Economic Globalization: Integration and Impact on World Markets

Posted on Dec 14, 2024 in Geography

Globalization

Globalization is a primarily economic process which is the increasing integration of individual national economies into a single market economy worldwide. ^{[1] [2]} The identification and assessment may vary depending on the interlocutor.

Globalization is sometimes mistakenly associated as the product of public international bodies like the WTO, IMF, and WB. However, globalization is an autonomous process and a spontaneous order unrelated to the management of such public bodies, ^[3] and depends instead on economic growth, technological progress, and human connectivity (transport and telecommunications). ^[4] It is questionable to link globalization with an extra-economic or technological size, ^{[5] [6]} but it should embrace global social issues (culture, migration, quality of life, etc.). The term “global village” is often used.

Etymology

Some authors consider the term globalization more appropriate in Spanish, a Gallicism derived from the French word mondialisation, instead of “globalización”, an Anglicized word from globalization, since in Spanish “global” is not equivalent to “worldwide”, as it is in English.

However, the Dictionary of the Spanish Royal Academy records the entry “globalization”, defined as the “tendency of markets and enterprises to increase, reaching a global dimension which transcends national boundaries” (DRAE 2006, 23rd edition), while the entry “globalization” is not in the dictionary, but they are planning to include it.

History

The history of societies, especially in Europe, from the voyage of Christopher Columbus in 1492 shows that the vast majority have been expanding with solid vocations. This led to a series of empires. During that period, the political and economic theory governing relations between both empires, like those of the metropolis to the colonies, was mercantilism, which presupposes the competition for a finite amount of wealth, which “forced” a strict control of trade. This caused tensions between the colonial powers, whence came the need to seek arrangements among them. For example, in 1494, the first global treaty in history, Spain and Portugal divided the world to be conquered, according to the Treaty of Tordesillas.

However, this situation began to change in the 1870s. Commercial difficulties of Great Britain grew in the “Long Depression” of 1873-96, a protracted period of deflation, which led to the abandonment of free trade between the European powers (in Germany since 1879 and in France since 1881). This in turn caused a new colonial period. The European powers colonized large areas of the Middle East, Africa, Asia, etc., occasionally displacing non-European empires. This caused new tensions between the colonial powers which in turn led to new attempts to arrange between them. In 1904, England and France signed the Entente Cordiale and the U.S. declared the Roosevelt Corollary to the Monroe Doctrine.

The new wave of protectionism led to two bloody world wars that caused great suffering to the people and extensive damage to economies, leading to shrinkage of the volume and importance of international trade flows. During that time, the Russian Revolution occurred in 1917, that after the seizure of power in the October Revolution by the Soviets, led by the Bolsheviks, ended the First World War with the Treaty of Brest-Litovsk and established the first workers’ state, the RSFSR, then enclosed within the Soviet Union, led in its first phase by the workers’ control of production, land distribution, and the power of the Soviets or Soviet democracy, to the further development and gradual concentration of power in the hands of the bureaucracy and the Soviet CPSU and the Comintern led by Stalin and later in the Nikita Khrushchev era, called for the nomenklatura. But wars did not solve the other central problem of the global economy of the time: the cyclical fluctuations or cyclical downturns in economic activity in relatively short periods of growth followed by recession. The best known of these is the Great Depression of 1929.

Toward the end of this period between the wars, capitalist nations began to accept the notion that the State has a dual role in the functioning of the economy: one in ensuring the prosperity of the people and the other to avoid the cycles of growth and recession. This created the foundation for the emergence of the Welfare State (see John Maynard Keynes and the New Deal).

In 1945, shortly before the end of World War II, the United Nations, currently being established, made a financial conference in Bretton Woods (USA), where it was decided to create the International Monetary Fund and World Bank. Soon after, in 1947, the General Agreement on Tariffs and Trade (GATT) was signed, predecessor of the WTO. In relation to development policies, the Marshall Plan was implemented.

However, when the war ended, the world was divided into two politico-economic blocs: the capitalist bloc with undisputed leadership in the U.S. and the communist bloc (COMECON) and also undisputed leadership of the Soviet Union. Atomic power that counted both blocks exposed mankind to the danger of nuclear war and for the first time, the possibility of self-destruction as a species. This danger was called the Cold War, and increased consciousness of common destiny as a species.

For their part, the peoples of the European colonies began a series of decolonization or national liberation struggles that culminated in the creation of more than 100 new independent nations. Many of these countries chose not to align to either of those two blocs. It emerged then a Third World that was organized as the Non-Aligned Movement which, while still maintaining some relationship with one or two blocks, remained neutral in the global confrontation. This sector implemented a series of policies to obtain economic development, many of which were based on the principle of import substitution industrialization.

During this period, capitalist countries reorganized, guided by the agreements of the GATT, the OECD. The inner product of the bloc expanded while the emergency was to pre-eminence of “corporations” or Multinational Enterprises with great economic and political power and which brings classical capitalist firms that both Smith and Marx met. ^[7]

Historically, protectionism was practiced by blocs in relation to the other and sometimes with their own allies. Between capitalist and communist blocs the reason is obvious. But in turn, they sought to manipulate both the loyalties of the members of the Third World through the granting or denial of economic relations. In turn, the third world countries tried to avoid a relationship that was described as dependency or neo-colonialism, trying to reach economic self-sufficiency.

But a new crisis that began in the mid-1960s (see stagflation), exacerbated by the 1973 oil crisis, caused a radical reorganization of the economy, based on the intense promotion of technological innovation (ICT), the reform policies (see Washington Consensus) and attempts to dismantle the welfare state, which came to be seen as — in the words of Margaret Thatcher – a “nanny state” quencher restringidor freedoms and the ability to select individuals.

On November 9, 1989, came the fall of the Berlin Wall, opening the way to the implosion of the Soviet Union in 1991 and the demise of the communist bloc.

From that moment began a new historical era: globalization.

On the stage of nature, some thinkers and rulers outlined, the first of which was the government of Pinochet in Chile (in what was called an “experiment”[8]), followed by Thatcher (1979-1990) in Britain) and Reagan (1981-1989) in the U.S., etc. They found either necessary or appropriate to make a strong criticism from the standpoint neoliberal to socio-political forms and economic past, they considered statist and therefore restrictor both individual liberties and economic and social development, proposing new ways to create an ideal breeding ground for expansion, implemented economic policies of characters such as Friedrich Hayek and Milton Friedman, ^[9] which in fact resulted in the generation of new relationships between economic factors and markets around the world (consumers, labor, natural resources, financial investments, etc..), But both governments were in other areas heavily interventionist (see, for example, Miracle of Chile). By their nature, multinational companies are in an optimal position to take advantage of the new scenario.

Globalization in itself is a continuous and dynamic process that defies the laws of not only developing countries with respect to elements such as protecting workers, environmental protection, and ways of regulating the operation of corporations, although they may give work to idle hands, they can also benefit from remaining irregularities and weaknesses in a particular country. It’s easy for these companies to simply relocate their production facilities to locations which are the maximum facilities. It is also a challenge to development projects in countries, especially those in developing countries, it not only considers any government intervention as inimical to the interests of those companies (to the extent that such plans and regulations involving tax demand and other resources) but also asserts that the very idea of social development as the goal and objective of government or state precludes individual freedom and distorts both society and the market. (see eg Pareto position at: [3])

These guidelines were initially in this new socio-economic relationship. It can be seen as an example, that high production costs in developed countries, which converge with an opening of the eastern countries, especially China and India, capital markets and their inclusion as members of the World Trade Organization (WTO) resulted in a massive shift of industrial production from Europe and the U.S. to those or other countries offering better conditions to increase the profits of these international companies.

This phenomenon is occurring in the second half of the first decade of the century, a profound change in relations of power between the countries, which in turn causes the slow breakdown or decline in developed countries were considered, ^[10] For example, in the U.S. this second period, which began during the administration of President George W Bush in an attempt to reaffirm the U.S. as a “superpower” world, establishing a “Pax Americana “based on U.S. dominance by one side of the world economic system and on the other, its military superiority. But the reality has been that the U.S. economy has become the deficit in the balance of payments largest in the history of the world, which leads to the devaluation of its currency and declining rates of saving and investment, which in turn means that the country begins to depend on foreign investment ^[11] and enters a prolonged period of “semi recession, “while his army level military is bogged down in Iraq and Afghanistan in a war that is coming to be seen as militarily unwinnable ^[12] Even more serious for the country, their political practices are daily more of the pragmatic consensus (especially in foreign policy) that prevailed during the rise and dominance U.S. world ^[13] making it difficult to solve their problems and called into question his leadership[14]

On a cultural level, the increase in physical intercommunication and virtual, have increased and facilitated this process. The physical interconnection is based on the mass of the carriage. The virtual interface is based solely on technology, eg Internet. This has led to two contradictory results: on one hand the centralization of administrative and political control to government and corporate levels has been facilitated greatly. For another, it has provided with equally massive dissemination of critical ideas and communication at the level of ordinary citizens, previously for information at the mercy of means provided or could not respond quickly and effectively in decisions affecting them (see, for example: Ciberactivismo)

A final point of interest is economic growth worldwide since the introduction of the process. According to IMF data, all developed countries and many of those who are developing, have experienced sustained growth of their economies, which has and is allowing the entry of hundreds of millions of people to modern economies. This is generally the most widely used justification for globalization.

It is important to note that among the advocates of globalization are current with conflicting views, and radically different in their perception of the benefits of globalization, is the case of libertarianism and conservatism in politics, or the Austrian school and the monetarist / neoclassical school in economic doctrine.

• Liberal libertarians and other proponents of laissez-faire capitalism say that higher levels of political and economic freedoms in the form of democracy and capitalism, have been valuable end in itself in the developed world and have also produced high levels of material wealth. They see globalization as a beneficial process of expansion of freedom and capitalism. ^[15]

• Those who support free trade claim that the increase in both economic prosperity and opportunities, especially in developing countries, increase civil liberties and lead to a more efficient allocation of resources. Economic theories of comparative advantage suggest that the free market produces such effective resource allocation, the greater benefit of all countries that are involved. In general, this leads to lower prices, more jobs, increased production, and living standards especially for those living in developing countries. ^{[15] [16]}

• There are also “global” or “world”, advocating a “democratic globalization”. They believe that the first phase of globalization, driven by market or economic, should be followed by a phase of building global political institutions representing the views or aspirations of “global citizen” The difference between “globalists” is that they do not define in advance any ideology to orient this will, leaving it to the will of those citizens via a democratic process

• Proponents of globalization argue that the anti-globalization movement is protectionist and use timely and anecdotal evidence to support their visions, while the statistical sources provide strong support for globalization:

• Although some would dispute, income inequality appears to be globally decreasing, as the economist Xavier Sala-i-Martin’s argument in 2007 –[4]. ^[17] Leaving aside who’s right, it can be argued that more important is the measure of absolute poverty: if everyone lived in poverty, income inequality would be very low.

• From 1981 to 2001, according to World Bank figures, the number of people living on one dollar or less per day income has declined in absolute terms than fifteen hundred million thousand one hundred million people. At the same time, the world’s population increase. Thus, in percentage terms the numbers to decline in developing countries from 40% to 20%. population.[18] with the largest decreases occurring in economies that have cut more barriers to trade and investment. However, some critics warn that it would be desirable to use more detailed measures of poverty. ^[19]

• The percentage of people living on less than two dollars a day income has fallen a lot in areas affected by globalization, while poverty rates have remained stable in other areas. In East Asia, including China, that percentage has declined by 50.1% compared with an increase of 2.2% in Sub-Saharan Africa.[16]

Source: World Bank, Poverty Estimates, 2002 ^[16]

• Life expectancy has nearly doubled in the developing countries since the Second World War and is beginning to cut the distance between it and the developed countries, where improvement was minor. Even in sub-Saharan Africa, the least developed region, life expectancy has risen from less than 30 years before that war some 50 years before the pandemic of AIDS and other begin to reduce it again to the present level of around 47 years. The infant mortality has declined in all regions of the developing world. ^[20]

• The presence of democracy has increased dramatically: from a position in which there were very few nations with universal suffrage in 1900 to be present in 62.5% of all countries in 2000.[21]

• Women’s rights (see feminism) have advanced. Even in areas such as Bangladesh they are making access to jobs that provide stability and economic independence. ^[15]

• The proportion of the world’s population living in countries where the victuals of food per capita is less that 2,200 calories or 9,200 kilo joules per person per day declined from 56% in 1960 to less than 10% in 1990. ^[22]

• Between 1950 and 1990. world literacy rate increased from 52% to 81%. Women have accounted for much of that growth: the female literacy rate as a percentage of males, increased 59% in 1970 to 80% in 2000. ^[23]

• There are similar trends in regard to access to electricity, cars, radios, telephones, etc., while an increasing proportion of the population with access to safe water.[24]

• The percentage of children in the workforce has fallen from 24% in 1960 to 10% in 2000. ^[25]

• Indur M. Goklany, in his book The Improving State of the World also finds evidence that these and other measures of human welfare are improving and that globalization is part of the explanation. It also seeks to answer the argument that the Limited environmental impact that progress.

• Other authors, such as Sen. Canadian Douglas Roche, simply see globalization as inevitable and argued in favor of creating institutions such as a United Nations Parliamentary Assembly chosen to monitor and control the action of international bodies and non-elected institutions.

• Although critics of globalization complain that this implies a dominance of Western culture (occidentalisacion) a 2005 report by UNESCO ^[26] shows that cultural change is being done in both directions. In 2002, China was the third country exports of cultural goods, behind Great Britain and the U.S.. Between 1994 and 2002, the proportion of such exports of both North America and Europe declined, while exports to Asia grew to overtake the U.S..

Proponents of globalization strongly criticize some current policies in developed countries. In particular, subsidies to agriculture and protective tariffs in those countries. For example, almost half the budget of the European Union is used in agricultural subsidies, mostly to large corporations and industrialized farms that constitute a powerful lobby. ^[27] Japan, meanwhile, gave his 47 farm sector billion dollars in 2005.[28] almost four times the amount given in Official Development Assistance. ^[29] The U.S. 3,900 million dollars given each year to his cotton farm sector, which includes 25 thousand farmers, three times the entire budget for USAID 500 million people of Africa ^[30] `These policies deplete the resources of taxpayers and increases the price to consumers in developed countries, decreases competition and efficiency, prevents the export of more efficient farmers and other sectors in developing countries development and undermines the industries in which developed countries have comparative advantages. Thus, trade barriers hampering economic growth not only in developing nations, which has a negative effect on overall living standards.[31