Globalization

“Globalization” refers to the increasing integration of global economics, finance, politics, technology, and culture, specifically since the early 1970s. The term has a second meaning as well: the ideology of globalization, meaning trade liberalization and the transnational integration of government economic policies. The difference between the two terms is at the center of an economic and political debate.

The term inspires considerable debate, not only among those who dispute the relative merits of the effects of globalization but also among those who argue that global integration of trade and politics has consistently been a feature of world history. The rapid development of technology and communications since the early 1970s and the concomitant surge in the volume of international trade, however, does indicate a distinct change in the pattern of international relations. James H. Mittelman, a prominent scholar of globalization, offers in The Globalization Syndrome (2000) a useful historical categorization of globalization, which takes into account these problems of location and definition. He suggests that the period before the 16th century may be referred to as “incipient globalization,” the period until the early 1970s as “bridging globalization,” and the period following the 1970s as “accelerated globalization.”

One of the primary factors behind the recent developments in global relations has been the advances made in the development and sophistication of communication and information technology, as well as transportation technology, such as air freight. The impact of technological progress on international relations was predicted in the 1960s, when the academic Marshall McLuhan envisaged the dawning of what he referred to as a “global village.” These developments, most notably the Internet, satellite communications, and computer technology, have had a profound impact on the speed and scope of personal, business, and political interaction, resulting in an unprecedented level of immediacy in the transfer of information.

Two manifestations of globalization have been the economic and political dominance of the United States, and the emergence of large multinational companies known as transnational corporations (TNCs). In 1999 the United States had a market value of $15.013 trillion, considerably ahead of Japan, the second-largest, with $4.244 trillion, and the United Kingdom, at $2.755 trillion. Most striking is the ranking of major corporations alongside national economies. As of 2000, Microsoft, with a market value of $546 billion, ranking 10th in world trade, and General Electric at 12th, with a market value of $498 billion, had a larger market value than countries such as Australia ($424 billion) and Spain ($390 billion). These transnational corporations have utilized the new conditions afforded by globalization to create business structures that increasingly cross national boundaries. Production can be transferred to more cost-efficient areas, increasingly in developing countries, while finance, distribution, and sales can be coordinated globally to make effective use of financial markets and national economic conditions, as well as the flexibility of supplying disparate markets.

While such business structures enable more cost-effective products, critics have argued that the use of

Protesters march down Lexington Avenue, February 2, 2002, in New York City. Activists from around the nation came to protest the World Economic Forum, a meeting of corporate leaders from multinational conglomerates. (McCollester/Cetty Images)

Cheaper labor, and the production of standardized goods, stifle smaller competitors. The increasing power of these corporations is also perceived as a threat to the primacy of national governments, especially those with weaker economies. A 1994 report by the United Nations identified 37,000 transnational corporations, 1 percent of which owned half the world’s corporate assets, with more than 40 percent based in England and the United States.

International institutions, such as the World Trade Organization (WTO) and the International Monetary Fund (IMF), as well as international trade treaties, such as the North American Free Trade Agreement (NAFTA), were in part developed to regulate the excesses of globalization. Their role has been troubled and ambiguous, however. Critics say these organizations represent the powerful interests of business and the wealthiest nations; that they supersede the autonomy of national governments; and that they provide tacit support for human rights abuses in countries such as China. These organizations have galvanized considerable opposition to globalization, as witnessed in the demonstrations at the Third

Ministerial Conference of the WTO in Seattle in 1999. Nonetheless, the broad and disparate collection of demonstrators, including labor unions, environment groups, anarchists, and far-right conservatives, was indicative of the confusion and ambiguity surrounding the effects and structures of globalization.

The concentration of wealth and market share within a small number of multinational corporations and the increasing size of the U. S. economy have caused many to see globalization as synonymous with “Americanization.” American hegemony across global markets has led to the development of what many people see as a form of economic and cultural imperialism. Corporations such as Nike, McDonald’s, and Microsoft, as well as media organizations, such as Time Warner, MTV, and the Hollywood film industry, arouse conflicting emotions. For supporters, these companies provide cost-effective quality goods and services as well as secure employment. Critics point to the loss of local cultural and economic autonomy, and the imposition of American market values and beliefs. Furthermore, globalization has raised concerns about illegal immigration, international terrorism, and the transnational crime syndicates.

Globalization offers the opportunity for worldwide development, but globalization does not progress evenly. Some countries are becoming integrated into the global economy more quickly than others. Those that have been able to integrate have seen faster growth and reduced poverty. In East Asia, globalization has contributed to the greater prosperity of the region, transforming it from one of the poorest areas of the world just 40 years ago. As living standards rose, progress on democracy, the environment, and work standards has been made possible.

In the 20th century, the world has seen remarkable average income growth, but this growth has not been even by any measure. The gaps between rich and poor countries, and between rich and poor people within countries, have increased substantially. The richest quarter of the world’s population experienced a nearly sixfold increase in the 20th century, while the poorest quarter experienced a less than threefold increase. Incomes, though, do not tell the whole story. If countries are compared using the United Nations’s human development indicators (HDI), which take such factors as education and life expectancy into account, the gaps between the richest and poorest nations may, in fact, have narrowed. The inflation-adjusted income levels of today’s poor countries are still well below those of the leading countries of the world in 1870. Judged by their HDIs, today’s poor countries are well ahead of where those leading countries were in 1870. This is attributed to modern medical advances and improved living standards, which have brought about significant increases in life expectancy. Unfortunately, while life expectancy has increased, the quality of life for many has not. Many people still live in abject poverty, and the spread of AIDS is reducing life expectancy in many countries, especially on the African continent.

Critics of globalization have noted how the strongest gains have been made by advanced countries and only some of the developing countries, that the income gap between high-income and low-income countries has grown wider, and that too many of the world’s citizens still live in crushing poverty. Supporters argue globalization is not the cause and, in fact, is part of the solution. They argue that developing countries that are lagging have not been able to integrate with the global economy as quickly as others and that no country can afford to remain isolated from the world economy, least of all the poorest countries. Globalization, for its supporters, through the mechanisms of the international financial system, international trade, and foreign aid, helps the poorest countries to grow more rapidly and reduce poverty by integrating those countries into the world economy.

See also BUSINESS; economy; General Agreement on Tariees and Trade; science and technology.

Further reading: International Monetary Fund. “Globalization.” Available online. URL: Http://www. imf. org/external/ np/exr/key/global. htm. Accessed January 5, 2009.

—Stephen Hardman and Stephen E. Randoll