalization has become a common word manifesting advances in modern
technologies that have made international transactions, in both trade & finances, convenient,
accessible & easy.

 IMF (2000) noted that same market forces that have operated for centuries at all levels of
human economic activity which includes village market, urban industries, or financial centers.

 Conversely, Hutton & Giddens, as cited by Cuturela (2009) emphasized that globalization is the
interplay of extraordinary technological innovation mixed with influence of the world that gives
today’s changing its complexity.

FIVE CORE CLAIMS OF Market GLOBALISM

 Steger (2014) pointed out that in the mid-1990’s, more population in the global north & south
had accepted globalism’s core claims, thus internalizing large part of its overarching neo-
liberalization of trade, the privation of state-owned enterprises, & after 9/11, the qualified
support of the global ‘War on Terror’ under US leadership.

 1st claim, Globalization is about the liberalization & global integration of market, this is
absolutely anchored in the neo-liberal ideal of self-regulating market as the normative basis
for the future global order.

 2nd, Globalization is inevitable & irreversible, the market-globalist perspective sees

globalization as the spread of irreversible market forces driven by technological innovations
that make the global integration of national economies.

 3rd,Nobody is in charge of globalization, highlights the semantic link between ‘globalization-

market’ & the adjacent idea of ‘leaderlessness.

 Roberts Hormats(1998) opined that “The great beauty of globalization is that no one is in
control.”

 Thomas Friedman (1999:112-3) emphasized that the most basic truth globalization is this: No
one is in charge…But the global marketplace today is an Electronic Herd of often anonymous
stock, bond, & currency traders & multinational investors, connected by screens & networks.

 4th, Globalization benefits everyone, this lies heart of market globalism & represents a ‘good’
phenomenon.

 19986 G-7 Summit in Lyons, France, the heads of state & government of the world’s 7 most
powerful industrialized nations issued a joint Economic Communique (1996) that exemplifies
the principal meaning of this claim:

 Economic growth & progress in today’s interdependent world is bound up w/ the process of
globalization.

 Its many positive aspects include an unprecedented expansion of investment & trade; the
opening up to international trade of the world’s most populous regions & opportunities for
more developing countries to improve their standards of living; the increasingly rapid
dissemination of info, technological innovation, & the proliferation of skilled jobs.
  5th, Globalization furthers the spread of democracy in the world.

 Francis Fukuyama(2000) stressed that there exists a clear correlation between the country’s
level of economic development & successful democracy.

 The former 1st Lady Hillary Rodham Clinton (1999) praised the Eastern Europe’s economic
transition towards capitalism by saying, “ The emergence of new businesses & shopping
centers in former communist countries should be seen as the ‘backbone of democracy.’

Market INTEGRATION

The student are expected to:

 Explain the role of international financial institutions in the creation of a global economy

 Identify the attributes of global corporations

G L O B A L I Z A T I O N LABOR MARKET INTEGRATIONi n l a t e 19th & Early 20th Century A SIA

By: Gregg Huff Giovanni Caggiao

 Beginning in the late 19th century, globalization swept through Asia, transforming its product
& labor markets.

 By the 1880s steamships had largely replaced sailing vessels for transport within Asia as well
as to Western markets, & shipping fares had begun to fall sharply.

 Also already underway was the mass migration of Indian & Chinese workers, principally from
the labor-abundant areas of Madras in India & the provinces of Kwangtung (Guangdong) &
Fukien (Fujian) in Southeastern China, to land-abundant but labor-scarce parts of Asia

 Chief among the immigrant-receiving countries were Burma, Malaya & Thailand (Siam) in
Southeast Asia.

 Indian & Chinese labor inflows to these countries constituted the bulk of two of three main
late 19th & early 20th century global migration movements, the other being European
immigration to the New World.

 Immigration to Southeast Asia was almost entirely in response to its growing demand for
workers which, in turn, derived from rapidly expanding demand in core industrial countries
for Southeast Asian exports

 Studies by Latham & Neal (1983) & by Brandt (1985, 1989) establish the development of an
integrated Asian rice market beginning in the latter part of the nineteenth century (see
also, .Myung, 2000)

 As Harley (2000, p. 928) observes, “analysis of the low-wage periphery, which is most relevant
to modern [globalization] debate, is restricted by data availability”.

 This article makes available for the first time the data needed to test for labor market
integration over a large part of Asia.
  The article has two main aims.

 One is to analyze whether as part of pre-World War II globalization an integrated Asian

market for unskilled labor existed to encompass Asia’s chief emigrant-sending regions of
South India & Southeastern China & the principal Southeast Asian receiving countries for
Indian & Chinese immigrants.

Our metric for integration, following both econometric work on GDP convergence & Robertson’s
recent analysis of integrated labor markets, comprises three complementary criteria:

(i) that wages do not diverge from a common trend;

(ii) that over time wage

dispersion does not increase;

(iii) that a correction mechanism pushes wages towards an equilibrium relationship after shocks.

 It can be misleading, as Robertson (2000,p.728) warns, to rely on price as a criterion for

integration.

 Markets are integrated if adjustment mechanisms operate to correct deviations from a wage
differential or “gap”.

 Second, the article aims to compare wage trends in the area of Asia from South India to South
China & including Burma, Malaya & Thailand with an industrial core of the global economy,
defined as the United Kingdom, United States, Germany & France.

 We argue that by the late 19th century South India, Southeastern China & the three Southeast
Asian countries had become integrated and constituted a unified labor market.

 The pre World War II labor market pattern was, instead, one of strong divergence between
Asia & the world’s rapidly developing & industrializing core economies.

Rise of the GLOBAL CORPORATION

Part 1:

The historic rise of the global corporation—three periods

 This chapter situates the global corporation in three broad historical periods, of which the last
two have become the most relevant.

 The approach to the study of globalization sometimes termed “historical globalization” locates
the phenomenon itself in early patterns of trade and exchange.

 In early historical periods as both cities & countries extended their reach beyond their own
borders, this view holds, a form of globalization was initiated which then followed complex
patterns of interactive engagements organized through trade
  As Moore & Lewis contend, the entities operating within this environment were functionally
& organizationally not so very different from contemporary organizations, being possessed of
“head offices, foreign branch plants, corporate hierarchies, extraterritorial business law,

 As the world emerged from the vast destructions of WWII, economic recovery & expansion
were led overwhelming by American corporations which for a period from the end of the war
until the re-entry of Japanese & European corporations into the global scene

 Next, the transformations of the global corporation occurring within this third period have
been far reaching & distinctive,

Part 2:

How do global corporations function ? Constitutes a global corporation?

 The contemporary global corporation is simultaneously and commonly referred to either as a

multinational corporation (MNC), a transnational corporation (TNC), an international
company, or a global company.

 International companies are importers and exporters, typically without investment outside of
their home country;

 Multinational companies have investment in other countries, but do not have coordinated
product offerings in each country.

 Global companies have invested in and are present in many countries.

 Transnational companies are more complex organizations which have invested in foreign
operations, have a central corporate facility but give decision-making, research & develop &
marketing powers to each individual foreign market.

 Transnational corporation has been defined by the United Nations Centre on Transnational
Corporations (UNCTC) as an “enterprise that engages in activities which add value
(manufacturing, extraction, services, marketing, etc) in more than one country (UCTC, 1991)

 The overall structure of this system would stay in place & continue to develop throughout the
1970s & 1980’s—a period that stands chronologically just prior to three fundamental
innovations that have substantially changed the character of the global corporation:

 the advent & impact of digitalization & instantaneous global communications;

 the structural transformation of global commerce from producer-driven commodity chains to

buyer-driven;

 & the increasing role performed through the global system by financial elements & the
emergence of the global financial firm.

Geriffi for example emphasizes three structural periods:

 Investment-based globalization (1950-1970);

 Trade-based globalization (1970-1995);

 Digital globalization (1995 onwards.)

 Another method of projecting this growth is to examine the sources and levels of Foreign
Direct Investment (FDI) most of which was of corporate origin.

 Usually referred to in terms of “out-ward” and “in-ward” flows, supplies of FDI were viewed
as the major elements of global economic development,

Part 3:

What is different about this phase of global corporate development

 The so-called “developing economies”, and especially those of Brazil, India and China—the so-
called BRICS economies,

 The number of global corporations from the emerging market economies listed in the Fortune
Global 500, which ranks corporations by revenue, rose from 47 firms in 2005 to 95 in 2010.

 Capital flows in general over the past decade & a half have begun to change from the
dominant North-North/North-South dynamic to one in which South-South & South-North
capital flows are significant (Rajan 2010) with most of the South-North capital flows coming
from China & India.

 The importance of global corporations in Brazil, India & China to the current & projected
global economy is singlular.

 Hawksworth & Cookson predict that “middle class” consumers in China & India will grow from
some 1.8 billion in 2010 to 3.2 billion in 2020 and 4.9 billion by 2030 (2008).

EXHIBIT
 In 1998 only one of the top 100 global corporations was located outside the US, Europe or
Japan (Oatley 2008).

MARKET INTEGRATION

Foreign trade

The Rise of the Global Corporation

 Global corporations are inseparable from the more general phenomenon of globalization itself.
It follows that how one identifies globalization serves to “locate” global corporations, both in
the complex interactive pattern defined by globalization and within given historical periods.

 The approach to the study of globalization sometimes termed “historical globalization” locates
the phenomenon itself in early patterns of trade and exchange

 As both cities and countries extended their reach beyond their own borders, a form of
globalization was initiated which then followed complex patterns of interactive engagements
organized through trade and directly influenced by the emergent and subsequently dominant
technologies, especially in shipping and navigation. (Harvey)

 The entities operating within this environment were functionally and organizationally not so
very different from contemporary organizations, being possessed of “head offices, foreign
branch plants, corporate hierarchies, extraterritorial business law, and even a bit of foreign
direct investment and value-added activity. (Lewis and Moore)

 The vast heterogeneity of this long period, however, leads a majority of scholars to situate the
direct antecedents of the contemporary global corporation within the dynamics of a two plus-
centuries long duration spanning the period prior to the end of WW II in which the modern
nation state system emerged in ways that allowed invention and social organization to combine
vastly increased world capital and the wealth of nation states.
 Coupled with an extraordinary rise in global population that attended the industrial revolution,
the societies that arose would invent new ways to organize the world itself through colonialism
and imperialism that vastly attenuated or to lesse and weaken their interactions between
peoples, states and regions such that a clearly differentiated era of global interaction can be said
to exist.

CHARACTERISTICS

 As the world emerged from the vast destructions of WWII, economic recovery and expansion
were led overwhelming by American corporations which for a period from the end of the war
until the re-entry of Japanese and European corporations onto the global scene essentially stood
for what by then had come by then to be viewed as multinational corporations (MNCs)

 This period from the end of WWII to the present can be viewed, therefore, as a third and
distinct period in the transformation of the global corporation.

 The transformations of the global corporation occurring within this third period have been far
reaching and distinctive, reflecting changes taking place within the broader structural
dimensions of globalization itself and at the same time significantly contributing to those
continuing changes.

 How do global corporations function? What constitutes a global corporation?

 The contemporary global corporation is simultaneously and commonly referred to either as a
multinational corporation (MNC), a transnational corporation (TNC), an international
company, or a global company.

 International companies are importers and exporters, typically without investment outside of
their home country.

 Multinational companies have investment in other countries, but do not have coordinated
product offerings in each country. They are more focused on adapting their products and
services to each individual local market.

MULTINATIONAL

 Scholarly work documents various “waves” of global corporate development through the
subsequent six decades to the present.

 The overall structure of this system would stay in place and continue to develop throughout the
1970s and 1980’s—a period that stands chronologically just prior to three fundamental
innovations that have substantially changed the character of the global corporation

1. the advent and impact of digitalization and instantaneous global communications;

2. the structural transformation of global commerce from producer-driven commodity

chains to buyer-driven; and

3. the increasing role performed through the global system by financial elements and the
emergence of the global financial firm.

 Geriffe emphasizes three structural periods:

1. Investment-based globalization (1950-1970);

 2. Trade-based globalization (1970-1995);

3. Digital globalization (1995 onwards.)

4. Within this analysis the nature of the global corporation changes accordingly, being
driven in each case by its evolving purposes and by its extended reach and abilities
(Geriffe 2001)

PHASES OF GLOBALIZATION SINCE THE 1800S

The First Phase of Globalization (1830-1880)

 The first phase of globalization began about 1830 and peaked around 1880.International
commerce became widespread in this period due to the growth of railroads, efficient ocean
transport, and the rise of large manufacturing and trading companies.

 The inventions of the telegraph and telephone in the 1800s facilitated information flows
between and within nations and greatly aided early efforts to manage companies’ supply chains.

 International Business: Strategy, Management, and the New Realities

THE SECOND PHASE OF GLOBALIZATION (1900-1930)

 The second phase of globalization began around 1900 and was caused by the rise of electricity
and steel production. The phase reached its height just before the Great Depression, a
worldwide economic downturn that started in 1929.

 At the turn-of-the-century, Western Europe was the most industrialized region and its
colonization of countries worldwide led to the establishment of some of the earliest subsidiaries
of multinational firms.

 European companies such as BASF, British Petroleum, Nestlé, Shell, and Siemens had
established foreign manufacturing plants by 1900.

International Business: Strategy, Management, and the New Realities

THE THIRD PHASE OF GLOBALIZATION (1948-1970S)

 At war’s end in 1945, substantial pent-up demand existed for consumer products, as well as for
input goods to rebuild Europe and Japan. Among the leading economies, the U.S. was least
harmed by the war and became the world’s dominant economy. Substantial government aid
helped stimulate economic activity in Europe.

 Commonplace were high tariffs, other trade barriers, with strict controls on currency and capital
movements. Several industrialized countries, including Australia, the United States and the
United Kingdom systematically sought to reduce international trade barriers.

 The result of this effort was the General Agreement on Tariffs and Trade (GATT) – the precursor
to the World Trade Organization (WTO)
  International Business: Strategy, Management, and the New Realities

The Fourth Phase of Globalization (since the 1980s to present)

 The fourth and current phase of globalization began in the early 1980s.This period witnessed
enormous growth in cross-border trade and investment activity. The following innovations
caused this phase: a. Commercialization of the personal computer. b. Arrival of the Internet and
the web browser. c. Advances in communication and manufacturing technologies. d. Collapse of
the Soviet Union and ensuing market liberalization in central and Eastern Europe. e.
Substantial industrialization and modernization efforts of the East Asian economies including
China.

 International Business: Strategy, Management, and the New Realities

 Another method of projecting this growth is to examine the sources and levels of Foreign Direct
Investment (FDI) most of which was of corporate origin. As Hedley indicates, in 1900 only
European corporations were major investors, to be joined by some American firms in the 1930s.

 Foreign direct investment (FDI) is when a company owns another company in a different
country. FDI is different from when companies simply put their money into assets in another
country—what economists call portfolio investment. With FDI, foreign companies are directly
involved with day-to-day operations in the other country. This means they aren’t just bringing
money with them, but also knowledge, skills and technology.

 Citing UN data he dates 1960 as the major turning point for FDI as the major driver of extended
global corporate development. In each subsequent decade until the turn of the century, FDI
would triple (Hedley 1999).

 Throughout these periods economists, other scholars and government actors at both the
national and transnational level tended to “frame” the progressive growth of the global
corporate structure (again, referred to almost indiscriminately as either MNC’s or TNC’s)
through efforts to define, measure and assess the extent and consequences of foreign direct
investment, defined initially and primarily as the entry of private capital from a source external
to a country into a receiving country.

FDI
What is different about this phase of global corporate development?

 The so-called “developing economies”, and especially those of Brazil, India, China and South
Africa—the so-called BRICS economies, have become the most dynamic sector of global
corporate growth, represented in part by their significant FDI over the three decades.

 The relative size, growth and range of activity of global corporations from the emerging
economies suggest that they are on a trajectory that will soon situate them firmly within those
of the historically more developed economies.

BRICS
 The number of global corporations from the emerging market economies listed in the Fortune
Global 500, which ranks corporations by revenue, rose from 47 firms in 2005 to 95 in 2010.

 These companies have also become active in the broad pattern of global mergers and
acquisitions (M&A), a primary vehicle by which corporate concentration takes place

CRACKS

 Hawksworth and Cookson predict that “middle class” consumers in China and India will grow
from some 1.8 billion in 2010 to 3.2 billion in 2020 and 4.9 billion by 2030 (2008).

 The relative import of their global corporate cultures can be gauged in part by the fact that in
2012 global corporations in China made up 73 of the largest in the Fortune 500 list (CNN
Money 2012), and whereas Brazil and India with 8 apiece currently account for a small share
of such corporations, emergent market countries are projected to account for a near doubling
of their share of world trade over the next 40 years, reaching nearly 70% by 2050 (Ahern,
2011).

 In 1998 only one of the top 100 global corporations was located outside the US, Europe or
Japan (Oatley 2008).