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Globalization is a term used to describe the changes in societies and the world economy that are the result of dramatically increased trade and cultural exchange. In specifically economic contexts, it refers almost exclusively to the effects of trade, particularly trade liberalization or "free trade". Between 1910 and 1950, a series of political and economic upheavals dramatically reduced the volume and importance of international trade flows. In the post- World War II environment, fostered by international economic institutions and rebuiliding programs, international trade dramatically expanded. With the 1970's, the effects of this trade became increasingly visible, both in terms of the benefits and the disruptive effects.
Meanings of Globalization"Globalization" can mean:
It shares a number of characteristics with internationalization and is used interchangeably, although some prefer to use globalization to emphasize the erosion of the nation- state or national boundaries. Globalism, if the concept is reduced to its economic aspects, can be said to contrast with economic nationalism and protectionism. It is related to laissez-faire capitalism and neoliberalism. History of globalizationSince the word has both technical and political meanings, different groups will have differing histories of "globalization". In general use within the field of economics and political economy, is, however, a history of increasing trade between nations based on stable institutions that allow individuals and firms in different nations to exchange goods with minimal friction. The term "liberalization" came to mean the combination of laissez-faire economic theory with the removal of barriers to the movement of goods. This led to the increasing specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade. The period of the gold standard and liberalization of the 19th century is often called "The First Era of Globalization". Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was Ricardo's work on Comparative advantage and Say's Law of General equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the gold standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is a matter of a great deal of contentious debate. The "First Era of Globalization" is said to have broken down in stages beginning with the first World War, and then collapsing with the crisis of the gold standard in the late 1920's and early 1930's. Globalization in the era since World War II has been driven by Trade Negotiation Rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on "free trade". The Uruguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade. Signs of globalizationGlobalization has become identified with a number of trends, most of which may have developed since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. The actual existence of some of these trends are debated.
Barriers to international trade have been considerably lowered since World War II through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for which GATT is the foundation, have included:
Anti-globalizationVarious aspects of globalization are seen as harmful by anti-globalization, public-interest activists. There is a wide variety of different kinds of "anti-globalization." In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations and labor into account. Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor. Many anti-globalism activists see globalization as the promotion of a Corporatist agenda, which is intent on constricting the freedoms of individuals in the name of profit. They also claim that increasing autonomy and strength of corporate entities increasingly shape the political policy of nation-states. Some anti-globalism groups argue that globalism is necessarily imperialistic, is one of the driving reasons behind the Iraq war and that it has forced savings to flow into the United States rather than developing nations. Some argue that globalization imposes credit based economics, resulting in unsustainable growth of debt and debt crises. Few activists favor getting rid of globalization completely. Rather, the main opposition is to unfettered globalization (neoliberal; laissez-faire capitalism), guided by governments and quasi-governments (such as the International Monetary Fund and the World Bank) that are not held responsible to the populations that they govern and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of "corporate globalism". Pro-globalization (globalism)Supporters of democratic globalization can be labelled pro-globalists. They consider that the first phase of globalization, which was market-oriented, should be completed by a phase of building global political institutions representing the will of World citizens. The difference with other globalists is that they do not define in advance any ideology to orientate this will, which should be left to the free choice of those citizens via a democratic process. Supporters of free trade point out that economic theories such as comparative advantage suggests that free trade leads to a more efficient allocation of resources, with all those involved in the trade benefitting. In general, they claim that this leads to lower prices, more employment and better allocation of resources. Libertarians and other proponents of laissez-faire capitalism sees differences in capitalism as the main reason that the western world is rich and that other parts of the world are poor. They see globalization as the beneficial spread of the capitalistic system to other countries. One effect being that the percentage of people in developing countries living below $1 (adjusted for inflation) per day have halved in only twenty years [1] (http://www.worldbank.org/research/povmonitor/). Many pro-capitalists are also critical of the WHO and IMF, arguing that they are corrupt bureaucracies controlled and financed by states, not corporations. Many loans have been given to dictators who never did any reforms. Instead leaving the common people to pay the debts later. They thus see too little capitalism, not too much. They also note that some of the resistance to globalization come from special interest groups with conflicting interests like Western world unions. Globalization in questionThere is much academic discussion about whether globalization is a real phenomenon or only a myth. Although the term is widespread, many authors argue that the characteristics of the phenomenon have already been seen at other moments in history. Also, many note that those features that make people believe we are in the process of globalization, including the increase in international trade and the greater role of multinational corporations, are not as deeply established as they may appear. Thus, many authors prefer the use of the term internationalization rather than globalization. To put it simply, the role of the state and the importance of nations are greater in internationalization, while globalization in its complete form eliminates nation states. So, these authors see that the frontiers of countries, in a broad sense, are far from being dissolved, and therefore this radical globalization process is not yet happening, and probably won't happen, considering that in world history, internationalization never turned into globalization - (the European Union and NAFTA are yet to prove their case.) However, the world increasingly shares problems and challenges that do not obey nation state borders, most notably pollution of the natural environment, and as such the movement previously known as the anti-globalisation movemement has transmogrified into a movement of movements for globalisation from below seeking, through experimentation, forms of social organisation that transcend the nation state and representative democracy. So, whereas the original arguments of anti-global critique can be refuted with stories of internationalisation, as above, the emergence of a global movement is indisputable and therefore we can speak of a real process towards a global human society of societies. Related articlesEconomy and trade
Politics
CommunicationsOther
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