Lecture 4
Lecture 4
Lecture 4
GLOBALIZATION
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What is Globalization?
increasing interconnectedness of people and places
as a result of advances in transport, communication,
and information technologies that cause political,
economic, and cultural convergence (IMF).
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What is Globalization?
growing integration between countries around the
world as a result of flows of goods and services,
capital, people and ideas.
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What is Globalization?
‘the compression of the world and the
intensification of consciousness of the world as a
whole (Roland Robertson,1992, Sociologist)
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History of Globalization
• Today the world economy can produce in 2.5 years all the value it
produced in the whole 19th century
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• China:
1.opening the economy in the early 1980s to obtain new capital
equipment and technology
2.Growth on average 9% 1978-1994
3.exports and imports grew 13-14% per year
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• India:
1.pursued inward-oriented policy until 1991
2.grew 1.4% per year in 60s,
3.-0.3% in the 70s;
4.80s - better but borrowed a lot from abroad
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• Arguments Against Globalization
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• Arguments Against Globalization
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• Arguments Against Globalization
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• Arguments For Globalization
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• Arguments For Globalization
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• Arguments For Globalization
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• About globalization, Mahatma Gandhi once said:
“I do not want my house to be walled in on all sides and my windows to
be closed. Instead, I want the cultures of all lands to be blown about my
house as freely as possible. But I refuse to be blown off my feet by any.”
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Types of Globalization
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Common Ecological constraints
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Cultural Globalization
development of human values and human rights
Western values of rationality, individualism, equality and efficiency
growth of cross-cultural understanding
erosion of local traditions and standards and their replacement by
foreign ones
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Globalization of communication
spread of knowledge, ideas
dramatic leaps in communications and travel
increase in world productivity
collaboration & co-creation
loss of species
spread of disease
environmental degradation
war and terrorism
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Economic Globalization
Declining Trade and Investment Barriers
Creation of high-tech jobs in wealthy nations
lifting from poverty
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Political Globalization
Institutionalization of international political structures.
Political centralization and decentralization
Global governance-specialized and general international organizations
International and global political organizations vis- a-vis national states.
https://www.youtube.com/watch?v=5SnR-e0S6Ic
https://www.youtube.com/watch?v=s_iwrt7D5OA
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Signs of Globalization
Increase in international trade at a faster rate than the
growth in the world economy
Increase in international flow of capital - including
foreign direct investment
Greater transborder data flow, using such technologies
such as the Internet, communication satellites and
telephones
Greater international cultural exchange, for example
through the export of Hollywood and Bollywood
movies.
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Signs of Globalization
Some argue that even terrorism has undergone
globalization. Terrorists now have attacked places all
over the world.
Spreading of multiculturalism and better individual
access to cultural diversity, with on the other hand,
some reduction in diversity through assimilation,
hybridization, Westernization or Americanization of
cultures.
Greater international travel and tourism.
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Signs of Globalization
Greater immigration, including illegal immigration
Development of global telecommunications
infrastructure
Development of a global financial systems
Increase in the share of the world economy controlled
by multinational corporations
Increased role of international organizations such as
WTO, IMF that deal with international transactions
Increase in the number of standards applied globally;
e.g. copyright laws
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Bretton Woods
System of Monetary Management
• In turn:
contraction in investment flows
a resulting further increase in unemployment.
Origins: Economic recession of the 1930s
duringthe war, the gold standard and currency
convertibility suspended.
to mobilize domestic economies, governments
printed paper money, depreciating the values of
national currencies.
massive inflation and unemployment.
Origins: Economic recession of the
1930s
in October 1929, the prices of basic foodstuffs
and materials lost between
two-thirds
three-quarters of their value.
1. monetary stability
2. fixed exchange rate based on gold
standard via US dollar as reserve currency
3. to facilitate international free trade
4. Mutual help to settle trade deficits
5. Postwar re-construction – mainly in Europe
Aims at Bretton Woods
6. create a credit organisation
7. give temporary assistance to countries
with bop problems;
8. create an international capital agency
9. set up an international trade organisation
10. devise and apply international trading
rules.
Results of Bretton Woods
• IMF
• GATT - WTO
The Emergence of Global Institutions
• G20; IMF, WB, UNTACD, WTO
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Globalization and migration
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Globalization and migration
There were relatively few institutional barriers to immigration in the
late 19th century. Today, migrants without appropriate documentation
may be deported or imprisoned.
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Globalization and migration
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Globalization and migration
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Globalization and migration
When new people arrive in a nation they are unemployed, so the first
impact of immigration is that it increases unemployment.
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Globalization and migration
Immigration also increases the cost of job loss for residents, because
the worker who loses a job is now in a larger pool of unemployed
workers.
Workers have more to fear from losing their jobs, and firms will be able
to make employees work effectively at a lower wage.
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Globalization and migration
Firms are now getting work at lower wages, and so are more profitable.
As a result they will seek to expand production.
To do this, they will invest in new machinery. This will increase labor
demand in the rest of the economy, and when the new capacity is
ready, firms will hire more workers.
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Globalization and migration
1.wages fall.
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Globalization and migration
https://youtu.be/qqZxJGW9B7M
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Trilemma of The World Economy
Dani Rodrik
https://www.youtube.com/watch?v=LRDIejhdtYk
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Trilemma of The World Economy
His trilemma refers to three dimensions which cannot occur at the
same time.
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Trilemma of The World Economy
Hyperglobalization is ruled out : there must be limits
on labour/capital mobility for effective policies of
stabilization and redistribution.
Democracy is ruled out: Hyperglobalization policies
can only be implemented by government if citizens’
opposition is weakened by a dilution of democratic
processes.
National sovereignty is ruled out : If
hyperglobalization policies are accompanied by
supranational institutions, this restricts the ability of
countries to choose national policies independently.
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A powerful logic exists in support of economic openness:
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