The Contemporary World

Globalization: The process in which people, ideas, and goods spread throughout the world, spurring more interaction and integration between the world's cultures, governments, and economies.

Features of Globalization: Historical instances like the Silk Road connecting China and Europe, an increase in cross-border trade, investment, and migration, and a more extensive and faster globalization compared to earlier waves.

Economic Impact of Globalization: Examples include a 20-fold increase in the volume of world trade since 1950 and a doubling of foreign investment flows from 1997 to 1999.

Drivers of Globalization: Technology, particularly information technology, plays a significant role in advancing globalization by transforming economic life and enabling faster and more informed economic activities globally.

IMF's Definition of Globalization: According to the International Monetary Fund (IMF), globalization is the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, international capital flows, and the rapid diffusion of technology.

Dimensions of Globalization: Globalization is a multi-dimensional process involving economic, political, technological, cultural, religious, and ecological dimensions. It results in the creation of something new, multiplying social connections, and transgressing traditional boundaries.

Worldwide Connectivity: Globalization is about growing worldwide connectivity, as described by Steger.

Globalization Involves New Social Networks: The creation of new social networks and the multiplication of existing connections that cut across traditional, political, economic, cultural, and geographical boundaries. (Example: Brazilian World Cup: Today’s media combine conventional TV coverage with multiple streaming feeds into digital devices and networking sites that transcend nationally based services.)

Globalization Expansion and Stretching: Reflected in the expansion and stretching of social relations, activities, and connections, such as reaching financial markets globally, electronic communication around the clock, and the emergence of large shopping malls catering to consumers worldwide. (Examples: Non-governmental organizations, commercial enterprises, social clubs, regional and global institutions and associations (UN, EU, ASEAN, Google, and others).)

Globalization Intensification and Acceleration: Involves the intensification and acceleration of social exchanges and activities, with examples like the worldwide web relaying distant information in real-time, satellites providing instant pictures of remote events, and the routine use of sophisticated social networking platforms like Facebook and Twitter. (Examples: The intermingling of local and global, shaping local happenings by events occurring far away and vice versa.)

Globalization in Human Consciousness: Globalization processes occur not only on an objective, material level but also involve the subjective plane of human consciousness, making the global frame of reference for human thought and action. (Examples: Extension into the core of the self and its dispositions, facilitating the creation of multiple individual and collective identities nurtured by the intensifying relations between the personal and the global.)

Prehistoric Globalization (10000 BCE-3500 BCE): In this earliest phase of globalization, contacts among hunters and gatherers – who were spread around the world – were geographically limited due to the absence of advanced forms of technology.

Pre-modern Globalization (3500 BCE- 1500 CE): In this period, the invention of writing and the wheel were great social and technological boosts that moved globalization to a new level. The invention of the wheel in addition to roads made the transportation of people and goods more efficient. On the other hand, writing facilitated the spread of ideas and inventions.

Early Modern Globalization (1500-1750): It is the period between the Enlightenment and the Renaissance. In this period, European Enlightenment projects tried to achieve a universal form of morality and law. This, with the emergence of European metropolitan centers and unlimited material accumulation which led to the capitalist world system, helped to strengthen globalization.

Modern Globalization (1750-1970): Innovations in transportation and communication technology, population explosion, and an increase in migration led to more cultural exchanges and transformation in traditional social patterns. The process of industrialization also accelerated.

Contemporary Globalization (from 1970 to present): The creation, expansion, and acceleration of worldwide interdependencies occurred in a dramatic way, representing a significant leap in the history of globalization.

Economic Dimension: Refers to the extensive development of economic relations across the globe as a result of technology and the enormous flow of capital that has stimulated trade in both sources and goods.

Major Players in Global Economy: Huge international corporations (General Motors, Walmart, Mitsubishi), International Economic Institutions (IMF, World Bank, The World Trade Organization), Trading Systems.

Result of Economic Globalization: Wide gap between rich and poor countries.

Major Sources of Economic Growth across Countries: Property rights, regulatory institutions, institutions for macroeconomics, stabilization, institutions for social influence, institutions for conflict management.

Political Dimension: Enlargement and strengthening of political interrelations across the globe.

Key Political Issues: State sovereignty, increasing impact of various intergovernmental organizations, future shapes of regional and global governance.

Examples of Political Globalization: European Union, United Nations, NATO, The World Trade Organization.

Impact of Political Globalization: The world in many ways turned into a borderless world, but governments often seek to restrict migration from poor countries.

Cultural Dimension: Increase in the amount of cultural flows across the globe.

Characteristics of Cultural Globalization: Dominant cultural characteristics include individualism, consumerism, and the drive for economic success stimulated by the internet and technological devices.

Result of Cultural Globalization: Rise in homogenized popular culture, cultural diversity often results in hybridization.

Role of Media in Cultural Globalization: Media empires (Yahoo, Google, Microsoft, Disney) play a major role in the flow of culture.

Religious Dimension: Religion is a personal or institutionalized set of attitudes, beliefs, and practices relating to or manifesting faithful devotion to an acknowledged ultimate reality or deity.

Significance of Religion: Religion is central to defining civilizations and often central to conflicts globally.

Example of Religious Globalization: Jihadist globalism, a religious response to materialist influences, seeks to transform the world based on religious beliefs.

Roman Catholic Teaching of Globalization: Eight principles summarize Roman Catholic teachings on globalization, including commitment to universal human rights, the common good, solidarity, and justice.

Justice Categories in Catholic Teaching: Commutative justice (fulfilling contracts), distributive justice (equity in goods distribution), social justice (creation of conditions for justice).

Ideological Dimensions: Ideology is a system of widely shared ideas, beliefs, norms, and values among a group of people, often used to legitimize political interests or defend power structures.

Major Ideological Claims of Advocates of Globalism: Globalization is about liberalization and global integration of markets, it is inevitable and irreversible, nobody is in charge of globalization, it benefits everyone, and furthers the spread of democracy in the world.

Economic Globalization: Increasing interdependence of world economies due to cross-border trade of commodities and services, international capital flow, and rapid spread of technologies.

IMF's Definition of Economic Globalization: Integration of economies worldwide, including the movement of goods, services, capital, labor, and technology across borders.

Two Major Driving Forces for Economic Globalization: Rapid Growth of Information, Marketization

Rapid Growth of Information: Information plays a crucial role in productive activities.

Marketization: Restructuring processes that enable state enterprises to operate as market-oriented firms, often achieved through reduction of state subsidies, organizational restructuring, decentralization, and privatization.

In the 16th century, long-distance trade marked the origin of modernity and globalization, such as the Silk Road connecting Asia, Africa, and Europe.

In the 19th century, globalization approached its modern form with growth in international exchange of goods.

In the 19th and 20th centuries, the global economy grew by an average of nearly 4 percent per annum, driven by international trade.

International Monetary System (IMS): Rules and standards facilitating international trade and capital flow among nations, governing exchange rates.

Gold Standard: Backing a country's currency with gold reserves, enabling freely convertible currencies at a fixed price.

Bretton Woods System: Established in 1944, a monetary system based on the US dollar as the primary reserve currency, ended in 1971.

Floating Exchange Rate System: Developed in 1973, a market-based system where exchange rates fluctuate.

European Monetary Integration: A 30-year process that led to the creation of the euro and the European Monetary Union (EMU).

European Monetary System (EMS): An arrangement from 1979 aimed at stabilizing exchange rates among European countries.

European Monetary Integration: A 30-year process beginning in the late 1960s to reduce the influence of the US dollar on domestic exchange rates and led to the creation of the euro.

European Monetary System (EMS): Established in 1979 to stabilize exchange rates among European countries.

Bretton Woods System: A monetary system based on the US dollar, created in 1944 and ending in 1971.

Floating Exchange Rate System: A market-based system developed in 1973.

European Financial Stability Mechanism (EFSM): A permanent fund created by the EU to provide emergency assistance to member states.

European Financial Stability Facility (EFSF): An organization created by the EU to provide assistance to member states with unstable economies.

European Stability Mechanism: Activated by the EU in 2013 as a permanent mechanism.

International Trade: The exchange of goods, services, and capital across national borders, vital to the GDP of many countries and essential for resource acquisition in various nations.

Specialization and Comparative Advantage: Two key concepts in international trade economics.

Specialization: The process where countries and businesses focus on producing goods and services where they are most efficient, leading to maximum advantages over rivals.

Comparative Advantage: Arises when two countries have different relative efficiencies, allowing both to benefit from trade.

Benefits of International Trade: Competition leading to competitive pricing, Greater availability of goods and services, Efficient resource utilization in wealthy countries, Exposure to products not available domestically.

Trade Policies: Regulations and agreements governing trade relations between countries, defining standards, goals, rules, and regulations.

Tariffs: Taxes or duties on imports or exports, used for protecting local industries.

Trade Barriers: Measures that make imported goods or services less competitive than local ones, including tariffs, duties, subsidies, embargoes, and quotas.

Safety Regulations: Ensure imported products meet safety and quality standards.

National Trade Policy: Protects the trade and interests of a nation.

Bilateral Trade Policy: Regulates trade relations between two nations, considering both nations' policies and negotiations.

International Trade Policy: Defines policies under international economic organizations such as the WTO, aiming to uphold the interests of developed and developing nations.

Trade Policy and International Economy:

World Trade Organization (WTO):

Global Economy Outsourcing:

Outsourcing: Assigning tasks and obligations under a contract to another party (subcontractor), common in complex projects

Determinants of Outsourcing Location:

Market Integration: The ease with which two or more markets can trade with each other, characterized by similar price patterns and relations among different markets.

Stock Market Integration: When stock markets in different countries show similar trends and expected risk-adjusted returns, allowing investors to move between markets without extra costs.

Financial Market Integration: Facilitated by common currencies and the elimination of technical, regulatory, and tax differences to encourage free capital and investment flow across borders.

Global Corporation: A business operating in two or more countries, also known as a multinational company, with advantages such as revenue diversification and access to more customers and capital.

Early Historical Periods: Marked by globalization patterns in trade and exchange, driven by shipping and navigation technologies.

Post-World War II: Multinational corporations (MNCs) led economic recovery and expansion, with American corporations playing a significant role.

Present: Transformation of global corporations, with increasing global expansion and diversity of challenges.

The Finance Function in a Global Corporation:

Foreign Direct Investment (FDI):

BRICS Economies:

General Agreement on Trade in Services (GATS):

State: A compulsory political organization with a centralized government that maintains a monopoly of the legitimate use of force within a certain territory.

Nation: An imagined political community that is both inherently limited and sovereign.

Imagined Community: Nations are imagined because the members of even the smallest nation will never know most of their fellow members, yet in the minds of each lives the image of their communion.

Golden Straitjacket: A term coined by Thomas Friedman to describe how globalization pressures states to conform to free-market principles.

Neoliberalism: An economic ideology that values market exchange as an ethic and emphasizes reducing government intervention in the economy.

Economic Sovereignty: The power of national governments to make decisions independently of other governments.

International Legal Sovereignty: Recognition of a state as a member of the international community.

Westphalian Sovereignty: The principle that one sovereign state should not interfere in the domestic affairs of another.

Interdependence Sovereignty: The capacity to control the flow of people, goods, and capital into and out of a country.

Domestic Sovereignty: The capacity of a state to choose and implement policies within its territory.

Preferential Trading Area (PTA): An agreement that reduces or eliminates tariff barriers on selected goods imported from member countries.

Free Trade Area (FTA): An arrangement that removes barriers to trade on all goods coming from other member countries.

Customs Union: A union in which all barriers to the mobility of resources and goods are removed among member countries, and a common external tariff is applied to non-members.

Common Market: A stage of economic integration that involves the free movement of goods, services, capital, and labor among member countries.

Economic Union: An integration level that includes a common market, coordinated monetary and fiscal policies, and sometimes a common currency.

Economic and Monetary Union (EMU): A stage of integration with a single economic market, common trade policy, single currency, and common monetary policy.

Complete Economic Integration: The final stage of integration, where member states forego independence of both monetary and fiscal policies.

Political Integration: The integration of political systems with economic, social, and other human systems.

Neo-Functionalism: A theory of integration where interest groups, political parties, governments, and supranational institutions drive the process.

Intergovernmentalism: A theory emphasizing the role of nation-states in the integration process.

Liberal Intergovernmentalism: A theory that applies rational institutionalism to European integration.

New Institutionalism: A theory highlighting the importance of institutions in integration, with rational choice, sociological, and historical strands.

Multi-level Governance (MLG): A theory of integration that focuses on the dispersion of authority across multiple levels of governance.

Transnational Activism: Mobilization of collective claims by actors located in more than one country, addressing multiple governments or international organizations.

Social Media: Computer-based technology that facilitates sharing of ideas, information, and building virtual networks and communities.

Social Movements: Large, informal groupings of individuals or organizations that focus on specific political or social issues and aim to bring about social change.

Global Justice Movement: A movement advocating for fair trade rules and against the global expansion of corporate power.

Network Society: A concept where citizens and organizations use networks to gain power relative to states and influence global discourse.

Global Governance: The movement towards political integration of transnational actors aimed at negotiating responses to problems that affect more than one state or region, often involving institutionalization.

Institutions of Global Governance: Organizations like the United Nations, International Criminal Court, and World Bank that have limited power to enforce compliance and play roles in addressing global issues.

Human Security: Concerns related to humanitarian crises, military conflicts, climate change, and economic volatility that pose threats to human well-being and require cooperation from various actors.

Globalization: The process of increased interconnectedness and interdependence among countries, affecting issues such as trade, culture, and politics.

UN Charter: The foundational document of the United Nations, outlining its purposes and principles, including maintaining worldwide peace and security, developing relations among nations, fostering cooperation, and providing a forum for countries to meet UN goals.

Sovereignty: The supreme authority of a state to govern itself independently without interference from external sources.

Transnational Challenges: Global issues such as climate change, terrorism, infectious diseases, and international migration flows that require cooperation among nations and various actors.

Depoliticization: Delegating decisions to independent regulators, central banks, or judiciaries, reducing the political aspect of certain policy areas.

Rescaling: The extension of economic and social relations beyond national borders, facilitated by transnational legal arrangements.

Capitalization of Assets: The process of transforming real assets into commodities and financial assets.

Nation-State: A political entity characterized by defined territory, a population, and sovereign power.

Trade Barriers: Obstacles such as tariffs and quotas that hinder international trade between nations.

Liberalization of Capital Markets: The opening up of financial markets to international investment and capital flows.

Technological Progress: Rapid advancements in information technology, transportation, and communication that facilitate globalization.

Collective Public Goods: Goods or services, often provided by governments, that benefit society as a whole.

Externalities: Unintended side effects of economic activities that affect other parties not involved in the activity.

Multi-Layered System of Governance: Decision-making processes occurring at various levels, including sub-national, national, and global.

Public Accountability: The responsibility of governments to be transparent and answerable to the public.

Inter-Governmental Regimes: Agreements and systems of cooperation between different governments.

Capacity Inadequacy: The limitation in the ability of individual states to address complex global issues.

Global South: A term referring to regions of Latin America, Asia, Africa, and Oceania, often characterized by low income and marginalization, and used to describe countries with interconnected histories of colonialism, neo-imperialism, and economic inequalities. It is sometimes synonymous with "developing world."

Third World: Originally used during the Cold War to describe countries whose views did not align with NATO and capitalism or the Soviet Union and communism. It often refers to less developed and economically disadvantaged nations.

Reterritorialized Geography: A concept highlighting the idea that economic disparities associated with the Global South can also be found within wealthier countries, challenging traditional notions of North and South.

Transnational Political Subject: A concept representing a shared experience of subjugation under global capitalism, resulting in a sense of resistance and shared identity among marginalized populations.

Decolonization: The political process through which former colonial entities seek independence and self-governance, often involving the end of colonial rule.

Neo-liberal Globalization: The process of economic globalization characterized by the promotion of free markets, limited government intervention, and privatization of public services.

IMF (International Monetary Fund): An international organization that provides financial assistance and policy advice to countries facing economic crises, often criticized for imposing harsh economic measures in exchange for loans.

Regionalism: The decentralization of political powers or competencies from higher to lower political levels, which can be either top-down (initiated by the state) or bottom-up (initiated within a region).

Open Regionalism: A regionalism approach that promotes non-discrimination, openness in membership, and economic flows, often exemplified by organizations like Asia-Pacific Economic Cooperation (APEC).

Globalization in Asia Pacific and South Asia: The impact of globalization on these regions, driven externally by world powers and viewed as a force for good, bringing economic development, political progress, and cultural diversity.

Developmental States: Nation-states that actively promote economic development through interventionist policies and investment in infrastructure and industry.

Middle Class Formation: The emergence and growth of middle-class societies characterized by improved education, income, and professional lifestyles, often driven by regional economic development.

Hybridization: The process of blending and mixing cultural, economic, and political elements from different sources, leading to the formation of hybrid societies and identities.