What Is It? 

"Globalization," has been defined in a variety of alternative ways including:

An economic orientation:

Globalization is "the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology." (IMF World Economic Outlook 1997)

Or, more in a more encompassing way:

Globalization is a state of the world involving networks of interdependence at multi-continental distances with multiple economic/financial, political, national security, environmental, social/cultural and technological linkages among nation states, markets and individuals. (Keohane and Nye; Friedman)

Or in a more lyrical and descriptive way by William Greider:

Globalization is like "wondrous new machine,"that reaps as it destroys. "huge and mobile, "like the machines of modern agriculture, but vastly more complicated and powerful...running over open terrain and ignoring familiar boundaries. " As it goes, the machine throws off enormous mows of wealth and bounty while it leaves behind great furrows of wreckage".But, no one is at the wheel. "the machine has no wheel or internal governor to control the speed and direction. It is sustained by its own forward motion, guided mainly by its own appetites.[The machine is] modern capitalism driven by the imperatives of global industrial revolution, [creating] "the drama of a free-running economic system that is reordering the world" (Greider p 11)

Clearly, globalization describes a world environment in which much freer international movement of goods, capital, people, information and ideas is making global market forces more important in the daily lives of the world's people relative to nation state political forces. But, the economic processes of globalization are not new. The period 1870-1914 was a time of very rapidly increasing free movement of goods, capital and people as the technology of the telegraph and the steamship made international communication and transportation much faster, easier and cheaper. This extraordinary period of growth in the global economy was interrupted by the two World Wars and the Cold War, but with the collapse of the Soviet Union, the primary alternative to "market capitalism" also disappeared. Nation states worldwide began to open their economies to international goods, services, practices and ideas, to privatize the means of production that for years had been government owned and to deregulate economic activity to allow market forces greater scope to allocate resources.

In theoretical economic terms, these changes should provide large gains that can be divided among all participants in the globalizing economy as capital flows to those investment opportunities with the highest risk-adjusted rates of return, as goods and services are produced by those who have comparative advantage in them and as profit-maximizing behavior in privatized public services increases the efficiency of providing them. Reinforcing the effects of these "economic efficiency factors," rapid advances in information technology and computerization are greatly reducing the costs of global communications. Faster, easier and cheaper communications facilitate the organization of production on a multi-continental scale, and the rapid movement of huge volumes of capital among countries makes possible the rapid construction of new productive facilities in virtually any nation that welcomes them.


What Is the Argument Against Globalization? 

The new primacy of "market capitalism" as the economic organization model and the technological feasibility of moving the information required to coordinate global markets are causing rapid changes in many people's lives. Great fortunes are created, of course, as world stock markets boom under the prospects of new global opportunities and declining costs of production. Many parts of the world have experienced rapid economic growth and increases in average living standards. But, growth has not been uniform for those participating in the global economy as Russia, Brazil and southeast Asian states experienced economic contractions in the late 1990s associated with reversals in international capital flows and resulting steep declines in international currency values. And, some observers think that the benefits of a globalizing economy accrue mainly to international investors, multinational companies ("MNCs") and developing country elites while the working classes suffer relative impoverishment. Further, some feel that massive inflows of foreign investment into developing countries cannot be effectively absorbed, especially as regards the protection of the environment and workers' rights since standards and enforcement mechanisms are not as well established in developing countries. Wide open production and marketing on a global scale tend to "homogenize" economic and even cultural life around the world as dominant entertainment and media offerings, consumer products and business practices spread virtually everywhere. And, the consumer goods produced in the globalized economy are not necessarily goods the world's poor most need.

For these reasons, opposition to globalization among a diverse but surprisingly cohesive group of non-governmental organizations ("NGOs") and interest groups has emerged. The primary targets of the anti-globalization movement have been the United States generally and the World Trade Organization ("WTO"), the International Monetary Fund ("IMF") and the World Bank, organizations seen by some as the enforcers of the "rules of globalization" and the rights of MNCs to the detriment of ordinary people. This loosely coordinated group of protesters has created a high profile by attempting to disrupt (with some success) WTO and IMF/World Bank meetings over the past year. Ironically, the same information technology that facilitates global commerce makes it easy for anti-globalization forces to mobilize their sympathizers. Information technology can amplify individual and NGO voices as they make the case for limits on global market forces by nation states and international organizations.

In "The Lexus and the Olive Tree," Thomas Friedman suggests that, in looking at countries in their global context today, a "six dimensional" framework is needed. To the traditional economic, political and national security analysis of countries' international relationships, we must add technology, the environment and culture as critical dimensions in which globalization is affecting the nations of the world. Interestingly, these dimensions can be observed in the eight core principles espoused by leading anti-globalization forces ("Beyond the WTO: Alternatives to Economic Globalization," International Forum on Globalization, Nov '99):

Popular sovereignty over resource allocation decisions through political institutions rather than the consumer sovereignty of the market (although globalization opponents normally express consumer sovereignty as "corporate control" as they see consumers as unable to resist MNC efforts to invest and sell their products in world markets-the French reportedly loathe McDonald's but many still eat there).

Localization vs. globalization: produce for and sell to local, not global markets and keep political decision authority at as local a level as possible.

Environmental sustainability: global market capitalism is seen as intrinsically harmful to the environment as it is characterized by ever-increasing consumption of unneeded homogeneous products, over-exploitation of natural resources and waste-disposal problems. Accordingly, local political institutions need to have primacy in environmental policy.

Economic human rights: workers are seen as having their traditional lives irreversibly disrupted by globalization and/or being treated less favorably than the same MNCs would treat them in developed countries. In this instance, it is often recognized that local political sovereignty may not be enough; global rules are needed to ensure MNCs cannot exploit workers.

Certain goods should not be traded as economic commodities or subject to trade agreements: food, water, seeds, genetic structures of life and some culturally sensitive products (e.g. entertainment) as well as toxic waste, arms, and drugs should not be "economic goods" subject to trade agreement restrictions on local government regulations. Knowledge embodied in genetic structures should not enjoy intellectual protection, but should be "collective property." Local political authority over agriculture and food should not be restricted by international trade agreements.

Equity: globalization should be restrained as a force that tends to increase the gap in living standards both among and within countries.

Cultural, biological, economic and social diversity: local political institutions should be able to prevent economic activities which tend to homogenize life among the various regions of the world.

The main theme running through the core principles of anti-globalization is local political control versus market sovereignty. This is the subject of Yergin and Stanislaw's "The Commanding Heights," which traces the ascendancy of centralized control by government over the economies of the countries of the world in the 1930s and 1940s and the more recent ascendancy of market forces in determining the allocation of resources, which we know as the phenomenon of globalization. As Yergin and Stanislaw point out, whether the capitalist market model maintains its current ascendant position depends on whether it in fact delivers enough benefits to enough people and at acceptable cost. At this point, anti-globalization activism is a developed world issue; the peoples of the developing world will probably not favor policies which limit access their countries have to western products, entertainment, capital and jobs in MNC factories. For example, in Robert Wright's "Will Globalization Make You Happy" (Foreign Policy, September 2000), the author argues that:

-The economic efficiency effects of globalization are in fact raising living standards world wide, even if in relative terms, the gap between rich and power nations is growing.

-Ignoring national boundaries in doing income distribution analysis gives a better picture of how the "income gap" is behaving; the gap between rich and poor people (as compared to nations) may not be growing. The poorest countries of the world (which are also those with the least involvement with the global economy) are relatively small while, for example, the much larger poor countries of east and southeast Asia have rapidly growing living standards, spurred by substantial participation in the global economy.

-Cross-cultural surveys of happiness indicate that rising average income levels increase happiness in poorer countries, but not in richer countries, suggesting that globalization is likely to make poorer countries happier but not richer countries.

-Those countries most connected to the global economy grow the fastest and, consequently having the fastest growing standards of living, also tend to enjoy improvements in political life (for example South Korea, Taiwan and Mexico).

-The disruption in life experienced by citizens of the developing world is real, but is analogous to that experienced in the developed world during its period of industrialization. The transition costs are real, but failing to make the transition to modernized means of production means remaining in rural poverty, a state, which looks better to developed world anti-globalization activists than to the developing world poor.

- More frequent connections among the peoples of the globalizing world, especially networking among the national elites, is quite likely an effective deterrent to war. Increasing global connectedness among all socioeconomic classes, even if it tends to be homogenizing culturally, could mean people are less prone to purely nationalistic fervor. Is it a coincidence that the horrors of ethnically based civil wars are observed much more frequently in those countries that are least involved in the global economy?

The philosophical debate about the relative merits of collective political control versus market forces to allocate society's resources is an old one, and one that will probably never be finally resolved. In any case, as you use CountryWatch, you will recognize the effects of the global market on each of the countries of the world and understand better how choices made by governments affect the globalization of economies and their economic, political and social progress.


Further reading: 

"Lexus and the Olive Tree" Thomas Friedman
"The Commanding Heights" Daniel Yergin and Joseph Stanislaw
"One World Ready or Not" William Greider
"Beyond the WTO: Alternatives to Economic Globalization" International Forum on Globalization
"Will Globalization Make You Happy?"Robert Wright, Foreign Policy, September 2000.
"The Great Disruption" Francis Fukuyama