Contemporary World Midterms Book

The Contemporary World Overview

Concept of the Contemporary World

The contemporary world encompasses not only the current ideas but also the societal changes and interactions that are prevalent at a global scale. This concept reflects a dynamic and fluid landscape where cultural, political, environmental, and economic factors interplay continuously.

Globalization significantly impacts this notion, as it represents the flow of goods, ideas, people, and services across borders, leading to increased interactions among different cultures and economies. Understanding contemporary times requires an appreciation of how interconnected and interdependent the world has become, as national borders increasingly blur in the context of global communication and trade.

Historically, the term contemporary referred to events or entities existing within the same period; however, in modern usage, it extends to current conditions within society or the present age, reflecting ongoing changes and developments.

Globalization in the Contemporary World

Globalization refers to the increased interconnectedness and interdependence among nations, which affects every aspect of life — cultural, political, and economic. It leads to profound changes in societies, influencing local customs, political frameworks, and economic practices. Through globalization, there has been a notable shrinking of the contemporary world, fostering a heightened awareness of global issues and shared challenges, such as climate change, economic disparities, and humanitarian crises. This interconnectedness presents opportunities for collaboration but also poses challenges regarding governance and equity.

Key Aspects of Globalization

Economic Aspect:

Globalization has significantly facilitated international trade, the flow of capital, and the integration of markets on a global scale. This creates numerous opportunities for businesses, as individuals and companies can access global markets more easily. One of the results of economic globalization is the proliferation of transnational corporations, which can operate across multiple countries, leading to an interconnected global economy that transcends national boundaries.

Cultural Aspect:

Cultural globalization influences cultural exchanges by promoting diversity and allowing for the mingling of cultures, leading to hybrid cultural expressions. Mass media and technology are pivotal in shaping perceptions and cultural norms, bringing global narratives to local contexts and vice versa. This cultural flow impacts everything from fashion, film, and music to food and social customs.

Political Regulatory Framework:

Global governance mechanisms, including international organizations such as the United Nations (UN) and the International Monetary Fund (IMF), play essential roles in regulating and facilitating international cooperation. These entities aim to address challenges that transcend national borders, such as climate change, trade disputes, and humanitarian issues, fostering collaborative approaches to resolving complex global problems.

Major Definitions Related to Globalization

Free Trade

An economic policy that allows for trade without tariffs, quotas, or restrictions; it fosters economic relationships and promotes integration among nations, enabling them to benefit from their comparative advantages. Free trade agreements can lead to economic growth albeit also raising concerns about local industries and labor conditions.

Mass Media

A significant agent of cultural globalization, mass media presents ideas and cultures across global platforms, influencing social behaviors, perceptions, and norms. Through television, news outlets, and digital media, mass communication shapes public opinion worldwide.

Technology and Internet

Technological advances have revolutionized communication, allowing businesses to operate globally and connect people worldwide more efficiently. The Internet, in particular, has enabled rapid information exchange, fundamentally altering traditional business practices, consumer behavior, and social interactions.

The Role of Mass Media and Technology

Mass Media

Mass media acts as both an enabler of globalization and a conduit for cultural exchange. It influences public opinion and cultural perception through the dissemination of information that is accessible globally. Media coverage of international issues also raises awareness of global challenges, enhancing the dialogue around those concerns.

Technology Impact

Technology facilitates globalization by enhancing communication and creating global supply chains that stretch across multiple continents. Innovations in data communication have not only accelerated trade but have also made real-time communication possible, fostering stronger connections between businesses and consumers globally.

Social Media's Role in Globalization

Overview

Social media platforms allow for swift sharing of content, thus facilitating connections across countries and cultures. These platforms contribute to the accelerated spread of ideas, cultural practices, and social movements at unprecedented rates, allowing for grassroots engagement and the formation of global communities around shared interests.

Pros and Cons of Social Media

Positive outcomes include enhanced communication, networking opportunities, and democratization of information. Conversely, negative aspects involve concerns over the reliability of information, the potential for misinformation, cyberbullying, and the amplification of divisive narratives. The challenge lies in balancing the benefits of social media connectivity with the need for critical media literacy among users.

Competing Concepts of Globalization

Rejectionists - scholars perceive globalization as a power word. For them, power words like globalization explain everything and nothing. It has become redundant and meant nothing to them, which is why they reject globalization According to Steger, supporters of globalization adopt either of the two possible retorts to this position.

Skeptics - point out that even if the term globalization is meaningful, it is nonetheless not significant at all. They claim that, for instance, most trades remain national in scope

Modifiers - consider globalization as simply one of many similar phases in history. They thus conclude that this phenomenon should be viewed not as a distinctive affair but merely one moment in a more general theory of world history.

In summary, Rejectionists deny its significance, Skeptics acknowledge but downplay it, modifiers accept but contextualize it

Underlying Philosophies of Globalism

Market globalism pursues to grant globalization with neoliberal meanings and free market norms.

Neoliberalism is defined as reduction of state liberalism

Justice Globalism - upholds an alternative vision of globalization based on egalitarian ideals of global solidarity and distributive justice

This ideology from the political Left contests market globalism. Political Left or Left wing politics is that which supports social equality, egalitarianism, and usually is in opposition to social hierarchy.

Religious Globalism - endeavors for a global religious community with dominance over secular structures.

Anthony Giddens - globalization is the intensification of social connections

Emmanuel Wallerstein - a process in improvement

Market integration

 is defined as the combination of separate markets into one as price differences are eliminated. It is when markets of goods and services correlated with one another experience similar changes in price, either increasing or decreasing. Market integration may either be planned, with the government implementing measures in order to control changes, or due to changes in supply and demand. Changes in markets with similar products also occur.

A SHORT HISTORY OF GLOBAL MARKET INTEGRATION IN THE 20TH CENTURY

The 20th century started on January 1, 1901 and ended on December 31, 2000.

This 10th and final century of the second millennium saw the fast rate of global market integration.

19th Century: A Prelude

The 19th century marked significant global market integration and the establishment of a world economy driven by technological advances. Key innovations like the marine steam engine, railroad locomotives, and the electric telegraph revolutionized transport and communication networks. The opening of the Suez Canal in 1869 shortened travel distances between Europe and Asia, reducing freight costs. Free trade policies, particularly in the British Empire, further stimulated market integration. This era saw countries specializing in goods production and trading efficiently, benefiting economies such as British India's through surplus commodities.

Start of the 20th Century

As the 20th century began, the global economy experienced unprecedented levels of free trade, high living standards in Europe and North America, and rapid elimination of trade barriers and tariffs. This era, particularly from 1870-1914, saw significant progress in real incomes, reduced transport costs, and a remarkable integration of global capital markets. By early 1900s, foreign-owned assets amounted to 20% of world GDP, with the UK leading as the world's banker, holding 80% of global foreign assets and having substantial capital outflows.

The First and Second World War

World War I halted the global economy's rapid progression, disturbing transport routes and causing inflation. Efforts to restore the pre-war global economy were hindered by imbalances such as Britain's overvalued pound sterling and German reparations.

The Great Depression (1929-1939) greatly diminished globalization, as economic downturns led to heightened trade barriers and competitive devaluations. Despite early recovery in the late 1930s, World War II further disrupted output and trade, shifting production focus to war-related goods.

Postwar Situation

Post-World War II saw the global economy divided into three parts: industrial countries, underdeveloped economies, and centrally planned economies. Industrial countries experienced output changes, while underdeveloped nations primarily produced raw materials. Centrally planned economies were isolated from the rest of the world until the 1990s.

The United Nations was formed for political cooperation, with the IMF and World Bank introduced in 1946 to facilitate international economic cooperation. The GATT was established in 1947 to promote open trade. The US played a dominant role in postwar reconstruction through initiatives like the Marshall Plan, which spearheaded European recovery and promoted sustained economic growth.

The postwar period saw significant tariff reductions and economic cooperation, spurred by the IMF and GATT, leading to rapid global economic growth. By the early 1970s, Europe and Japan emerged as key players in the world economy alongside the United States.

The 1970s, '80s, and *90s

The 1970s, '80s, and '90s saw significant changes in the global economy. The abandonment of the Bretton Woods system in 1971 led to floating exchange rates by 1973. The oil price shock of 1973-74 caused recessions in many countries, and another oil price hike in the early 1980s led to a global recession and the "lost decade" for developing nations due to debt crises.

Inflation control in the late 1980s and the Brady Plan's debt restructuring efforts helped recover some economies. The collapse of the Soviet Union in 1991 integrated former centrally planned economies into the global economy. The 1990s also saw rapid growth in the U.S. and the rise of the European Union as a major economic force with the creation of a single market.

Despite some challenges, growth in developing countries surged due to economic reforms and a favorable global environment by the 2000s.

At the Turn of the Century

At the turn of the century, the world economy became more open, significantly influenced by the rapid growth of the Internet, which facilitated e-business and e-commerce. The drop in transport and communication costs, along with reduced tariffs, opened up global trade. By 2000, average tariff rates among industrial countries were below 5%. Emerging Asian economies, notably China and India, became major economic forces, while transition economies from the former Soviet Union and Eastern Europe achieved high growth. However, many Sub-Saharan African countries remained extremely poor.

The rapid integration of global financial markets was another hallmark. While only seven countries had free exchange rate regimes in 1952, by 2000, 165 countries had accepted IMF's Article VIII obligations, allowing freer capital account transactions.

FOUR DIMENSIONS OF CORPORATE GLOBALITY

Corporate globality can be understood through four key dimensions:

1. Globalization of Market Presence: Measures the extent a corporation has globalized its market presence and customer base. Car and oil companies score high, while even large retailers like Wal-Mart generate less than 30% of revenues outside the US.

2. Globalization of Supply Base: Considers how a company sources from various global locations, with optimal parts of the supply chain situated globally. For instance, Caterpillar has operations in about 200 countries, manufactures in 24, and maintains R&D facilities in nine.

3. Globalization of Capital Base: Evaluates to what degree a corporation's financial structure is globalized, considering where shares are listed, capital is attracted from, taxes are paid, and how profits are repatriated.

4. Globalization of Corporate Mind-Set: Reflects a company's ability to manage diverse cultures, with companies like GE, Nestlé, and Procter & Gamble operating on a global scale, featuring international top management and ideas sourced from worldwide.

THE ATTRIBUTES OF GLOBAL CORPORATIONS

Global corporations, also known as multinational (MNC), transnational (TNC), international, or global companies, operate in multiple countries. Here are some distinctions:

1. International companies export and import without significant investment outside their home country.

2. Multinational companies invest in other countries but tailor products for local markets.

3. Global companies invest in many countries and offer consistent marketing across local markets.

4. Transnational companies have foreign investments and central corporate facilities but grant autonomy in decision-making, R&D, and marketing to each local market.

The degree of global operations may also be judged by market presence, supply chain reach, company size, management makeup, and funding strategies. This understanding showcases the nuanced operation modes of different global corporations.

SOME ATTRIBUTES OF MNCS

Many attributes of global corporations align with their organization types, with some shared traits evident in US-based MNCs. Here are the common attributes:

1. Organizational Structure: They often share similar structures.

2. Global Size and Presence: Characterized by size, structure, and performance both in the parent country and globally.

3. Major Firms: They are some of the world's largest companies, like Wal-Mart, ExxonMobil, and General Motors.

4. International Operations: Operate through a network of branches and subsidiaries, controlling assets worldwide.

5. Economic Power: Often oligopolistic, gaining power through mergers and takeovers.

6. Resource Transfer: Capable of transferring resources internationally with professional management.

7. Market Research: Conduct extensive research before expanding operations.

8. Organizational Characteristics: Defined by formalization (structured operations), specialization (specific job roles), and centralization (top management control).

US-based MNCs are distinct from European MNCs in their level of centralization, formalization, specialization, and corporate culture.

International financial institutions (IFIs)

  are financial institutions founded or chartered by more than one nation and are subjects of international law. The most recognized IFIs were established after World War II to help with reconstruction.

The role of IFIs in the Creation of a Global Economy

International Financial Institutions (IFIs) were established after World War II to aid in the recuperation of damaged nations. The priority of IFIs is to assist in economic and financial cooperation, as well as resource allocation. IFIs offer financial support and advice for developing countries and promote cooperation and stability regarding international economic cooperation and stability. The World Bank is the primary source of development knowledge. Other donor institutions obtain knowledge from the World Bank and IMF, which are mandated by shareholders to provide analyses and funding regarding global concerns, particularly those pertaining to global economy. 

When speaking about IFIs, the term refers to the International Monetary Fund (IMF) and multilateral development banks (MDBs)

The International Monetary Fund (IMF)

 was founded in 1945 by international treaty as the central institution of the international monetary system. Members in need of provisional financing can tap into the IMF.  The IMF has 189 countries as members and has a headquarters in Washington, DC. 

The three main types of activities the IMF engages in are:

a.       Monitoring of economic and financial developments and policies and offering policy advice to members

b.       Lending to member countries and supporting economic adjustments and reforms

c.        Providing the government and central banks of member countries with technical training and assistance

The World Bank

 which was established around the same time the IMF was in 1945. It was originally involved in reconstruction of countries destroyed in World War II. As those countries recovered, the Bank turned to focusing on economic development of the world’s non-industrialized countries. Like the IMF, The World Bank is headquartered in Washington, DC and its shareholders are the same countries with IMF membership. The shareholders are represented by a Board of Governors, which have policymaking authority.

The World Bank is composed of these five institutions:

The Inter-American Development Bank (IDB) was founded in 1959 is known as the oldest development bank. As of 2018, it has 48 countries as members and is headquartered in Washington, DC. It is the primary source of funding for both public and private sectors’ economic, social, and institutional development, as well as for regional programs. Its priorities include:

a.       promotion for competitiveness by supporting programs and policies that enhance a country’s development potential in an open global economy

b.       reforming the state through reinforced efficiency and transparency of public institutions

c.       investments in programs that provide opportunities for the poor

d.       fosters relationships among nations to improve their markets in order to further regional economic integration

The Asian Development Bank (ADB) started with 31 members in 1996 and has now expanded to 67 members as of 2018 (48 from within Asia and the Pacific and 19 outside). Its headquarters are in Manila. Its funds come from member contributions, bonds, and recycled repayments on loans. More than half of its cumulative lending come from ordinary capital resources, however ADB also provides loans from special funds such as the Asian Development Fund. It provides concessional loans to members who are the least developed countries.

The African Development Bank (AfDB), which has headquarters in Abijdan, Cote d’Ivoire, was founded in 1964 and has 80 member countries. Its prime functions are mostly for social and economic development of Africa and its shareholder countries:

a.       Create loans and equity investments

b.       Offer technical assistance for development projects and programs

c.       Endorse investments of public and private capital

d.       Answer assistance requests in coordination with regional member countries regarding development policies and plans

The European Bank for Reconstruction and Development (EBRD) was founded in 1991 and is headquartered in London. It is owned by 67 member countries from 5 continents and two intergovernmental institutions which are the European Union and European Investment Bank. It does not finance loans using shareholders’ capital, rather it borrows funds from international capital markets. It invests mostly in private capital markets. The EBRD operates with publicly owned companies with the intention of supporting the restructuring of state owned firms, privatization, and improvements in municipal services. Aside from that, it provides project financing  for individual banks, businesses, and industries in the form of investing in companies and new ventures.

Global Interstate System

Jean Jacques Rosseau - powers of europe among themselves form a kind of system

George-Henri Soutou - the general balance of the powers makes up,

Interstate system - system for international relations, deals w government or states and their authorities, divided into three:

Interstate - focus on how countries interact with one another, based on sovereignty itself

Intersocietal - how different societies interact regardless of political boundaries

Interpersonal/international - explains how individuals interact with one another within the global scale

International institutions - government

International organizations - non government entities

Global Interstate System

State - A community of persons more or less numerous permanently occupying a definite portion of territory, independent of external control to which the greater body of inhabitants render habitual obedience.

Elements of a State - People, government, territory, sovereignty

System - refers to interactions by various political entities, but mostly states

Jean-Jacques Rousseau - (1712-1778) a Genevan philosopher who stated that the powers of Europe formed amongst themselves a kind of system that joins them together through same religion, law of nations, customs, letters, commerce, etc.

Georges-Henri Soutou - introduced international system as characterized by the general balance of powers making it up, and also by shared solidarities that are cultural, religious, economic, social, as well as with regard to diplomatic structures.

Interstate System - a system for international relations, specifically which deals with governments or states and their authorities.

International relations

Divided into three:

Interpersonal relations - relations between citizens of different states acting in their personal interests

Intersocietal relations - groups within one state with groups of another state (example: companies selling goods/services to citizens of other states, contacts between foreign firms, etc)

Interstate relations - government authorities of one state to government authorities of another state (examples: state visits, treaties, international conferences, etc.)

Institutions governing International Relations

they seek to understand the following:

the origins of war and maintenance of peace

the nature and exercise of power within the global system

the changing character of state and non-state actors who participate in international decision making

International institutions govern interaction at the system level and outlaw some traditional institutions and practices of international relations. (government entities)

International organizations - institutions with international membership, scope, or presences

Types of international organizations

International non-governmental organizations (INGOs) - non-government organizations that operate internationally, with members who are either associations or individuals

Intergovernmental organizations - composed of member states and established by intergovernmental agreements

Internationalism vs Globalism

Internationalism - the political, cultural, economic cooperation among countries

Globalism - an ideology anchored on the belief that people, goods, information ought to cross national borders unrestrained

Global Capitalism and Social Outcomes

Capitalism

Capitalism is an economic system primarily driven by private ownership and free market principles where goods and services are produced for profit. Globalization plays a significant role in facilitating capitalism by opening up opportunities for companies to access international markets, leading to increased competition and innovation.

Social Implications

The growth and wealth generated through globalization and capitalism often lead to inequalities, particularly between developed (Global North) and developing (Global South) nations. The historical context of colonialism and imperialism continues to influence these modern trajectories, creating disparities in wealth distribution and access to resources.

The North-South Divide

Definition

The North-South divide is a socio-economic division between the Global North, which consists of wealthier nations, and the Global South, comprising less developed countries facing various social and economic challenges. This divide is not just about wealth but encompasses access to education, healthcare, technology, and political power.

Characteristics

• Global North: Wealthier nations characterized by higher living standards, developed infrastructures, and economic stability. These countries generally exhibit advanced technological capabilities and better access to education and healthcare.

• Global South: Less developed nations struggling with social and economic challenges, including poverty, limited access to education and healthcare, and political instability. Many countries in the Global South continue to feel the lingering effects of colonialism and seek pathways to development and sustainability.

Summary of Key Historical Contexts

Historical Development

Colonialism, imperialism, and historical biases have significantly shaped global inequalities. The legacies of past injustices are reflected in current global power dynamics, where historical affiliations continue to affect economic and political relationships today.

Regional Relations in Asia

Introduction of Regionalism

Regionalism emphasizes the importance of geographical and political collaboration among countries, aiming to enhance economic and political integration. Successful regional organizations such as ASEAN (Association of Southeast Asian Nations) promote cohesion, economic cooperation, and political alignment among member countries, demonstrating the vital role regional collaboration plays in the context of globalization.

Asia's Emerging Role in Globalization

Asian countries are increasingly positioned as crucial players in globalization processes, not only being affected by global trends but also enhancing their influence through robust economic growth and cultural exchange. The dynamic economies of Asia present opportunities for collaboration while also contributing to the evolving narrative of globalization.